Air France-KLM reports second-quarter profit and hopes for a positive operating result in 2022, Company News

PARIS (Agefi-Dow Jones). The Air France-KLM airline group announced on Friday that it expects positive operating results throughout 2022 after returning to net profit in the second quarter, during which its results rebounded significantly.

The Group expects to achieve a “clearly positive” operating result in the third quarter and a “positive” for the whole of 2022, which will be the first since the 2019 financial year.

However, Air France-KLM was forced to revise its capacity forecast for the third quarter downwards. The group now aims to utilize its network’s passenger capacity of between 80% and 85% of passenger-kilometers in the third quarter of 2019, compared to the 85% to 90% range previously.

This revision is due to operational difficulties currently occurring at airports due to a lack of staff, especially at Schiphol, Amsterdam Airport and the KLM hub. These difficulties led to additional customer compensation costs of €70 million in the second quarter for Air France-KLM.

“The strong recovery we’re seeing this summer is a test of all air transport,” Ben Smith, the group’s chief executive, said in a press release. “While Air France-KLM has prepared for levels of demand close to pre-pandemic levels, our companies are not immune from the operational difficulties seen around the world,” he added.

In the fourth quarter, Air France-KLM expects throughput to be between 85% and 90% compared to the same period in 2019.

Turnover multiplied by more than two

Air France-KLM released the outlook as its results soared in the second quarter, well above analysts’ expectations.

The group recorded a net profit of 324 million euros against a loss of 1.5 billion euros a year earlier. Air France-KLM has not posted positive net results since Q4 2019.

The operating result was 386 million euros compared to a loss of 753 million euros in the same period in 2021. Quarterly turnover for its part amounted to 6.7 billion euros, an increase of 143.9% year on year.

According to the consensus available on the company’s website, analysts on average expected revenue of 6.27 billion euros, operating income of 141 million euros and a net loss of 36 million euros.

Air France-KLM also generated €1.5 billion in adjusted free cash flow from operations in the second quarter.

At the end of June, the group’s net debt was reduced by more than two billion euros compared to the end of 2021, to 6 billion euros.

To bolster its capital and repay France’s state aid, Air France-KLM raised its capital by 2.256 billion euros last month. This transaction also allowed the introduction of the maritime transport group CMA CGM into the capital of a Franco-Dutch company, which acquired a 9% stake.

Air France-KLM also said on Friday that it plans to issue up to 1.2 billion euros of hybrid bonds this year or next, depending on market conditions.

-Julien Marion, Agefi-Dow Jones; +33 (0)1 41 27 47 94; [email protected] editorial: ECH

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July 29, 2022 01:17 AM ET (05:17 GMT)