Air France-KLM is launching a new round of cost cuts, including a hiring freeze and deeper capacity reductions, as the European airline group moves to preserve profitability amid deteriorating conditions Europe and the United States.
The carrier will cut more capacity in the coming winter season and the next summer season, which will reduce the cargo belly space on its passenger services. It previously halved a planned increase in winter capacity from 5.1 percent to 2.7 percent in July.
The French-Dutch carrier’s cargo unit has already downsized its freighter operation by transferring several 747 freighters to its Amsterdam-based Martinair subsidiary.
The cargo unit swung to a $20.2 million operating loss in the second quarter from a $15.8 million profit a year earlier, mainly due to supply chain disruptions caused by the Japanese earthquake and tsunami. Cargo made a profit of $99 million in the fiscal year to March 31, compared with a year-earlier loss of $624 million.
CEO Pierre-Henri Gourgeon met with union leaders in Paris on Monday to “seek a consensus to reduce structural costs in a context of economic uncertainty,” Europe’s largest airline said.
Air France-KLM aims to achieve $705 million in saving in 2011 from improvements in productivity and procurement, up from the $663 million initially targeted.
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