Air France-KLM Posts First Quarter Results

‍DALLAS — European airline group Air France-KLM (AF-KL) has posted its first quarter (Q1 2024) results, reporting an increase in revenue but a loss in operating results.

The group increased its capacity by 4.5% compared to last year, the increase being mainly driven by the group’s low-cost carrier, Transavia (TO). This higher capacity allowed the group to carry 20.9m passengers, which is 6.2% higher than in Q1 2023.

Moreover, the group had additional revenue thanks to its loyalty program, Flying Blue, which had a positive operating result of €47m.

This additional capacity also increased the group’s total revenue, reaching €6.7bn, about 5.1% higher than during the same period last year. However, despite this increased revenue, the group posted a net loss, with an operating result of -€489m.

According to the group, this loss is primarily due to increased costs and disruptions. The unit cost has improved since last year, and cargo revenue decreased due to less demand. Increased passenger revenue and lower jet prices partially compensated these higher costs.

The geopolitical situation also impacted the group’s operations, as did a change in Air Traffic Control (ATC) systems in France, which impacted AF operations.

Fleet Renewals, Opportunities in 2024

When presenting its financial results, the group also revealed information on its fleet renewal plans. All of its airlines are awaiting new-generation aircraft in 2024. The new-generation fleet now represents 21% of AF-KL’s total fleet, and this proportion should keep growing in the future.

In 2023, the airline took delivery of seven A350-900s and 16 A220-300s for AF, 3 Boeing 787-10, four Embraer 195-E2 for KL, and three A320neo family aircraft for TO. AF-KL expects additional units for these aircraft types this year, especially the A320neo and A321neo aircraft, which will renew the Boeing 737NG fleets of KL and TO.

This fleet renewal will help the group reach its sustainability goals and decrease unit costs, thus improving operating results.

The airline group, and especially AF, is getting ready for the summer. The French flag carrier will be the official airline of the Paris 2024 Olympic games. The airline will expand its capacity at Paris Charles de Gaulle Airport (CDG) to welcome travelers and athletes this summer.

Executives Comments

In a recent statement, the Chief Executive Officer of AF-KL, Ben Smith, acknowledged the company's challenges. Despite these challenges, he highlighted the positive revenue growth the company has achieved in the current quarter, thanks to a strong demand for travel.

Ben Smith emphasized that AF-KL has experienced further revenue growth despite the challenging start to the year marked by persistent geopolitical tensions. The company has been able to capitalize on a structurally robust travel demand, contributing to its financial success.

The CEO recognized that the company has encountered certain challenges, including disruption costs and a slower Cargo business. As a result, AF-KL's operating income has been affected. However, these challenges were anticipated, and the company remains confident in achieving its 2024 unit cost outlook.

Ben Smith emphasized that his airline group is committed to executing its strategic roadmap. The company is focused on delivering its mid-term commitments. Despite the challenges faced, the CEO expressed confidence in the company's ability to achieve its goals and maintain its financial outlook.

The CEO also highlighted the strategic importance of the upcoming Paris Olympics this summer. Ben Smith stated that AF-KL is actively preparing for a promising summer season, with a particular focus on the eagerly-awaited Olympic and Paralympic Games in Paris. The company sees this as a unique opportunity to showcase its expertise and commitment to providing excellent customer service.

The featured image shows the nose of PH-AKF KLM, an Airbus A330-300 at AMS EHAM.