Air France-KLM shook off last month's volcanic ash crisis and predicted a return to breakeven this year after record losses for the 12 months to March 31, which ended on a note of economic recovery. The Franco-Dutch airline group confirmed its outlook for 2010/11 but scrapped its dividend after a year dominated by the global financial crisis and last June's Atlantic jet disaster.
It posted an operating loss of 1.285 billion euros ($1.60 billion) or 3.5 million euros a day for 2009/10 and said it expected to break even in the current year, excluding the impact of unfavourable fuel hedges taken out before 2009. The group's fiscal fourth quarter ended two weeks before ash from the eruption of an Icelandic volcano forced Europe to close many of its airports in mid-April, resulting in a total of $1.7 billion of estimated revenue losses for airlines world-wide.
The breakeven target is subject to the definitive cost of the airspace closures which the airline said hit operating income by around 160 million euros in the current quarter. Chief Executive Pierre-Henri Gourgeon said the airline was in active talks with European authorities for compensation for the disruption and confirmed that experts were looking at importing US-style rules for assessing future threats. The rules set a 120-mile exclusion zone around visible ash plumes instead of relying on contamination readings. As with many airlines emerging from severe recession, Air France-KLM's 2009/10 loss was far steeper than the year before but beat analyst forecasts for a loss of 1.298 billion euros.
Revenues dropped 15 percent to 20.994 billion euros, pipping a forecast of 20.96 billion provided by Financial Europe AB. Air France-KLM said its priority was to "control costs via headcount reduction" and to boost its unit revenues by holding the growth in capacity.
Comments
Comments are closed.