Air France-KLM cuts air cargo capacity

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Air France-KLM is cutting air cargo capacity by 11 per cent  following  a sharp drop in cargo traffic in its fourth quarter – the second quarterly fall in a row.

Excluding Martinair, which the group took over in January 2009, traffic was down 21.3 per cent for capacity down 9.8 per cent. Consolidating Martinair, traffic was virtually stable (+0.2 per cent) with capacity up 11.5 per cent.

Passenger traffic fell 5.8 per cent though the company managed to reduce capacity by 2.7 per cent.

This resulted in a operating loss of 574 million euros for the fourth quarter,  while in the full year to 31st March the group produced a loss of 129 million euros compared to a profit of 1.4 billion euros the year before.

Looking ahead, the group said: “Although we have experienced some signs of stabilisation in our operating environment in recent weeks in both the cargo and passenger activities, it is too early to tell whether they indicate the start of an economic recovery.

“We therefore continue to take appropriate measures to protect our business, including a reduction in capacity of 4.5 per cent in passenger and 11 per cent in cargo for summer ’09 and a reduction in the initial investment plan of 2.9 billion euros to 1.4 billion euros.

“We have also increased our cost-savings target to 600 million euros, including the adaptation of our workforce in line with current activity levels.”

Chief executive Pierre-Henri Gourgeon said: “Visibility remains low, even though we have seen some signs of stabilisation in recent weeks. We will therefore continue our strategy of adapting capacity and costs, while at the same time reinforcing our fundamentals, notably via the strategic partnership with Alitalia and the North Atlantic joint venture with Delta.”

* British Airways has also report falling cargo volumes and Steve Gunning, managing director, BA World Cargo, said: “The major challenge we now face across a number of markets is the imbalance between capacity and demand which has led to unsustainable price pressures. The industry clearly needs to reduce capacity to better align with demand if it is to achieve a sustainable equilibrium.”

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