Air France-KLM prepares for busy summer on strong bookings

Air France-KLM is preparing for a busy holiday season amid strong summer ticket sales and said it’s regained “full strategic autonomy” after repaying pandemic state aid, suggesting it might consider purchases again to bolster its position.

The first-quarter net loss narrowed to 344 million euros (S$502.8 million) from 552 million euros a year earlier, Air France-KLM said in a statement on Friday (May 5). Revenue surged 42 per cent to 6.33 billion euros, slightly exceeding analyst expectations. Recovery in air traffic demand continued in North America, with premium cabin load factors performing well, while the impact from air-traffic controller strikes in France was limited to several million euros, the airline group said.

Air France-KLM “continued to show strong revenue growth as well as robust cash flow generation thanks to the very encouraging summer ticket sales,” chief executive officer Ben Smith said in the statement, adding that “we now stand on our own feet” after repaying the remaining portion of state aid.

Air France-KLM issued a slightly more cautious tone on its full-year capacity guidance, cutting back the outlook for the year to about 95 per cent after previously saying it would reach as high as 100 per cent. 

Smith said in February that the company had “turned the page” on the Covid-19 pandemic, which had prompted an unprecedented industry slump and forced a government bailout. The exit from state aid gives Air France-KLM flexibility to resume its growth path. The CEO has already signalled interest in taking a stake in Portuguese flag carrier TAP as the government in Lisbon seeks an industry backer for an airline it was forced to rescue during the health crisis.

The results were “mainly driven by stronger pricing,” even though there was a miss on costs, Citigroup analyst Sathish Sivakumar wrote in a note.

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The global aviation industry has enjoyed a robust comeback since most countries lifted their coronavirus restrictions and people resumed travel for business and leisure. Deutsche Lufthansa this week provided an upbeat preview of the early summer months – the crucial travel period for the aviation industry.

Earlier today, IAG reported a surprise operating profit in the first quarter as bookings for the summer came rushing in, and the airline group benefited from lower fuel prices. It also raised its outlook.

Air France-KLM said it entered exclusive talks with Apollo Global Management for a 500 million euro equity financing into an affiliate owning engineering and maintenance assets as it continues to restore its balance sheet. It also received “several” non-binding offers on equity financing supported by its loyalty programme, with talks continuing with potential investors. BLOOMBERG