Newly-merged Air France-KLM on Tuesday forecast a "substantial increase" in operating profit for the current financial year on rising passenger traffic and cost savings from integrating cargo activities.
The bullish forecast accompanied Air France's final financial results as a stand-alone company which showed operating profits slumped by 28 percent to 139 million euros ($166.8 million) in the year ended March 31 from $230.4 million in the previous fiscal year. Net profit was $111.6 million, down 22.5 percent from $144 million on revenues 2.8 percent lower at $14.76 billion.
Air France said its cargo unit made an operating profit of $18 million compared with $58 million a year ago. Despite a poor global economic climate and the weak dollar, revenue fell just 3.8 percent to $1.51 billion from $1.56 billion. Traffic expressed in revenue ton-kilometers was off 0.2 percent on a 1.8 percent increase in capacity. The load factor, or portion of available cargo space filled, dipped by 1.3 percentage points to 64 percent.
Air France-KLM said pooling cargo activities, streamlining their networks and cutting inventories would deliver savings of between $78 million and $90 million in the current financial year. The company said that with combined annual freight revenues of $3 billion it had become the world's biggest non-integrator cargo operator.
The carriers' combined cargo traffic increased by 10.8 percent in April, the first month of their merger, on a 12.9 percent increase in capacity, which resulted in a 1.3 percentage point slide in the load factor to 67.7 percent.
KLM Cargo is outperforming its bigger French partner, boosting traffic by 14.6 percent in April, nearly double Air France's 7.8 percent increase, and its load factor increased by 2.6 percentage points to 73.5 percent, while Air France's utilization was 4.1 percentage points lower at 63.4 percent.
— Bruce Barnard
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