Air France-KLM warned that a soaring fuel bill would hit profits this year after it swung to a loss in 2011 and scrapped its dividend.
With fuel costs expected to increase by EUR€1.1 billion (USD$1.44 billion) in 2012, Air France-KLM said operating profit in the first half of the year would be below that of the year-earlier period.
“The economic outlook remains uncertain while the fuel price remains at a record level in euros,” the company said on Thursday.
But results in the second half should benefit from the first effects of its new three-year turnaround plan, it added.
Air France-KLM pledged in January to cut debt by EUR€2 billion by the end of 2014 and said it would shrink its fleet by shedding more than a EUR€1 billion from a planned expansion project.
The group posted an operating loss of EUR€353 million for 2011, compared with a profit of EUR€28 million in the previous year, the airline said in a statement.
No dividend will be paid for 2011, it said.
“2011 was a tough year for the group, due to the uncertain operating environment and the high fuel price,” chief executive Jean-Cyril Spinetta said in the statement.