Air France-KLM Group is to implement new cost-saving measures immediately after its latest financial figures showed a 22% decline in its second-quarter operating profit and a 12% wider first-half loss.

These measures will include cutting routes and restricting winter capacity.

The group made a profit of €185 million ($203 million) in the three months to 30 June but a first-half loss of €232 million.

Second-quarter revenue rose 3% to €6.64 billion, Air France-KLM discloses in its financial statement for the six months to 30 June.

In its outlook, it says it expects savings on fuel expenditure to be offset by unit revenue pressures and the negative effects of currency exchange, in a repeat of what happened in the first half.

This "more challenging revenue environment", it adds, has spurred the company to "accelerate" implementation of its Perform 2020 turnaround programme.

It will close routes which are making heavy losses and revise its capacity plans for the winter season downwards – particularly on weak sectors to Brazil and Japan.

The group will cut capacity to Japan by 14%, to Brazil by 5%, and to eastern Africa by 6%.

This will keep capacity flat in the fourth quarter, and over the year, Air France-KLM's capacity growth will be only 0.6% – about half of the 1.1% figure planned at the beginning of the year.

Air France-KLM adds that it will speed its cost-saving efforts and broaden their scope. It is maintaining a number of financial targets for the full year, including a 1-1.3% improvement in unit costs and a net debt of €4.4 billion.

But group chief Alexandre de Juniac points out that a "rapid" conclusion of negotiations with Air France unions – following agreements reached with KLM – remains "key" to the company's turnaround efforts. The company is aiming to secure agreements by the end of September.

Source: Cirium Dashboard