Air France-KLM reports $1 billion loss for 2011
March 8, 2012, 1:05 p.m. |
CEO of Air France-KLM, Jean-Cyril Spinetta, announces the full year results during a press conference in Paris, Thursday, March 8, 2012.
Air France-KLM on Thursday reported a €809 million ($1 billion) loss for 2011, which the struggling carrier called a "tough year" beset by volatile fuel prices, political upheaval and a lackluster global economy.
The Franco-Dutch airline said that a 4.5 percent increase in revenue to €24.7 billion ($32.4 billion) wasn't enough to offset the high cost of jet fuel.
A string of uprisings in the Middle East over the past year has pushed oil prices higher. In just the last quarter of the year, the company said its fuel bill jumped 20 percent to €1.6 billion.
The company said the Arab Spring also wreaked havoc on its business, while a tsunami in Japan decimated travel in its most important Asian market. Meanwhile, Europe's debt crisis pummeled the real economy in the airline's core market.
The company said its expansion in Latin America helped absorb some losses elsewhere, but not all.
As a result, the company posted a net loss of €809 million for last year. In 2010, its net income was €289 million.
Shares in the company slipped 0.6 percent in early trading on the Paris bourse to €4.16.
CEO Jean-Cyril Spinetta said that although the figures reflected a "tough year," they were largely in line with what the group had anticipated.
"How to characterize this year?" he asked. "It's a year that unfolded in an uncertain economic environment in Europe, with the euro crisis and fairly weak European growth. It's a year that unfolded with a strong increase in oil prices."
But the struggling carrier has also been beset by high levels of debt and operating costs.
In January, the company unveiled a three-year turnaround plan to reduce its costs by 10 percent — outside of fuel — and slash its debt by €2 billion. The plan pledges to freeze wages at Air France, reduce the fleet size and improve productivity; it is already under way.
The company is also in negotiations with unions and said it hopes to sign new agreements by the end of June. Executives who briefed reporters on the company's performance on Wednesday night would not be drawn out on whether they anticipated staff reductions, saying it was too early to say.
But Spinetta refuted the idea that improving productivity would necessarily mean layoffs.
"If we reduce our costs, it's not for fun, it's to be a lot more ambitious in terms of capacity," he told reporters. "Productivity is by definition good for employment."
The company said it expects the operating income for the first half of 2012 to be below that of 2011, but that the "second half should benefit from the first effects of the three-year plan." Spinetta would not get more specific, contending that the volatile price of oil made any precision pointless.
Air France-KLM's 2011 fiscal year was shortened to nine months because the company is shifting to a calendar fiscal year beginning in 2012, from the April-to-March fiscal year it had maintained. But in its reporting Thursday, the company provided figures for January-December 2011 as well their comparisons to the same period in 2010.