Cargo yields collapse in “sometimes desperate” competition. Air France-KLM said its cargo unit booked a US$219 million second quarter loss against a year earlier profit of nearly US$15 million and won’t break even for at least another eighteen months.

The worsening cargo performance contributed to Europe’s biggest airline swinging to a US$70 million operating loss in the three months to September 30 from a $583 million profit in the same period in 2008. Pierre-Henri Gourgeon, Air France-KLM chief executive, said the carrier is still facing a “very big crisis” in its cargo operation which is facing “extremely aggressive, sometimes desperate” competition.

Cargo revenue tumbled 41 per cent in the second quarter to $851 million from $1.43 billion a year ago as traffic fell 16.8 per cent on a 17.9 per cent cut in capacity. As a result, the load factor rose almost one percentage point to 64.5 per cent. Cargo yields collapsed 27.8 per cent from the corresponding quarter in 2008. First half cargo losses grew to $513 million from a year earlier profit of $38.7 million on revenue down 41.5 per cent at $1.66 billion. The second quarter deficit included a $29.8 million loss on hedging fuel prices.