In a note published this morning, AlphaValue reiterated its 'sell' rating on Air France-KLM shares, with a price target of 8.82 EUR.

The firm highlights that, despite capacity increases and revenue growth over the past two years, the group's profitability remains hampered by recurring strikes, supply chain tensions, environmental restrictions, and a 41% hike in airport fees at Schiphol.

According to AlphaValue, the market continues to underestimate the long-term consequences of fuel price volatility linked to the Middle East conflict, logistical disruptions, and the slowdown in travel demand driven by global inflation.

Contacted by Zonebourse, the Air France-KLM group nevertheless noted that its second-quarter bookings confirmed 'strong appetite for travel'. Consequently, the load factor stands at 72% for long-haul flights (vs 73% a year earlier) and 64% for short and medium-haul (vs 63% a year earlier). The trend is similar for Transavia, where the load factor rose from 71% to 72%.

AlphaValue also views Air France-KLM's expansion ambitions as risky, notably the planned stake increase in SAS and the interest shown in TAP Air Portugal, while the group already carries 9bn EUR in net debt and 7.5bn EUR in provisions.

Under these conditions, the broker anticipates further margin erosion and believes that the target of an operating margin exceeding 8% by 2028 now appears difficult to achieve.

In early afternoon trading, Air France-KLM shares were up nearly 0.7% in Paris.