Air France-KLM expects fuel costs to increase by $2.4 billion this year due to the ongoing Middle East crisis and, as a result, has downgraded its full-year capacity outlook.
In an earnings call on Thursday (30 April), the Franco-Dutch aviation group said its fuel hedging strategy had helped to protect yields in the first quarter, despite the price of jet fuel rising nearly 84 per cent since the start of the conflict on 28 February. The company anticipates its total fuel bill for 2026 to reach $9.3 billion.
Air France-KLM chief financial officer Steven Zaat warned of a “significant” $1.1 billion increase in fuel costs for the second quarter, stressing the group’s “tactical” approach to monitoring fuel prices. Air fare increases have also done little to stifle demand – particularly for the upcoming summer season.
The group reported “strong” summer demand, with forward-booking load factors largely on par with 2025 results: 72 per cent of long-haul travel in Q2 has already been booked (compared to 73 per cent at the same time last year), along with 64 per cent of short-haul travel bookings (compared to 63 per cent in 2025).
After rival Lufthansa announced plans to cut 20,000 flights this summer, Air France-KLM CEO Benjamin Smith reassured analysts on the call that the group expects to fly “the whole schedule of Air France-KLM until the end of Q3”.
Additionally, Smith said the group has not encountered jet fuel shortages at its European hubs, and has received “no indication” of any short-term fuel shortages across the region.
Moving into winter, however, Zaat warned that capacity cuts are likely if fuel prices remains high.
The group said it expects full-year capacity to rise between 2 per cent and 4 per cent in 2026, down from a previous forecast that put growth at between 3 per cent to 5 per cent.
Q1 metrics
Air France-KLM reported a first-quarter operating loss of €27 million, which marked an improvement of €301 million compared to Q1 2025.
The group reported an initial demand boost after the start of the Iran war, particularly on routes to Asia, as travellers looked to avoid Gulf hubs. Smith also described demand increases in Asia as an “opportunity” to attract new corporate business.
Group revenue per available seat kilometres (ASK) in the first quarter was up 0.5 per cent year-on-year. Group capacity and traffic also increased 4 per cent and 4.4 per cent, respectively, despite winter storms disrupting KLM services in January.
Load factor increased by 0.3 percentage points to 86.3 per cent, while passenger yields were “strong”, particularly across the airlines’ premium cabins.
"While fuel price increases are not yet reflected in the results we present today, they are expected to weigh on the coming quarters," Smith said in a statement.
“We’ve already introduced measures to support our financial performance through disciplined cost management and continue to monitor the situation closely. While the environment remains uncertain, we remain committed to the execution of our strategy,” he said.
TAP Air Portugal
Air France-KLM on Thursday said it has been selected by the Portuguese government to submit a binding offer for a minority share in TAP Air Portugal. Earlier in April, both Lufthansa and Air France-KLM had submitted non-binding offers for a 44.9 per cent stake in the carrier.
Smith reiterated that, if the bid succeeds, the company plans to make Lisbon its southern European hub.