KLM warns of full year loss

KLM Royal Dutch Airlines today said cargo traffic was flat in December, and also issued a warning that it is unlikely to achieve a full-year operating profit as a slowing global economy and political uncertainty are depressing demand and trimming margins.

Europe’s fourth-largest airline said cargo volumes last month were the same as a year ago and down 5 percent from December 2000. Traffic on Asia Pacific routes, which has grown strongly in recent months, stagnated in December while traffic on the North Atlantic slipped 4 percent.

KLM’s cargo traffic is still up 4 percent for the first nine months of the fiscal year but the sudden slowdown in December has raised concern the revival in the world air freight market is running out of steam.

As KLM boosted year-on-year freight capacity by 3 percent, the load factor, or proportion of cargo space booked last month, fell to 68.9 percent from 71.3 percent.

KLM said it expects an operating loss in the current fiscal year ending March 31, 2003, even without taking into account a $150 million penalty it must pay to Alitalia for aborting Europe’s first cargo and passenger joint ventures with the Italian airline.

KLM Chief Executive Leo van Wijk warned last month the carrier would have to cut costs further to prevent another loss in the 2003-2004 fiscal year.

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