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04 October 2023

Air France-KLM sees 1.9% dip in passengers

By Reuters

Air France-KLM reported a 1.9 per cent drop in passenger traffic in January, led by falls in Europe driven by bad weather, and a drop of more than 20 per cent in underlying cargo traffic for the second month running.

Europe's largest airline said yesterday a "deterioration in the operating environment weighed on activity", despite the removal of seats from the market.

And the economic crisis continued to hit business traffic, driving down unit revenues.

The passenger load factor, or proportion of seats sold, fell 0.5 percentage points to 76.6 per cent after the traffic drop was only partially offset by a 1.2 per cent cut in capacity. Air France-KLM shares opened down one per cent at €8.035. France's benchmark CAC-40 index was down 0.8 per cent.

In Europe, where snow led to the temporary closure of some airports, traffic fell 7.9 per cent with capacity down 6.7 per cent. Asia traffic fell 3.9 per cent, while traffic on American routes grew 1.9 per cent.

In cargo, which has been hit by a slump in trade due to the economic crisis, underlying traffic fell by 23.3 per cent and capacity was reduced by 10.4 per cent in January. The resulting load factor dropped nine points to 53.5 per cent.

Including cargo activities of Martinair, consolidated from January 1, cargo traffic fell 1.2 per cent with capacity up by 10.9 per cent and a load factor of 55.6 per cent.

Cargo traffic had fallen 20.4 per cent in December.

The head of airports body ACI Europe said on Friday 2009 would be an "annus horribilis" after passenger traffic dropped 7.7 per cent year-on-year in December and freight plunged more than 21 per cent.

The organisation is particularly worried about freight traffic, which fell 21.4 per cent year-on-year in December and is seen as an indicator of the strength of international trade.

As a barometer of the way the economy is affecting aviation, cargo data could point to further declines in passenger traffic in coming months, the official said.

Analysts have said the slump in cargo traffic could dominate Air France-KLM's third-quarter earnings due on Friday. In a profit warning in January, Air France-KLM said it would post an October-December operating loss of some €200 million (Dh956m).

It said it still expected an operating profit for the full year ending March 31, but that the level would depend on how the economy treated its activities, notably the cargo business.

The Franco-Dutch group withdrew detailed full-year forecasts in November after warning in October that it would miss its 2008-2009 operating profit goal of €1 billion.

Announcing a reduced nine-month loss on Friday, British Airways said it did not expect the economic backdrop to improve for airlines for 24 months.