Stocksak: Air France and KLM beat quarterly estimates for travel recovery

© Stocksak. FILE PHOTO A passenger walks past an Air France self-service ticketing machine in the departures area of the Nantes-Atlantique Airport in Bouguenais, France, June 29, 2022. REUTERS/Stephane Mahe/File

By Dina Kartit

(Stocksak). Despite lower capacity and rising costs, Air France-KLM’s quarterly core profits beat expectations on Friday.

Operating income for the Franco-Dutch group was 1.02 billion euros ($1.02billion) in the third quarter. This is compared to an average estimate of 844 million from analysts polled. Quarterly revenue was 8.11 billion euros, which is higher than the 2019 levels.

“While the situation remains poor in certain key airports, including KLM at its Amsterdam Schiphol Hub, we saw significant improvement following the operational challenges that erupted earlier this years,” Chief Executive Officer Ben Smith stated.

Since April, European airlines have been struggling to find staff and labor disputes. Cabin crews and pilots in Europe are demanding better working conditions as well as higher wages to offset inflation.

Airlines were forced to reduce the number of flights on their schedules and to limit ticket sales for the winter.

These disruptions caused 60 million euros extra compensation costs compared with the same quarter of 2019, Air France-KLM stated.

The company’s activities include maintenance, cargo, and aeronautics. It stated that the winter season should have a healthy yield environment with a strong demand to match the capacity.

Transavia’s low-cost subsidiary and traffic increased by 45.4% to 41.8% in the third quarter. This was due to demand recovery in Europe and North Africa, despite record high inflation in the Eurozone.

Air France-KLM expects that seat capacity levels will be at around 85%, 80%, and 90% in the fourth quarter, full year 2022, and the first quarter 2023 respectively. They are confident that the recovery context can continue.

German Lufthansa, the competitor, stated that this quarter it “left behind (the) pandemic” and gave a positive forecast for air travel. They expect steady demand with high average yields as holidaymakers splash on tickets.

($1 = 1.0015 euros)

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