Air France-KLM made a loss in the fourth quarter of 2023, as costs relating to geopolitical developments in the Middle East and Africa contributed to its swing into the red but only slightly dented a positive full-year performance from the group.
The European airline group’s fourth-quarter operating loss of €56 million ($61 million) included a €65 million hit from costs relating to conflict in the Middle East and instability in West Africa, it said on 29 February. A further €70 million impact came from “disruption costs” relating to a lack of aircraft spare parts and MRO slots, the group adds, while it took a further €30 million hit from the one-off impact of an employee shareholding scheme.
Still, Air France-KLM insists that its underlying business ended the year strongly, and that indicators are positive looking into 2024.
Indeed, the group says that passenger yields grew year on year in all areas during the October-December period, and that forward bookings and load factors are in line with 2023 levels despite higher capacity. It says demand is particularly strong in the premium cabins that are crucial to its profitability, as higher demand from leisure travellers continues to offset any falls in corporate spending.
Cargo yields are continuing their decline amid market “normalisation”, Air France-KLM notes, with unit revenues from the group’s cargo business down 23% year on year in the fourth quarter.
But unit revenues at Air France and KLM were up 6.2% in those three months, while Transavia’s were some 4.4% higher.
Unit costs were 3.5% higher during the period – including 1.5% from disruption-related costs – but the business is forecasting a unit cost increase of just 1-2% for full-year 2024.
The group expects a 5% rise in capacity this year, which would still leave it a couple of percentage points short of 2019 levels.
Air France-KLM’s overall fourth-quarter 2023 revenue was some 4% higher year on year at €7.4 billion, while its net loss for the period of €256 million compares with a profit of almost €500 in the same period of 2022.
Its full-year revenue of €30 billion was a record-high in the company’s history, as was its operating profit of €1.7 billion. The group’s full-year net income was within touching distance of €1 billion, at €934 million.
Air France-KLM’s full-year operating margin of 5.7% is closing on its previously stated mid-term target of 7-8%.
The group notes that it is in a positive equity position for the first time since the pandemic.
