Air France-KLM has posted a stronger than expected recovery in the first quarter with earnings before interest, tax, depreciation and amortisation (EBITDA) of €266 million compared to a loss of €26m in the first quarter of last year. The group’s operating loss reduced to €99 million from €417 million a year earlier, with revenue rising slightly by 0.4% to €5.605bn.
The Franco-Dutch airline group was aided by low oil prices but warned this benefit could be "significantly offset" by pressure on unit revenue and negative currency swings.
Currencies had a positive €95 million impact on revenues primarily driven by the strengthening of the US dollar against the euro partly offset by the weakening of other currencies. The negative impact on costs reached €174 million, including a lower tailwind from currency hedging compared to the First Quarter 2015. The net impact of currencies thus amounted to a loss of €79 million.
Total operating costs were 4.9% lower year-on-year and down 7.6% on a like-for-like basis. Ex-fuel, they increased by 2.0% and by 0.3% on a like-for-like basis. Unit cost per EASK was down 1.3%, on a constant currency and fuel price basis, with a stable capacity measured in EASK (+0.3%).
The fuel bill amounted to €1.096bn, down 25.9% and like-for-like down 30.5%. Based on the forward curve at 22 April 2016, the Full Year 2016 fuel bill is expected to reach €4.6 billion.
Alexandre de Juniac said: “Air France-KLM is continuing to deliver a clear improvement of its financial indicators in the First Quarter 2016, leading to a significant increase of its operating result while continuing to reduce its net debt. Despite a difficult environment marked in particular by the Brussels attacks, the upgraded product offer, the commercial efforts and the ongoing network adaptation have enabled the Group to limit the unit revenue decline and to retain a substantial part of the fuel savings, while unit costs have decreased during the quarter in line with the objectives set at the beginning of the year.”
Capacity is being cut however with Air France dropping plans to increase its long-haul network by 10% by 2020 and is only taking the first 787 from later this year.