Air France-KLM Expects Only ‘Skeleton Operation’ Through May
Air France-KLM Expects Only ‘Skeleton Operation’ Through May
(Bloomberg) -- Air France-KLM expects more than 90% of its capacity to remain suspended through the end of May as the coronavirus pandemic paralyzes the travel industry worldwide.
For the next two months, the airline aims to continue serving only some key city pairs with a “skeleton operation,” according to a statement Thursday. Beyond that time frame, the company said, projections are too difficult to provide.
Traffic in March was “strongly impacted” by the spread of Covid-19 across the globe and subsequent reductions in capacity, it said. Group passenger traffic plunged 51%, while the load factor dropped 20 percentage points to 67%.
The gloomy outlook from one of Europe’s biggest airlines comes as carriers worldwide battle for survival after governments closed borders and ordered populations to stay at home in an effort to stop the spread of the virus. The French government, which along with the Netherlands owns a stake in Air France-KLM, has vowed to prop up the former flag carrier.
“Air France is losing billions of euros a month” French Finance Minister Bruno Le Maire said on France 2 television Wednesday. “It’s not a helping hand that Air France will need, it’s massive support from the state. Air France will have this massive support from the state as we want to preserve this airline at any cost.”
The airline is already in negotiations with the governments on state-backed loans of about 6 billion euros (around $6.5 billion). A spokeswoman declined to comment.
The airline industry has been hit with an unprecedented near-total shutdown of travel as the health crisis sweeps across the globe. About 70% of world carrier capacity is idled even as flights within the U.S. continue and Chinese domestic services return, according to the International Air Transport Association. Jets are parked on tarmacs across airports in Europe, where more than 90% of operations have halted.
As part of its efforts to weather the deep slump, Air France-KLM drew on a credit facility to raise available liquidity to 5.5 billion euros and has reduced its capacity more than 95%. European rivals have made similar cuts.
While airlines are rushing to secure backing from banks and governments, the situation at Air France-KLM is made more difficult by dueling political forces. The Dutch state’s stealth purchase last year of its holding was aimed at matching the one held by France. The move infuriated the French government and fueled suspicion between the two sides.
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