Air France-KLM posted a net loss of (EURO)368 million ($483 million) in the first quarter of the year, saying Friday that high fuel costs and a continued drop in cargo cut into its profits.
The Franco-Dutch airline said revenue grew 6 percent to (EURO)5.6 billion, but that was not enough to offset the continued slide in the income column. The group made a net loss of (EURO)367 million in the first quarter of last year.
Despite what the company characterized as a "tough quarter," the results were better than the average consensus of analysts surveyed by FactSet, who had predicted (EURO)5.5 billion in sales.
Uprisings in the Middle East and tension with Iran have pushed fuel prices up over the past year, and the company said Friday that its fuel bill rose 18 percent to (EURO)1.7 billion in the January to March quarter. Only 1 percent of that rise was due to higher volumes.
Higher labor costs because of a 2011 salary increase also ate into profits.
The carrier is getting squeezed from both ends, as its costs rise and an important part of its revenue, cargo, drops. The global economic slowdown has weighed on international commerce, and the company said cargo traffic dropped 6 percent in the first quarter.
The one bright spot was improving passenger traffic, which was up 5.5 percent. Revenue in that business rose 8.8 percent.
All airlines have struggled during the global recession, but Air France-KLM was also beset by high debt and operating costs. The company unveiled a turnaround plan last year to reduce costs by 10 percent, outside of fuel, and slash its debt. It is also negotiating new employee contracts.
The carrier said it expected its first-half operating result to be worse than the (EURO)548 million loss it recorded last year. But it said the its turnaround plan should begin bearing fruit in the second half.