Air France-KLM's cargo unit moves forward with optimism

AIR FRANCE-KLM's air freight division generated an operating income of EUR11 million (US$14.37 million) in the first quarter against a loss of EUR197 million a year earlier.

First quarter revenue for the period totalled EUR774 million (US$1.01 billion), an increase of 42.3 per cent compared to the same quarter a year earlier, contrasting sharply with the modest growth in traffic (measured in RTK), up 2.6 per cent, against a 6.8 per cent reduction in capacity. The load factor increased by 6.4 points to 69.6 per cent, reports London's International Freighting Weekly.

"Without the impact of the five-day closure of European air space in April due to the Icelandic volcano eruption, operating income would have totalled EUR14 million," the report said.

An Air France-KLM Cargo spokesman said the results could be largely attributed to the company's policy of addressing the problem of overcapacity, which also helped lower operating costs.

"This has always had dramatic consequences on the level of the yields, and we reacted very quickly to this by reducing capacity to adapt to the global downturn," he said.

"We have also pushed strongly throughout our networks to increase yields which had fallen to unreasonable and non-viable levels," the spokesman said.

"Last, but not least, and with some relief, traffic has started to pick-up, notably from Asia, which appears to indicate that the worst of the crisis may be behind us."

An Air France-KLM statement said that while market visibility remained difficult, the group was relatively confident that the recovery would continue in the current quarter.

It added that the "quicker-than expected turnaround of the cargo business" was a major factor in its objective of "operating break-even for full-year 2010-11, excluding the impact of the air space closure in April," the report said.
(Source:www.schednet.com)