Financial Collapse RSS

May 20, 2010

Air France-KLM posts 1.55b net loss

Air France-KLM posted record losses of ?1.55 billion (?1 = RM4.04) on Wednesday, as a shock new book on its safety record added to the problems facing Europe's biggest airline.

The giant net loss for the 2009-2010 financial year came as the Franco-Dutch carrier grappled with the global economic crisis and the fallout from a deadly accident last year.

Slumping air traffic, particularly for cargo, drove the company to its biggest loss since Air France and KLM merged in 2004. The latest results followed ?811 million (?1 = RM4.04) in red ink the previous year.

"2009-10 will go on record as our 'annus horribilis.' The global 'economic crisis had a profound effect on the entire airline industry," chief executive Pierre-Henri Gourgeon said in a statement.
He noted the company also had to grapple with an accident last June that saw Air France Flight 447 from Rio to Paris break apart and plunge into the Atlantic, killing all 228 people on board.

Against that backdrop, the company scrapped its dividend payment for the 2009-2010 financial year.

Gourgeon said restructuring of the airline's cargo business began bearing fruit in the fourth quarter, although the company's fuel bill rose for the first time during the year as the price of jet fuel surged 31 per cent.

The figures were released as the company's safety record came under harsh scrutiny with "The Hidden Face of Air France," an investigation by journalist Fabrice Amedeo into what he alleges are failures in Air France's management culture leading to a lax attitude to flight safety.

The carrier rejects the allegations.

Air France flights have fallen victim to several accidents in recent years and, according to the French daily Liberation, statistics compiled online rank its safety record as only the 65th best in the world.

And with 1,783 fatalities in its history, according to a tally compiled by the Swiss-based website "Aircraft Crashes Record Office," Air France has been the second deadliest airline for passengers after Russia's Aeroflot.

Germany's Lufthansa, which is of similar size and age, is in 43rd place.

"Air France has a fleet of ultramodern planes, and its pilots are among the best in the world... but its safety statistics are those of a second division company," Amedeo wrote in his book.

Gourgeon told reporters the book "is not worth a response," insisting that safety was the "number one concern of Air France." The company said separately that its safety standards "meet the most stringent requirements in the international aviation industry," noting it was continuously working on improving flight safety.

[tags : ]

Air France KLM sinks to €1.56 billion fiscal-year loss

Air France KLM Group reported a heavy net loss of €1.56 billion ($1.93 billion) for its fiscal year ended March 31, nearly double its €814 million deficit in the prior year, but management reiterated that it believes a breakeven operating result is possible in the current financial year excluding the impact of pre-2009 fuel hedges and subject to costs related to the closure of European airspace owing to volcanic ash.

The group estimates that the Icelandic volcano-related disruptions April 15-21 caused €260 million in lost revenue with a €160 million impact on its operating result.

CEO Pierre-Henri Gourgeon said, "2009-10 will go on record as our 'annus horribilis.' The global economic crisis had a profound effect on the entire airline industry. In addition, Air France KLM had to contend with the tragedy" of the A330-200that crashed last May 31, killing 228 (ATWOnline, May 7). Results for FY2009-10 include a negative impact of €637 million linked to pre-2009 fuel hedges.

Revenue fell 15% year-over-year to €20.99 billion including a 13.6% decline in passenger revenue to €16.27 billion. Total operating expenses dropped 14.8% to €13.24 billion. Operating loss deepened to €1.28 billion from €186 million in the prior year.

Passengers carried dipped 4.1% to 71.4 million and RPKs fell 3.2% to 202.5 billion on a 4.3% cut in capacity to 251.1 billion ASKs. Passenger load factor improved 1 point to 80.7%. Yield was down 10.8% on the previous year to €0.0765 and RASK decreased 9.7% to €0.0615. CASK slid 4.6% to €0.0646.

For the fiscal year's fourth quarter ended March 31, AF KLM posted a €691 million net loss, up 44.3% from a €479 million deficit in the year-ago period. Quarterly revenue slipped just 0.8% year-over-year to €5.02 billion as both passenger and cargo demand picked up and restructuring of the cargo business launched in the previous quarter started to bear fruit. Unit revenue was up 2.7% per ASK and 30.9% per ATK.

Operating costs dipped 1.4% to €5.52 billion and 4.1% excluding fuel, reducing operating loss for the quarter 7.1% to €497 million, of which €381 million was attributed to passenger activity. Excluding the negative impact of fuel hedges, operating loss would have been €324 million.

The company is in negotiations with the relevant authorities concerning the eventual level of compensation for the volcano disruptions, Gourgeon said, noting that AF KLM also is "actively working with the authorities to define a comprehensive and pragmatic approach to the volcanic ash risk so as to avoid the repetition of unnecessary flight operation stoppages in the future."

Source : ATWOnline
[tags : ]

Europe to lose 1,000 flights to volcanic cloud: Eurocontrol

The volcanic ash cloud playing havoc with airline schedules will mean the loss of 1,000 flights in Europe on Monday with airports in Britian and the Netherlands hit, the Eurocontrol agency said.

The cloud was however expected to disperse over the day, Europe's intergovernmental air traffic coordinating agency said, as British and Dutch airports were closed because of the risks of flying through the ash.

"On Monday Eurocontrol expects 28,000 flights in Europe. This is approximately 1,000 less than on a normal day, and is due to the expected impact of the current closure of airspace in the south-east of the UK and in the Netherlands," it said.

The areas of ash concentration are mainly at low levels. During the course of the day, the current cloud is expected to disperse somewhat," it said in one of its regular updates.

By 1200 GMT "the cloud is expected to mainly affect Northern Ireland, parts of Scotland and parts of south-west UK," it said.

There may also be some disruption to flights in the greater London area and there would be delays due to congestion in airspace adjacent to closed areas, Eurocontrol warned.

The ash cloud forced the closure of Amsterdam's Schiphol airport and those in Rotterdam and Groningen until 2:00 pm (1200 GMT) Monday, Dutch officials said.

London's main airports Heathrow and Gatwick reopened Monday after being forced to close overnight by the ash cloud billowing from the Eyjafjoell volcano in Iceland, but other British airports remained shut.

However there were no incoming flights at Gatwick airport in the morning and departing flights were subject to delay and cancellation.

Scotland's busiest airport, Edinburgh, plus Aberdeen and Inverness were closed while Wales's main airport Cardiff was shut, as was Swansea.

In England, Bristol in the southwest and Farnborough, southwest of London, were also closed until 1200 GMT.

The volcanic dust at more concentrated levels presents a danger to plane engines, though some industry officials have complained that the safety measures and airport closures have been excessive.

The latest ash closures came at the beginning of a week where air travel disruption was already expected due to a five-day strike by British Airways cabin crew set to kick off on Tuesday.

Much of European airspace was shut for up to a week in April following Eyjafjoell's eruption.

It was the biggest shutdown of the continent's airspace for more than 50 years.

Air travellers were advised to contact their airline for the latest flight information.

On Sunday, Eurocontrol said, disruptions in Ireland and the north-west of Britain resulted in a loss of some 400 flights.

Source :EconTimes
[tags : ]

Thai protests: the economic impact

Thai woman waits for business at a stall The night market at Patpong is usually packed with tourists

As clashes between Thai forces and anti-government protesters in Bangkok continue, there are growing fears about the impact the protests are having on the Thai economy.

The protesters, called red-shirts after the colour they have adopted, converged on Bangkok in March. They want Prime Minister Abhisit Vejjajiva to resign, with many supporting former prime minister, Thaksin Shinawatra, who was ousted in a coup in 2006.

The latest round of violence has left 36 dead and some 250 injured.

The crisis has left the city a virtual no-go zone for tourists with hotels, shops and restaurants faced with a sharp drop in the number of visitors.

Some businesses in Bangkok's shopping district had to close their doors altogether when anti-government protesters occupied the area last month.

And there are now fears that the political unrest could harm Thailand's economic growth and put off foreign investors.

Fewer tourists

Tourism makes up about 6% of Thailand's economy, but accounts for 15% of the country's workforce.

The British Foreign and Commonwealth Office currently advises against all but essential travel to Bangkok, but Abta, the UK travel association, says that while British tourists are rearranging their holidays, they are not cancelling altogether.


  • 14 Mar: Red-shirts converge on Bangkok, occupy government district
  • 16 Mar: Protesters splash their own blood at Government House
  • 30 Mar: Talks with government ends in deadlock
  • 3 Apr: Occupy Bangkok shopping district
  • 10 Apr: Troops try to clear protesters; 25 people are killed and hundreds injured
  • 13-17 May: 36 killed in Bangkok clashes
Bangkok protests day-by-day Thai protests: Eyewitness accounts

"The majority of the country is not a problem at all," Abta says. "Places like Ko Samui and Phuket - seen as the 'real' Thailand - are not affected by this.

"Many people may have been planning on just going to Bangkok for a couple of days of their trip. What we suggest people do and what they are doing is amending their itineraries so they don't go to Bangkok now."

But while the island resorts may still be attracting the tourists, the capital certainly is not.

Following clashes last month between soldiers and protesters, hotel occupancy in Bangkok was down to 20% at a time when it is normally at 80% or 90%, government spokesman Puttipong Punnakan has said.

Shops and mall operators have not only had to deal with fewer tourists, but the red shirts' occupation of the Rachaprasong shopping district has also forced many to shut up shop.

"Shops and department stores in the red zone have now lost about 1bn baht ($31m; £21m) a day," Thanapol Tangkananan, president of the Thai Retailers' Association said after April's clashes.

Growth revisions

Thai Finance Minister Korn Chatikavanij has forecast economic growth of between 4.5% and 5% this year, but the civil unrest is threatening to reduce that figure.

After meeting with business associations, Mr Chatikavanij has said the protests could cut 0.3% off his forecast.

Analysts have said growth could be as much as 2% lower than the government estimate if the clashes continue.

Protesters take part in a rally Protesters have been holding rallies in Ratchaprasong shopping district

Thailand's economy relies heavily on exports and how the economy performs this year will largely depend on whether or not exporters are hit.

Richard Han, chief executive of electronic components manufacturer Hana Microelectronics, said in a recent interview that as long as the airports are open, business would be able to continue.

But he did voice longer-term concerns as to what customers would think about dealing with Thai companies in the future if the situation is not resolved.

Foreign investor fears

Meanwhile, Amata Corp, Thailand's biggest industrial land developer, is already having to deal with customer concerns.

It has revealed that some Japanese clients have delayed signing contracts because of the unrest and warned that sales might suffer.

Foreign investors have already shown some signs of withdrawing from Thailand - since violence broke out last month, foreign investors have sold $584m in Thai shares, leaving Thai stocks among the cheapest in Asia.

Investment firm Fidelity had said that should the ongoing crisis affect corporate earnings, it would reconsider its investment decisions.

"Our decisions around investing in Thailand are more driven by the underlying fundamentals of the companies," Gregor Carle, investment director at Fidelity, said.

But he went on: "If we feel that there is an escalation in events in Thailand that threatens the corporate environment, obviously we will adjust the portfolio to reflect that."

Source : BBC
[tags : ]

May 19, 2010

Pfizer to cut 6,000 jobs

Drugmaker Pfizer Inc will cut 6,000 jobs, or 18 per cent of the workforce, at its 78 manufacturing plants over the next five years as it pares back operations following last year's purchase of rival Wyeth.

The firm plans to cease operations at eight plants in Ireland, Puerto Rico and the US by late 2015 and cut activities at six factories in those countries, plus Germany and Britain.

Pfizer had 40 manufacturing sites before acquiring more than three dozen Wyeth facilities in the October merger.

The affected plants make conventional pills, injectable medicines, biotech drugs and consumer healthcare products.
Pfizer will wind down their operations over the next 18 months to five years, depending on business considerations such as the time required to transfer product manufacturing.

The firm said in November it would close six research sites and trim jobs in the US and Britain as part of its absorption of Wyeth. It then began a six-month study of how to reconfigure its manufacturing sites.

"We have a complex network of manufacturing plants, with excess capacity that is not good for costs," Nat Ricciardi, Pfizer's president of manufacturing, said in an interview.

Pfizer can be more competitive, both in its operations and drug pricing, by streamlining its plants and improving their processes, Ricciardi said.

"It's not disproportionately Wyeth," Ricciardi said, adding that many legacy Pfizer plants and employees are on the target list. Half of the plants slated for ceased operations are legacy Pfizer sites, the firm said.

One of the biggest incentives for companies to merge is the ability to cut overlapping operations and employees. Pfizer said it is on track to realise total cost reductions from the deal of US$4 billion to US$5 billion (US$1 = RM3.24) by 2012.

Pfizer in early 2009, at the time the Wyeth deal was announced, said it expected to cut 15 per cent of the combined workforce - or almost 20,000 jobs.

The firm is counting on the savings to help offset expected plunging sales of its US$12 billion a year Lipitor cholesterol fighter, which will face generic competition late next year.

Source : BusinessTimes

[tags : ]
Related Posts with Thumbnails