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Introduction & Market Context
Air France-KLM (EURONEXT:AF) presented its second quarter 2025 financial results on July 31, 2025, revealing accelerated revenue growth and significant margin expansion compared to the previous year. The airline group’s stock closed at €11.16 on July 30, down 0.31% ahead of the results announcement, with shares trading well above their 52-week low of €6.70 but below their high of €12.09.
The results demonstrate continued improvement from the first quarter, when the company reported an 8% revenue increase but still posted a negative operating result of €328 million. The second quarter results show the airline group’s successful navigation of industry challenges through its premiumization strategy and operational efficiency initiatives.
Quarterly Performance Highlights
Air France-KLM reported strong financial performance for Q2 2025, with revenues reaching €8.4 billion, up 6.2% year-over-year. The operating result improved significantly by €223 million to €736 million, resulting in an operating margin of 8.7%, up 2.3 percentage points from Q2 2024. Net result increased by €484 million to €649 million.
As shown in the following chart of quarterly performance metrics:
The company’s leverage ratio improved to 1.5x from 1.7x at the end of December 2024, reflecting strengthened financial position. Passenger numbers increased by 6%, from 25.7 million in Q2 2024 to 27.3 million in Q2 2025.
The group’s performance was driven by strong unit revenue growth and favorable fuel price evolution, as illustrated in this operating result breakdown:
Segment performance varied across the group, with Network and Maintenance segments showing particularly strong results. The Network segment, which includes Air France and KLM’s passenger operations, delivered an operating result of €666 million with an operating margin of 10.5%, while Maintenance contributed €70 million with a 12.5% margin. Transavia, the group’s low-cost carrier, posted a more modest €12 million operating result with a 1.3% margin.
Strategic Initiatives
Air France-KLM’s premiumization strategy continues to gain traction, with revenue from premium cabins showing significant growth. La Première and Business Class revenue increased from 27.3% of total revenue in H1 2024 to 28.7% in H1 2025, while Premium and Premium Comfort revenue grew from 6.7% to 8.1%. This shift in revenue mix contributed to the overall revenue growth, with La Première and Business revenue up 11%, Premium and Premium Comfort up 27%, and Corporate revenue up 6%.
The company also announced plans to take a majority stake in SAS in the second half of 2026, increasing its ownership from 19.9% to 60.5%. This strategic move will strengthen Air France-KLM’s position in the Nordic market and add a carrier with €4.1 billion in revenue, 130 destinations, 25 million passengers, and over 8 million loyalty program members.
Additionally, the group is expanding its global footprint through multiple strategic partnerships, including agreements with AerCap to create a LEAP engine joint venture, Riyadh Air to expand global connectivity, and maintenance partnerships with Saudia for GE90 engines.
The company’s Flying Blue loyalty program celebrated its 20th anniversary, now boasting approximately 30 million members, 40 airline partners, and over 100 commercial partners.
Detailed Financial Analysis
Air France-KLM’s strong operating free cash flow led to a reduction in net debt, which decreased from €7.33 billion at the end of December 2024 to €7.14 billion at the end of June 2025. This improvement was driven by €1.29 billion in operating free cash flow, partially offset by new and modified lease debt of €1.18 billion and other factors.
The cash flow evolution for H1 2025 is detailed in the following chart:
The company maintained a strong liquidity position, with cash at hand of €9.4 billion, well above the targeted liquidity level of €6-8 billion. Air France-KLM successfully issued a €0.5 billion hybrid bond in May 2025, contributing to the ongoing simplification of its balance sheet.
Despite unit cost increases in Q2, primarily driven by labor costs, ATC and airport charges, and premiumization-related expenses, KLM’s "Back on Track" program helped mitigate these increases. The program is on track to deliver €450 million in cost savings in 2025 through various initiatives including fleet optimization, procurement savings, and productivity improvements.
The company’s fuel bill for 2025 is expected to decrease year-over-year, with 69% of fuel requirements hedged. The following chart illustrates the fuel cost evolution:
The debt redemption profile shows a manageable repayment schedule through 2030, with no major concentration of maturities in any single year:
Forward-Looking Statements
Air France-KLM reconfirmed its outlook for 2025, projecting capacity growth of 4-5% compared to 2024. This includes 3-5% growth in long-haul capacity, 3-5% in short and medium-haul, and 10% growth for Transavia. The company expects a low single-digit increase in unit costs, net capital expenditure of €3.2-3.4 billion, and a net debt to current EBITDA ratio between 1.5x and 2.0x.
Forward bookings for Q3 2025 are in line with Q2 trends, with load factors of 74% for long-haul (vs. 77% in 2024), 65% for short and medium-haul (vs. 66% in 2024), and 70% for Transavia (vs. 72% in 2024).
For the 2026-2028 period, Air France-KLM aims to achieve an operating margin above 8%, significantly positive adjusted operating free cash flow, unit cost reduction, and an investment-grade leverage ratio.
CEO Benjamin Smith emphasized the company’s strong execution in a complex environment, highlighting the progress in fleet renewal with next-generation aircraft now comprising 30% of the fleet. CFO Steven Zaat noted the company’s agility in capacity management and the benefits of the ongoing balance sheet simplification efforts.
As Air France-KLM continues to navigate industry challenges, its focus on premiumization, strategic partnerships, and operational efficiency positions the group well for sustained performance improvement in the coming years.
Full presentation:
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