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Pilot strikes deepen Air France-KLM's quarterly loss

Air France-KLM has blamed a combination of pilot strikes, fuel-price rises, currency changes and increased competition after its first-quarter operating loss more than doubled to €303 million ($333 million) from €118 million.

Strike action by Air France at the beginning of last year cost the group €75 million.

Its fuel bill came in at €1.2 billion, a rise of €140 million, of which €44 million is accounted by a rise in the fuel price and €34 million by capacity increases. Fuel hedges provided a gain of €35 million.

Currency fluctuations had a €65 million positive impact on revenue, but had a €108 million adverse effect on costs, including currency hedging.

At an individual airline level, Air France's operating loss rose 78% to €256 million and KLM's 116% to €56 million. Transavia's operating loss was up 13% at €71 million.

The network airlines' revenue was up 1% on a constant-currency basis, at €5.2 billion.

A "visible" slowdown in first-quarter cargo volumes is blamed for a 4% constant-currency fall in unit revenue at the group's freight business. Several network "rationalisation" measures have been implemented during the quarter to counterbalance the negative trend, say the group.

The carrier group links a visible slowdown in cargo volumes across the "whole air freight market" to "economic slowdown, political uncertainties and trade disputes".

Air France-KLM chief executive Ben Smith describes the first quarter as having been a "challenging" period for the whole European airline sector, as a result of "substantial" industry capacity growth during what is an off-peak business period which led to unit revenue "pressure".

Smith hails further improvements in unit cost, down 0.4% at constant currency, and the "first signs" of progress in improving the operational performance of Air France, including its net promoter score and punctuality.

The group says that the global outlook remains "uncertain" given the current geopolitical environment and fuel-price trends. It plans to "selectively " grow capacity on the passenger network by 2-3% compared with 2018. Transavia will continue to grow at a sustained pace of 9-11%.

Long-haul industry capacity to and from Europe during the summer will, the group expects, grow at a "slower" pace compared with last year, particularly to the Middle East, North America and Asia.

Based on the current data for the passenger network, Air France-KLM says long-haul forward-booking load factors from May to September are on average ahead compared with last year.

First-quarter capacity was increased 2.3%, mainly driven by the South American, North Atlantic and Asian networks, where it grew 9.8%, 5.3% and 1.8% respectively.

Passenger numbers in the quarter rose 3% to 22.6 million. Load factors rose 0.2 percentage points to 92.1%.

The airline group reaffirms its full-year targets of reducing unit costs by 0-1% at constant currency and fuel prices. The fuel bill for the year is foreseen rising by €650 million to €5.6 billion.

Capital expenditure of €3.2 billion is planned.

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