As travel restrictions continue to hamper the recovery of European aviation, the financial losses persist for its major players. Posting its results for the first quarter of the year on Thursday, the Air France-KLM Group reported an operating result of -€1.2 billion, and EBDTIA of -€0.6 billion. Revenue stood at €2.2 billion, down 57% compared to last year.
Strict cost control while waiting for vaccinations
The airline said that due to the strict lockdown measures in place across France and the continued lockdown in the Netherlands, along with the worldwide travel restrictions still in place, it expects the second quarter to resemble the first. The key to turning the tide, it said, is a rapid roll-out of large-scale vaccinations, citing the recovery of the US domestic market as an example.
“The success of the first set of capital-strengthening measures completed in April allows us to look forward to the summer season with greater confidence, hoping that the progress of the vaccination roll-out worldwide and the implementation of travel passes will allow borders to reopen and traffic to recover,” Benjamin Smith, CEO of Air France-KLM, said in a statement.
“In the coming months, we will continue our strict cost control approach while reinforcing our sustainability commitments, in line with our ambitious environmental roadmap,” he continued.
Q1 capacity at 20%
During the first three months of 2021, Air France-KLM transported 352 000 passengers, down by 85% from 2020. However, it should be remembered that by March last year, the airline was already suffering from the impact of COVID-19 on travel. Group net employee costs were down 39%.
The first-quarter capacity hovered around 20% for the carrier, with an average load factor of 57.6%. However, the Group’s subsidiary, Transavia France, fared slightly better due to the launch of domestic routes. Its plan for the growth of Transavia is still valid and saw the leisure carrier’s fleet grow by eight Boeing 737-800 aircraft in the first quarter.
Due to continued restrictions, the Group said it expects to operate at around 50% of capacity for the second quarter when compared to 2019. The third quarter capacity will hopefully see a ramp-up and land somewhere between 55% and 65%.
Substantial increase in cargo revenue
While passenger figures remain abysmally low, as for many other airlines, a bright point for Air France-KLM is cargo. A limited belly-hold cargo capacity combined with high demand resulted in high yield and load factors for Q1. Despite a reduction in overall cargo capacity by 15.8%, the Group saw an increase in total cargo revenue by 80%.
Included in cargo are, of course, pharmaceutical goods and medical supplies. Air France-KLM has transported millions of vaccines to over 30 destinations since the pandemic began and expects to see an increase in shipments in the months ahead.
As of March 31st, Air France-KLM had €8.5 billion in liquidity and credit lines at its disposal. This level, the airline said, could be considered comfortable given the expected recovery in the summer.