Europe's biggest airline, Air France-KLM, said on Friday it had plunged into loss and would have to cut jobs and spending while waiting for clearer economic skies ahead. In the final quarter of 2008, the third quarter of the carrier's financial year, the French-Dutch group made a net loss of 505 million euros (651 million dollars) and an operating loss of 194 million euros.
"The economic environment continues to deteriorate, and the group is taking several new measures to face up to this situation including a reduction in capacity of two percent for summer 2009," an Air France statement said.
"Activity in the third quarter reflected the increasing severity of the economic downturn," the group said, announcing a cut of around 1,200 from its 74,000-strong workforce through a hiring freeze and by not replacing retirees. The group will also cut capital expenditure by 1.2 billion euros (1.5 billion dollars), including 600 million next year.
Air France hopes to return to profit in 2009, but it warned the early signs were very worrying, with January seeing the worst ever one month drop in cargo traffic: a 25 percent month-on-month fall.
Stock markets welcomed the job and spending cuts, and Air France-KLM shares climbed by more than five percent when Paris trading opened, passing eight euros - although remaining much lower than the 18 euros of a year ago. The net loss was much wider than a forecasted loss of 274 million euros by a consensus survey of 10 analysts provided earlier by the company, but apparently not as bad as traders were expecting.
Sales for the quarter were 5.97 billion euros, marginally lower than the 5.98 billion euros of the year before. Air France-KLM, like other airlines, has had a tough year, facing record high fuel prices in the first half of the year and then a global economic crisis triggered by the US credit crunch in the second. For its full-year results, which end on March 31, the group said it still expected to make an operating profit.