Air France-KLM posted a first-quarter net loss of €368m today, saying that high fuel costs and a continued drop in cargo had cut into its profits.
The Franco-Dutch airline said revenue grew 6% to €5.6bn, but that was not enough to offset the continued slide in the income column. The group made a net loss of €367m in the first quarter of last year.
Despite what the company characterised as a “tough quarter”, the results were better than the average consensus of analysts surveyed by FactSet, who had predicted €5.5bn sales.
Uprisings in the Middle East and tension with Iran have pushed fuel prices up over the past year, and the company said today that its fuel bill rose 18% to €1.7bn in the January to March quarter. Only 1% of that rise was due to higher volumes.
Higher labour costs because of a 2011 salary increase also ate into profits.
The carrier is getting squeezed from both ends, as its costs rise and an important part of its revenue – cargo – drops. The global economic slowdown has weighed on international commerce, and the company said cargo traffic fell 6% in the first quarter.
The one bright spot was improving passenger traffic, which was up 5.5%. Revenue in that business rose 8.8%.
All airlines have struggled during the global recession, but Air France-KLM was also beset by high debt and operating costs. The company unveiled a turnaround plan last year to reduce costs by 10%, excluding fuel, and slash its debt. It is also negotiating new employee contracts.
The carrier said it expected its first-half operating result to be worse than the €548m loss it recorded last year. But it said the its turnaround plan should begin bearing fruit in the second half.