AF-KLM Cargo - Still in the Red

Whilst other airlines are reporting better cargo revenues and bottom line figures for 2016 compared to the year before, Air France - KLM Cargo is still fighting an uphill battle to keep its cargo product alive.

AF-KL needs an urgent U-turn in cargo.
AF-KL needs an urgent U-turn in cargo.

2016 results show a full year loss
The results from the cargo arm of the Franco-Dutch airline alliance which were shown last week do not give much hope for improvement during this year either.
The overall loss for the year amounted to -244 million euros on actual revenues of just under 2 billion euros.
This is almost on par with the 2015 loss of -245 million euros.
Whereas other carriers have reported a relatively strong 2016 fourth quarter and also better end results on operating results, AF-KL Cargo end the Q4 with a -28 million euro loss. This is represents a loss of around 20% more in that period compared to the previous year.

The annual operating result of -244 million euros shows that the carrier is not making any headway on improving cargo  attractively for the company shareholders.

Tonnage down, capacity down, load factor down
Where is this going to end for the once proud cargo operator?
Cargo capacity has been cut back drastically during the past few years with the demise of the Martinair cargo fleet and the drastic cut back by Air France also doing away with many freighters.
Many are still questioning whether this has turned out to be a good decision for the long-term cargo strategy of the airline.
Customer satisfaction seems to continuing waning as the results clearly show.

Tonnages carried during 2016 fell by -6.2%. This was somewhat on-line with the continued capacity on offer which also went down by -4.6%.
The average load factor which was already low in 2015 (60.4%) dropped a further 1.1% down to 59.3%.
This figure is not good for any airline and if the trend continues then losses will increase further.
Furthermore, the Unit Revenue per ATK for 2016 dropped to 13.4 euro cents, down from 15.2 euro cents in 2015. A further drop of almost 12%.

Something has to happen
Changes in cargo management, less freighters on-line and reportedly some unrest among the cargo staff.
This has been the picture for the past years and not much seems to have changed.
When, as shown, 2016 cargo revenues fall by almost 16% compared to an already bad year in 2015, then surely the red lamp must be burning bright somewhere.
But where?

The management is still trying to appease shareholders with statements that the airline is striving to continue its (cargo) restructuring program in order to make a turnaround.
However, by stating also that competition is heavy is not going to convince anyone anymore.
The overall results for the AF-KL Group were more satisfactory. A net result of 792 million euros on an operating income of just on 1 billion euros.

Maybe the cargo problem will go away by itself as Air France - KLM will discontinue publishing separate cargo results as of this year. They will be consolidated or included in the passenger results and will not be visible anymore in the future.

One way of getting rid of the problem!

John Mc Donagh 

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