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Air France-KLM reports Q3 freight drop

By control on November 9, 2011

The sluggish global economy has affected Air France-KLM’s third quarter freight volumes, with the European carrier experiencing a 2.1 percent, year-over-year, decline in cargo traffic. Compounding the loss was Air France-KLM’s increased capacity, which rose 1.5 percent from the third quarter of 2010.

The carrier’s capacity surge and reduced traffic resulted in a load factor of 63.7 percent, a 2.3-point, year-over-year, decline. Revenue per available tonne kilometer (RATK) also fell slightly in the third quarter, dropping 2.8 percent, despite a 2.4-percent ex-currency increase.

These numbers are somewhat consistent with the carrier’s April-to-September averages, which showed an RATK loss of 2.7 percent, year-over-year. Capacity was also up from a six-month perspective, surging 3.8 percent from April-to-September 2010. Cargo traffic remained relatively flat, however.

Regardless of these numbers, total revenue for Air France-KLM’s cargo group rose slightly in the third quarter of 2011, increasing 2.1 percent, year-over-year, to €6.79 billion. An Air France-KLM spokesman said this gain is even more impressive considering the negative currency impact of 2.8 percent.

It’s a phenomenon affecting trade volumes worldwide, he explained. “The current economic climate continues to impact international trade as well as business confidence, leading to volatility in both traffic and revenues,” the spokesman said.

Such an environment has also led Air France-KLM officials to reevaluate their business model. “Our insufficient profitability in recent quarters, in an economic environment affected by the weak global demand and high oil prices, shows that we need to go further,” Air France-KLM Chairman Jean-Cyril Spinetta said in a statement.

As a result, executives for the carrier have taken a three-pronged approach to increasing profitability, Spinetta revealed. “The first is the reestablishment of the group’s competitiveness, implying additional cost savings,” he stated. “The second is the restructuring of our short- and medium-haul activity, and the third is a rapid reduction of our debt.”

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