France’s largest airline AIR France-KLM suffer catastrophic losses in first quarter due to Coronavirus pandemic
AIR DRANCE-KLM have predicted that demand could take ‘several years’ to recover as they suffered an €815 million first-quarter operating loss during the first two weeks of Coronavirus shutdown.
In the month of March there was an “abrupt plunge in revenue that will obviously extend through the second quarter,” Chief Financial Officer Frederic Gagey warned.
However, many large airlines have received government help as they struggle to reduce costs. Air France-KLM, has received €7 billion in French-backed rescue aid and Dutch pledges for a further €2 billion to €4 billion, expects to reduce monthly cash burn to €400 million in the second quarter thanks to cost-cutting and state-funded furloughs that save €350 million a month. Loss of operation will grow in April-June with 95 per cent of flights expected to remain grounded due to travel restrictions designed to contain the pandemic. The group also predicted that capacity will still be down 80 per cent in the third quarter with customers returning only gradually.
Air France-KLM said it now planned to reduce its aircraft fleet by 20 per cent in 2021. Chief Executive Ben Smith will present an updated “transformation plan” to investors within months.