Air France-KLM will carefully grow capacity this year after last Winter’s additional capacity hurt unit revenues in Q1. The Franco-Dutch airline group plans to add capacity by on average 2-3 percent, slowing down growth on routes to the Middle East, Asia, and North America. Low-cost subsidiary Transavia/Transavia France is allowed to grow at 9 percent.
Air France-KLM released its Q1 results on May 3, confirming the trend at many airlines of a weak quarter under pressure due to rising costs and a late Easter. Net operating result for the Group is EUR -303mln, down from -118mln the previous year.
Air France net result is EUR -256mln, down from -178mln last year when a strike impacted performance. KLM’s net result dropped to EUR -56mln from +52mln, reflecting a weak Q1 affected by weather and other operational issues.
As seen with most airlines, Group revenues were up: 3.1 percent to EUR 5.986bln. Air France grew +4.1 percent to EUR 3.698bln, with KLM lagging behind at -0.1 percent to EUR 2.385bln.
The two network airlines grew capacity (ASK) by 3.1 percent to 69.759mln, but traffic (RPK) only grew by 1.9 percent to 60.221mln. As a result, load factor dropped by 0.4 percentage points to 86.3 and unit revenues by 0.9 percent or -1.6 percent at constant currency to EUR 6.34.
The strongest growth was on the Caribbean and Indian Ocean network followed by Asia, while overcapacity and a weak economy in South America and competitive pricing to North America impacted unit revenues. Like Lufthansa, Air France-KLM reports a weaker European market with overcapacity.
Cargo witnessed the global slowdown of the economy, with revenues flat compared to last year. Here too adding extra capacity resulted in lower unit revenues, down 2 percent over last year.
Fuel costs were up 13.2 percent. In order to tame costs, Air France is to introduce a program to reduce staff by some 400 on a voluntary basis.
Group debt was lowered by EUR 403mln to 5.8bln.
LCC Transavia reported a net result of EUR -71mln, down from -58mln last year. Passenger numbers were up 7.8 percent, but at 11.4 percent capacity grow faster. Yet, traffic (RPK) grew by 11.7 percent.
Based on promising forward bookings on long-haul, Air France-KLM is positive it can compensate the lower results expected on its short-haul network and still improve on unit revenues and costs at constant currency and fuel. The fuel bill is expected to be some EUR 650mln higher.