Air France-KLM Q1 losses three times lower than 2021

by Tangi QUEMENER
Air France-KLM cut its net losses for the first quarter to 552 million euros, one-third of the losses reported the year before, in a “promising” result the airline group said Thursday.
The Franco-Dutch airline company, which has been hit hard by the coronavirus crisis which has cost it some 11 billion euros (14 billion dollars) over two years, saw its business pick-up between January and March.
Three times more passengers took to the skies on its planes than a year ago, and quarterly sales doubled to 4.44 billion euros, it said in a statement.
Despite the war in Ukraine, the oil shock and inflation, the company said it saw “strong” demand for air travel and expected to profit during the peak season.
Between January and March, the group’s airlines — Air France, KLM and Transavia — handled three times more passengers than a year earlier, doubling overall sales, while the net loss fell to 552 million euros, from 1.5 billion a year earlier.
The benchmark was low, as the first quarter of 2021 was marked by global restrictions on movement imposed to fight the Covid-19 Delta variant.
But the results were better than expected by a consensus of financial analysts compiled by the Factset consultancy.
That could herald a more optimistic chapter for the company that has lost around 11 billion euros in more than two years of the pandemic.
Compared to 2019, the last full year before the crisis, the group deployed 75 percent of its capacity in the first quarter, measured in seats-kilometres offered (SKOs), one of the industry’s benchmark indices.
It plans to raise the proportion to between 80 and 85 percent in the second quarter and between 85 and 90 percent in the third, which includes the crucial summer holidays.
And for Transavia, one of the engines of its development, this index will be “above 100” in the second and third quarters, the company promised in a statement.
– ‘Recovery is here’ –
“The performance of the Air France-KLM Group over the first quarter of 2022 confirms that recovery is here. In spite of a challenging context, with the continued effect of the Omicron variant, the situation in Ukraine and the sharp increase of fuel prices,” chief executive Benjamin Smith said in a statement.
Smith, who had his mandate extended to 2027 at the end of March, welcomed the fact that the group had once again posted a positive gross operating surplus (EBITDA) and had solid reservations for the following quarters.
“This paves the way for a successful summer season in all our activities.”
But Air France-KLM is still far from welcoming back all its pre-crisis customers: they numbered just 14.57 million in the first quarter compared to 22.67 in the same period three years ago.
The group has carried out an all-out assault on costs, including the elimination of 8,500 jobs at Air France (17 percent of the workforce), of which 700 will take place this year, and 5,500 at KLM.
It said it had also increased fares on all its long-haul flights in the first quarter of 2021, particularly in view of soaring fuel costs, but noted “strong demand”.
In another positive sign for the company, its SKO unit revenue nearly doubled year-on-year.
The results enabled a reduction of net debt by 600 million euros, but leaving a considerable pile of 7.7 billion euros, making a new recapitalisation operation necessary after the one in April 2021.
Among other measures, the French state doubled its stake to 28.6 percent.
Like the one a year ago, the proposed operation, already revealed in annual results last February, could reach 4 billion euros.
Air France-KLM did not give a timetable for the deal, saying only that it would depend on market conditions.
Agence France-Presse