In the second quarter of 2022, Air France-KLM Group posted a positive operating result of €386 million, up by €1,145 million at a constant currency compared to last year, which was driven by an increase of capacity. In parallel, the increase of load factor and yield generated an increase of the unit revenue. Net income amounted to €324 million in the second quarter 2022, an increase of €1.8 billion compared to last year. The recognition of tax assets at KLM group for an amount of around €300 million supported the positive net income generation.
Air France-KLM unit cost is up 2.4% at a constant fuel price and constant currency versus the second quarter 2019, with a capacity down by 15%. The ongoing transformation programs enable Air France-KLM to limit the impact of increasing costs such as airport and ATC charges, and the KLM Collective Labour Agreement (CLA) delayed implementation.
The Group generated an adjusted operating free cash flow in the second quarter 2022 of 1,532 million euros, an increase of €1,322 million compared to last year, mainly driven by a positive change in working capital of €1,510 million. This was the fifth quarter in a row that the adjusted operating free cash flow was positive.
Second quarter 2022 revenues increased by 137.4% at constant currency to €5,753 million. The operating result amounted to €352 million, a €1,013 million increase at constant currency compared to last year. Both airlines – Air France and KLM – reached a positive operating margin in the second quarter. Air France posted a €133 million operating result for the second quarter, with KLM posting a positive result of €262 million.
Second quarter 2022, capacity in Available Seat Kilometers (ASK) was 69.4% higher than last year and at 82% of 2019 second quarter level.
In response to the rise in fuel prices and other external costs, the Group proceeded to different fare increases during the first half of the year across all long-haul flights. Additionally, the spike in travel demand, the strong performance in Premium cabins, and the solid corporate traffic recovery have all led to a yield above the 2019 level in the second quarter.
During the Second quarter, Air France added three Airbus 350-900 and two Airbus A220-300. One B777-200, one Airbus 320, three Airbus 319, two Embraer 170 and five Canadair Jet 1000 were phased out. KLM phased in three Embraer 195 E2.
Compared to the second quarter 2021, Air France-KLM cargo capacity strongly increased by 27.4% in Available Ton Kilometers, mainly due to the increase in worldwide belly capacity, except for Asia. This limited belly capacity to Asia affected the overall traffic which resulted in a traffic decrease of 17.2% and contributed to an overall decrease in load factor by 27.9 points. Yields, however, remain at a consistently high level (+17.4% vs. 2021), leading to a total Second quarter revenue performance at last year's level.
When compared to the pre-COVID year 2019, cargo capacity in the second quarter was still 8% below 2019. However, due to exceptional yield performance – driven by high demand – total revenues in the Second quarter of 2022 were 76% higher than 2019.
In May, Air France-KLM announced its entry into a strategic partnership with CMA-CGM Air Cargo (CCAC). The partnership agreement is currently being worked out and expected to be finalized before the end of 2022.
For the maintenance division, Air France-KLM Engineering & Maintenance (AF-KLM E&M), posted a second quarter operating result of €57 million, an increase of €61 million at constant currency versus the second quarter 2021 thanks to a higher activity and an operational improvement.
AF-KLM E&M total revenues increased by 34.1% in the second quarter while third party revenues increased by 35.1%, showing a strong recovery. The operating margin stood at 6.3%, which is 6.7 points higher than the operating results in the Second quarter 2021. The half year margin amounts to 5.8%, which is at the level of the pre-covid period when excluding the states support.
During the second quarter, Air France-KLM and Apollo Global Management announced the signing of a definitive agreement for Apollo managed funds and entities to make a 500 million euros investment in to an ad hoc operating affiliate of Air France that will own a pool of spare engines dedicated to the airline’s Engineering and Maintenance activities.
At June 30, 2022, the Air France-KLM Group fleet comprised 534 aircraft, of which 515 were in revenue service compared with, respectively, 537 and 505 aircraft at December 31, 2021. The average age of the aircraft in the operational fleet was 12.1 years, of which 12.0 years for the long-haul fleet, 13.4 years for the medium-haul fleet, 19.3 years for the cargo fleet and 8.7 years for the regional fleet. This compared with 12.2 years at December 31, 2021, of which 12.2 years for the long-haul fleet, 13.4 years for the medium-haul fleet, 18.8 years for the cargo fleet and 8.9 years for the regional fleet.
At June 30, 2022, 37.3% of the total Group fleet was fully owned (37.8% at December 31, 2021), 12.4% was under finance lease (12.3% at December 31, 2021), and 50.4% under operating lease (49.9% at December 31, 2021).
Air France-KLM expects a significantly positive result in the third quarter and for the full year 2022, for the first time since 2019.
As of June 30 2022, Air France-KLM Group has a strong €11.9 billion of liquidity and credit lines at disposal. Full year 2022 Net Capex spending is estimated at circa €2.5 billion, which is 80% fleet & fleet related and 20% IT & Ground related.