Air France-KLM posts massive loss, to cut 1700 jobs

Air France-KLM posted Wednesday a second quarter loss of 147 million euros, prompting the airline to plan to cut 1,700 jobs.

The second quarter loss in 2009 is more than five times worse than its 27 million euro loss in the second quarter of 2008.

For the six months to September 30, 2009, operating loss was 543 million euros, attributed to negative impacts of fuel hedges.

In its earnings statement, Europe's biggest airline (in terms of revenue) said unit revenues continued to be impacted by the recession and drop in premium traffic.

Air France-KLM Chief Executive Pierre-Henri Gourgeon said the airline had responded quickly to the crisis and aimed to cut costs to around 700 million.

However, the airline said the cost reductions were still unable to offset the revenue decline.

Gourgeon said the airline now needed to stabilise its activity levels and "therefore reduce headcount within the group."

"We are proposing a voluntary redundancy program at Air France involving 1,700 jobs, which will be effective in 2010" he said.

"Lack of visibility over the timing and strength of the economic recovery means we must pursue our efforts in terms of cost reduction"