Air France-KLM reports revenues down 18.4% year-on-year in Q1 2020

Air France-KLM

Air France-KLM has reported its financial results for Q1 2020. Despite a strong performance at the start of the year with passenger unit revenue up 0.8% at the end of February 2020, the company said that March 2020 results were strongly impacted by the expansion of the novel coronavirus and globally imposed travel restrictions to counter the spread of it. This influenced negatively the Q1 2020 results. Revenues totalled €5,020m, down €922m year-on-year. Operating result stood at -€815m, down €529m year-on-year, entirely caused by March 2020 recording an operating result decreasing by €560m. EBITDA for the financial period totalled -€61m (Q1 2019: €443m).

Net income stood at -€1,801m, including covid-19 related over hedging (-€455m), release of deferred tax assets (-€173m) and impairment of Boeing 747 aircraft (-€21m).

The company added that March 2020 capacity was down 35% year-on-year, and around 95% of planned capacity was to be suspended for the Q2 2020.

The Group now anticipates that with progressive lifting of border restrictions in 2020, capacity for the second and third quarter 2020 will be down 95% and 80% year-on-year. It foresees a prolonged negative impact on passenger demand, not expected to recover to pre-crisis levels before several years and a fleet repositioning including structural capacity reduction of at least -20% in 2021 compared to pre-crisis 2019 level. The Group foresees significantly negative EBITDA in full year 2020 and a significantly higher current operating income loss in Q2 2020 than in Q1 2020.

To partially counteract that, Air France-KLM has implemented measures including costs reduction of €500m. It has also benefitted from liquidity injections of €7bn to Air France through a bank loan guaranteed by the French state and a direct shareholder loan from the French state. Furthermore, it reported ongoing discussions with the Dutch state concerning KLM support.

Looking ahead, the group previews high level of uncertainty on the duration of the covid-19 crisis and impact on the macro-economic environment. The Group will build a new plan to ensure economic and financial sustainability over the medium and long term with integration of new environmental goals.

Source: Air France-KLM