Air France-KLM Group, Europe’s biggest airline, said it will eliminate as many as 2,000 jobs after lower ticket revenues and dwindling cargo volumes pushed it to a third-quarter loss.
The cuts, comprising 3 per cent of the Air France unit's workforce, will be achieved this fiscal year as people leave and aren't replaced, spokesman Nicolas Petteau said.
The company had a €505 million ($653 million) net loss in the three months ended December 31st versus a year-earlier profit of €139 million.
European airlines have cut more than 5,000 jobs this month as companies including Virgin Atlantic Airways Ltd. and SAS Group are buffeted by crumbling demand for travel.
Air France rose as much as 7.3 per cent in Paris trading after the carrier said it will reduce capital spending by €1.2 billion and is still aiming for an operating profit this fiscal year.
"I'm encouraged by the moves they're making to protect their financial position," said NCB analyst Neil Glynn, who recommends buying Air France stock.
"Airlines globally, the flag carriers in particular, are firefighting to try and weather the current storm."
Air France, which will also reduce capacity by 2 per cent this summer, rose 56.3 cents to €8.30 before trading up 3.3 per cent at €7.99 as of 4.10pm in the French capital, where it is based. The stock has lost 13 per cent this year.
The company's French unit currently employs about 60,000 people, with a further 30,000 at Amsterdam-based KLM, which was added to the group in 2003. KLM spokeswoman Joyce Veekman declined to comment on possible job cuts at the division.
"Activity in the third quarter reflected the increasing severity of the economic downturn," Air France said in a statement today.
"We will continue to assess all our costs in order to achieve additional savings wherever possible."
The three-month loss came after cargo traffic declined almost 13 per cent and tumbling oil prices compelled the company to reduce fuel surcharges to passengers, hurting ticket revenue.
Bloomberg