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Air France-KLM releases its first quarterly profit since the pandemic

If the group remains hard hit by the Covid-19, it nevertheless recorded record profits for this quarter.

Air France-KLM returned to profit in the second quarter, for the first time since the Covid-19 pandemic, but saw the progress of its activity slowed down by staff shortages at airports.

The Franco-Dutch group remains loss-making over the first six months of the year, but it generated a net profit of 324 million euros between April and June. The last profitable quarter dates back to the summer of 2019, before the Covid-19 pandemic plunged global air traffic and caused the company to lose some 11 billion euros in two years. Between April and June, Air France-KLM carried 22.8 million passengers, i.e. three times more than a year earlier, and generated a turnover multiplied by almost two and a half, to 6.7 billion euros.

SEE ALSO – Where is the resumption of post-covid air traffic? The answer of the CEO of Aéroports de Paris

Results “above expectations”

For group chief executive Benjamin Smith, it’s the “dedication” and the “sense of collective responsibility“which allowed these results”above expectations“. Both Air France and KLM generated an operating profit, with margin levels (3.3% for Air France, 9.4% for KLM) approaching their pre-crisis level.

Compared to 2019, the last full year before the crisis, the group deployed 82% of its capacity in the second quarter, measured in available seat-kilometres (ASK), one of the sector’s benchmarks. However, it is revising this capacity slightly downwards for the summer and fall, counting on a proportionbetween 80% and 85% in the third trimester“, or 5 points less than before, and between 85 and 90% in the fourth quarter.

For the low-cost Transavia, one of the spearheads of its development, this index will remain “greater than 100in the second half, the group reaffirmed. “Despite efforts to anticipate summer growth, since January operational difficulties have emerged in Europe and the United States, mainly due to airport labor shortages“, he justifies in a press release.

Reimburse “as soon as possible”

The lack of staff at airports, which can lead to flight delays and cancellations, affects many platforms in Europe, including London-Heathrow and Frankfurt.

For Air France-KLM, the impact is strongest at Amsterdam-Schiphol airport, where KLM is located, according to management. “The strong recovery we are seeing this summer is testing the entire airline industry“, observes Benjamin Smith, who saw his mandate extended until 2027 at the end of March.The satisfaction of our customers is at the heart of our priorities and we know that we have not been able to provide the quality of service that is expected of us.“, he regrets.

A cost reduction plan

To bounce back, the group has carried out an all-out cost reduction plan, including the elimination of 8,500 positions at Air France (17% of the workforce), of which 700 will take place this year, and 5,500 at KLM. Air France-KLM also completed a new capital increase of 2.256 billion euros in mid-June, its two largest shareholders, the French and Dutch States, having taken part in proportion to their holdings (respectively 28.6% and 9.3%), while the shipowner CMA CGM took a 9% stake.

An American fund, Apollo, has also injected 500 million euros into the capital of a subsidiary of the group. This new money enabled the company to repay €942 million in loans to the Dutch state and €1.6 billion in perpetual bonds to the French state.

The company is seeking to repay at least 75% of these quickly as possible“, amount required by Brussels to be authorized to make strategic acquisitions. However, many opportunities are emerging in the post-crisis period, including the new transalpine company ITA, also coveted by the Lufthansa/MSC tandem. Net debt has fallen by 2.2 billion since the end of 2021 but remains very high, at 6 billion euros.

SEE ALSO – CDG Express: “It will be in service in 2027”, assures the CEO of Aéroports de Paris


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