Air France-KLM Reports $1.06 Billion Loss for 2011

Air France-KLM reported a loss of 809 million euros ($1.06 billion) for 2011. The airline, which reported a profit of 289 million euros last year, blamed the uncertain economy and high fuel prices, as well as increased competition for its performance in 2011.

“The economics of certain countries where we have a strong commercial presence were affected by various crises, the consequences of which are still being felt,” said Jean-Cyril Spinetta, chairman of the Air France-KLM board.

He said that fact makes the transformation plan the airline introduced in January more important than ever. That is a cost-cutting program that aims to reduce nonfuel unit costs 10 percent by 2014. It is also renegotiating labor contracts.

The group's costs in France are higher than those of rivals, and France has complex labor laws that tend to favor workers. The airlines reported that volume was up -- passenger business was up 6.6 percent -- but revenues were weaker, rising 3.2 percent.