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Air France-KLM trims losses but remains cautious

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Air France-KLM trims losses but remains cautious
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There was mixed news from Air France-KLM as it trimmed its operating losses last year. It did that by booking more passengers in its planes and it was also able to raise prices on North Atlantic routes.

However net losses rose from costs linked to layoffs. The airline is renegotiating pay and conditions with its staff, cutting more than 5,000 jobs.

Chief executive Jean-Cyril Spinetta said: “There are still losses, but they are smaller losses compared to 2011. And that reflects (the airline’s) very good business performance – notably for long haul – and that can be explained by the efforts made by all our workers in these difficult economic times, and their efforts in the very necessary task of gradually getting the Air France-KLM Group back to profitability.”

The company is restructuring its network with reducing debt its top goal, and also to cope with a worsening cargo business and tough competition from Gulf-based and low-cost carriers.

Finance chief Philippe Calavia declined to give a profit forecast for this year, saying the context was “too uncertain”, but told a briefing he was sticking to targets to return to profit and cut debt by two billion euros by the end of next year.

Reducing debt “is the main goal of the group,” Calavia said. “Everything else is done to contribute to this.”

Air France-KLM’s net debt, which totalled 6.51 billion euros at the end of 2011, was reduced to 5.97 billion last year thanks to disposals and lower spending, with a target to cut it further to 4.5 billion by the end of 2014.

Euronews Paris correspondent Giovanni Magi focused on another factor: “Right now, high fuel costs are weighing heavily on airlines, even those like Air France-KLM that have embarked on major restructuring plans. The situation may be improving, but the outlook remains uncertain.”