Airline industry woes continue with losses from Air France-KLM and Iberia

Air France-KLM and Spanish airline, Iberia, have revealed huge losses as a result of soaring fuel costs and a slowing economy.

Air France-KLM , the French-Dutch airline, said first-quarter net profit fell 59% to €168 million (£133 million).

Operating profit at Air France-KLM fell to €234 million from €415 million - the airline is the world’s largest carrier by revenue.

Meanwhile, Iberia plunged €32.2 million (£25.5 million) into the red in the first six months of the year, against operating profits of €69 million a year ago.

The Spanish airline, which is merger talks with British Airways, said fuel costs soared 38% to €732 million and that a new Madrid-Barcelona high speed rail link had hit domestic passenger numbers.

Should a merger go ahead, it would create one of Europe’s largest airlines and according to British Airways, it would help the airlines during the challenging economic environment.

Yesterday, a report by the International Air Travel Association (IATA) revealed that global airline passenger growth has slowed to 3.8% in June. This represents the slowest rate in five years.

The IATA recently warned that the airline industry faced a grim outlook and passenger numbers would be affected by surging fuel costs and the deteriorating economic situation.

This weekend, chairman of British Airways, Willie Walsh, warned that airlines will go bust this year as a result of rising fuel costs.

Ryanair’s chief executive, Michael O’Leary, also recently warned that most of Europe’s airlines will go bust if oil prices remain high.

25 airlines have gone out of business this year including ATA Airlines, Aloha Airgroup, EOS, Maxjet, Silverjet and Skybus Airlines.

Story link: Airline industry woes continue with losses from Air France-KLM and Iberia