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It’s not that long ago that when speaking of Air France-KLM’s results, the onus was on Air France. That’s no more. It’s Dutch flag carrier KLM that has work to do, operating in the most difficult environment of high costs and low productivity. The Back on Track program produced improvements in 2025, but they aren’t enough.
Air France-KLM reported its FY25 results today with a consolidated net profit of €1.754 billion, up from €459 million in 2024. The operating result surpassed €2.0 billion for the first time since the pandemic. Revenues grew 5 percent to €33 billion, while operating expenses were up by 4 percent to €31 billion. That earned the group a consolidated net margin of 6.1 percent. Group CEO Ben Smith is very pleased with how La Premiere/Business and Premium Economy are performing at the two network carriers.
However, look at the individual airlines, and the difference is noticeable. Full-year revenues of Air France grew 5.3 percent to €20.4 billion, and the net result increased by €382 million to €1.382 billion. The operating margin improved by 1.6 points to 6.7 percent.
KLM’s revenues were up by 3.9 percent to €13.2 billion, the net result was only €1 million to €416 million, producing an operating margin of 3.2 percent. The Q4 margin was only 2.4 percent compared to 5.1 percent for its French sister.
Over a 12-month period, salaries grew faster at Air France than at KLM (4.9 versus 4.1 percent), while other expenses rose more at KLM (9.7 versus 5.0 percent). For Q4, KLM’s costs were again higher than at Air France: salaries up by 3.9 percent versus 3.0 percent, other expenses 2.8 percent versus 1.8 percent.
450 million
KLM’s results include the effects of Back on Track, the program to review and reduce costs at all levels. The targeted €450 million was exceeded, Group CFO Steven Zaat said. Costs were saved, and productivity improved, said CEO Marjan Rintel, who has been nominated for a second term. In Q4, productivity was up 6% year-over-year, with 250 fewer office jobs, surpassing targets.
KLM also renegotiated component contracts for its Boeing 787 fleet, receiving the 28th and last in late January. Dynamic pricing and optimising the front-end website generated more revenue. But in Q4, unit revenues grew by only 3.5 percent while capacity grew by seven percent. Yet, initiatives produced operating results of €27 million to €78 million yoy.
While the improvements offer a solid basis for continued improvement, they are not enough to safeguard KLM’s position. In 2025, KLM suffered a 41 percent rise in airport charges at Amsterdam Schiphol, which cost it an extra €100 million in landing fees and €150 million in revenue. Higher ticket taxes imposed by the Dutch government also hurt demand, with more to follow in 2027. The new government, which takes office coming Monday, sticks to the previous capacity cap at Schiphol of 478K movements and a phasing out of night flights.
Back on Track had to be an answer to this cost escalation and has proved to be so. But while Schiphol has reduced charges this year, KLM is affected by high inflation in the Netherlands. The website Statista.com lists Dutch consumer inflation for November at 2.6 percent compared to the EU average of 2.4 percent and just 0.8 percent for France. KLM is also in constant negotiations with unions about renewal of collective labour agreements, aiming to keep escalations as low as possible.
Accelerate
On February 2, KLM said it would accelerate its transformation program. Back then, Rintel said: “We will take structural measures to simplify our organisation, improve our operation, increase our revenue, and reduce our costs.”
Today, Ben Smith added, “We have got some very good plans in place. We have to relocate how the network is set up, which sides correctly with the new environment we are operating in, but I am positive we can get the margin up at KLM.”
KLM was expected to quantify the financial impact of these accelerated transformations today at the earnings presentation, but it didn’t. The airline only stated in the earnings release: “In order to achieve its 2028 ambition of delivering an operating margin above 8 percent, KLM Group will continue to execute its transformation program and enhance productivity, notably through the expansion of its long-haul operations. The Group will also pursue cost-efficiency measures, including further reductions in non-performance costs, and is in parallel assessing strategic interventions.”
KLM CFO Bas Brouns remarked: “We have delivered stable results, but our costs are rising faster than our revenues, leaving KLM vulnerable and requiring structural decisions. This will enable us to increase the predictability of our results and create the capacity to invest in our customers, employees, and operations.”
Not helpful has been the difficult start to 2026, when KLM suffered heavy winter weather in the first week of January. Cancellations and re-bookings in Amsterdam and Paris cost KLM and Air France €90 million.
Air France
Although Air France produced better results than KLM, not all is rosy. The Q4 operating result was down by €46 million to €256 million compared to 2024; the operating margin was 1.1 percent yoy. Air France blames this on higher fuel, maintenance, and carbon offsetting costs under the European ETS scheme. For the full year, unit revenues improved, while unit costs and fuel costs rose modestly.
Low-cost subsidiaries Transavia and Transavia France have work to do, as they produced a net operating loss of €49 million, down €52 million year over year. What we see here is 12.3 percent higher revenues to €3.451 billion, but salaries and related costs grew 13.3 percent, and other operating costs by 18.7 percent. Q4 was a loss of €73 million.
Dutch Transavia increased capacity through upgauging to Airbus A321neos, of which it now has 15 in its fleet. But its cost structure is affected by high operational costs at Schiphol Airport, which have already led to a shift of some capacity to subsidiary airports in Eindhoven, Rotterdam, and Brussels. The Dutch carrier is also facing increased competition from airlines that redirected traffic away from the Middle East. Transavia currently still has discontinued services to Dubai. French Transavia incurred additional costs from taking over Air France routes at Paris Orly, which take time to mature. Group CFO Steven Zaat admitted that the transformation from Boeing to Airbus at both airlines has been “a lot more complicated than we expected.
Air France-KLM guides capacity growth at 4 percent for its mainline carriers’ long-haul network and stable for short- and medium-haul routes. Transavia will grow its capacity by 10 percent. Group unit costs should be flat or up by two percent.
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