Air France-KLM will make further cutbacks of €300 million following the announcement today that it made a net loss of €79 million in the second quarter.
CEO Alexandre De Juniac said the new savings will be about 25 per cent of the group's €1.1 billion in administrative expenses.
Despite revenue growing by 3 per cent to €6.64 billion, he said the first half of 2015 saw "exceptional volatility in exchange rates and the fuel price, and by ongoing pressure on unit revenues".
In the second quarter of 2014, Air France-KLM made a net loss of €14 million, substantially less than the €79 million reported today. Total operating costs increased by 3.9 per cent compared to a year ago.
As a result, the group will now close more loss-making routes and reduce winter 2015/16 capacity.
De Juniac said: "The lack of results improvement leads us to implement immediate additional adaptation measures including, in particular, the closure of heavily loss-making routes, the downward revision in capacity for the forthcoming winter season, together with an acceleration and an increase in the magnitude of our cost-saving initiatives."
He also called on Air France-KLM pilots to reach a productivity agreement by the end of September, otherwise even more routes will need to be slashed.
In June, Air France announced it will cancel its services to Kuala Lumpur, Stavanger, Verona and Vigo in September and October (see news, June 17).
airfrance.com, klm.com
Graham Smith
