Air France-KLM recorded a quarterly net profit for the first time since 2019 in the second three months of this year, driven by resurgent revenues and high yields as Covid-related travel restrictions fell away.

The result comes despite the “severe operational disruption” being seen in the group’s markets, it says, with some of those challenges expected to be years-long issues.

Notably, the group’s operating margin returned to pre-Covid levels in the quarter, and it is forecasting for a full-year operating profit.


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“We are living in very exceptional times,” says group chief financial officer Steven Zaat during an earnings briefing on 29 July. “If you look at the operating margin in 2022, you see that we are already at the level of 2019.

“Who would expect that with 15% less capacity [than in 2019], China still closed, the oil price at $110 per barrel and last, but not least, all the operational problems we face as an airline?” he asks.

The key to what Zaat describes as “exceptional results” is “very strong revenue development” during the quarter, as income hit €6.7 billion – a figure close the 2019 equivalent of €7.0 billion.

The group was able to offset the impact of higher fuel charges and a €70 million hit from disruption-related charges to achieve an operating profit of €386 million and a net profit of €324 million, amid yields up 15% on 2019 – as premium cabins exceeded pre-Covid load factors – and a positive impact from business transformation efforts.

The net profit figure marks a €1.8 billion improvement from the equivalent 2021 figure.

Both network carriers contributed positively to the second-quarter operating profit, with KLM leading the way at €262 million and Air France at €133 million. The group’s maintenance division contributed €57 million to the operating profit, with only Transavia weighing on the group picture, as it recorded an €18 million operating loss for the quarter. Air France-KLM says that the performance of the latter unit was negatively affected by the transfer of French domestic routes to its operation.

North American services performed strongly during the period, the group notes, with capacity above the same quarter of 2019. Dollar-booked revenue is particularly significant given the currency’s current strength, Air France-KLM says. At the other end of the scale, Asia-Pacific services continue to lag the wider recovery, with capacity at just 40% of pre-Covid levels.

It highlights the group-wide unit cost increase of 2.4% versus 2019 in the context of capacity being 15% lower on the same basis. 

Air France-KLM’s cargo operations continued to perform strongly, with high yields mitigating the impact of disruption to traffic on Asia trade lanes.

The group recorded operating free cash flow of €1.5 billion in the quarter, which left it with €11.9 billion cash at hand. It reduced its net debt by €2.2 billion versus December 2021, to €6.0 billion.

Air France-KLM says it may issue a hybrid bond in the coming months as it looks to pay down more of the €3.6 billion in French state aid it received during the crisis. It has currently paid off around 60% of that aid, having completed repayment of Dutch state aid during the second quarter using its free cash.

It further notes that it has implemented a set of equity measures so far this year to strengthen its financial position – including a €2.3 billion rights issue in June, with CMA CGM becoming a new strategic shareholder.

The group is guiding that capacity will reach 85-90% of pre-Covid levels in the fourth quarter, having dipped slightly in the third quarter amid operational challenges at KLM’s Schiphol hub.

It expects the yield environment to stay strong for the rest of 2022.