Air France has posted its first profits since 1989, although the upbeat results from the mainline airline were tainted by deepening losses at its strike-hit sister company, domestic carrier Air France Europe.
The profits at Air France mark a successful end to the three-year restructuring programme which was launched in 1994, backed by a Fr20 billion ($3.5 billion) cash injection from its state owner. The airline, which had made losses for the previous seven years, managed to show net profits of Fr211 million for the financial year through to March 1997.
The profit contrasts to the 1996 result, when the French national carrier turned in a Fr2.87 billion loss after taking provisions of close to Fr2 billion to cover redundancies and new union agreements.
The latest figures were helped by a healthy 13% growth in passenger traffic, which stayed well ahead of capacity growth, allowing load factors to reach a record high of 75.8%. Passenger yields were down by 2.6%, but have showed signs of picking up over the last six months. Cargo traffic also grew by 5.5%, although Air France implies that the growth was unprofitable, given another 3.6%drop in yields.
Air France says that the results would have been better still, but for the rise in fuel prices - which alone cost Fr900 million over the year. Labour costs "-remained stable" as staff numbers dipped slightly to just below 36,200. Results released by Air France Europe, the former Air Inter operation - effectively a sister company within the new Groupe Air France structure - show the domestic carrier ploughing into heavy losses.
The operation ended 1996/7 with a net loss of Fr488 million, despite earning Fr266 million from aircraft sales. At operating level, the loss rose to Fr735 million, representing 6% of sales.
Declining yields and load factors in France's increasingly competitive and deregulated domestic market are also being blamed for deteriorating load factors and yields. Passenger numbers were down by 1.5%, at 15.5 million, in part caused by the series of strikes, which, says the carrier, resulted in the loss of 350,000 passengers. It puts the cost of the strike action at the equivalent of Fr220 million in lost revenues, representing around 2% of its Fr11.3 billion sales.
Air France Europe came within the Groupe Air France structure on 1 April, but it is working with Air France only on a management lease basis until September.
Source: Flight International
