Air France-KLM is heading for a quarterly loss of a billion

In July, August and September, the French-Dutch company achieved a turnover of about 2.8 billion euros, is the consensus among analysts who follow the company. In comparison: in the same quarter last year, sales were 7.6 billion euros.

The company could not operate nearly as many flights as normal and so plunged deep into the red again, the analysts expect. Some are more pessimistic than others. The consensus is a loss of more than 1 billion. But analysts from the British investment bank HSBC assume 1.3 billion.

The third quarter is what airlines usually rely on, so HSBC analysts fear it will be just as bad a quarter as the second quarter.

Incidentally, Air France-KLM suffered a lot in that quarter loss of 2.6 billion euros on a turnover of 1.2 billion euros. The fact that this loss turned out so high at the time was partly due to the depreciation the company made on devices that were discarded early.

Question marks about tactics

For the coming quarter, the HSBC analyst is questioning the tactics of the company, which wants to continue flying at about 50 percent of last year’s capacity. That is a lot more than major competitor Lufthansa. The German carrier only operates 25 percent of the normal number of flights.

The financial troubles raise the question of how long the aid package of roughly 10 billion euros from the French and Dutch governments will still offer relief. The company itself has given itself until May next year to make a decision on the issue of new shares.

Share issue?

But the question is whether that will be an option at all by then. Credit Suisse analyst Neil Glynn wonders whether there will be interest in financial markets in the spring to buy new shares of Air France-KLM if the debt continues to rise and it is unclear when the market will recover.

An analyst, who does not want to be named, also thinks that no news about a share issue can be expected for the time being. Before the company can start working on this, for example, the approval of KLM’s austerity plan must first be obtained from Minister Wopke Hoekstra.

KLM submitted that plan, necessary to receive the next tranche of emergency aid from the package of 3.4 billion euros. Hoekstra promised at the time that he would report this month whether the plan is in order or not.


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