by Staff Writers
Paris (AFP) March 8, 2012
Air France-KLM switched into heavy loss last year owing to high and still rising fuel costs, disruption to traffic from unrest in North Africa and an earthquake in Japan, the firm said on Thursday.
Its figures also showed that the group is suffering from competition from low-cost airlines. The overall outcome was worse than analysts' had expected and shares in the airline fell.
"The 2011 year was difficult for the group because of an uncertain economic environment and a large increase in the price of fuel," Air France-KLM head Jean-Cyril Spinetta said.
The airline warned that in view of the uncertain business climate and the rising cost of fuel, the operating outcome for the first half of this year would be worse than in the first half of last year.
But in the current first half the business should begin to benefit from the effects of a three-year plan to boost competitiveness.
Spinetta confirmed that the group had begun informal talks on possible ties with Abu Dhabi airline Etihad while adding that the future of struggling Italian carrier Alitalia lay with working even more closely with Air France-KLM.
Air France-KLM reported results for the calendar year for the first time since it was structured in its current form in 2004, and revealed a net loss of 809 million euros ($1.065 billion) compared with net profit of 289 million euros on an equivalent basis in 2010.
The group also reported an operating loss of 353 million euros compared with a profit of 28 million euros.
However the base figures for 2010 were boosted by an exceptional capital gain.
The fuel bill, the second-biggest cost after staff pay, amounted to 6.438 billion euros last year, an increase of 904 million euros or 16.3 percent from the figure for 2010. The company foresaw that this cost item would rise again this year by 1.1 billion euros.
The airline said that it had set an "absolute priority" of stabilising its net debt this year at 6.5 billion euros.
The losses were higher than analysts had expected, as calculated by Bloomberg. Overall, the analysts had expected a net loss of about 650 million euros and an operating loss of 241.5 million euros.
The price of shares in the airline was showing a fall of 0.43 percent to 4.17 euros in afternoon trading on the Paris stock market which was rising overall.
Spinetta told journalists, in a reference to the so-called Arab Spring, that unrest in North Africa, civil war in Africa and the earthquake and tsunami in Japan had "profoundly disorganised our network".
Under the three-year plan to 2015 announced in January, the airline intends to cut debt sharply to 2.0 billion euros by the end of 2014, to improve productivity and to return to balanced results for the medium-haul segment by the end of 2014.
Air France is under particularly strong competition on medium-distance routes from low-cost airlines, and lost 700 million euros in this sector alone last year.
Despite the overall figures, the board expressed confidence, saying that sales had risen by 4.5 percent to 24.36 billion euros.
Spinetta said: "Our liquidity (access to cash) remains at a comfortable level. We have a treasury of 2.9 billion euros and a line of credit of more than 1.8 billion euros."
He added: "We have a sufficiently comfortable treasury situation to be able to look to the future in a serious way but serenely."
Spinetta also said that Air France-KLM was holding informal talks with Abu Dhabi airline Etihad on a possible commercial agreement but ruled out any possibility of Etihad acquiring an interest in the French group.
The chief executive said Alitalia "performed honorably" despite all its problems and said that cooperation with Air France-KLM was clearly a factor.
Any question of increasing Air France-KLM's 25 percent stake in Alitalia lay in the hands of investors, Spinetta added.
Aerospace News at SpaceMart.com
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Aviation agency asks EU to delay airline carbon tax
Montreal (AFP) March 6, 2012
The head of the International Air Transport Association (IATA) on Tuesday urged the European Union to delay rolling out a carbon tax on air travel next year, warning it could provoke trade wars. "Non-European states see it as a direct attack on their sovereignty," the IATA's director general Tony Tyler told a forum on international relations in Montreal. "That is easy enough to understan ... read more
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