(BFM Bourse) – The air transport group published revenues just a little higher than expected, unlike operating profit and net profit. The group is, however, preparing for a “promising” summer season with the Olympic Games in its sights.
For the third time in a row, Air France-KLM’s financial results fell below expectations. The Franco-Dutch air transport group has delivered its accounts for the first quarter, a period traditionally not very dynamic for airlines.
From January to March, the revenues of the company led by Ben Smith increased by 5% in published data, and by 6.2% excluding currency effects, to reach 6.65 billion euros, a little better than the consensus compiled by the company (6.62 billion for the average).
“Despite a difficult start to the year, marked by persistent geopolitical tensions, Air France-KLM recorded a further increase in its turnover this quarter, benefiting from structurally robust travel demand,” explained Ben Smith, the group’s general manager in a press release.
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Problems in maintenance activities
The company’s profitability, however, declined over the period. The operating loss widened significantly to 489 million euros compared to a loss of 306 million euros over the same period of 2023. The net loss increased to 480 million euros compared to 337 million euros. euros a year earlier.
Analysts expected a little better, anticipating an operating loss of 424 million euros and a net loss of 407 million euros.
Air France-KLM saw its costs penalized by the exceptional payment of salaries at KLM, for a negative impact of around 50 million euros. Another impact: “operational disruption” costs, which also weighed up to 50 million euros.
These disruptions were caused by aircraft availability problems at KLM, due to problems in the Dutch company’s maintenance activities which grounded the aircraft for longer than expected. This disrupted flight schedules and forced the group to pay compensation to its customers.
The maintenance problems experienced by KLM are not isolated, and can be explained by problems in the logistics chain with difficulties in supplying spare parts.
An Air France-KLM spokesperson, however, explained that KLM took measures from April to neutralize the disruptions. The Dutch company notably transferred the workload from its maintenance site at Schiphol to a workshop in the United Kingdom. The spokesperson also said supply chain tensions were reaching a point where they appeared to be easing.
Reassuring outlook on costs
Air France-KLM was also penalized by unfavorable weather at Schiphol (Amsterdam), which undermined its activity but not its profitability, and especially by the fall in its unit revenue in the cargo division, down 27%. Oddo BHF explains that this decline is linked to “a reduction in supply in Asia, which is the most dynamic market, as well as the difficult implementation of an IT system”.
Ultimately, UBS believes that the group faced “a difficult start to the year”. Concerning its prospects, Air France-KLM confirmed that it is targeting capacity (the number of flights offered) in 2024 to increase by 5% over one year and unit costs to increase by 1% to 2%, thanks in particular to a hiring freeze. administrative.
Oddo BHF considers that this latest indication on costs is “reassuring” because it demonstrates an “acceleration” on the part of the company on cost control.
On the Paris Stock Exchange, Air France-KLM shares fell without collapsing, losing 3.8% around 10:30 a.m.
“We are actively preparing for a promising summer season with the highly anticipated Paris 2024 Olympic and Paralympic Games in Paris,” said Ben Smith.
In a cross-sectional note published last week, Oddo BHF highlighted that Air France-KLM and Easyjet should be the two airline groups to benefit the most from the Olympic Games (and from Euro 2024 for Easyjet).
Due to significant tensions on supply, with already tight capacities and concerns about the availability of certain aircraft, the broker estimated that the impact on volumes would be limited. On the other hand, the Olympic Games should support prices and the “yield”, the average price. Oddo BHF calculated a positive impact of 3 percentage points to 6 percentage points for the third quarter.
Julien Marion – ©2024 BFM Bourse
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