Air France-KLM reports bumper profits as French economic growth rises
Air France-KLM has announced it has doubled its year-on-year net profit in the second quarter of 2023 to €604 million, benefiting from high demand in air travel despite rising inflation which has increased costs.
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The Franco-Dutch group saw its sales rise by almost 14 percent compared with the same period in 2022 to €7.6 billion, boosted by an increase in passengers and higher ticket prices, achieving a "record" operational margin of just below 10 percent.
The results were reached despite seat capacity being significantly down with 2019, before the Covid pandemic.
According to figures released this Friday, Air France, KLM and Transavia – the group's low-cost airline – transported over 24 million passengers between April and June, down 11 percent compared to the same period four years ago.
However, ticket prices have soared since the pandemic, driven by rising fuel costs, increased demand and capacity constraints.
However, despite high inflation putting a strain on consumers' pockets, Air France-KLM said it expects bookings for the current quarter – which includes the crucial summer holiday season – to be at the same or higher level compared with 2022.
Yet inflation is affecting the group's costs, which have risen well over 5 percent in the second quarter of the year, compared to just under 1 percent in the first quarter.
Still, operational profits nearly doubled compared to the same time last year by €733 million.
Turbulent history
Air France-KLM turned a profit in 2022 after having lost €11 billion during the pandemic, requiring the governments of France and the Netherlands to intervene.
The company's debt has fallen by €1.4 billion since the end of December to just under €5 billion.
Air France-KLM made huge losses in 2020 and 2021 after the coronavirus pandemic slashed passenger numbers to around a third of normal levels.
At the height of the pandemic, Air France-KLM lost €7 billion as global restrictions triggered a 67 percent slump in passenger numbers.
In 2020, the French and Dutch governments threw their national carriers a lifeline of at up to €10 billion to ensure they survived the unprecedented downturn amid fears of the group's total collapse.
[#AirFranceKLM Q2 2023 Results]
— Air France-KLM Group (@AirFranceKLM) July 28, 2023
In the second quarter of 2023, #AirFranceKLM made the most of the strong demand for travel. The Group posted strong results with an operating margin at 9.6% and a positive adjusted operating free cash flow at €0.6 billion. https://t.co/fmXuio9kSR pic.twitter.com/u7CLqUfJ6u
'Good news' for French economy
In related news, the French economy saw a surprisingly robust performance in the second quarter of 2023, with 0.5 percent growth that exceeded forecasts.
The figure, also published this Friday, is well above the INSEE statistics office's own forecast of 0.1 percent growth for April to June and better than expected by analysts.
In further positive news, France's year-on-year inflation in July dropped to just over 4 percent, mostly due to falling energy prices and cooling food inflation, after running at more than six percent earlier this year.
The economic growth is set to be highlighted by President Emmanuel Macron's government at a time of multiple domestic political challenges.
The French economy grew 2.5 percent in 2022, keeping up with or even surpassing its European partners.
(with AFP)
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