Nigeria Business & Finance Updates

Air France-KLM reduces capacity, to ground A380, B747

Following the continued spread of the COVID-19 crisis, the Air France-KLM Group says it is reducing its flight capacity.

The group said it was as a result of growing restrictions on the possibility of travelling and a strong downward trend in demand which had resulted in a drop in traffic and sales over the last few weeks.

The groups also said as a result of the reduction in capacity, Air France would ground its entire Airbus 380 fleet while KLM would ground its entire Boeing 747 fleet.

Air France-KLM said, “The group is obliged to gradually reduce its flight activity very significantly over the next few days, with the number of available seat kilometres potentially decreasing between -70 per cent and -90 per cent.

“This reduction in capacity is currently scheduled to last two months, and the group will continue to monitor the evolution of the situation on a daily basis and adjust it, if necessary.

The groups said it had put measures in place to secure its cash flow.

These measures, it said, included additional savings measures which would generate €200m in 2020 and an initial review of the investment plan which had reduced the capital expenditure plan by €350m.

The group said Air France and KLM would be consulting with their elected employee representatives on measures to take into account the impact of the expected decline in activity, including a project to implement partial activity.

According to the group, last week, it drew a revolving credit facility for a total amount of €1.1bn and KLM drew a revolving credit facility for a total of €665m.

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It explained that as of March 12, along with its subsidiaries, it had more than €6bn in cash and cash equivalents.

“In spite of the measures taken, the deterioration of the environment linked to the epidemic and the sharp reduction in its activity that has resulted today led the group to forecast a sharply deteriorated financial trajectory compared to the outlook presented at the publication of its annual results,” the group said.

Punch

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