Air France-KLM reports passenger decline, Airbus to cut production amid pandemic

Air France-KLM, one of many airlines around the world that has been hit hard by the impact of the coronavirus, reported a sharp drop on Thursday in passenger numbers for March compared to a year earlier, one day after aircraft manufacturer Airbus announced plans to cut production.

The logo of Air France-KLM Group is visible on the company’s first Airbus A350 during a ceremony at the aircraft builder's headquarters in Colomiers, near Toulouse, France, September 27, 2020.
The logo of Air France-KLM Group is visible on the company’s first Airbus A350 during a ceremony at the aircraft builder's headquarters in Colomiers, near Toulouse, France, September 27, 2020. © Regis Duvignau, REUTERS

Air France-KLM carried a total of around 3.6 million passengers in March, down 56.6 percent from a year earlier. Its load factor – which measures the extent to which an airline's planes are full – also fell by 20.5 points from a year ago.

The airline added it was expecting to suspend more than 90 percent of its planned capacity over the course of April and May, as a result of travel restrictions imposed around the world in a bid to thwart the spread of the coronavirus.

"Beyond May 2020, the group is currently unable to provide insight due to the high level of uncertainty over the duration of the crisis," Air France-KLM said in a statement.

The airline added it was continuously monitoring the situation and accordingly evaluating if additional network adjustments would be required.

The French government has pledged to support Air France-KLM.

Earlier this week, French junior transport minister Jean-Baptiste Djebbari said a figure of €6 billion ($6.5 billion) in loans to help Air France-KLM was "not unrealistic”.

Sources have told Reuters that Air France-KLM is in talks with banks to receive up to €6 billion in loans guaranteed by the French and Dutch governments as it braces for a sustained coronavirus shutdown.

The French and Dutch states have a 14 percent stake each in Air France-KLM.

Airbus to cut jetliner production

In the aviation sector, European manufacturer Airbus announced plans on Wednesday to cut jetliner production across the board after the coronavirus epidemic triggered aviation's worst industrial crisis and drastically reduced deliveries to cash-starved airlines.

In its largest-ever production adjustment, Airbus said it was reducing output of its best-selling A320 narrow-body family by a third to 40 aircraft a month.

It also cut production of larger wide-body jets with the A350 falling by about 40 percent to six aircraft a month, and the A330 family down by more than 40 percent to two aircraft a month, based on the most recently published Airbus production figures.

Announcing a parallel slowdown in new investments, chief executive Guillaume Faury said the cuts reflected the "new realities" of airlines, whose industry association warned this week of the loss of 25 million jobs dependent on air transport.

“We have no short-term cancellations in front of us, but we have a lot of requests for postponements and deferrals ... for 2020 and sometimes 2021," Faury told reporters. "That’s why we are decreasing our production rates.”

The move, which Airbus said represented an average output reduction of a third, came as data showed that March deliveries had halved to 36 jets.

Reuters reported last week that Boeing's European rival was considering sharp cuts in all models in the face of plunging demand, cash problems at airline customers and logistical difficulties in delivering aircraft.

Airbus has experienced particular disruption since France and Spain – two of its host nations alongside Britain and Germany – put their populations in lockdown last month. Since then, it has delivered just six aircraft. Total first-quarter deliveries fell 25 percent to 122.

Airbus produced a further 60 jets that it was unable to deliver because of the crisis, which has forced many airlines to seek postponements and prevented others from sending teams.

In some cases, sources say Airbus has hired private jets to fly in customer pilots as commercial flights dwindled.


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