Air France-KLM pre-tax losses widen

Pre-tax losses widened at Air France-KLM in Q1, with the Franco-Dutch airline joining its competitors in blaming higher fuel prices and an oversupply of seats. The airline’s pre-tax loss grew to E450m, from E257m in the same period a year ago. With the effect of currency fluctuations stripped out, earnings before interest, tax, depreciation and amortisation fell 32% to E424m, far below the analyst consensus of E606m. CE Benjamin Smith said Q1 had been challenging for the sector across Europe, as “substantial” capacity growth put pressure on revenues. Revenue per available seat kilometre fell 1.9% in the period, while the company’s fuel bill increased 13% to E1.2b. Meanwhile Easter, traditionally a profitable travel period, fell after the end of the quarter. Total revenue rose 2% to E6b. Smith said that Air France-KLM’s summer outlook appeared “more benign” and he confirmed the company’s full-year guidance, which included flat, or a slight reduction in unit costs. The airline projected that this summer “long-haul industry capacity to and from Europe” would increase at a slower pace than last year, especially for the Middle East, North America and Asia. The KLM part of the business, which has tended to perform better than Air France, fell 4.5 percentage points into a negative operating margin of -2.3%. Air France’s negative operating margin worsened 1.9 percentage points to -6.9%.<br/>