Air France KLM loss widens as excess capacity cuts prices

Air France-KLM's first-quarter loss widened as the airline suffered from too much capacity in the market and rising fuel costs.

The French-Dutch carrier's operating loss for the three months to the end of March widened by €185m (£159m) to €303m from a year earlier.

Unit revenue fell by €115m and the total fuel bill rose by €140m, of which €44m was from the higher price of fuel. Air France-KLM joins Lufthansa, easyJet and Ryanair in blaming excess capacity for increased competition, putting pressure on seat prices.

Benjamin Smith, Air France-KLM's chief executive, said: "As anticipated, the first quarter has been challenging for the European airline industry including the Air France-KLM group, as substantial industry capacity growth in the off-peak business period led to unit revenue pressure."

Smith said he expected "a more benign industry supply outlook for the summer". Better conditions, combined with improved operational performance at Air France-KLM, led the company to leave its full-year guidance unchanged despite the tough first quarter.

The company said it expected summer 2019 long-haul industry capacity to and from Europe to grow at a slower pace than a year earlier, particularly to the Middle East, North America and Asia. It said long-haul forward booking load factors from May to September are stronger than a year ago and that unit revenues for the second quarter would be slightly better than a year earlier.