KLM posts record full-year loss
AMSTERDAM, Netherlands (Reuters) -- KLM, Europe's number four airline, unveiled a record full-year net loss on Thursday and reiterated a new cost drive as it saw no fast improvements in operating climate due to SARS and global economic downturn.
Its net loss of 416 million euros ($471 million) slimmed to 186 million euros, still worse than market forecasts, after excluding exceptional items mainly related to a hefty alimony payment to jilted partner Alitalia.
The Dutch carrier was seen posting a net loss, excluding exceptionals, of 123 million euros in the fiscal year ending in March, according to a Reuters poll of 12 analysts. Sales were 6.49 billion, less than the flat 6.53 billion that was forecast.
In the previous fiscal year, savaged by the after-effect of September 11, 2001 attacks, KLM had a net loss of 156 million euros.
KLM showed signs of recovery following the debilitating effects of the 2001 hijack attacks in the United States, but prolonged economic slowdown and the war in Iraq, as well as the spread of SARS made it for a rough landing in the final months of its fiscal year.
"These figures are a major disappointment,'' said Fortis Bank analyst Maarten Bakker. ``The full year results indicate just how bad the fourth quarter really was.''
KLM shares slid as much as five percent and were 3.6 percent lower at 7.02 euros at 0745 GMT at Amsterdam's stock exchange. Despite a gain of some 18 percent this month, the stock is still down a fifth on the year.
To combat the poor operating conditions, KLM reiterated it planned a major cost-cutting drive, which includes a reduction of its 30,000-strong workforce by a tenth to reap savings of 650 million euros annually by March 2005.
"The current industry environment is unprecedented and we believe that the revenue environment has permanently changed,'' KLM Chief Executive Leo van Wijk said in a statement.
"Our yields are decreasing and our cost base does not currently compensate for this development. We must therefore work hard... to reduce our cost base to match the new revenue environment,'' he added.
Severe Acute Respiratory Syndrome (SARS), is the latest in a string of afflictions hitting the airline sector, forcing air carriers to slash flights to China and other affected areas.
Traffic on KLM's Asia/Pacific routes dropped 24 percent in April, when the effects of the SARS virus were gathering steam. The Netherlands's flag carrier has already reduced its total capacity by three percent through cutting flights to destinations like Beijing and Hong Kong.
But the drop in passenger numbers at KLM and larger rival British Airways on Tuesday was not as steep as some feared, indicating airlines may be coping with SARS better than expected.
But KLM's battered stock means its current market value of 341 million euros is now less than the price tag of two of its 22 largest Boeing aircraft.