Significant Improvement: Air France-KLM Cuts Q1 Loss to €250 Million

Sustained Demand Supporting Rise In Revenues

On April 30, Air France-KLM issued its Q1 results, with the airline group ending the period with a net loss of €249 million ($283 million), an improvement of €231 million ($262.7 million) compared to the same quarter in 2024. Revenues climbed 7.7% YoY to €7.1 billion ($8 billion) as the airline group’s capacity, measured in ASKs, increased by 3.8%.

While average load factors dropped by 0.4% to 86%, Air France-KLM welcomed 21.8 million passengers on its aircraft during the three-month period, split between 17.2 million passengers on Air France and KLM and 4.5 million on Transavia’s flights.

Ben Smith, the Chief Executive Officer (CEO) of Air France-KLM, said that the group delivered a solid start to the year, with sustained demand supporting a rise in revenue across all businesses. Summer ticket sales allowed the group to improve cash flow generation, Smith added.“This quarter, we continued to deliver on our ambitious strategic roadmap, notably with the successful launch of Air France’s new La Première experience – a key milestone in the ongoing premiumization of our offer, and with the continued integration of the latest generation aircraft across our airlines.”According to Air France-KLM’s Q1 report, during the quarter, Air France and KLM, the two network airlines of the group, improved their revenues to €6 billion ($6.8 billion), with earnings before interest, taxes, depreciation, and amortization (EBITDA) being €339 million ($385.5 million). However, the network airlines’ operating result was still negative, with an operating loss of €193 million ($219.3 million) in Q1.The group highlighted that the network airlines’ operational results improved by €215 million ($244.3 million) due to lower fuel prices and higher revenues, despite Easter and Ramadan shifting to Q2 and Q1, respectively. Better operational performance also contributed to the improvement. Air France-KLM also pointed out that despite the uncertainty caused by the US, its North Atlantic revenue increased by 11% even if its capacity was flat YoY, with the group saying that strong performance on US routes was driven by US point-of-sale yields.

Yet Air France-KLM warned that Transavia’s performance, which posted a €205 million ($232.7 million) operational loss in Q1, was affected“by geopolitical instability and bad weather in Spain.” At the same time, higher passenger taxes in the Netherlands diverted some passengers to fly out of Belgium or Germany instead of the Netherlands.Shutterstock
Smith concluded that the increasingly uncertain macroeconomic context may bring additional headwinds. Still, Air France-KLM believes it is uniquely positioned to adapt and perform, in part due to its diversified network, products, and services, which, together with strong hubs and brands, are essential assets.

As such, Air France-KLM preserved its full-year guidance, with the Franco-Dutch company expecting capacity, measured in ASKs, to rise from 4% to 5% YoY, while unit costs (at constant fuel and currency exchange rates) should increase by low single digits. Capital Expenditures (CapEx) should range between €3.2 billion ($3.6 billion) and €3.4 billion ($3.8 billion), with Air France-KLM already welcoming nine new aircraft in Q1: one A220, four A320neo, two A321neo, and two A350s.The airline group is also well-positioned financially since it had €9.3 billion ($10.5 billion) of cash in hand at the end of the quarter, with quarterly positive recurring adjusted operating cash flow being €783 million ($889.5 million).

Considering that Air France-KLM has been at the forefront of various talks of consolidation in Europe, including potential investments in Air Europa and/or TAP Air Portugal, having substantial cash reserves, even at times of uncertainty, could spur the group to expand its investment portfolio, which includes a 20% stake in SAS as of 2024.