EUROPE & CIS: Belly focus key in AF-KLM return to profitability

The Air France-KLM group credits the “strategic actions” of its cargo division launched at the end of 2009 for helping the Franco-Dutch carrier group’s return to profitability, despite a one billion euro fuel bill and crises in north Africa, the Middle East and Japan which depressed demand. The carrier group posted a full-year operating profit […]


The Air France-KLM group credits the “strategic actions” of its cargo division launched at the end of 2009 for helping the Franco-Dutch carrier group’s return to profitability, despite a one billion euro fuel bill and crises in north Africa, the Middle East and Japan which depressed demand. The carrier group posted a full-year operating profit of €69 million (US$98.6 million) in its cargo business – an impressive swing from the loss of more than €430 in the previous year. This, together with improved profits in its maintenance business and the wiping out of almost all its passenger business losses, helped the group post an operating profit of €122 million for the year to March 2011, compared to group losses of €1.28 billion a year earlier. The full year net profit of €613 million was substantially aided by a one billion euro gain from a revaluation of the company’s 15 per cent stake in the Amadeus reservations system, which is now listed. The restated net loss amounted to €234 million. These strategic actions in the cargo division included a bold step to focus on a strategy of utilising belly space on its passenger and combi aircraft while scaling back its freighter operations and shifting freighters to its Martinair unit. “It completely validates the strategy to fill the belly space of the passenger and combi aircraft,” said Air France-KLM chief executive Pierre-Henri Gourgeon of the group’s cargo performance during its annual results briefing. The group reduced its full freighter fleet from 25 to 15 aircraft which now accounts for just a third of its overall capacity – with the remainder comprised of belly and combi aircraft capacity. Air France-KLM had initially been targeting a halving of the €436 million cargo losses it incurred in the 2009/10 financial year. But in a strong recovery year for air freight traffic, KLM chief executive Peter Hartman, noting the carrier boosted revenues without adding capacity, said: “We returned to the black [in cargo] a year ahead of our expectations.” Meanwhile, for the month of April, AF-KLM Cargo saw an 11 per cent rise in volumes against a 15.6 per cent rise in capacity which caused the load factor to slip by 2.8 percentage points to 67.7 per cent, compared to the same month 2010.