IT issues and yield declines weigh on AF KLM’s Q1 cargo results
Air France KLM saw its cargo revenues decline in the first quarter of the year despite volumes increasing.
The Franc0-Dutch airline reported a 16.5% year-on-year decline in cargo revenues during the first quarter to €562m while unit revenues per available tonne km (ATK) were down 27%.
This revenue decline came despite cargo volumes increasing by 3.7% to 217,000 tons (revenue tonne kms were up 4% to 1.6bn). Meanwhile, capacity was up 5% and the cargo load factor slipped 0.4 percentage points to 47%.
The revenue performance reflects a decline in overall air cargo rates – figures from Xeneta show that global air cargo rates fell by 22% in January, 15% in February and 5% in March.
The airline group added that revenue performance was also affected by “the challenging implementation of an IT system”.
In early March, the company faced difficulties with the rollout of a new IT system at its Paris CDG hub which resulted in booking restrictions that began to be lifted on March 18.
In an April 9 update, the cargo division said that all restrictions had been lifted other than on some dangerous goods shipments.
It is also notable that the group’s cargo volumes grew at below the market average. Figures released by IATA yesterday show that over the first three months of the year cargo volumes (CTK) were up 13.2% compared with a year earlier.
Explaining the disparity, Air France KLM said: “The demand in the airfreight industry in the first quarter was higher than the capacity growth and was driven by e-commerce from Asia and the Red Sea disruption.
“The Group was limited in its ability to benefit from this tailwind due to relatively low capacity on China and payload restrictions on Asian flights due to the Russian airspace closure.”
Much of the demand growth this year has been the result of rapidly rising e-commerce demand out of Asia, and in particular southern China, due to the rise of online retailers Temu and Shein.
The performance in cargo – along with operational disruption – weighed on the group’s overall result as it reported an operating loss of €489m.
The first quarter of the year also proved to be a challenging period for European rival Lufthansa Cargo as lower rates and disruption caused by strike action resulted in an operating loss for the first time since the first quarter of 2020.
