AF-KLM finds black ink, but cargo losses mount

It’s been a long, hard climb back to overall profitability for Air France-KLM, which reported a 2015 net income of €118 million, compared to its €225 million loss in the strike-plagued 2014 – its first annual net profit since March of 2011. However, cargo figures continued to show declines, with revenue tonne kilometers (RTKs) dropping 8.5 percent from the previous year.

AF-KLM managed to narrow the losses for its cargo unit from €31 million in the the fourth quarter of 2014 to €23 million in the final three months of 2015, but cargo traffic was down 7.7 percent, year-over-year, at 309,000 tonnes in Q4 2015, resulting in a full-year total of 1.2 million tonnes – a 7.5 percent drop from 2014’s total.

For the full-year of 2015, losses in the cargo sector increased to €245 million, from €212 million in 2014, while total external revenues for cargo fell 9.5 percent to €2.4 billion.

In an attempt to slash excess cargo capacity, the carrier cut its maindeck freighter capacity by more than 23 percent by phasing out five aircraft in 2015. This action helped reduce the fleet’s all-cargo losses from €55 million in 2014 to €42 million last year.

By the middle of 2016, AF-KLM expects to operate only five remaining freighters, which the carrier said will “enable the full-freighter business to return to operating breakeven in 2017.” In 2013, AF-KLM operated 13 freighters, which was exactly half as many as it operated when Air France merged with KLM in 2005.

Much of the reason for AF-KLM’s return to black ink came from a surge in operating income of €816 million for 2015, compared to a €129 million loss in 2014. Like-for-like, the operating result rose by €698 million, after corrections for the strike impact of (€425 million) and negative currency effects (€178 million).