Closed borders still hurt Air France KLM: €1.5 billion loss | Financial

Closed borders still hurt Air France KLM: €1.5 billion loss | Financial

Despite easing of corona measures, far fewer passengers are still taking the plane than before the pandemic. The Franco-Dutch group does see bright spots, because bookings will start again this summer now that Europeans want to go on holiday and vaccinated Americans are welcome in the European Union.

In the months of April, May and June, Air France, KLM and subsidiaries such as Transavia transported 7 million passengers. That is more than five times the passenger numbers a year earlier, when international flights were virtually impossible. But compared to the same period in 2019, when no one had heard of Covid-19 yet, the airline company transported more than half as much.

Turnover amounted to 2.8 billion euros, more than double the revenue in the disastrous second quarter of 2020. Because costs still exceed the benefits, Air France-KLM still suffered a significant loss. That loss was more than 1 billion euros less than a year earlier, partly due to the often painful cost savings such as the cut of thousands of jobs at KLM. Cargo flights also yielded more now that a lack of containers makes maritime transport expensive.

Improvement

According to financial chief Steven Zaat, improvement is on the way. In the current third quarter, he says, there is even a profit in it, albeit before taxes, interest payments and depreciation. The Dutchman also looks hopeful at the heavy rain showers in his native France. This may convince many people to book a holiday flight to sunnier destinations, he said in an explanation of the figures.

In the third quarter, with the important summer months of July and August, Air France-KLM is expected to fly at 60 to 70 percent of pre-pandemic capacity. Much further depends on Washington. Vaccinated Americans are already welcome in the EU, but the other way around, the United States often keeps the borders closed to European travelers due to concerns about the contagious Delta variant of the corona virus.

Additional government support is also needed. The Netherlands is talking to the European Commission about the conditions for a new support package for KLM, and Zaat says that the signals about an agreement are very hopeful. Additional capital is needed, as Air France-KLM’s debts still exceed its own assets by 3.6 billion euros.

Earlier this year, France and other shareholders already provided additional financial aid for Air France-KLM, after Paris and The Hague had pledged EUR 10.4 billion in loans and credit guarantees in 2020. Last spring, new support of 4 billion euros was added, including 1 billion in new capital for Air France.

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Closed borders still hurt Air France KLM: €1.5 billion loss | Financial
Source link Closed borders still hurt Air France KLM: €1.5 billion loss | Financial

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