UPDATE: Air France, Singapore Air Adjust Fleets To Recession
February 17 2009 - 3:26AM
Dow Jones News
Scrambling to cut costs in the face of a deepening economic
recession and falling demand, Air France-KLM (3112.FR) and
Singapore Airlines (CBL.SG) are considering delaying taking
delivery of previously ordered aircraft.
Singapore Airlines said Monday it will cut capacity by 11% in
the fiscal year ending March 31, 2010, while Air France-KLM said
Friday it is aiming for a 2% capacity cut beginning this
summer.
The moves show the global economic crisis is battering even the
biggest of airlines. Several European carriers are yet to report on
the October-December period. But they are suffering the same
combination of recession, high fuel costs and diminished
demand.
British Airways (BAIRY) last week reported a swing to a pretax
loss in the fiscal first nine months and said it continues "to
review every aspect of the business to control costs while at the
same time improving the customer experience and operation."
Franco-Dutch Air France-KLM's U.S. partner Delta Airlines (DAL)
has posted a big loss for the final three months of last year and
plans to remove 40-50 mainline aircraft from its fleet to eliminate
fixed costs associated with its 6-8% system capacity cuts.
In reporting a swing to a EUR505 million fiscal third-quarter
loss, Air France-KLM Friday disclosed measures including deferring,
though not canceling, plane deliveries, the capacity cut, job
reductions through attrition and voluntary departures, reduced
capital spending and deepening the company-wide cost-cutting plan.
It also plans to cut fuel costs and unwind costly fuel hedges.
On Monday, Air France-KLM, which is Europe's largest airline by
market value, specified it will seek to delay taking delivery of
some aircraft by two to three years. The delays would affect about
a half a dozen aircraft, including Boeing 777-300 planes, Boeing
777 cargo planes and Airbus planes, a spokesman said. Delivery of
the Airbus A380 is still planned for the end of the year.
French business daily Les Echos reported the airline could delay
delivery of three Boeing 777-300 planes until 2013, while one of
three Boeing 777 cargos could be stalled for 18 months.
Singapore Airlines said Monday it will decommission 17 aircraft
over the year, rather than the four planes initially planned. The
company last week posted a 42% decline in net profit for its fiscal
third quarter. A spokesman in Singapore Monday said the company
can't rule out delaying deliveries on orders.
"The drop in air transportation has been sharp and swift,"
Singapore Airlines' Chief Executive Chew Choon Seng said in a
statement. "Given the falls of over 20% that we have seen recently
in air cargo shipments, and the tradition of demand for air travel
following closely behind trends on the cargo side of the business,
we have to face the reality that 2009 is going to be a very
difficult year," he added.
Air France-KLM, too, has been suffering a sharp decline in cargo
haulage, though its passenger business has been holding up
relatively better than the cargo sector.
Company Web sites: www.airfrance-klm.com
www.singaporeair.com
-By A.H. Mooradian and Ruth Bender, Dow Jones Newswires; +33 1
40 17 17 40; art.mooradian@dowjones.com and
ruth.bender@dowjones.com
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