Posted Oct 28, 2022, 7:47 AM
What a spectacular turnaround! On the backside of the opening two years in the past, Air France-KLM unveiled this Friday quarterly outcomes near their all-time highs, because of an distinctive summer season. With 1.024 billion euros in working revenue generated from July to the tip of September for a turnover of 8.112 billion, the group shouldn’t be solely above its pre-crisis profitability ranges, with a margin of 12 .6%, however it virtually equals the file revenue of the third quarter of 2018 (1.065 billion). And this, regardless of the hovering value of gasoline. All the group’s entities are largely within the inexperienced. And as within the second quarter, Air France-KLM continues to outperform its essential “comparable”, the Lufthansa group.
With this billion euros collected throughout the summer season, which is added to the income of the second quarter, Air France-KLM is now virtually sure to have the ability to finish the yr with a optimistic working consequence for 2022 – the primary since 2019 -, “greater than 900 million euros”, specifies the group. Over the primary 9 months of the yr, working revenue has already reached 1.06 billion. And this, particularly since site visitors, which averaged 85% of the 2019 degree within the third quarter, doesn’t appear to be falling within the fourth quarter, regardless of the threats of recession in Europe.
Elevated capability this winter
“We’ll proceed to extend our capability throughout the winter”, underlines Steven Zaat, the monetary director of Air France-KLM, who forecasts a seat supply of 90% of the 2019 degree within the first quarter of 2023. Particularly 91% for long-haul, 83% for brief and medium-haul and even 142% for Transavia, the group’s low-cost, which has returned to progress from the summer season of 2021. “We have already got an excellent degree of reservations as much as on the finish of the yr and a degree of dedication for the start of 2023 akin to that of 2019.”
To assist this improve, Air France and KLM are relying on the sturdy comeback of American vacationers in France and Europe, supported by the rise within the greenback, in addition to by the very excessive degree of the common value of aircraft tickets, together with fares flared up this summer season. But in addition on the reopening of Japan and the primary Asian locations, apart from China.
KLM affected by issues in Amsterdam
Nonetheless, the group needed to barely decrease its site visitors forecast for the fourth quarter, because of capability restrictions imposed on KLM in an try to scale back the issues at Amsterdam-Schiphol. The lack of the Dutch airport to deal with the return of site visitors has already brought about KLM to lose 225 million euros in income this summer season, to which should be added 60 million euros in compensation paid to passengers who’re victims of delays and cancellations.
The dysfunctions of the Schiphol “hub” additionally partly clarify the truth that KLM’s working revenue within the third quarter (443 million euros) was, for as soon as, decrease than that of Air France-KLM ( 570 million), even when over 9 months, the Dutch firm and its subsidiaries stay far more worthwhile (708 million and eight.9% margin, in opposition to 340 million and a couple of.9% margin for Air France).
Money owed to be repaid
However, KLM has the benefit of getting already reimbursed all of the state assist obtained throughout the Covid disaster (900 million euros). This isn’t the case of Air France. Whereas the French authorities has decreased Air France’s debt by changing 3 billion euros of direct assist into quasi-equity, the French firm has solely repaid 500 million of the 4 billion euros in assured loans, and it plans to repay an extra billion in November. It can subsequently nonetheless have 2.5 billion euros of assured loans to repay, to which it will likely be obligatory so as to add curiosity, in addition to different money owed and obligations.
In complete, the Air France-KLM group will subsequently should face vital maturities in 2024 and 2025, with respectively 2.8 billion and a couple of.85 billion in debt to be honored. Which isn’t insurmountable, if the group manages to take care of its profitability at its present degree, however which may nonetheless require new fundraising subsequent yr. “If market circumstances permit it, we may proceed with the problem of hybrid bonds, for an quantity that would attain as much as 1.2 billion euros”, confirms its monetary director, who, in view of the online progress of the title on the inventory market, doesn’t appear nervous about its capacity to persuade personal traders.