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Air France-KLM revised up its forecast for costs this year due in part to inflationary pressures, taking the shine off higher than expected quarterly earnings on Friday.
Shares in the Franco-Dutch airline were down around 2.5% at 1049 GMT, recovering from losses of over 4% in early trading.
Although fuel prices have fallen, the carrier said overall unit costs would increase by a low single digit percentage in 2023 versus 2022 due to factors including higher salaries and a previously downgraded capacity estimate.
Its previous guidance had been for flat costs this year.
The airline will operate more than 32,400 flights, reflecting a 4% increase. These measures aim to meet high demand during peak seasons and ensure smooth operations, efficient reservations for scheduled and seasonal destinations, and streamlined processes at airports. For international flights, Saudia is providing more than 4.2 million seats, achieving a 16% increase.
Air France-KLM expects to reduce its unit cost by improving productivity, but does not plan to cut full-time equivalent positions as it needs more staff, the airline said in a call with journalists. The company flew 24.7 million passengers in the second quarter, up 8.2% from a year earlier. It said conditions at airports, including KLM‘s hub at Amsterdam Schiphol Airport, were much improved this summer after strikes and staff shortages last year – the first holiday season without restrictions following the COVID-19 pandemic.
This summer season will serve as a test run for 2024, when France will host the Olympic and Paralympic Games, Chief Executive Benjamin Smith said in a statement.
Air-France KLM’s operating profit jumped to 733 million euros in April-June from 386 million a year earlier, above the 663 million euros forecast in a company-compiled consensus.
The group confirmed its capacity outlook for the rest of the year, reduced in May to around 95% of the 2019 level – from 95-100% previously – due to delays on new aircraft deliveries.
The carrier, which like IAG and Lufthansa has shown an interest in Portugal’s state-owned airline TAP, has hired legal advisers for a possible bid, but said any transaction would depend on keeping its commitment to a medium-term operating margin of 7-8%.
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