Air France-KLM reported a €815 million operating loss for the three months to March, having lost €560 million in March alone due to an “abrupt plunge in revenue”.
But Air France-KLM’s net loss with the addition of exceptional items, including losses on fuel hedging, soared to €1.8 billion – up from €324 million a year ago.
It forecast a full-year operating loss and predicted demand would take “several years” to recover.
The group secured €7 billion in aid from the French government at the start of May, through a loan and guaranteed bank loan, and remains in discussions with the Dutch government on up to €4 billion in support for KLM.
Air France-KLM reported 95% of its scheduled capacity would remain grounded through to the end of June, but forecast: “Progressive lifting of border restrictions in 2020, enabling slow capacity resumption in summer 2020.”
The carrier anticipates operating 20% of capacity in the third quarter from July to September.
It warned: “Passenger demand [is] not expected to recover to pre-crisis levels before several years.”
Air France-KLM expects its capacity to remain “at least 20%” down in 2021 on 2019.
In a first-quarter results statement, Air France-KLM said “a new transformation plan to be communicated in summer 2020” would form “an integral part of the financing packages”.
Group chief executive Benjamin Smith said: “Uncertainties remain regarding the evolution of Covid-19 and we must be cautious in the assumptions of recovery in the coming months.”
But he added: “The commitment to financial support of the French and Dutch governments, as well as our banking partners, is a strong testimony of their confidence in our ability to weather this crisis.
“We are working on a renewal plan to ensure the Air France-KLM Group regains its competitiveness in a deeply shaken world.”
Smith reported Air France-KLM had cut its operating costs to about €400 million a month but still required additional liquidity in the third quarter of 2020.
The €7 billion in French government aid, which was approved by the EU this week, would “enable the group to meet Air France’s financial obligations and ensure recovery of activity”, he said.
Air France has opened talks with French unions on proposed job cuts but gave no details.
However, Smith said: “There are a lot of people close to retirement, so we have that advantage. In France, you negotiate with the unions. You don’t just come out and say, ‘I want to cut 1,000 jobs’.”
Air France employs 45,000 and KLM 35,000.
The carrier is expected to shrink its domestic network and expand low-cost subsidiary Transavia.
Smith said: “Ninety-five percent of domestic routes do not make money.”
KLM chief executive Pieter Elbers said: “The downturn from the start of March has been enormous.”
However, he reported: “KLM is now operating 15% of its original scheduled network [and] is taking all possible measures to be in a position to operate a large proportion of its network later this year.”
