Air France-KLM has turned in a €496 million ($698 million) operating loss over the first quarter, which was heavily affected by a €252 million impact from fuel hedging.

Revenues were down by more than 20% at €5.17 billion. This included a 19% fall in passenger revenues and a 41% drop in freight revenues.

Air France-KLM says the results do not include its 25% shareholding in Alitalia.

The operating losses included a €141 million deficit in the passenger business and €253 million in cargo - although the company's maintenance activity turned in a €30 million profit.

Air France-KLM is to ground four freighters during the winter season, taking a further 5% out of its cargo capacity and bringing to 10 the number of aircraft taken out of the cargo fleet since the economic crisis began.

The company also says it is reviewing its medium-haul network and, based on the results, will implement new measures at the beginning of 2010.

"At the same time we continue to adapt our employee headcount to current levels of activity," it adds.

The company says that, if the economic situation stabilises, and starts to recover this year, it expects passenger unit revenues to deteriorate - albeit more slowly - in the second quarter.

Air France-KLM conducted a €661 million bond issue during the quarter, while KLM extended a €530 million credit facility by two years to 2012.

Source: Air Transport Intelligence news