Air France-KLM posts H1 loss on recession woes

Air France KLM posted on Wednesday first-half losses, hit by fuel price hedging and a slump in demand for travel, but said it looks to return to operating break-even by the start of the next financial year.

The airline — hit like its peers by an economic crisis-sparked slowdown in demand for travel as well as by high oil prices — said it expects to return to break-even on an operating basis around the beginning of the 2010-11 financial year, but noted that this target does not take into account the impact of fuel hedging contracts signed before 2009.

"The situation remains uncertain, and competition is fierce, but we want to play our trump cards," Chief Executive Pierre-Henri Gourgeon told a news conference.

In the second quarter of this financial year, pre-2009 fuel hedges caused a 179 million euro negative impact, and in the first half overall it saw a 430 million euro negative impact from fuel hedging. The airline has now changed its fuel hedging policy, reducing the length of hedging contracts from four years to two, it said in a statement.

Nevertheless, Chief Executive Pierre-Henri Gourgeon said in a statement that the group's performance improved in the second quarter compared with the "deep losses" it experienced in the first quarter.

The crisis is prompting many airlines to think about teaming up to share costs. Asked about a possible investment in Japan Airlines Corporation, Gourgeon said Air France-KLM, as well as the Skyteam alliance to which it belongs, were ready to invest. He said it would be up to the Japanese government to determine the conditions under which an investment could take place.

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