Air France-KLM net down

An improvement in cargo profitability was the highlight of otherwise dismal quarterly figures from Air France-KLM, with the group's overall profit slumping by almost 60 per cent.

The leading European airline group reported that for the quarter ending June 30, net income was $260 million (Dh955m), down 59.4 per cent compared to same period in 2007. The reported revenue, however, was up 5.8 per cent to $9.8 billion, though "after a negative currency impact of 3.9 per cent".

Air France-KLM also reported that operating costs during the quarter had soared by 9.5 per cent to $9.4bn, with the group's fuel bill jumping by more than 24 per cent to $2.1bn "under the combined effect of a three per cent rise in volume, an increase in jet fuel costs after hedging of 40 per cent and a favourable currency impact of 14 per cent".

On the plus side, Air France-KLM said passenger traffic had achieved a 3.7 per cent rise and a high load factor of just over 80 per cent. Premium traffic had remained "dynamic", underpinning unit revenue. "The recovery in profitability at the cargo division was confirmed, with a significant increase in unit revenues," said the group.

In terms of traffic figures it reported, cargo increased by 1.5 per cent while capacity was three per cent higher, leading to a one percentage point drop in average load factor to 66.2 per cent. The group transported 372,000 tonnes in the quarter.

Revenue from cargo transportation increased by 11.6 per cent to $1.1bn, after a negative currency impact of 6.1 per cent, while the operating income figure was a positive $26m compared to a loss of $26m in the same period of 2007.

Unit revenue per tonne-kilometre rose 9.9 per cent to 39 cents and per available tonne-kilometre by eight per cent to 26 cents – on a constant currency basis the respective increases were 17.1 per cent and 15 per cent.

"The strong rise in unit revenues and the containment of unit costs, notably thanks to the rejuvenation of the Air France fleet, led to a significant improvement in the profitability of this business," said Air France-KLM.