Record €2,6 billion loss for Air France-KLM

July 31, 2020
© Sidowpknbkhihj / CC BY-SA

Air France-KLM has suffered a record EUR 2,6 billion loss over the second quarter of 2020.

According to Air France-KLM CEO Ben Smith, the results show “the unparalleled impact of the corona crisis” on the airline industry. Air France-KLM revenue fell to 1.2 billion euros. For comparison: one year earlier that was 7 billion euros. The results were worsened by additional write-downs that had to be factored in by the early retirements of KLM’s Boeing 747s and Air France’s Airbus A380s and A340s. In April, May and June, KLM and Air France carried mere percentages of its normal numbers of passengers.

KLM

Over Q2, KLM suffered a “historical loss” of EUR 493 million. The company’s sales fell by more than 75 percent. The company has decided to cut 1,500 jobs short-term and approximately 5000 jobs over the course of 1.5 years. No decisions have yet been taken about any further fleet reductions. In terms of number of passengers transported compared to last year, KLM reached 5 percent. Subsidiary Transavia transported only 1.8 percent of its 2019 number of passengers.

Air France

As for Air France, the quarter has been even worse. Its revenues fell by almost 87 percent. The airline transported merely 4.8 percent of its number of passengers last year. Both Air France and KLM have reached agreements with their respective governments about financial support packages. In total, 14 billion euros of French and Dutch state guarantees, loans and third-party credit lines are supposed to help the airlines get through the current crisis.

Due to worldwide travel restrictions, there was hardly any flying over the course of the second quarter. Air traffic shutdown now results in one of the largest airline net losses worldwide. Air France-KLM expects a slight improvement over the coming months. However, public health uncertainties and concerns about border closures and the global economic situation “remain strong”, according to Smith.

Air traffic has been restarting slowly in recent weeks, so the holding expects to carry slightly less than half of last year’s passengers in the third quarter. KLM announced earlier this week that, towards October, its network will grow to 91 European destinations and 61 intercontinental destinations.