Air France-KLM Said to Consider Exiting Freighter-Plane Business

Air France-KLM Group (AF) will review options for its cargo business that include the possibility of getting rid of dedicated freighter planes, according to two people familiar with the carrier’s plans.

The airline’s board will begin discussing alternatives at a meeting later this month and aims to make a decision no later than September, said the people, who asked not to be named because the deliberations haven’t yet been made public.

While Air France-KLM said in February that a turnaround plan is taking hold, the Paris-based company’s cargo business is still losing money. The French unit has already cut the number of freighters to four from a dozen, though Dutch arm KLM still owns 11 dedicated wide-bodies through its Martinair unit.

Air France-KLM, Europe’s biggest airline group, said today it wasn’t immediately able to comment on its cargo plans.

The company, once one of the biggest global freight carriers, lost 202 million euros ($281 million) in cargo last year amid a general slump in the market. Specialized freighters are generally carrying a smaller percentage of airborne goods as fast-expanding passenger fleets boost so-called belly space.

Martinair, founded in 1958 and wholly owned by Air France-KLM since December 2008, has five Boeing Co. 747-400Fs, each able to carry about 113 metric tons of cargo, plus six Boeing MD-11s with a capacity of 82 tons, according to its website.

Air France, which recently had six cargo planes, found a buyer for two 747s in recent weeks and plans to hand two more back to lessors, leaving a dedicated fleet of just two Boeing 777s, one of the people said.

Under the company’s Transform savings plan the group has already committed to paring the fleet to 10 freighters by 2015.

Air France-KLM’s net loss widened to 1.83 billion euros last year on costs tied to disposals and the depreciation of losses on its balance sheet. Earnings before interest, tax, depreciation and amortization rose 34 percent to 1.86 billion euros. It’s predicting Ebitda of 2.5 billion euros this year.

To contact the reporter on this story: Andrea Rothman in Toulouse at aerothman@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net Christopher Jasper

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