Air France-KLM narrows Q2 losses as bookings begin recovery
By Tim Hepher
PARIS, July 30 (Reuters) - An easing of coronavirus travel restrictions is generating the first signs of recovery at Air France-KLM AIRF.PA, said the airline group, as its unveiled narrower losses for the second quarter coupled with positive cash from operations.
The Franco-Dutch group posted losses before interest, tax, depreciation and amortisation (EBITDA) of 248 million euros ($294.57 million)for the quarter - marking a 532-million-euro improvement from heavy losses a year earlier when the pandemic had triggered global lockdowns.
Third-quarter EBITDA is expected to be positive, it said, adding its medium-term operating margin goal remained unchanged.
With long-haul capacity rising again following the reopening of the North Atlantic to Americans visiting Europe, Air France-KLM said it expected capacity at 60-70% of 2019 levels in the third quarter.
In May, it had said it expected to operate 50% of its pre-pandemic flight capacity in the second quarter, picking up to 55-65% in the third quarter.
But with U.S.-bound travel still closed to the majority of Europeans, it held back from giving capacity forecasts for the fourth quarter and called for reciprocity in the opening of borders as well as faster vaccination rollouts worldwide.
"We are closing the gap but we are still not there. We are still hampered by the COVID situation and the changing conditions," said Chief Financial Officer Steven Zaat.
For the first time since the start of the crisis, operating free cashflow after lease repayments was positive at 210 million euros. Both of its main carriers - Air France and KLM - were cash-positive on the back of rising ticket sales.
"The appetite is there for people who can and will travel," Zaat told reporters.
The group sees "good" summer bookings in Europe, though they are coming in later than usual, he said.
Air France-KLM reported quarterly revenues of 2.75 billion euros, up 1.57 billion euros from the same period last year.
Operating losses roughly halved to 752 million euros. Quarterly unit costs fell 71% due mainly to higher capacity, which grew by 389% compared to the tough year-ago quarter.
"We were able to reduce more costs than what we expected," Zaat said, with restructuring showing improved results.
Fuel costs rose by about 300 million euros, mainly due to the extra capacity as well as a slight impact from rises in oil prices, cushioned by more favourable hedge contracts.
"The cargo market is still resilient" despite a 66% increase in capacity compared to last-year's crisis-hit second-quarter, Zaat said.
Net debt fell by 2.7 billion euros to 8.3 billion euros from end-2020 after measures to boost the group's balance sheet.
Zaat said KLM was in close touch with the Dutch state as it discusses further measures with the European Commission, but declined to give details of any concessions.
($1 = 0.8419 euros)
(Reporting by Tim Hepher; Editing by Sudip Kar-Gupta)
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