Are Air France-KLM Searching for a News Cargo Partner?

The French-Dutch carrier recently published their results for the first quarter of this year.
Losses deepened even further and reports out of some financial circles state that Air France-KLM cannot get their “cargo act together” anymore.

Looking for a cargo partner
Looking for a cargo partner

Group results for the first three months of this year show a net loss of €504 million compared to a loss of €485 million in the same period last year.
This loss was despite a marginal increase in Q1 group revenues from €5.6 billion in 2014 to €5.7 billion this year.

The breakdown of the group figures published is interesting and possibly highlights where the (continued) problem lies.
Whereas Air France records a 2.1% revenue increase, KLM’s rose by only 1.3%.
Air France shows a first quarter operating loss of €233 million which is €46 million better than last year.
On the other side, KLM states its operating loss was €183 million, but € 9 million worse than the 1st three months of 2014.

The combined French-Dutch carrier continued making losses but group operating costs (without fuel) rose a further 3.3%.
Fuel costs were thankfully 4.7% less than last year.
Without that, the results would have spiraled even further downwards.

Where does all of this leave cargo?
Cargo revenues for Q1 were €625 million, which represents a drop of 7.5% compared to the same period in 2014.
The result of this is that the cargo segment saw their Q1 operating results drop from minus €34 million in 2014 down to minus €63 million by the end of March this year.

Almost double!
And - this despite the fact that cargo capacity was reduced in the first quarter by a further 9.6%,  necessary due to, what the company called – “continued weak global trade and structural air cargo industry overcapacity.”
Strange! - considering other carriers reporting increased revenues and higher freighter utilization.

The rumors out of serious financial areas say that running a profitable AF-KL cargo product is now no more possible.
The continuing changes in management, internal disagreements and even worse, a lack of confidence in the product by the shipping industry, have led to continued downward results.

The same sources state that it is high time, if not too late, for Air France-KLM to join up with a new cargo partner.
One which will take up the reins and restructure cargo operations as well as instilling confidence back into the market and, last but not least, bring results back to some semblance of sanity.
At least to break even.

But - will the managers in Paris and Amsterdam see it this way?

John Mc Donagh

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