Airline Industry: Cost Cuts Helped Air France-KLM Trim Operating Loss in 2012 - Nicola Clarke

An aggressive cost-cutting effort at Air France-KLM showed the first faint signs of bearing fruit Friday, as the airline said it had managed to trim its operating losses last year despite a weakening European economy and higher fuel prices.

Air France-KLM, Europe’s third-largest airline by passengers, recorded an operating loss of €300 million, or about $400 million, for 2012, compared with a €353 million loss a year earlier, as efforts to rein in seat capacity led to higher average fares. Revenue for the year rose 5.2 percent to €25.6 billion, while net debt declined to €6 billion from €6.5 billion in 2011.

But one-time expenses associated with a deep restructuring begun last year widened the airline’s net loss to €1.19 billion from €809 million in 2011.  “They have made a good start, but it is an improvement that is still just barely visible,” said Yan Derocles, an analyst at Oddo Securities in Paris. 

Air France-KLM unveiled plans last June to shave more than €2 billion in costs, reduce debt and return to profit by the end of 2015. Despite the modest improvements achieved in the plan’s first six months, Jean-Cyril Spinetta, the carrier’s chief executive, stressed Friday in a statement that the company had laid the ground work for a more significant recovery this year.

Read more: Cost Cuts Helped Air France-KLM Trim Operating Loss in 2012 - NYTimes.com