Air France-KLM Cargo’s 2016 woes stretch into the new year

Air France-KLM Cargo’s ongoing restructuring has failed to correct a slide in cargo volumes and revenues that has dogged the carrier since it’s merger in 2004. Cargo revenues fell especially hard last year, down 14.7 percent to €2.06 billion as the worlds most storied combined cargo carriers struggle to compete in a competitive marketplace.

While other carriers announced a strong start to the new year, Air France-KLM Cargo’s numbers were still sliding. Revenue tonne kilometers (RTK) were down 1.3 percent for January, and carriers’ already-low load factor of fell another 0.3 percentage points to 56.6 percent over January 2016.

In its 2016 year-end results, the carrier claimed that a “gradual turnaround” was under way, and blamed weak global trade and industry overcapacity for the latest round of disappointing numbers. But its gloomy outlook is at odds with IATA’s relatively sanguine disposition regarding the prospects for air cargo in the year ahead.

For context, IATA’s data for global airfreight markets indicate that demand, measured in freight tonne kilometers (FTKs), grew by 3.8 percent in 2016, compared to 2015. With nearly twice the industry’s average growth rate over the last five years, 2016 was the year that optimism found its way back into the industry.

At Air France-KLM, however, total tonnes carried in 2016 fell by 6.2 percent, year-over-year, to 1.13 million. Traffic for the year, measured in RTKs, fell 6.3 percent to 8.4 billion. The cargo load factor dipped as well, down 1.1 percentage points, to 59.3 percent, suggesting that cutting freighters has done little to offset overcapacity at the carrier.

The carrier continues its move away from freighter services towards belly-hold, cutting full-freighter capacity by 24 percent. Air France-KLM now has only six freighters in operation, leading to a 4.6 percent decrease in total cargo capacity, measured in available tonne kilometers.

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