Air France-KLM cautions on revenue drop amid lockdowns
Air France-KLM unveiled a €1.05 billion ($1.24 billion) quarterly operating loss and warned of worse to come as a resurgent coronavirus brings new travel curbs.
The Franco-Dutch airline group reported a 67 percent drop in thirdquarter revenue to €2.52 billion on Friday, as France returned to full lockdown for at least a month. New COVID-19 outbreaks pose a threat to network airlines already weakened by the crisis and longhaul travel collapse.
“The gradual closure of international borders in the second half of August and the resurgence of the pandemic strongly impacted our results,” Chief Executive Ben Smith said.
Air France-KLM has €12.4 billion in liquidity, thanks largely to a French and Dutch governmentbacked bailout, a cash cushion comparable to those of European peers Lufthansa and IAG.
Net debt increased by €1.34 billion in the quarter to €9.31 billion as of Sept. 30.
But the depletion will accelerate
with a further collapse in traffic, Chief Financial Officer Frederic Gagey cautioned.
Air France is expected to operate less than 35 percent of its yearearlier capacity in the fourth quarter, with KLM’s schedule only “slightly” better, he added.
And the group’s €1.22 billion quarterly operating cash burn would have been €582 million worse without payment delays from suppliers and tax authorities — whose benefit will now begin to wear off.
The operating loss was better than the €1.24 billion expected by analysts on €2.79 billion in revenue, according to the median of 16 estimates in a company consensus poll.
Earnings before interest, tax and depreciation came in at a negative €442 million and will be “substantially lower” in the fourth quarter, Air France-KLM said.
Some €565 million in restructuring charges swelled its bottomline net loss to €1.67 billion.
Air France and KLM aim to reduce combined headcount by the equivalent of 9,000 full-time positions this year, with a further 4,500 to follow at the French carrier by 2022.
A doubling of cargo unit-revenue was a rare bright spot, thanks to freight pricing supported by the widespread grounding of planes, but did little to offset the broader gloom.
Air France-KLM said that it still aims to raise new capital to bolster its debt-laden balance sheet; a second step demanded by creditor banks and announced with the April bailout. “We’re working intensively on it,” Gagey said.