Air France-KLM said Wednesday its net loss widened in the fourth quarter as the global economic crisis hammered freight and passenger traffic, resulting in its biggest loss in more than 15 years.
Europe's largest airline reported a net loss of euro691 million ($859 million) for the three months to March 31, compared to a loss of euro479 million in the same period a year earlier.
That took its loss for the year to euro1.6 billion, even more than its previous record loss of euro1.3 billion in 1993.
The airline blamed a drop of 3.2 percent in passenger traffic and a nearly 14 percent drop in freight traffic last year, as the global economic crisis weighed on travelers and businesses.
The airline's fourth quarter performance was in line with guidance the company provided in February, when it said the operating loss would be about the same as the year earlier loss.
The airline's CEO Pierre-Henri Gourgeon called last year "our 'annus horribilis.'" A year ago an Air France flight from Rio de Janeiro to Paris crashed into the mid-Atlantic, killing all 228 aboard and all efforts to discover the cause of the crash have to date failed.
The Paris-based airline said its efforts to trim costs and cut capacity would help it to break even at the operating level this year, excluding the negative impact of fuel hedges, financial instruments that helped the airline when oil prices were soared in 2008, but which are causing big losses now that the price of oil and jet fuel have fallen.
The company is cutting 1,700 jobs through voluntary departures this year as part of its effort to return to break-even at the operating level in its next fiscal year ending in March 2011.
Air France-KLM warned however that reaching its 2010-2011 goal was contingent on establishing the final cost to it of the major shutdown of European air space last month caused by the volcanic eruption in Iceland.
Air France-KLM estimated its lost revenue from the four-day shutdown and gradual resumption of flights at euro260 million, with a euro160 million negative impact on operating profit.
Airlines suffered the worst-ever fall in passenger demand in 2009, according to the International Air Transport Association. The fall in demand slowed toward the end of the year, partly as a result of airlines slashing flights to avoid overcapacity, but yields remained 5-10 percent below 2008 levels, IATA said.