Air France-KLM posted a narrower than expected fourth quarter loss on Tuesday after capping staff costs, but scrapped its dividend as it waits for elusive signs of a recovery in passenger and freight demand.
Europe's largest airline by revenue reported a fiscal fourth quarter operating loss of EUR574 million euros as the economic crisis deepened but said declining traffic may have bottomed out.
The figures brought the Franco-Dutch airline group's operating loss before interest, tax and exceptional items for the year to March 31, to EUR129 million in a dramatic flip from last year's profit of EUR1.4 billion.
"Since 6 to 8 weeks ago we have seen some stabilization of the crisis in passenger and cargo, but no sign of recovery yet," CEO Pierre-Henri Gourgeon told reporters.
The company said last month it expected to lose EUR200 million in a year marked by a fuel price spike, then a collapse in business travel and cargo caused by the global market meltdown.
Air France-KLM is among airlines that survived record oil prices relatively well compared to the sector because of an aggressive hedging policy, only to suffer more harshly when oil fell and trapped the airline in prices well above the market.
JOB REDUCTIONS
Air France-KLM posted a net quarterly loss of EUR505 million and a full-year net loss of EUR814 million, amounting to a drain of more than two million euros a day on reserves.
It said the board had decided to recommend no dividend compared with 0.58 euros a share a year ago.
"Our priority is to preserve cash," Gourgeon said.
The group ended March with net debt of EUR4.46 billion, up from EUR2.69 billion a year earlier.
Air France-KLM increased its target for cost savings in 2009-10 to EUR600 million from EUR400 million.
Combined with a lower fuel bill, it said this would partially offset an anticipated drop in revenues.
The company has already said its expects another operating loss in 2009/10 but did not give a numerical target.
"You would have to be extremely visionary to answer the question everyone is asking, which is when will we see the beginning of a recovery," Gourgeon said.
Revenues fell 12.2 percent in the fourth quarter of 2008/09 to EUR5.014 billion.
Gourgeon said the group had beat forecasts in the last quarter by tightening staff costs and non-fuel external costs.
The airline's staff bill was stable at EUR1.8 billion.
The head count fell 2,700 to around 107,000 in 2008/09 without compulsory lay-offs, according to the airline, and Finance Director Philippe Calavia predicted 3,000 more cuts in 2009/10.
The group said it had cut 4.4 percent of its seat capacity going into the summer, up from a previous target of 3.4 percent.
It revised its fleet investment plans downwards and said it would fly nine fewer aircraft than originally planned in 2009 and 13 fewer in 2010.
Air France-KLM unveiled earnings a day after airlines body IATA said the number of people flying business and first class had fallen 19 percent in March.
IATA said the industry had not reached a floor to the fall in air travel but that were "tentative signs of stabilization" in premium markets across the Atlantic and within Europe.
The industry expects to lose USD$4.7 billion as a whole this year after losses of around USD$8.5 billion last year but some airline executives have said IATA is too optimistic.
