Air France-KLM is the latest major European airline group to report strong ticket sales moving into summer after revenue for the first quarter rose 42 per cent year-on-year to €6.3 billion.
Despite seeing positive recovery momentum in Q1, the group posted a net loss of €306 million on Friday (5 May), which was above market expectations for a loss of €294 million. Consequently, the group's full-year capacity forecast has been downgraded to 95 per cent of pre-pandemic levels, compared with 95-100 per cent previously.
Commenting on the results, group CEO Benjamin Smith said Air France-KLM “continued to show strong revenue growth as well as robust cash flow generation thanks to the very encouraging summer ticket sales”.
He added the airlines’ teams are “actively gearing up” for a busy summer season, echoing recent comments made by Lufthansa and IAG bosses in quarterly earnings reports.
While financial statements did not reference the impact of recent strikes in France, on a call with analysts Smith said “it takes an enormous amount of effort from our operational teams to mitigate [related] losses”. According to a Bloomberg report, Smith said the impact of the ongoing labour action is “below €20 million” so far.
Revenue for Air France between January and March came in at €3.9 billion, with a net loss of €181 million, while KLM posted €2.5 billion in revenue, with an operating loss of €128 million. The group noted that the sum of individual airline results does not add up to the total Air France-KLM earnings due to “intercompany eliminations” at the group level.
In the first quarter, Air France-KLM welcomed 19.7 million passengers, a 35.3 per cent increase compared to the same period last year. Capacity increased by 19.8 per cent and traffic grew by 38.9 per cent, while the load factor increased by 11.8 points compared to 2022.
Group passenger unit revenue per available seat kilometre (ASK) increased by 35.3 per cent compared to the same period last year, driven by both load factor and yield.
The group highlighted corporate traffic recovery across the North Atlantic was "maintained" throughout the quarter at approximately 75-80 per cent of pre-Covid levels, while performance in Asia and the Middle East was boosted by the January reopening of China.
Short and medium-haul routes saw “better yield trends” while a higher load factor helped to offset revenue loss linked to a decrease in capacity. Meanwhile, strong performance in Africa was in line with the previous quarter, driven by West and Central Africa for Air France and by East and South Africa for KLM.
Smith added that the airline group has now fully repaid state aid, provided to support Air France and KLM during the pandemic, “which releases us from the associated restrictions and gives us back our full strategic autonomy”.
“Looking ahead, we remain focused on further strengthening our balance sheet and delivering the transformation efforts that will enable us to continue to improve our competitiveness while accelerating our decarbonisation efforts,” he added.