Air France-KLM jumps 5% on Q2 profit beat, strong network results

Investing.com -- Air France-KLM (EPA:AIRF) shares rose more than 5% on Thursday after the airline group reported second-quarter profit that beat expectations, supported by stronger network performance and higher operating margins.

Operating profit reached €736 million in the quarter, above the consensus estimate of €671 million and UBS’s forecast of €707 million. 

Net profit surged to €606 million from €121 million a year earlier. Revenue increased to €8.44 billion, up from €7.95 billion last year, but came in below the consensus estimate of €8.52 billion.

The network division posted an operating result of €666 million, up from €446 million, as margins improved by 2.9 percentage points to 9.6%. 

Air France reported a €490 million operating profit, rising from €195 million, while KLM’s dropped to €197 million from €260 million due to operational issues and higher costs.

Passenger traffic, measured by available seat kilometers (ASK), rose 2.8%, with unit revenue per ASK up by the same rate on a constant currency basis. 

North Atlantic passenger unit revenue climbed 5%, though economy yields remained under pressure. Cargo unit revenue per available tonne kilometer (ATK) increased 2.6%.

Transavia’s profit declined to €12 million from €26 million, weighed down by strikes in France, competitive pressures and rising costs. 

The MRO (maintenance, repair and overhaul) business earned €70 million, up from €37 million, while Flying Blue, the loyalty program, contributed €60 million versus €54 million a year ago.

The group kept its full-year guidance unchanged, projecting capacity growth of 4–5%, low single-digit growth in unit costs, and capital expenditure between €3.2 billion and €3.4 billion. 

Fuel hedging for 2025 rose to 69%, up from 67%, with projected fuel costs revised to $6.9 billion from $6.7 billion.

Net debt stood at €7.1 billion at the end of the quarter, down from €7.3 billion at the end of the first half. The net debt-to-EBITDA ratio improved to 1.5x from 1.6x a year earlier.