A small light in a long, dark tunnel. That's how one might interpret today's surge in sales, up 27% at the time of writing.
Air France-KLM had a good last quarter, buoyed by increases in capacity (+2.2%), passenger numbers (+5.1%), load factor (+2.1%) and unit revenue per available seat per kilometer flown (+2.7% to 8.11 cents). These factors offset the rise in unit costs (+4%), due to increases in airport and air traffic control charges, salaries, the capacity mix effect and the development of premium cabin offerings.
In the last three months of 2024, sales rose by 6.4% to €7.9bn, and operating income amounted to €396m, compared with a loss at the same time last year.
These results bode well for the future, and allay fears in a year which was affected by the Olympic Games (from June to September, the negative impact was between 150 and 200 million euros), the deterioration in unit costs at KLM, and the implementation of an IT system for the Cargo business (impact of €45m).
For the current year, costs are set to rise by a low single-digit percentage. To ensure operational resilience, the group will continue to invest between 3.2 and 3.4 billion euros. Capacity should also increase by 4 to 5%.
Air France-KLM also confirmed its medium-term targets (2026-2028): an operating margin in excess of 8% (5.1% in 2024) and a reduction in unit costs. In terms of cash flow, the company is aiming for significantly positive adjusted free cash flow. However, the term "adjusted" needs to be defined, as it's often misleading when reading the results.
In any case, Air France-KLM's revival will be possible as long as demand for air travel continues to grow and costs remain under control, or at least offset by revenues. The improving outlook is rekindling hope amongst investors: the stock has risen by 42% since the start of the year.
