Air France-KLM reports an exceptional third quarter

The Air France-KLM group has achieved an exceptional third quarter, posting record results with a 6.8% increase in sales. Despite geopolitical challenges and substantial debt, Air France-KLM continues to pursue its strategy of development and consolidation in the European air transport sector.

 

“Record” results! Air France-KLM, the group owning the airlines Air France, KLM and Transavia, posted an “exceptional” net profit of 931 million euros between July and September, its CEO Benjamin Smith announced enthusiastically. Sales rose by 6.8% to 8.66 billion euros.

 

This summer, the group posted its highest-ever quarterly operating profit, amounting to 1.34 billion euros, translating into an operating margin of 15.5%. Air France-KLM certainly benefited from lower oil prices and a favorable exchange rate, which helped offset rising costs. But it also succeeded in increasing its revenues per passenger.

 

“Air France-KLM had a solid quarter, marked by very good results. This performance was driven by strong summer demand, and I would like to thank all our teams for their unwavering commitment during the season,” said the company’s CEO, Benjamin Smith, quoted in the press release.

 

However, financial analysts were expecting an even better performance, with quarterly net profit of 991 million euros, operating income of 1.38 billion euros and sales of 8.7 billion euros.

 

Air France KLM has come a long way, however. It was saved from bankruptcy by the French and Dutch governments during the pandemic (the group recorded losses of over 11 billion euros during the health crisis), before returning to profitability in 2022.

 

Increase in passenger numbers

 

In the third quarter of 2023, the Franco-Dutch company carried 26.9 million passengers, an increase of 7.6% on the same period in 2022.

 

Compared with the third quarter of 2022, Air France-KLM increased its flight capacity by 6%, reaching 94% of the 2019 level. In addition, the company recorded a higher aircraft load factor (+1.3 points to 90%) and an increase in yield per passenger, meaning more expensive tickets (+1.8%).

 

In contrast to the first half of the year, all Group entities contributed to profits during the summer season. While Air France remained the main source of cash flow, KLM was once again the most profitable, posting a margin of 15.7% and operating income of 539 million euros. Low-cost subsidiary Transavia also posted excellent results, with a record margin of 18.5% and earnings of 188 million euros. The only downside was the decline in the Group’s cargo business, which fell by 39%. However, Air France puts this situation into perspective, noting that unit freight revenues are still higher than before the Covid-19 pandemic.

 

An indebted company

 

Despite these “very solid” financial results, Air France-KLM still has substantial debt and needs to rebuild its shareholders’ equity, which has remained negative since the start of the health crisis. At the end of September, this debt still stood at 5 billion euros, compared with 6.3 billion nine months earlier.

 

However, during a conference call, Benjamin Smith announced that this situation should be resolved by the end of the year, following the announcement confirmed on Thursday evening of the agreement with Apollo Global Management. This American fund has agreed to invest 1.3 billion euros in a new subsidiary associated with the airline group’s frequent flyer program, Flying Blue.

 

Geopolitical concerns

 



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Hugues Reydellet
Hugues Reydellet
Hugues Reydellet is a young and passionate journalist whose favorite subjects are economy, culture, gastronomy, but also cars, and sports. With a sharp pen and an insatiable curiosity, Hugues is constantly on the lookout for new hot information to report.

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