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Air France-KLM Group’s annual traffic figures show that the company’s Dutch arm again grew faster than its French sister carrier, where flights were disrupted by strikes as pilots pushed for higher pay.
KLM boosted revenue passenger kilometers — the number of customers times the distance flown — by 4 percent in 2018, compared with a gain of just 1.9 percent at Air France and its domestic unit Hop!, according to a statement Wednesday.
The imbalance is reflected in higher profit margins at KLM that have been a source of tension within the group since Air France acquired the Dutch business in 2004. New Chief Executive Officer Ben Smith must seek to placate French pilots without alienating their counterparts in the Netherlands and further inflaming those strains.
Group traffic rose 3.5 percent, lagging behind a 7.1 percent advance reported by rival IAG SA on Tuesday. The London-based carrier is expanding after CEO Willie Walsh defeated a pay strike by British Airways cabin crew and cut jobs to pare costs at Spanish unit Iberia.
Smith, who took over in December after his two immediate predecessors were forced out, is expected to unveil his strategy in the next few months. The Canadian struck an initial deal with labor groups in October, but talks with powerful pilot unions continue.
Air France-KLM’s passenger tally rose 2.8 percent to 101 million, including discount arm Transavia, and the company may retain its status as Europe’s largest carrier by traffic. But in an industry with notoriously thin margins, size certainly isn’t everything.
Air France-KLM shares fell 30 percent last year, compared with a 5 percent drop at IAG and a near 36 percent slide at Germany’s Deutsche Lufthansa AG, which reports traffic figures on Thursday.
The Paris-based company increased capacity 2.7 percent, less than the gain in traffic, so that its load factor, a measure of seat occupancy, increased by 0.7 points to 87.2 percent.
©2019 Bloomberg L.P.