Strike creates turbulence for Air France-KLM

19th February 2015, Comments 0 comments

A 14-day strike by Air France pilots had a devastating effect on the results of Europe's second-largest airline, the group said Thursday, as it published its annual results.

Air France-KLM booked a net loss of 198 million euros ($226 million) in 2014, the Franco-Dutch group said in a statement.

"During the second half of 2014, activity was affected by a 14-day strike by Air France pilots, which had an estimated negative impact of 425 million euros on the operating result," the statement said.

Without the impact of the strike, the firm would have made a net profit of 296 million euros, up from 130 million euros last year.

The pilots went on strike over the firm's bid to expand its low cost operation Transavia France.

They feared the plan could force well-paid Air France crew into penny-pinching Transavia jobs, and that the low-cost carrier might be used to take over Air France routes.

Total turnover at the airline in 2014 was 24.9 billion euros, a drop of 2.4 percent compared with a year earlier.

Under a restructuring programme, Air France-KLM already cut 8,000 jobs -- roughly 10 percent of its workforce -- in the three years to the end of 2014 through a voluntary departure scheme.

A further 1,300 jobs are slated to be cut during the first half of 2015, company officials said Thursday.

In addition to internal rationalisation squeezing costs, Air France-KLM has also been getting help from outside factors to limit operating expenses and lure customers -- particularly in North America and Asia.

"The economic environment has significantly changed because, after several months of stability, the oil price and the euro has declined appreciably, which changes our own parameters significantly," said chief executive Alexandre de Juniac.

Still, Air France-KLM refused to make any forecasts for 2015.

"The group unsurprisingly published degraded results," wrote analysts at Aurel BGC following the announcement. "Net profit could have been back in the black without the strike, which considerably penalised results in the second semester. Despite that, results in the fourth quarter were positive."

Investors, however, were not impressed.

Air France stock went into a tailspin on the Paris Bourse, dropping by 7.4 percent in morning trading Thursday.

Elsewhere Thursday, Transavia said it had ordered 20 Boeing 737-800 jets -- 17 firm -- in a deal worth up to $1.8 billion (1.6 billion euros) at current list prices.

De Juniac said Air France-KLM planned on making Transavia the leading low-cost carrier operating at Orly airport by the end of 2015.

© 2015 AFP

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