Air France-KLM reports quarterly loss of €2.6bn

Airline group Air France-KLM reported a €2.6 billion loss for the three months to June and pushed back its forecast for a full recovery to 2024.

Air France-KLM recorded an operating loss of €1.55 billion for the quarter and warned of a “significant” loss of jobs.

KLM described its losses as the “worst financial setback” in its history, yet the €768 million loss at the Dutch carrier in the first half of the year was half the €1.6 billion loss at Air France.

The group reported “a slow recovery of leisure demand in June and July” and said it would be “carefully increasing capacity for the summer months”.

It said group capacity between July and September would be about 45% of the level in 2019, with capacity in the fourth quarter set to increase to 65%.

But Air France-KLM noted: “There is limited visibility on the demand recovery curve as customer booking behaviour is much more short term than before the Covid-19 crisis.”

The group forecast capacity for 2021 would be at least 20% down on 2019, and recovery to pre-crisis capacity levels would only come in 2024, not 2023 as previously forecast.

Air France-KLM reported having €14.2 billion in liquidity or available credit following substantial financial support from the French and Dutch governments.

But it said: “The group and its airlines must significantly reduce the number of employees.”

Air France plans to cut 16% of jobs or 6,560 full-time employees by the end of 2022 and another 1,000-plus or 42% of the jobs at regional subsidiary Hop.

Job losses at KLM remain subject to negotiation with unions but would be “significant”, with the Dutch carrier due to announce a restructuring in October.

Air France-KLM reported it had processed almost three million consumer refunds since mid-March, representing almost 90% of the “direct refund requests” for cancelled flights, but did not put a figure on the repayments.

It pledged: “Requests from customers who booked through travel agencies can now be made through the agencies.”

The group said it had expanded the team processing refunds from 60 to 600, saying: “The size of the team in charge of reimbursements was multiplied by 10 at the height of the activity to process customers’ requests as quickly as possible.”

Air France-KLM group chief executive Ben Smith said: “The exceptional support of the French and Dutch governments has provided Air France-KLM with the liquidity needed to weather the crisis and ensure a gradual recovery in business.

“However, the uncertainties linked to the health situation, the opening of borders and the general economic situation are very strong.

“We must also adapt to important changes in customers’ behaviour.”

Air France secured €7 billion in an equity stake, loan and credit guarantees from the French government, while KLM secured €3.4 billion in aid from the Dutch government.

KLM president and chief executive Pieter Elbers said: “These financial results highlight the huge impact of this crisis.

“A loss of €800 million for the first six months of the year is the worst financial setback in KLM’s history.”

The carrier reported: “Passenger operations have yet to display any form of structural recovery despite the fact that KLM gradually and carefully expands its network.”

However, Elbers said: “KLM will continue to expand its European and intercontinental network. This is an important step towards recovery, albeit limited and cautious.”

He noted: “Further far-reaching measures will unfortunately be unavoidable.”

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