Like a year ago, Air France-KLM must have asked itself the question: what if? What if Air France hadn’t lost €335mln on social unrest and strikes that never seemed to end? The effect has been clearly visible in the 2018 results, presented on February 20.
Air France-KLM booked an operating result of €1.332bln, down 30.7% from the €1.923 in 2017, a year also affected by strikes. Total revenues were €26.51bln, up 2.5% from last year. Net income was €409mln, 151% higher than the previous year.
By airline, the differences are striking. KLM performed strongly, with revenues up 5% to €10.955bln. Net income was slightly down by 0.5% to €1.073bln, or almost 80% of the total Group result. By comparison, net income of Air France was €266mln, down a whopping 69.2%, on revenues up 1.2% to €16.073bln.
Except for the strikes, the group – like all airlines – was hit by higher fuel costs, especially in Q4. Despite this AF-KLM Group improved its net debt position by €195mln to €6.184bln. The biggest reduction was at KLM, €-454mln.
The low-cost subsidiaries Transavia and Transavia France saw strong growth, with revenues up 12.2% to €1.611bln and a net income 18% higher to €139mln. The airline carried 7.1% more passengers or 15.8mln on 10.1% higher Revenues per Passenger Kilometer to 28.392mln. Especially Transavia France increased capacity by over 21%.
CEO Ben Smith outlined his masterplan for the Group, briefly announced on February 14. By getting rid of over-lapping brands and by simplifying the brand structure, improving the cabin products, optimizing the network, Air France-KLM expects to steer towards a course of stability and growth. Its guidance is a 2.1-3% increase in capacity at the network carriers and 9-11% for Transavia.
By securing a number of social contracts with pilots, cabin crew and ground staff, at last AF-KLM should have a year without new social conflicts. This year the Group targets a cost reduction of 0-1%, despite an expected fuel bill increase by €650mln.
Smith confirmed that the Group will offer a tender to OEM’s for replacing the medium-haul Airbus A320-family at Air France and Boeing 737-fleet at KLM, which at an average age of over a decade are up for replacement. He didn’t give details, although Airinsight reported on January 8 that an order might be announced as soon as the Paris Air Show next June.
The AF 777-300ERs will get a cabin update this year and the A380s next year. The A380 fleet will be reduced from the current 10 to 7 when these aircraft come out of lease in the next two years. The A340-fleet at AF will be phased out in 2020 and the Boeing 747 fleet with KLM in 2021.
Richard Schuurman
Active as journalist since 1987, starting with regional newspaper Zwolse Courant. Grand Prix reporter in 1997 at Dutch monthly Formule 1, general reporter Lelystad/Flevoland at De Stentor/Dagblad Flevoland, from 2002 until June 2021 radio/tv reporter/presentor with Omroep Flevoland.
Since mid-2016 freelance aviation journalist, since June 2021 fully dedicated to aviation. Reporter/editor AirInsight since December 2018. Contributor to Airliner World, Piloot & Vliegtuig. Twitter: @rschuur_aero.
