- Joe Breitfeller
Air France-KLM Group Reports First Quarter Net Loss of €1.8 Billion on Revenues of €5.02 Billion
The Air France-KLM Group reported on Thursday a first quarter net loss of €1.801 billion on a €922 million year-over-year revenue decline to €5.02 billion. The first quarter operating loss was (€815) million with the remaining losses largely attributable to over-hedging.
Yesterday (May 7, 2020), the Air France-KLM Group reported a first quarter net loss of €1.801 billion on revenues of €5.02 billion. The Group’s operating loss was €815 million with the expanded net loss largely attributable to over-hedging (€455) million, release of deferred tax assets (€173) million and impairment of a Boeing 747 aircraft (€21) million. The Group reduced March capacity by 35 percent which was further reduced by 95 percent for the second quarter. KLM’s contribution to the operating loss of €815 million for the first quarter was reported as (€275) million. In Thursday’s announcement, KLM’s President and CEO, Pieter Elbers said in part,
“As a consequence of the Covid-19 outbreak, KLM is currently navigating a storm of unprecedented severity, as reflected in the figures for the first quarter of 2020. While the first two months started positively, the downturn from the start of March has been enormous. In the course of March, most of the fleet was grounded and the number of flights operated was reduce to less than 10% compared to the situation before Covid-19. KLM therefore generated a Q1 loss of €275 million compared to a loss of €47 million in the same period last year.”
The company has undertaken cash preservation measures including a 2020 cost reduction of €500 million, a €1.2 billion reduction in CAPEX to €2.4 billion and a crew variable pay reduction expected to save approximately €350 million/month for the second quarter. Additionally, the Group has deferred delivery of 3 Airbus A350s to 2021 and will defer €570 million in tax and social charge payments beyond 2020. Air France has received €7 billion in liquidity through a bank loan guaranteed by the French government as well as a direct shareholder loan from the French State. The Group expects a cash burn rate of around €400 million/month during the second quarter.
Source: Air France-KLM Group