Air France-KLM Post Robust Q2 Performance

Against a backdrop of increasing demand for travel from Europe, Air France-KLM Group today posted a robust set of Q2 2023 results.



July 28, 2023

DALLAS — Against a backdrop of increasing demand for travel from Europe, Air France (AF) - KLM (KL) Group today posted a robust set of Q2 2023 results. In addition to the Air France and KLM brands, Transavia France (TO) and Transavia Holland (HV) are additional entities within the Franco-Dutch airline group.

In an excerpt from the published financial results, the airline group declared that the robust performance was, "driven by higher load factor, strong yield and lower fuel cost."

Compared to Q2 2022, the airline group announced healthy increases in seat capacity and overall demand. Passengers carried increased by 8% to just under 24.7 million. Fleet capacity increased by 8% and load factor also grew by 3%, to reach 88%.

AMS experienced severe operational disruption last summer due to a shortage of security staff. Photo: Adrian Nowakowski/Airways

Healthy Yield

Among the sea of healthy financial metrics is a 9% jump in passenger yield, which accounts for a buoyant operating margin of just under 10%. This represents a 4% rise from Q2 2022. That said, the airline group has outlined their expectation that margins will likely flatten to around 7-8% in the medium term.

Group revenue rose by €0.9bn (US$1.0bn) to €7.6bn (US$8.4bn). Net income nearly doubled and jumped by €280m (US$308m) and amounted to €604m (US$665m), supporting equity restoration. This was illustrated by net debt falling by €1.4bn (US$1.5bn) and stood at €4.9bn (US$4.9bn), compared to results published at the end of 2022.

Despite the inflationary pressures, forward bookings for Q3 and Q4 2023, are on a par compared to demand last year. The only exception lies with the Transavia brand, which expects demand to rise by a few percentage points and exceed Q3 and Q4 2022. The airline group also indicated that overall unit costs for 2023 will increase very slightly, with higher staff salaries being a key contributor.

Record Operating Margin

With the airline group expecting to restore capacity to pre-pandemic levels next year, Group CEO Benjamin Smith reflected on the most recent results.

"We have again delivered a strong set of results during the Second Quarter of 2023. In spite of the inflationary context, we posted double-digit growth in our revenues and a record operating margin. The rollout of new award-winning products across our airlines continued unabated, which serves as a testament of the commitment of our employees, whom I would like to thank. We were also busy throughout the quarter, actively preparing for the summer. I am very glad to see that the situation at airports is much better, including at KLM’s hub at Amsterdam Schiphol Airport.

Benjamin Smith, Air France-KLM Group CEO.

Looking ahead, the airline group has over 160 aircraft on order, including narrow and wide-body Airbus types. In sharp contrast, orders for Boeing airframes total less than 4% and are represented by a handful of new Boeing 787 aircraft.

Featured Image: F-FZUH Air France Airbus 220-300. Photo: Alberto Cucini/Airways