Air France-KLM operating results fall short of expectations
Air France-KLM reported a sharper-than-expected drop in operating profit due to higher unit costs and higher fuel prices, highlighting the cost and revenue pressures in the industry. Air France-KLM operating profit fell 220 million euros from last year to 513 million euros ($556.55 million), missing the company’s consensus forecast of 547 million euros.
“The second quarter of 2024 was marked by increasing challenges for the aviation industry, with rising fuel prices and continued cost pressures,” group CEO Benjamin Smith said in a statement.
The company stressed that the cost increase was due to wages related to employment agreements with Air France and KLM and to higher fares at Schiphol and Paris airports, but stressed that disruption costs had stabilised, especially for KLM.
Net profit for the quarter (the first profit since last summer) was $165 million, only about a quarter of the $612 million in the same period last year, and net profit for the first half of the year was negative $314 million. Revenues increased 4.3% to $7.9 billion in the second quarter and 4.7% to $14.6 billion in the first half of the year.
Air France-KLM estimates that the discontent of passengers during the Paris Olympics (a “avoidance factor” to avoid chaos in the French capital during the event) will cost it 200 million euros in revenues this summer, after a “lackluster” second quarter. The growth in passenger capacity measured in “available seat kilometers” (one of the reference parameters of the aviation industry) has been revised down between 2023 and 2024: to 4%, compared to the 5% previously promised to the market.