Air France-KLM posts record loss amid safety concerns

20th May 2010, Comments 0 comments

Air France-KLM posted record losses of 1.55 billion euros on Wednesday, as a shock new book on its safety record added to the problems facing Europe's biggest airline.

The giant net loss for the 2009-2010 financial year came as the Franco-Dutch carrier grappled with the global economic crisis and the fallout from a deadly accident last year.

Slumping air traffic, particularly for cargo, drove the company to its biggest loss since Air France and KLM merged in 2004. The latest results followed 811 million euros (1.0 billion dollars) in red ink the previous year.

"2009-10 will go on record as our 'annus horribilis.' The global economic crisis had a profound effect on the entire airline industry," chief executive Pierre-Henri Gourgeon said in a statement.

He noted the company also had to grapple with an accident last June that saw Air France Flight 447 from Rio to Paris break apart and plunge into the Atlantic, killing all 228 people on board.

Against that backdrop, the company scrapped its dividend payment for the 2009-2010 financial year.

Gourgeon said restructuring of the airline's cargo business began bearing fruit in the fourth quarter, although the company's fuel bill rose for the first time during the year as the price of jet fuel surged 31 percent.

The outlook for the current year was "subject to the definitive cost of the closure of European airspace" due to a huge cloud of ash belched out of an Icelandic volcano, he noted.

The figures were released as the company's safety record came under harsh scrutiny with "The Hidden Face of Air France," an investigation by journalist Fabrice Amedeo into what he alleges are failures in Air France's management culture leading to a lax attitude to flight safety.

The carrier rejects the allegations.

Air France flights have fallen victim to several accidents in recent years and, according to the French daily Liberation, statistics compiled online rank its safety record as only the 65th best in the world.

And with 1,783 fatalities in its history, according to a tally compiled by the Swiss-based website "Aircraft Crashes Record Office," Air France has been the second deadliest airline for passengers after Russia's Aeroflot.

Germany's Lufthansa, which is of similar size and age, is in 43rd place.

The cause of the Rio-Paris crash has not been officially determined, but investigators found that cockpit flight computers were receiving incorrect airspeed readings and Air France has since replaced speed probes on its other jets.

In July 2000, an Air France Concorde supersonic airliner caught fire after taking off from Paris and exploded, killing all 113 on board.

"Air France has a fleet of ultramodern planes, and its pilots are among the best in the world... but its safety statistics are those of a second division company," Amedeo wrote in his book.

"The problem appears not to be technical but cultural," he said, accusing the airline's executives of a "certain laxity" in responding to incidents and adapting safety procedures.

Gourgeon told reporters the book "is not worth a response," insisting that safety was the "number one concern of Air France."

The company said separately that its safety standards "meet the most stringent requirements in the international aviation industry," noting it was continuously working on improving flight safety.

© 2010 AFP

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