Business & Investment

Air France-KLM reduces second-quarter losses as bookings begin to recover

© Reuters. File Photo: Passengers will wait at the Air France desk at Nice International Airport, France, on February 20, 2020.Reuters / Eric Gaillard

Tim Heffer

The relaxation of the Paris (Reuters) -coronavirus travel ban has produced the first signs of recovery at Air France-KLM, the airline group said.

The Franco Dutch Group posted interest, taxes, depreciation and pre-amortization losses of € 248 million ($ 294.57 million) in the quarter. This shows an improvement of € 532 million from the huge loss a year ago that caused the pandemic globally. Lockdown.

EBITDA is expected to be positive in the third quarter, adding that the medium-term operating margin target remains unchanged.

Air France-KLM expects third-quarter production capacity to reach 60-70% of 2019 levels as long-haul capacity increases again after the North Atlantic is reopened by Americans visiting Europe. He said he was expecting it.

In May, it was forecast to operate 50% of its pre-pandemic flight capacity in the second quarter and reach 55-65% in the third quarter.

However, travel to the United States remains closed to the majority of Europeans, refraining from making fourth-quarter volume forecasts and calling for a cross-relationship between border opening and rapid deployment of vaccinations around the world. I did.

“We’re trying to fill the gap, but we’re not there yet. It’s still hampered by the COVID situation and changing circumstances,” said Stephen Zart, Chief Financial Officer.

For the first time since the onset of the crisis, operating free cash flow after repayment of the lease was positive at 210 million euros. Both major airlines Air France and KLM Royal Dutch Airlines were cash positive against the backdrop of increased ticket sales.

“People who can travel, those who travel have an appetite,” Zart told reporters.

The group is seeing “good” summer bookings in Europe, but he said it will come later than usual.

Air France-KLM had quarterly sales of € 2.75 billion, an increase of € 1.57 billion from the year-ago quarter.

The operating loss was about half, 725 million euros. Quarterly unit prices fell 71%, primarily due to increased capacity. This was an increase of 389% compared to the same period last year.

“We were able to save more than we expected,” said Zaat, and restructuring showed improved results.

Fuel costs have increased by about 300 million euros. This was primarily due to the additional capacity and the slight impact of higher oil prices mitigated by more favorable hedging agreements.

“The freight market is still resilient,” Zaat said, despite a 66% increase in capacity compared to last year’s crisis in the second quarter.

Net liabilities fell € 2.7 billion from the end of 2020 to € 8.3 billion after taking steps to raise the Group’s balance sheet.

Zaat said KLM is in close contact with the Dutch state as it is discussing further measures with the European Commission, but did not provide details of the concession.

($ 1 = 0.8419 euros)

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Air France-KLM reduces second-quarter losses as bookings begin to recover Air France-KLM reduces second-quarter losses as bookings begin to recover

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