Air France-KLM swung to profit in 2024 with net earnings totalling €489 million in the full year, up €501 million. Fourth quarter net losses totalled €21 million, improving €210 million compared to fourth quarter 2023. The company cited cost reductions and the strong end to 2024 as key drivers.
The group's CFO Benjamin Smith said during the company's results call that discussions on the acquisition of a majority stake in TAP Air Portugal are “positive”. The government-owned airline originally wanted to sell off a 49% share of the airline.
Smith said the company would bid for the stake “if the conditions are right and the opportunity comes along at the right time”. He added: “The discussions that took place last week were quite positive. At the political level, there is a strong interest in partnering.”
Smith noted the strength of Latin America market to the company. “We'd like to maintain and grow our position,” he added. “TAP offers something that could — if we do take the decision and we are able to integrate them into the group — should solidify our position.”
The company's shares soared over 35% after results, compared to the past six months.
Fourth quarter revenues were up 6.4% to €7.9bn. Quarterly EBITDA improved by €402 million, totalling €1bn. Operating result was up €452 million, totalling €396 million. The company’s operating margin improved 5.8 percentage points to 5%. Group unit revenue per available passenger kilometre (RASK) revenues were up 3.9% to 8.90 cents.
The company said the “solid” operating result for the fourth quarter was driven by the strong unit revenue improvements, as well as the reduction in fuel costs. The company’s aircraft fuel costs were down 21% to €1.5bn for the fourth quarter and down 5% to €6.9bn for the full year.
For the quarter, group passengers totalled 23.5 million, up 5.1%, coupled with group capacity up 2.2%. Traffic, or revenue passenger kilometres (RPK), improved 4.7% and passenger load factor improved 2.1 percentage points to 87.4%.
“In the fourth quarter of 2024, Air France-KLM delivered a particularly strong finish, concluding a year shaped by both operational and external challenges,” said group CEO Benjamin Smith.
The company’s full year results were equally positive, with revenues climbing 5.3% to €31.5bn. Full year 2024 EBITDA totalled €4.2bn, up €36 million. However, operating result fell €111 million to €1.6bn, along with its operating margin declined 0.6 percentage point to 5.1%. Company management said this decline was driven by the Olympic games impact in the summer. Group unit revenue was flat, up 0.1% to 8.82 cents.
Traffic was up 4.2% in 2024, while group passengers totalled 98 million, up 4.7%. Capacity was up 3.6%, along with passenger load factor improving 0.5 percentage point to 87.8%.
The company's net capex for 2024 was €3bn, largely driven by fleet. Capital expenditure is expected to be between €3.2 and €3.4bn for 2025 as it continues its fleet renewal.
“We are seeing delays, but relative to our major competitors, we are best positioned when it comes to a fleet decision and the speed at which we are receiving them and the aircraft types they are replacing,” said Smith. “From a financial, operational efficiency and profitability perspective, we are seeing results over and above what we were expecting… we will get better cost saving because of the simplicity [of the fleet].”
The company said full year premium revenues were up 12% compared to 2023, with premium revenue share totalling 26.9%, up 1.3 percentage point compared to a yea prior. Corporate revenue was up 4% versus 2023, citing strong trends for premium cabins on both medium and long haul.
The company’s expects group capacity – including Transavia – to increase 4-5% in 2025. Unit costs are expected to increase in the low single digits for the year.
The company noted that the Olympic games impact, coupled with other headwinds, in 2024 impacted the company's EBIT by around €600 million in 2024. However, the company expects an EBIT impact of around €300 million in 2025, thus net recovery from 2024 is expected to be an EBIT recovery of €300 million for the year ahead. The 2025 headwinds include increased staff costs, ATC charges, and charges at KLM's hub in Schiphol.
As of the end of the year, operating free cash flow was €446 million, down from €922 million a year prior. Net debt was €7.3bn, with net debt to EBITDA ratio was 1.7x. Net debt rose by €2.3bn, which was largely driven the company’s fleet renewal and extension of current lease to cover delivery delays. For 2025, net debt to EBITDA is expected to be between 1.5x and 2.0x. Cash on hand at the end of the year amounted to €9.4bn.