Citing an economic slowdown, as well as “political uncertainties and trade disputes,” Air France-KLM said today that the resulting pressure on airfreight rates caused a 4% unit revenue drop in its first-quarter results. Due to the sluggish economy, airfreight tonnage was essentially flat, at 270,000 tonnes, for the three-month period ending March 31
“Several network rationalization measures have been implemented during the quarter to counterbalance the negative trend,” the carrier said. “A slight capacity increase [1.4%] has been offset by this unit revenue decrease,” which resulted in a 1.3% year-over-year decline in revenues to €547 million in constant currency. Scheduled cargo revenue also dropped to €473 million in constant currency.
In its first quarter overall results, the Air France-KLM Group posted an operating loss of €303 million, down by €185 million compared to last year, which the carriers said lost €75 million by the Air France strike alone. The unit revenue at constant currency of negative 2.2%, year-over-year, resulted in a further loss of €115 million on the operating result.
Fuel hedging costs came to €1.2 billion euros in Q1, which was a rise of €140 million, y-o-y. Of that total, €44 million came from an increase in the fuel price and a volume effect of €34 million euros for the capacity increase, compared to the previous year. “The result of the fuel hedges has been a gain of €35 million,” AF-KLM said.
Currency changes had a positive €65 million impact on revenues, as well as a negative €108 million effect on costs, including currency hedging. “The net impact of currencies thus amounted to a negative €43 million for first quarter 2019,” the carrier said.
Air France-KLM’s figures were similar to the sluggish Q1 results posted a month ago by Lufthansa, which reported an adjusted earnings before interest and taxes (EBIT) loss of €336 million, a substantial plunge from €52 million of the previous Q1. The key drivers of Lufthansa’s earnings decline were a €202 million increase in fuel costs and a deterioration in unit revenues in Europe. “A continued reduction of unit costs could only partially offset the decline,” the German carrier said. “The adjusted EBIT margin for the period amounted to -4.3%.”