Air France-KLM Cargo 1st Half Year Weak Despite Signs of a Market Pick-Up

The signs are that the air cargo market has now started a small, but noticeable upswing.
This was particularly noticeable in the June figures issued by IATA whereby it is stated that their was a 4.3% rise in freight tonne kilometers (FTK) in June alone which represents the fastest growth rate of the past fourteen months.
This growth however was not reflected in the first half-year results of Air France-KLM Cargo which continues to suffer from disappointing results.

AF-KL Cargo have seen better days
AF-KL Cargo have seen better days

2016 first half year slightly better than 2015
The total operating loss for the period January to June was €116 million, which although being a heavy loss, was somewhat better than that of the same period 2015 - €141 million.
The revenue picture of the Franco-Dutch cargo department gives further reason for concern.
Revenues in the first six months fell by a further 15.8% - down to €1.04 billion.
The carrier’s Revenue Tonne Kilometers (RTK) dropped by 7.5% down to a total of only 4.12 billion RTKs.

The era of MD-11Fs is over
Things could have been worse if the previously announced cost reductions and fleet readjustments had not been actioned.
Air France-KLM have pushed ahead with their drastic main-deck capacity reduction with the now completed phasing out of the Martinair MD-11 freighters, the last of which was sadly flown into its desert graveyard towards the end of July this year.

KLM’s Boeing 747-400 Combis will be retired gradually
KLM’s Boeing 747-400 Combis will be retired gradually

47-Combis also on their way out
AF-KL Cargo now only have six freighter aircraft in operation.
These are two B777Fs, three B747-400ERFs and one 747-400BCF.
These aircraft alongside KLM’s fleet of B747-Combis are now the only mainstay of their cargo programme. The 747-Combi aircraft are slated for gradual retirement during the coming few years and it is probably only a matter of time before the 747 freighters, which are expensive to run, are taken out of the fleet.

Doubtful air cargo product
There is one positive effect for the beleaguered cargo department in that the fleet reduction, which heavily impairs expanding freight operations, has brought operating losses in the freighter operations down considerably.
Freight operating losses in 2013 were €120 million, in 2015 down to €42 million and the report shows that these are down to a loss of €12 million for the first six months of this year.
Air France-KLM Cargo is bringing operating losses down thanks to following a hard line on fleet reduction and still aims for a freighter operation break-even by 2017.
This, however leaves the once mighty cargo carrier with a very lean and for some in the shipping world, an unattractive air cargo product for the future.

John Mc Donagh

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Comments: 1
  • #1

    Bob (Monday, 22 August 2016 19:02)

    don't forget AF took over Deltas flights in BRU+CDG (up to 12 daily widebodies- now as 057 iso 006) as of 01JUN - which impacts/whitewashes YOY results