Air France-KLM to boost Asia and Latin America capacity

Air France-KLM to boost Asia and Latin America capacity

Air France-KLM plans to raise capacity on routes to Asia and Latin America to meet rising demand after reporting “robust” 2017 traffic figures.

The Franco-Dutch airline group said operating profit rose 42% year-on-year to €1.48 billion as passenger carryings grew by 4.3% to 84 million.

But a net loss of €274 million was reported following a €1.4 billion charge on a new pension deal for pilots and cabin crew.

Chief financial officer Frederic Gagey told the BBC that revenues in France had come under pressure from new high-speed train routes to Bordeaux and that the group was closely watching the development of new low-cost carriers.

“But it seems that launching low-cost long-haul flights without connecting services is challenging,” he said, pointing to Norwegian, which yesterday reported a bigger than expected losses.

The group said it had significantly strengthened existing partnerships and set up new joint ventures with China Eastern, Jet Airways and Vietnam Airlines.

The foundations are also being laid for a new North Atlantic joint venture with partner carriers Delta Air Lines and Virgin Atlantic.

Air France-KLM described the global situation as “uncertain given the current geopolitical environment and fuel price trends”.

However, the company aims to increase capacity by as much as 4% with current long-haul forward bookings for the coming three months ahead of last year’s levels with a strong March 2018 due to an earlier Easter.

“Passenger network unit revenue is expected to be positive in first quarter 2018 at constant currency compared to last year,” the group said.

Cost cutting is planned this year through further increases in productivity, higher fleet utilisation and efficiency, the lower cost base of new Air France budget airline Joon and a focus on operational performance.

The full year 2018 fuel bill is expected to increase by €150 million compared to 2017 to €4.7 billion.

Chairman Jean-Marc Janaillac said: “Air France-KLM closed 2017 with strong results boosted by a positive business environment.

“Thanks to the commitment of employees and the continuing focus on the quality of customer service, the group confirmed its leadership position in Europe in traffic terms while reporting an operating income increase of 42% and significantly improving its financial profile.

“These achievements went hand in hand with major strategic advances including the strengthening and broadening of our network of alliances and the successful launch of Joon.

“As we enter 2018, in a context of rising oil prices and even more intense competition, we will pursue the offensive, work on competitiveness and unit cost reduction, and capitalise on the realisations of 2017 in order to maintain a profitable growth momentum.”


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