Air France-KLM is warning of an even more challenging first quarter of 2021 before it hopes to lift capacity in the summer after today posting a group net loss of €7.1 billion ($8.6 billion) for the pandemic-hit 2020.

The SkyTeam carrier group posted a 59% fall in revenues for 2020, to €11.1 billion, as group passenger numbers slid two-thirds to 34 million.

Air France-KLM

Source: Andrew Balcombe/Shutterstock

Passenger numbers at the group’s airlines, which include low-cost unit Transavia as well as Air France and KLM, were down by 75% in the fourth quarter as travel restrictions tightened.

”Due to the lockdown and travel restrictions still in place, the group anticipates a challenging first quarter 2021, with a lower EBITDA compared to the fourth quarter 2020,” it says. The group posted an EBITDA loss of €1.7 billion for the fourth quarter.

”The group will progressively ramp up capacity towards summer 2021 and expects recovery in the second and third quarters 2021 thanks to the vaccine deployment,” it says.

The French and Dutch governments have been in talks over a fresh capital injection to the group, with negotiations with the European Commission reportedly hinging on slot conditions attached to any further aid.

“Air France-KLM Group continues to work on quasi-equity and equity solutions in order to strengthen the balance sheet and expects progress in the following weeks,” the group says, noting discussions continue with the European Commission.

The group says that at end-December it had ”a solid €9.8 billion of liquidity and credit lines” at its disposal.

Air France-KLM group chief executive Ben Smith says: ”In the coming months, we will continue to strengthen the group’s core, improving its economic and environmental performance, so that Air France-KLM will be in a position to fully leverage all opportunities when the industry starts to recover.

”We begin 2021 looking forward that this year will see an upturn in traffic as soon as vaccination is deployed on a large scale and borders once again reopen.”

Air France-KLM had cut full-time employees by 10% by year-end and expects an additional 8% reduction – around 6,000 positions – during this year. This, it says, combined with ”other key transformation initiatives” will drive its unit cost down by 8-10% once capacity is back at 2019 levels. 

The group says it expects the number of aircraft in its fleet to still be 7% down on 2019 levels next year and that it does not expect ASK capacity to return to 2019 levels until 2024.

At an airline level, Air France posted an operating loss of €3.4 billion for 2020, and KLM an operating loss of €1.2 billion.