Shares of Air France-KLM took a hit after the Franco-Dutch carrier group reported lower-than-expected revenue and profit for the third quarter. The company is currently grappling with the effects of inflation and high fuel prices.
At 0730 GMT, Air France-KLM shares were trading 6.7% lower at EUR10.27.
Strong Summer Demand Boosts Revenue, But Falls Short of Expectations
In the three months ending in September, Air France-KLM recorded a revenue of 8.66 billion euros ($9.15 billion), marking a 6.8% increase compared to the previous year. The group also handled 26.9 million passengers during this period, representing a 7.6% year-on-year growth.
“This performance was driven by strong summer demand,” said Chief Executive Benjamin Smith.
Despite these positive figures, the company’s revenue fell short of analysts’ expectations. According to estimates from 15 financial analysts, Air France-KLM was projected to generate revenue of EUR8.72 billion, with a net profit of EUR957 million and an operating profit of EUR1.37 billion.
Improved Profits and Margin, But Challenges Remain
Net profit for the quarter totaled EUR931 million, up from EUR460 million in the previous year. Additionally, operating profit rose to EUR1.34 billion from EUR1.02 billion, resulting in a 15.5% operating margin.
The carrier group also faces ongoing challenges concerning rising costs. These inflation-driven expenses are primarily attributed to higher salaries, along with air traffic control charges and airport fees. Air France-KLM expects costs to increase by a low single-digit percentage compared to the previous year.
In addition, fuel costs for the quarter amounted to EUR1.92 billion which was 4% higher than what was predicted.
Future Outlook: Capacity Remains Steady
Despite the current challenges, Air France-KLM maintains its outlook for the year, expecting capacity to remain at approximately 95% of 2019 levels.
In conclusion, Air France-KLM’s recent financial performance fell below analysts’ expectations due to continuing inflation and high fuel prices. The company did, however, record growth in revenue and profits, while remaining cautious about the future impact of rising costs.