Air France-KLM takes a hit from soaring fuel prices | Business| Economy and finance news from a German perspective | DW | 04.05.2012
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Business

Air France-KLM takes a hit from soaring fuel prices

Franco-Dutch carrier Air France-KLM has posted more losses in the first quarter of 2012 after a very painful period throughout 2011. The airline has been grappling with exploding fuel prices and higher wages.

Air France-KLM has logged a net loss of 368 million euros ($483 million) in the first quarter of the current year.

The Franco-Dutch carrier said revenue increased by 6 percent to 5.6 billion euros in the first three months of 2012. But that was not enough to offset sharply higher fuel costs buoyed by uprisings in the Middle East and tension with Iran.

Fuel spending soared by 17.9 percent to a total of 1.68 billion euros in the first quarter. Air France-KLM said the problem was made worse by unfavorable currency exchange rates.

Cargo transport down

The carrier announced that apart from rising costs it also suffered a decline in its cargo business. It said the global economic slowdown kept weighing on international commerce, seeing Air France-KLM's cargo traffic drop by 6 percent in the period under revision.

The only silver lining was a first-quarter improvement in passenger traffic. Revenue in that segment rose by 8.8 percent, not enough, however, to offset the company's operating costs.

Air France-KLM last year announced a turnaround plan to reduce costs by 10 percent and slash its debt. It is also negotiating new employee contracts. But a quick recovery is not in sight. The carrier expects its first-half operating result to be even worse than the 548-million-euro loss incurred in the same period last year.

hg/ng (AP, AFP, Reuters, dpa)