Air France stock rises after Q1 results beat expectations

Investing.com -- Air France shares climbed 2.2% following the airline’s first-quarter earnings release, which surpassed analysts’ forecasts.

The company reported 1Q25 revenues of €7,165m, exceeding the consensus estimate of €6,983m, and marking an increase from €6,654m in the same quarter last year.

Despite a net loss of -€292m, the figure was better than the consensus of -€538m, reflecting a significant improvement from the -€522m loss reported in 1Q24.

The airline’s capacity increase of 3.8% was within the full-year guidance of 4-5%. Notably, unit revenue per Available Seat Kilometer (ASK) in constant currency was up by 3%, with passenger unit revenue per ASK increasing by 2.6%. Specifically, North Atlantic unit revenue surged by 11% with stable capacity, while Asia/Middle East rose by 6.4%.

However, there were declines in other regions, with the Caribbean/Indian Ocean down by 6%, Africa by 1%, and short haul/medium haul by 2.7%. Cargo also performed well, with unit revenue per Available Ton Kilometer (ATK) up by 17.8%.

The company’s ex-fuel unit costs increased by 2.1%, affected by factors such as premiumization, haul mix, and infrastructure charges. This was within the full-year guidance for low single-digit growth.

Breaking down the results, the Network division’s loss narrowed to -€193m from -€356m in 1Q24, while Transavia’s losses widened to -€205m from -€166m. Air France and KLM both reported reduced losses compared to the previous year.

Operating free cash flow was around €1bn, and net debt decreased to €6.9bn, with leverage improving to 1.6 times from 1.7 times at the end of the previous year. Air France maintained its full-year outlook, with capacity expected to grow by 4-5%, unit costs to rise by a low single-digit percentage, and capital expenditures projected between €3.2-3.4bn.

The airline also noted robust inbound travel to Europe from May to June, although outbound travel to the US showed a slight decline as travel patterns shift. Other international markets are expected to see a 9.2% increase.

Furthermore, the company has hedged 67% of its fuel and now anticipates a fuel bill of $6.7bn, which is lower than the previous year-end guidance of around $7bn. The forward booking load factors are showing declines in long-haul and short/medium-haul sectors.

UBS analysts commented on the earnings, "We expect shares to be higher on the back of results and guidance."

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