Air France-KLM Narrows First-Quarter Operating Loss

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Published: April 30, 2015

Air France-KLM said pressure on ticket prices and negative currency effects would offset virtually all the benefits of lower fuel prices this year after it reported a narrower first-quarter operating loss.

Like Lufthansa, Air France-KLM is battling with unions to cut costs amid tough price competition in Europe and is cutting back on investments to bolster its finances.

Air France-KLM said its first-quarter operating loss narrowed to EUR€417 million (USD$ 463 million) from EUR€445 million a year ago as it cut short- and medium-haul capacity at its main passenger network.

The Franco-Dutch carrier said revenue remained under pressure on its east African and Asian routes, where rivals have been offering more seats.

Currencies had a negative impact of EUR€81 million on operating profit in the quarter, Air France-KLM said. Like other European airlines, it is losing some of the benefit of lower fuel prices, which it buys in US dollars due to the weak euro.

It said it expected a fuel bill of EUR€6.6 billion for 2015 and around EUR€6.1 billion for 2016.

It confirmed a target to reduce unit costs by between 1 and 1.3 percent this year, and said talks with unions on improving productivity were ongoing.

Air France-KLM has already said it would cut planned investments by EUR€600 million over the next two years as it tackles weak margins.

Net debt would total around EUR€4.4 billion at the end of 2015, helped by the sale of Amadeus shares in January and the issue of a EUR€600 million hybrid bond in April, the company said.

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