Overcapacity and evaporating fuel surcharges put pressure on cargo pricing in the third quarter, driving down unit revenue as freight traffic fell by 12.5 per cent, Air France-KLM said.
The airline reported a drop of more than 20 per cent in underlying cargo traffic for a second month and a 1.9 per cent drop in passenger traffic in January, led by falls in Europe where bad weather worsened the impact of recession.
As a barometer of the way the economy is affecting aviation, aviation executives say cargo data could point to further declines in passenger traffic in coming months.
Air France-KLM said revenue fell 0.1 per cent to €5.97 billion in its third quarter ending 31 December. The €288 million negative impact of its fuel hedging contracts helped to push Air France-KLM into a net loss of €505 million in third quarter from a net profit of €139 million a year earlier.
For the nine months it fell from a net profit of €1.29 billion to a net loss of €309 million including the negative impact of €649 million from its fuel hedging contracts.
The group said it was reducing capacity in the summer season from April to October by 2 per cent and was cutting capital expenditure by €1.2 billion, including €600 million in the coming financial year as part of the effort to conserve cash.
It is unwinding several of its fuel hedging positions leaving it 43 per cent hedged for 2009-10 and 20 per cent for each of the two subsequent years.
Air France-KLM did however, reiterate its expectation that it would post an operating profit for the full year ending 31 March, but that the level would “depend on economic developments, their impact on the passenger activity, and especially on cargo which is facing extremely difficult conditions”. Last May it forecast an operating profit of about €1 billion.
“In the meantime, we will continue to assess all our costs in order to achieve additional savings wherever possible,” the group said in a statement.