Air France - KLM returns to profit and claims to be free of state aid soon

The group, which says it has "turned the page on Covid", has announced a net profit of 728 million euros in 2022, after a loss of 3.3 billion a year earlier.

Air France-KLM is largely back in the green in 2022 after two years of massive losses, making a net profit of 728 million euros, and expects to be freed from the constraints of state aid during the health crisis as of April.

This result represents more than double the 290 million euros of 2019, before the pandemic plunged the airline industry into the worst crisis in its history. In 2020, the Franco-Dutch airline group had suffered an abysmal loss of 7.1 billion euros, further increased by 3.3 billion in 2021. In addition to this return to profit, Air France-KLM has reached a level of revenue close to that of 2019, at 26.4 billion euros, against 27.2 three years earlier, he stressed this Friday in a statement.

And this, while the group has transported only 83 million people last year, 21 million less than in 2019. It had moreover deployed in 2022 only 85% of its pre-crisis seat capacity. "We end the year with a positive net result, having turned the page on Covid, and look to the future with confidence in our ability to face future challenges," said Air France-KLM CEO Benjamin Smith, quoted in the statement.

Cost reduction

Saved from bankruptcy by the interventions of the French and Dutch states, and after two recapitalizations, the group has emerged intrinsically more profitable from the Covid-19 crisis. It has implemented a cost reduction plan, getting rid of its least profitable aircraft and reducing its workforce through voluntary redundancy plans. At the end of last December, it employed 75,500 full-time equivalents, compared with 85,600 at the end of 2019.

After this year 2022, which will have virtually erased the effects of the crisis on activity and profitability - the operating margin of 4.5% was higher than the 4.2% of 2019 -, Air France-KLM hopes to do the same for its financial structure. The group, has further reduced its net debt from 8.2 to 6.3 billion euros between the end of 2021 and the end of 2022. The ratio between debt and gross operating margin (Ebitda) has fallen to 1.8, already below the target range of 2 to 2.5 for 2023, which could allow the company to access the markets more easily for refinancing.

In addition, the company intends to be released by April from all obligations related to the aid provided in 2020 and 2021 by the home states of its two main companies, to enable it to survive the pandemic. This will involve the repayment of the last 2.5 billion euro tranche of the loans guaranteed by the French state, as well as the conversion in March and April of 600 million euros of securities considered as equity. The capital structure will not be changed, with the State still holding 28.6% of the shares.

The group will thus be freed from the constraints that the European Commission had linked to this aid: a ban on the payment of dividends, moderation of management remuneration and a limit on acquisitions, for example of other companies, while some competitors have emerged much weaker from the health crisis.

Source : https://www.bfmtv.com/economie/entreprises/transports/air-france-klm-renoue-avec-les-benefices-et-se-dit-bientot-libere-des-aides-d-etat_AD-202302170085.html