Image source: Air France-KLM Results presentation, May 6, 2021
By Laurence Frost
Air France-KLM sales are showing little sign so far of a travel upturn it still hopes to see by summer, the airline group said on Thursday, as it posted a wider first-quarter operating loss.
Air France-KLM said it expects to operate 50% of its pre-pandemic flight capacity in the second quarter under way, ramping up to 55% to 65% in July-September.
"We're waiting to see the first effects of vaccination," Chief Financial Officer Frederic Gagey said. Demand is showing "no noticeable improvement so far," he added, with customers often waiting to book at the last minute.
While rebounding U.S. and Chinese domestic markets are already benefiting airlines there, carriers in Europe are stuck waiting for the region's slower vaccine rollouts to give way to looser curbs and an anticipated recovery.
Lufthansa cut its 2021 capacity forecast last week while narrowing its first-quarter loss with a workforce reduction of 19%. British Airways parent IAG posts quarterly earnings on Friday. read more
Air France-KLM's operating loss increased to 1.18 billion euros ($1.42 billion) from 815 million in the first quarter of 2020, which was only partially affected by the onset of the pandemic. Revenue fell 57% to 2.16 billion euros.
The group, which took a 10.4-billion-euro government-backed bailout last year, raised 1 billion euros in an April share issue that saw the French state double its holding to 28.6%.
Air France-KLM is seeking shareholder approval this month to raise more equity and hybrid capital, in a process its CFO said would see debt and state support "gradually transformed into market-credible products" as the outlook improves.
Gagey, 64, is due to retire at the end of June and will be replaced in the group role by current Air France finance chief Steven Zaat, the company said on Thursday.
The quarterly numbers beat the 2.07 billion in revenue and 1.31-billion-euro operating loss expected by analysts, according to the median of 12 estimates in a company poll.
The net loss narrowed to 1.48 billion euros from 1.8 billion a year earlier – which included a large fuel-hedging deficit as traffic collapsed.
Air France-KLM said net debt rose by 1.5 billion euros over the quarter to 12.5 billion at March 31, when it held 8.5 billion euros in liquidity and available credit.
($1 = 0.8330 euros)