Air France-KLM executives on Thursday (19 February) reported positive group-wide earnings growth in 2025 but stressed the business model of KLM remains under threat amid soaring airport charges and air passenger taxes in the Netherlands.
The European airline group posted a 6.2 per cent year-on-year increase in revenues to €33 billion, driven by ongoing premium demand and lower fuel costs. It also reported a €403 million year-on-year uptick in profits to €2 billion, which represents an improved profit margin of 6.1 per cent.
The positive result comes after KLM in 2025 introduced its ‘Back on Track’ programme to reduce costs and “stabilise” operations, with annual revenues in 2025 of €13.2 billion and an unchanged operating result of €416 million, representing a profit margin of 3.2 per cent.
Nevertheless, operating costs out of KLM’s Amsterdam hub continue to put pressure on the group, with recent increases in airport charges and government-imposed air passenger taxes adding “a considerable amount of expense”.
“We need to address this either by convincing Schiphol to lower charges or by increasing fares or by changing the model,” said Air France KLM CEO Benjamin Smith. “We’re working on the assumption that Schiphol will operate at the same cost and for us to adapt around that… when you have airport charges that are exponentially increased so rapidly, as well as taxes that do not exist in other jurisdictions around Europe, we have no choice but to relook at everything… [and] we have all options on the table.”
Group financial chief Steven Zaat added fuel to fire with his comments: “I want to give all the compliments to Schiphol for their 26 per cent margin. They increased their operating income by €350 million, but we paid the bill for it,” he said during the call. “We paid €100 million in take-off and landing charges [in 2025] … this is really an issue… we cannot let this go on forever.”
Group revenue per available seat kilometre (ASK) for 2025 was up 2 per cent year on year, while capacity (measured in available seat kilometres) increased 3.3 per cent and load factor fell 0.4 percentage points to 87.2 per cent.
Air France-KLM reported a “stable” operating result for the fourth quarter with revenue per ASK increasing 2.2 per cent compared to the same period in 2024, while capacity rose 4.3 per cent and load factor fell 1.1 percentage points to 86.4 per cent. This was driven by “strong” demand in premium and business class.
Smith said demand on US-bound routes also remains steady, despite heightened geopolitical tensions, adding there has been “no need to reduce capacity” on its transatlantic routes between Europe and the US.
On the sustainability front, the group in 2025 incorporated 244,000 tonnes of alternative aviation fuels – also known as ‘sustainable’ aviation fuels (SAF) – representing 2.9 per cent of its total fuel mix, which is above the requirement set for European airlines in the EU’s SAF blending mandate.
Smith nevertheless urged the European Union to create to “a level playing field” when it comes to SAF mandates, imploring policy makers to introduce a “balancing mechanism”.
“We’re totally aligned on decarbonising our industry as quickly as possible. However, we don’t want it done on the backs of European airlines to the benefit of foreign carriers. We expect the European Union to support its European companies… the market for European travel is fully open to most jurisdictions so to have this type of advantage is unacceptable.”
M&A
The group last June announced plans to take a majority stake in Scandinavian carrier SAS, with Smith on Thursday stating he expects to achieve regulatory approval to close the transaction by the end of the year.
Along with its rivals IAG and Lufthansa Group, Air France-KLM has also thrown its hat into the ring for a stake in TAP Air Portugal. Zaat on Thursday confirmed the group is working on a non-binding offer after “a nice conversation with the [TAP] management team” last week. He said that TAP will “have a central place in our group in terms of co-organisation” but did not provide further details on the potential governance structure.
Despite a "pretty painful" start to 2026 due to winter storms, the group expects capacity for the year to increase by between 3 and 5 per cent compared to 2025.