Air France-KLM fourth quarter result underscores the current global air cargo status
February 21, 2020: In the view of Air France-KLM group's fourth quarter 2019, the Covid-19 situation has impacted the demand outlook globally, with the biggest hit taken by the Asian network. This translates in long-haul forward booking load factors down from February to May 2020.
As a consequence, the Group anticipates unit revenues at constant currency to be down for the first quarter of 2020.The Cargo activity will seemingly maintain pressure on the load factor and capitulate in the first part of 2020.
Based on the Group announcement on the suspension of China operations in February-March and possible resumption of operations starting from April 2020, the high-level estimated impact on operating result stood between negative 150 and 200 million euros for February to April 2020.
The group’s last quarter 2019 unit revenue remained under strong pressure and was down at 17.1% compared to last year. The group saw cargo revenues go down by 12 percent year on year to €559m.
Fourth-quarter volumes slipped by 5% on a year ago to 288,000 tons and load factors were 4.5 percentage points to 59.5%. Substantial cargo industry capacity additions in 2019 led to the worst traffic versus capacity trend for the last 10 years, driven by opportunistic growth strategies after the strong cargo market in the second half of 2017 and full year 2018.
This caused substantial (belly) overcapacity, particularly on the North Atlantic routes. On the demand side, at the year-end world-wide air freight volumes had fallen for 14 consecutive months, caused by geo-political uncertainties resulting in weak global air freight demand, trade tensions impacting especially ex-Asia volumes and a strong decline in demand from the auto-motive industry. In this context, the market share of Air France-KLM Cargo growth realized in alternative flows partly mitigating the ex-Asia losses.
The last quarter report a net loss of €385m for the year with increases in fuel costs and cargo performance having an impact.