Stuart Todd

Air freight revenue soars in airline group's first financial quarter


The recovery of Air France-KLM’s cargo business gathered momentum in the first quarter of the group’s financial year ending in June, building on the marked improvement of the previous quarter, IFW was told today.

Revenue for the period totalled €774 million (US$1.01 billion), an increase of 42.3% on 1Q 2009 – contrasting sharply with the modest growth in traffic (measured in RTK), up 2.6%, against a 6.8% fall in capacity. The load factor gained 6.4 points to 69.6%.

The air freight division generated an operating income of €11 million against a loss of €197 million a year earlier.

Without the impact of the five-day closure of European air space in April due to the Icelandic volcano eruption, operating income would have totalled €14 million.

An Air France-KLM Cargo spokesman described the results as “encouraging”, and said they could be largely attributed to the company’s “wise policy”, initiated shortly after the economic downturn began to bite, to address the problem of overcapacity.

“This has always had dramatic consequences on the level of the yields, and we reacted very quickly to this by reducing capacity to adapt to the global downturn,” he said.

The capacity cutbacks also had the knock-on effect of generating cost savings.

The spokesman said: “We have also pushed strongly throughout our networks to increase yields which had fallen to unreasonable and non-viable levels.

“Last, but not least, and with some relief, traffic has started to pick-up – notably from Asia, which appears to indicate that the worst of the crisis may be behind us.”

However, he issued a note of caution, underlining that the first-quarter results were being compared with the same period a year ago which had been very weak.

“When the results show a return to the 2007 (pre-crisis) levels, perhaps we will be able to talk of a thorough recovery in international air cargo markets.”

While significant growth in Asia was spearheading the “comeback”, market conditions had improved a little almost everywhere, he added.

An Air France-KLM statement said that while market visibility remained difficult, the group was relatively confident that the recovery would continue in the current quarter.

It added that the “quicker-than expected turnaround of the cargo business” was a major factor in its objective of “operating break-even for full-year 2010-11, excluding the impact of the air space closure in April.”