Pre-tax losses widened at Air France-KLM in the first quarter, with the Franco-Dutch airline joining its competitors in blaming higher fuel prices and an oversupply of seats.
The airline’s pre-tax loss grew to €450m, from €257m in the same period a year ago. With the effect of currency fluctuations stripped out, earnings before interest, tax, depreciation and amortisation fell 32 per cent to €424m, far below the analyst consensus of €606m.
Air France-KLM’s shares fell 4.5 per cent in morning trading.
Chief executive Benjamin Smith said the first quarter had been challenging for the sector across Europe, as “substantial” capacity growth put pressure on revenues.
Revenue per available seat kilometre, a standard industry unit, fell 1.9 per cent in the period, while the company’s fuel bill increased 13 per cent to €1.2bn. Meanwhile Easter, traditionally a profitable travel period, fell after the end of the quarter.
Total revenue rose 2 per cent to €6bn.
Earlier this week, Lufthansa reported an adjusted loss of €336m before interest and tax in the first quarter, blaming “overcapacities, intensive competition and correspondingly high pricing pressure on short-haul routes”.
At the start of April, easyJet warned that “macroeconomic uncertainty and many unanswered questions surrounding Brexit” had driven down customer demand.
Mr Smith said that Air France-KLM’s summer outlook appeared “more benign” and he confirmed the company’s full-year guidance, which included flat, or a slight reduction in unit costs.
The airline projected that this summer “long-haul industry capacity to and from Europe” would increase at a slower pace than last year, especially for the Middle East, North America and Asia.
Europe’s overall seat count rose 4.8 per cent in the first quarter, analysts at Barclays have estimated.
The KLM part of the business, which has tended to perform better than Air France, fell 4.5 percentage points into a negative operating margin of -2.3 per cent. Air France’s negative operating margin worsened 1.9 percentage points to -6.9 per cent.
Transavia, the group’s low-cost brand, increased its capacity by 11 per cent in the first three months of the year. However, its unit revenue fell 3.5 per cent, which management ascribed to the timing of Easter.
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