Air France-KLM widened its loss in the first quarter, affected by rising costs, geopolitical tensions and the fall in freight revenues, the company announced on Tuesday, by strengthening its savings measures including a hiring freeze for certain staff.
At 522 million euros compared to 344 million in the first three months of 2023, the group’s net loss of the Franco-Dutch group is greater than expected by financial analysts, even if the period turns out to be traditionally weak for airlines based in Europe.
Despite this loss representing more than half of the record annual profit for 2023 (934 million euros), the company maintained its annual financial objectives, with strong reservations for the summer peak.
Between January and March, it was pleased to have transported 6.2% more passengers than at the same time in 2023, or 20.8 million, and saw its revenue per passenger increase, for a figure of total business up 5.1% to 6.7 billion euros.
But as in the fourth quarter of 2023, which ended in a net loss, Air France-KLM failed to take advantage of the increase in attendance.
Elements of explanation: the increase in costs weighed on operating profit by 243 million euros, between an increase in the prices of spare parts, supply difficulties and a salary agreement at KLM estimated at 50 million euros.
More unusual, another 50 million was spent on compensation for passengers affected by flight delays or cancellations.
This also suffered from “the weakening of the freight market”, after a period of euphoria during the health crisis. This aspect of activity was also disrupted by the implementation of a new computer system.
The “cargo” thus burdened the operating profit by 157 million euros over one year, more than the 144 million gained thanks to a reduction in the kerosene bill.
Benjamin Smith, managing director of the group cited in the press release, recognized “a difficult start to the year, marked by persistent geopolitical tensions”: war in Ukraine and closed Russian airspace, prohibiting the shortest routes to Asia, suspended flights to three Sahel countries (Burkina-Faso, Mali and Niger) and war between Hamas and Israel.
While the group’s unit costs increased by another 4% in the first quarter, Air France-KLM continues to target growth in costs of only 1 to 2% for the 2024 financial year.
This will involve in particular a “freeze on the hiring of administrative and non-operational staff”, in addition to the arrival of new, more economical aircraft in the fleet, explained the group, which confirmed its other annual objectives including an increase of 5% of its seat capacity between 2023 and 2024.
