Europe's top airline Air France-KLM posts loss

November 19, 2009 11:26:17 AM

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Air France-KLM, Europe's biggest airline, on Wednesday posted a loss of 147 million euros (220 million dollars) in the second quarter of its fiscal year as the crisis continues to hit air travel.

"Unit revenues continue to be impacted by the recession and the decline in business traffic," the airline said in its earnings statement.

Chief executive Pierre-Henri Gourgeon said the airline had reduced costs and capacity but added: "Lack of visibility over the timing and strength of the economic recovery means we must pursue our efforts in terms of cost reduction."

The company had registered a profit of 27 million euros in the same July-September period last year. The Franco-Dutch airline also announced cumulative losses over six months at 573 million euros.

Air France-KLM faces stiff competition from Germany's Lufthansa, Europe's second biggest airline which reported rising profits in its July-September quarter, as well as from a proposed merger of British Airways and Iberia.

In a bid to boost its image, Air France will carry out an inaugural flight on the Airbus A380 on Friday on the Paris to New York route, becoming the first European airline to put the superjumbo into service.

Air France-KLM said earlier this month that passenger numbers had dropped for a 10th month running in October, falling by 4.1 percent on a 12-month comparison, while cargo activity plunged 19.1 percent over the same period.

The figures were worse than in September, when passenger traffic dropped by a yearly 3.7 percent and cargo traffic fell 17.2 percent.

The biggest drops in passenger numbers came in Europe, Asia and North America. The decline was less marked on Caribbean/Indian Ocean routes, as well as in Africa and the Middle East, the airline said.

The worst global slump in decades has devastated the airline industry.

Air France has launched a voluntary redundancy scheme to shed up to 1,700 jobs next year due to a decline in both passenger and cargo business.

Air France-KLM is Europe's largest airline in terms of revenue.