Air France-KLM stock closed almost 15% lower after the company reported a third-quarter profit of €768 million - a 6.8% drop compared to the same period last year.
The combined French and Dutch flag carrier group posted a total revenue of €9.2bn for the quarter, an increase of 2.6%.
Operating result was €1.2bn, a 2% improvement over the same period last year, and operating margin was unchanged at 13.1%.
Passengers carried rose 5% to 29.2 million, and passenger network unit revenue rose 0.5%, driven by strong premium cabin and maintenance revenue.
However, overall unit cost rose 1.3%, and overall unit revenue fell 0.5%.
The Group attributed the drop in unit revenue to weak performances across its cargo and Transvia businesses, fuel costs, and an overall capacity increase of 5.1% with “limited” productivity gains.
It also noted that its unit cost increase is “moderating” in line with expectations, despite increases in air traffic control and airport charges.
The company said that Amsterdam Schiphol's 41% fee hike "significantly" impacted revenue, as did TSBA solidarity taxes.
Air France-KLM described its free cash flow performance as “strong”, pointing to continued year-to-date improvements.
For the first nine months of 2025, the Group generated €700 million in free cash flow, up from €23 million over the same period last year.
Benjamin Smith, Group CEO, said the third-quarter results demonstrate the Group's “resilience” amid a challenging operational environment.
“We maintained solid revenue growth and a stable operating margin, while cash generation remained strong, confirming the benefits of our continued focus on execution,” he said.
“Premium cabins performed exceptionally well across both Air France and KLM, further reinforcing our confidence in our premiumization strategy.”
The Group accelerated its fleet renewal programme, noting that by quarter-end, 32% of its fleet was made up of next-generation aircraft.
Previous full-year guidance was retained, with unit costs expected to rise by a low-single-digit percentage, and capacity expected to rise between 4% and 5%.
Net capex for the year is expected to be between €3.2bn and €3.4bn, 80% of which is expected to be made up of fleet or fleet-related investments.
In an investor call, Smith singled out airport fees and air traffic controller strikes as two of the main headwinds the Group faces heading into the fourth quarter.
“On the political side, in the Netherlands and in France, the main focuses for us are will there be any additional taxes or charges imposed on customers, passengers, or us directly or airports?” he said.
“So far, we don’t see anything new from what we’ve seen already and what we’ve been lobbying to change or get rid of.”
The CEO said that air traffic controller strikes have “cost us a lot of money” this year, and have had an even more damaging impact in terms of operational performance.
“So far we don’t have any visibility for the rest of the year,” he said. “We are hoping things will stay stable, and we have a new head of the government body which oversees the air traffic controllers.
“This is in France, which is much worse than any other country in Europe, but it’s a bit too early to tell whether there will be any change in policy towards aviation.”
Finally, Smith noted that the Group is not expecting any significant impact from government-imposed capacity reductions at major US airports, which began on Friday (November 7).
As covered by Airline Economics, 40 “high-traffic” US airports have been ordered to reduce capacity by 10%, to ensure passenger safety amid ongoing air traffic controllers shortages.
“From the information we received this morning, it’s only going to impact domestic flights, and international flights as of today should be business as usual,” said Smith.