European airline group Air France-KLM posted a first quarter 2024 loss, albeit on increased revenues from the prior year. Revenues grew in the quarter to €6.7 billion, which is 5.1% higher year-over-year. The group posted a net loss of (€489) million during the period. The operating losses for the various divisions widened in 2024 over 2023 levels, with AirFrance reporting a loss of (€249) million, down (€68)MM YoY, KLM with an operating loss of (€290) million, down (€163) million, and a loss at Transavia of (€166) million, up €6 million from last year. The Flying Blue frequent traveler program and other units added incremental revenue and profitability, but not enough to offset airline losses, which were also hit by diminished cargo yields.
There are more positive signs for the second quarter, with yields for April up about 3% year to year. The question is whether that trend can continue for the entire year. At the KLM unit, which absorbed a one-time labor agreement settlement in the first quarter, the group will have better knowledge of performance at the end of the second quarter, with bookings currently strengthening.
The stake in SAS is likely to see final EU approval this year, unlike LH group with ITA Airways and Air Europa stakes, as the two Scandinavian hubs remain unconstrained and available to competition. AF-KLM will have interest in bidding on the privatization of TAP Air Portugal once that process begins later this year. The slot constrained Lisbon airport will be critical for EU approval of a deal, and “we’ve good a good idea on what is necessary for the business case to make sense,” said CEO Ben Smith.
With consolidation in Europe a necessity for the three airline groups, all eyes will be on the ITA situation and what remedies might be needed at Madrid if IAG acquires AirEuropa, as it already owns Iberia. Those situations may offer a template for TAP Air Portugal.
The Bottom Line
With the Olympics in Paris this year, the carrier is actively preparing for a strong summer season that offers an opportunity to differentiate the carrier on service. The rebound in revenue should emerge, but the question is that will translate to profitability.
