You don’t have to be a long-time shareholder of Air France-KLM to know that you have to have a strong heart to follow the fluctuations in the air carrier’s stock market price. Up 7.8% on Monday, thanks to Iata (International Air Transport Association) forecasts of an improvement in financial performance in the sector, the title of the Franco-Dutch group dropped 4.5% on Tuesday , 0.5% on Wednesday and another 5% on Thursday, essentially caught up by the rise in the dollar. With the euro approaching perfect parity with the greenback, Air France-KLM has cause for concern, as 60% of its revenue was made in euros in 2021 – compared to 20% for the greenback and 20% for other currencies, including the yen – while its costs, including that of kerosene, were 25% in dollars (75% in other currencies, especially the euro).
Exorbitant prices
To counter this negative exchange rate effect, the Franco-Dutch group will have to be agile and adapt its network, to bring in more revenue in dollars. The decline in traffic to China, in particular, allows it to increase the supply of seats to and from North America. In view of the latest statements by the CEO of Air France-KLM, Ben Smith, Americans have not lost the desire to travel and even less to discover France. The wealthiest among them and business travelers do not hesitate to put their hands in their pockets. Air France’s first class is sold out on transatlantic flights for the next two weeks. ” Trying to find a ticket to leave New York, it’s impossible “, he launched during a press conference in Paris. Sometimes, the prices reach exorbitant levels: 17,000 euros for a Paris-Los Angeles round trip. ” Our ability to pass on higher costs to customers is amazing. However, the results will only benefit in part because of the inflation that affects raw materials, among others.
The way soon clear for acquisitions
Ben Smith also said to himself ” really happy of the success of the last capital increase of 2.256 billion euros. It will make it possible to repay up to 1.7 billion euros of the super subordinated securities issued in the spring of 2021 and to reduce the net debt by 0.6 million euros, which peaked at 7.7 billion euros on 31 march. The carrier does not intend to stop on such a good path. It plans to repay the balance of aid from The Hague “ in a few months » and those of the French State up to 75% by the end of the year. If he succeeds, the group will then have a free hand to carry out acquisition operations, he who, for the time being, is bound hand and foot by the ban imposed by Brussels on buying more than 10% of an actor in the sector as long as he has not reimbursed at least three-quarters of the aid measures. ” It’s just a matter of whether we’re comfortable closing all of these lines of credit due to a future change in circumstances. “, indicated Ben Smith, adding that he does not want ” to be marginalized in Europe. The group is in the running, within the framework of a consortium led by the American investment company Certares Management, for the takeover of ITA, the heiress of Alitalia, against a consortium made up of Lufthansa and MSC.
About the strikes which recently paralyzed the traffic, the leader wants to be calm. Since his arrival, he has pacified relations with the different categories of staff. And above all, about 300 pilots have been hired.