Revenue for Air France-KLM fell by 67% to €2.524 million in the third quarter of 2020 compared to the same period in 2019. The group posted an pre-tax loss of €442 million for the quarter, which was buoyed by state aid and cost saving measures, with an operating loss of €1.046bn – a fall of €1.995bn in 2019.
The airline group has also booked a hedging loss of €39 million and fleet impairment costs of €565 million on its A380 fleet and HOP!. Net debt has increase for the group to €9.308bn – an increase of €3.161bn compared to end of 2019. Staff redundancy costs amounted to €565 million.
The Group has €12.4 billion of liquidity or credit lines at disposal at the end of September 2020.
Air France and KLM have agreed with labour representatives on substantial restructuring plans and submitted them for final validation to the French and Dutch states.
Air France-KLM Group states that it observed a positive demand recovery trend until mid-August, which then reversed forcing the group to adjust capacity down for the fall and winter period. Capacity for the fourth quarter is around 40% of 2019 levels.
“There is limited visibility on the demand recovery curve as customer booking behaviour is much more short-term oriented and also highly dependent on the imposed travel restrictions, especially on the long haul network. The period of lockdown starting today in France is a new difficulty that will weigh on the Group's activities,” states the airline in its earning report.
The group states that it has accelerated the implementation of cost reduction and cash preservation measures and is also working on rapid detection tests that would allow traffic to return.
Air France-KLM chair Anne-Marie Couderc, says: “Beyond these immediate necessary measures, we are engaged in a more profound transformation of our Group, with the objective of exiting this crisis in a stronger position, ready to address the future challenges of our industry. Air transport will continue to connect people and cultures, but we foresee changes in customers’ expectations that we anticipate too. We expect a challenging fourth quarter 2020, with current forward booking sharply down compared to last year.”
Air France-KLM global air cargo capacity is only 15% lower than 2019, and the group reports a tightening of supply and demand levels increased yields by significant amount over the past months.
Air France-KLM E&M maintenance business posted an operating loss of €46 million, a decrease of €117 million. Revenues declined and were also impacted by the Air France-KLM Group airlines decrease in activity.
During the third quarter, the group reports that signed contracts have restarted and will be included in the order book before year end. “The maintenance business is carefully managing agreements with clients on payment terms” says the company, noting that operating costs have been reduced in the third quarter 2020 by a reduced maintenance activity level, partial activity pay schemes for employees and other initiated cost savings measures.
The maintenance order book is assessed to $9.3bn at 30 September 2020 a decrease of $2.2bn compared to 31 December 2019.