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Air France-KLM to cut costs as revenue decreases

Xinhua, February 17, 2017 Adjust font size:

Air France-KLM continues to focus on cost reduction due to a high level of uncertainty regarding future revenue and fuel prices, the Franco-Dutch airline announced on Thursday.

Revenues of Air France-KLM declined by 3.3 percent last year, from 25.68 billion euros (27.3 billion U.S. dollars) in 2015 to 24.844 billion euros in 2016, it said.

The geopolitical, economical and airline industry capacity environment and uncertainty on fuel prices make it difficult for the Franco-Dutch airline to forecast future developments of revenue.

Although the January traffic statistics and forward bookings indicate a resilient start to the new year, global economic and political context stays highly uncertain, according to Air France-KLM.

To improve its competitiveness, Air France-KLM plans to continue cost reductions as part of a strategic project launched in November last year.

The group's earnings before interest, taxes, depreciation, and amortization (EBITDA) went up from 2.387 billion euros in 2015 to 2.714 billion euros in 2016, while net result increased from 118 million euros in 2015 to 792 million euros in 2016.

This positive result was mainly driven by the positive fuel developments and the good cost performance, while there were negative effects coming from the pressure on revenue and currencies.

Air France-KLM carried 93.4 million passengers in 2016, an increase of 4 percent over the previous year. The 2016 results were in line with the targets, the airline stated.

"Within a contrasting environment, Air France-KLM delivered an improvement in its 2016 results, reflecting the initiatives and efforts of its employees and the loyalty of customers," commented Jean-Marc Janaillac, CEO of Air France-KLM, in a press release

"Status quo is not an option," Janaillac added. "We are resolutely committed to regaining the offensive, reinforcing our ability to innovate and improving our competitiveness. In an economic and geopolitical context that remains very uncertain, and faced with aggressive competition." Enditem