Air France-KLM is expected to post its first positive full-year operating result since 2019, company news

In 2022, Air France-KLM could announce victory: this is the first positive operating result since 2019. The carrier bounced back in the second quarter, posting an operating profit of 386 million euros from a deficit of 753 million a year ago. From a loss of $1.49 billion in June 2021, the net result turned into a profit of $324 million, for the first time since 2019. In general, based on a turnover of 6.7 billion, an increase of 143.9%. The icing on the cake: summer ticket sales have grown by more than 1 billion euros. General manager Ben Smith, who commented on these results on Friday morning, could only rejoice: ” Air France-KLM recorded results better than expected. We carried three times more passengers than last year. » « We had an exceptional periodCFO Steven Zaat added. The operating margin, which stood at 5.8% in the second quarter, is close to the pre-pandemic level of 6%. This exceeds our expectations and those of the market. At Air France-KLM, like KLM, operating margins are back to near pre-crisis levels and the maintenance division is profitable for the first time since Covid. On the stock market, these figures are welcome: the shares rose by 6.1% to 1.365 euros.

Operational failures

This rebound is not a surprise. This was announced by Ryanair or Lufthansa, which have already released their results. This was facilitated by an exceptional revival of passenger traffic, the desire to get away from it all never disappeared, despite the health crisis. This recovery was even faster than expected by the industry, causing disruptions to some airports. In Amsterdam, Schiphol, which serves as a site for KLM, has repeatedly asked to limit ticket sales and cancel flights due to a lack of staff, including security. ” KLM is mitigating disruptions by prioritizing delayed customers at the expense of punctuality, facilitating repeat bookings and limiting load factors already limited by Schiphol Airport. Ben Smith said. For its part, Air France maintained a stable operation, with 99.4% of flights operated in June and July. This situation cost the group 70 million euros per quarter. It will take time to calm down. Consequently, the Franco-Dutch carrier must limit its passenger capacity to 80-85% in the third quarter, after 82% in the second quarter, before increasing capacity by 85-90% at the end of the year. ” In the fourth quarter, operational disruptions at airports will be offset. hopes the CFO. AT budgetary Transavia, on the other hand, will have capacity above 2019 levels.

Americans in Paris

Another object of close attention is the dynamics of oil prices. They flew away with the post-COVID recovery and the war in Ukraine. In the second quarter, Air France-KLM fuel spending was €1.86 billion, up €1.34 billion from a year ago and €459 million more than in 2019. However, in a year as a whole, the group should save 1 billion thanks to its fuel. a hedging policy that secured the price of 72% of kerosene demand in the spring. ” We have already implemented a hedging policy for 2023.the chief financial officer said. In conditions of higher oil prices, it is necessary to increase profitability by 13-15%. [rendement, ndlr]. In the second quarter, it increased by 12.5% ​​in premium class and by 16.9% in economy class. Since the market conditions there are favorable, further price increases are planned for the third quarter.

In the United States, fill levels are reaching unprecedented levels and yields are much higher than in 2019. ‘ exclaimed Ben Smith. A stronger dollar is giving Americans a sense of wealth, who are returning en masse to Paris… Taking advantage of this trend, Air France-KLM announced on Thursday the opening of a daily direct service this winter between its Paris-Charles de Gaulle hub and Newark Liberty, a stone’s throw away from the Big Apple. In Asia, China and Japan are still closed. ” Yields are good, but with too low capacities, that’s how it iscomplained Steven Zaat. But we are ready to open and have the ability to move our transport capacity from west to east.. »

On the balance sheet, a rise in gross operating surplus to €931m, combined with very strong ticket sales, enabled Air France-KLM to generate free operating cash flow of €1.5bn in the second quarter and reduce net debt by 2.2. billion. The latter is still too high – 6.03 billion euros, but the group is working to reduce it. To date, KLM has reimbursed all Dutch government aid received during the crisis. Air France has reimbursed 60%, which puts the company on the right track to free itself from the restrictions imposed by Brussels and reach the 75% threshold, which, once passed, will allow it to participate in sector consolidation.