Air France-KLM said on Friday its 2023 bookings were almost back to pre-pandemic levels as it reported a better-than expected fourth-quarter operating profit with global travel demand seeing a rebound.
The airline’s shares rose more than 6% in early trade, hitting their highest since June and outperforming the broader weak stock market. The pan-European Stoxx 600 was down 0.85% at 8:05 a.m. London time.
The carrier reported its highest fourth-quarter revenue at 7.1 billion euros ($7.55 billion), up almost 50% year-on-year.
Operating profit fell 45% to 134 million euros on the back of higher costs including fuel, but it beat estimates.
“Early 2022 was a bit difficult with Omicron and the issues in Ukraine, but we had a fantastic summer, especially across the Atlantic,” Air France-KLM CEO Benjamin Smith told CNBC’s Charlotte Reed.
“We had more capacity on the Atlantic than we did in 2019, Africa was always a market that was resilient throughout the crisis.”
He added that the premium leisure market had “exploded” and was filling business class, first class and premium economy cabins, bridging the gap left by a lag in the return of business travel.
Looking ahead, he said: “Demand is still strong, yields are good, capacity is quite tight in many of our markets, Paris is a very attractive market.”
Air France-KLM share price.
Last year was a difficult one with the travel industry struggling with pandemic-related restrictions and as prices of jet fuel and other key products soared due to the Russia-Ukraine conflict, Chief Financial Officer Steven Zaat said.
Air France also lost 170 million euros in revenue last year due to travel disruptions at Amsterdam’s Schiphol airport after the airport restricted capacity last year due to staff shortages.
“I’m very happy that we can say now that 2022 Q4 ended better than where we ended in Q4 2019,” Zaat added.
The company said it was on track to fully pay back French state aid by April 2023, reporting a net debt of 6.3 billion euros, down 1.9 billion euros from the previous year.
Zaat, however, said staffing shortages at Schiphol airport may not be resolved before end-June.
Royal Schiphol Group said on Friday it was not certain when the airport will return to 2019 levels of traffic, given continuing operational difficulties and a 440,000 per year flight cap imposed by the Dutch government.
“It is improving, so that’s very good to see. Of course, we are still impacted by the fact that there are labour shortages everywhere, but also at the airport … but we see that gradually operations are actually back on track,” Zaat said.
Smith also warned that European airlines would have to go head-to-head with Chinese carriers, which are still able to fly over Russian airspace.
“Between Paris and Seoul, it can add up to three hours in flight time,” Smith told the Financial Times. “If you’ve got a Chinese carrier that is flying over Russia, they’ve got an unfair advantage over us.”
However, he told CNBC the airline had also seen some benefits from the airspace ban, due to capacity being removed from the market to and from the U.S.
— CNBC contributed to this report.
