Air France-KLM reports worse than expected financial results as costs soar

Airline group Air France-KLM on Tuesday reported a higher than expected first quarter operating loss of €489 million as it faced high customer compensation at Dutch carrier KLM and one-off payments to staff.

European airlines have been struggling with climbing costs surrounding labour disruption and geopolitical turbulence in recent months, with German group Lufthansa issuing a profit warning earlier in April tied to strikes.

Still, Air France-KLM, which posted revenues of €6.7 billion (up 5.1% compared to last year) maintained its outlook, including a vow to keep a rise in unit costs capped at 1-2 percent for the 2024 financial year, even though they climbed to 4 percent in the first quarter.

"As anticipated, our operating income was impacted by disruption costs and a slower cargo business. We nonetheless remain confident in our ability to achieve our 2024 unit cost outlook," Chief Executive Ben Smith said in a statement.

Analysts had forecast the group's Q1 loss at €424 million, according to a company-compiled consensus, while last year's Q1 loss was €306 million.

Net income was also lower than forecast, with analysts expecting a loss of €407 million and the company reporting a loss of €480 million.

Specifically, a poor operational performance at KLM between December 2023 and early March led to compensation payouts to customers amounting to around an additional €50 million, with costs going up at suppliers and air traffic control services more broadly, too.

(With newswires)