Air France-KLM's Q3 Results Fall Short of Expectations

Airline company Air France-KLM reported a larger-than-expected decline in its third-quarter operating results. The operating result decreased by 162 million euros to 1.18 billion euros. This figure fell short of the 1.24 billion euros analyst consensus provided by the company.

The group attributed this decline to the Paris Olympic Games, noting it had a 160 million euro impact on unit revenue. According to the company, excluding this specific factor, the operating result would have been in line with last year's performance. Group CEO Benjamin Smith highlighted the operational expertise demonstrated during the Olympic Games and its role in promoting France as a destination.

The company observed that international markets tended to avoid Paris during the Games, and many people in France delayed their vacations, leading to travel to city centers and other destinations falling below the normal mid-summer average.

Despite the decline in operating results, Air France-KLM's quarterly revenue grew by 3.7% to reach 8.98 billion euros. This increase was attributed to expanded capacity and strong underlying demand. However, the airline faced challenges such as maintenance costs, adverse weather conditions, air traffic control issues, and unrest in the Middle East, all of which continued to exert pressure on carriers.

Looking ahead, Air France-KLM expects a nearly 3% increase in unit costs for 2024. This is a revision from the previously anticipated 2% increase. This metric reflects the average cost of flying a seat one mile.

Additionally, the group revised its net capital expenditure expectation for the year to 3 billion euros, representing an increase from the previous estimate of being below 3 billion euros.