Air France-KLM Q1 Operating Loss Narrows

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Published: May 3, 2013

Air France-KLM reported a narrower operating loss in the first quarter and confirmed downward pressure on unit costs and debt, but stopped short of giving detailed financial forecasts for the year.

Europe’s second-largest traditional airline by revenue said on Friday its first-quarter operating loss narrowed to EUR€530 million (USD$ 693 million) from a comparable loss of EUR€611 million a year earlier, as revenue grew 1.3 percent to EUR€5.72 billion.

The Franco-Dutch group said its 2015 debt reduction plan remained on track and confirmed plans to reduce like-for-like unit costs and debt for 2013 as a whole.

On the basis of constant currency and fuel prices, unit costs fell 1.7 percent in the first quarter.

Air France-KLM became the latest airline to spell out weakness in the cargo sector due to Europe’s economic slowdown as traffic declined by more than capacity and unit revenue excluding currency fell 1 percent. Passenger revenue rose.

Operating cash flow stood at EUR€38 million in a traditionally weak quarter, stemming a negative cash flow of EUR€449 million seen in the previous quarter.

Europe’s top three traditional airlines are in the midst of deep cutbacks and restructuring to cope with high fuel costs and tough competition from Gulf and low-cost carriers.

Germany’s Lufthansa said on Thursday it expected higher operating profit and revenue in 2013, driven by cost cuts that helped offset soft demand in January to March as Europe’s debt problems weighed on consumer sentiment.

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