(News Bulletin 247) – The air transport group has suffered greater losses than expected by analysts and has also lowered its capacity forecast for the whole of 2023. The market is turning to its British competitor IAG, which published a surprising operating profit.

Like Lufthansa on Wednesday, Air France-KLM hardly impressed the market with its first quarter results.

The first three months of the year are never the most important in terms of activity for the air carrier, unlike the third quarter (ie the bulk of the summer period). But with renewed optimism for the airlines and a good performance of their shares (Air France-KLM has taken more than 17% since the start of the year, against 13% for the SBF 120) the publications must meet expectations. , under penalty of a stock market sanction.

This is not 100% the case for that of the group led by Ben Smith. Over the first three months of the year, Air France-KLM was obviously driven by the improvement in the health context and the recovery in travel demand, with nearly 20 million passengers carried, up 35% over a year.

Turnover jumped 42% to 6.33 billion euros, a figure in line with the consensus, which stood at 6.3 billion euros.

However, Air France-KLM’s operating loss stood at 306 million euros and its net loss at 344 million euros, when analysts were expecting respective losses of 294 million euros and 340 million euros. euros.

Chill in the stock market

Differences far from dramatic, but sufficient to penalize the Air France-KLM share, which dropped 3.2% around 11 a.m. The group also suffers from the comparison with its British competitor IAG, the parent company of Iberia and British Airways, which shines on the London Stock Exchange, with an increase of 3%.

“I don’t think that the publication of Air France-KLM is enough to scare investors, the management controls the company well. But maybe the market is making arbitrages going from Air France-KLM to IAG”, estimates a London-based analyst.

“Air France-KLM is a little disappointing in terms of first quarter operating income, but the group has lowered its capacity outlook for the whole of 2023 quite a bit. However, the group’s publication does not contain any good surprises to compensate for these negative elements,” said Yi Zhong, an analyst at independent research firm AlphaValue.

Air France-KLM has, in fact, revised its capacity forecast (either simply the number of seats offered over a period or lines put in place). The company estimates that it will deploy capacity this year representing around 95% of that of 2019, whereas it previously expected a range between 95% and 100%.

“IAG, for its part, also adjusted its capacity forecast downwards, but very slightly. On the other hand, the British group largely beat expectations in the first quarter in terms of operating profit. [Ebit, NDLR] adjusted with a deviation of almost 200 million euros from the consensus, and it raised its adjusted Ebit forecast for 2023”.

IAG explodes the consensus

IAG generated adjusted operating income of 9 million euros in the first quarter, while the consensus was for a loss of 179 million euros. The British company has also indicated that it is now aiming for the top of its previously communicated adjusted operating profit forecast range (ranging from 1.8 billion to 2.3 billion euros).

To return to Air France-KLM, the company is counting on a good summer for the future which “proves promising for all our companies”, indicated its general manager, Ben Smith, during a conference call with analysts. Chief Financial Officer Steven Zaat told him that the company was on track to achieve its medium-term profitability target of an operating margin of between 7% and 8%.

It should be noted that the airline group continues to multiply initiatives to strengthen its balance sheet weakened by the pandemic. The company has announced that it has entered into exclusive negotiations with the Apollo investment fund with a view to obtaining financing of 500 million euros in the capital of an engineering and maintenance subsidiary in the form of quasi-funds clean. Air France-KLM also indicated that it had received offers to carry out a similar operation with its loyalty program.