One quarter ago, executives at Air France-KLM were looking forward to a "promising summer season," particularly with the Olympics and Paralympic Games being held in Paris. In a Thursday second-quarter earnings release, however, Air France-KLM CEO Benjamin Smith noted the "negative effect of the Olympic Games," particularly for Air France.
The company estimated that negative impact in June to be €40 million, contributed by less international inbound traffic to Paris as a "consequence of the Olympic Games." It also projects a negative effect on unit revenues in the third quarter of €150 million to €170 million.
But the sporting events were not the only factors contributing to the company's results.
"The second quarter of 2024 confirmed an increasingly challenging environment for aviation, with rising fuel prices and a continued pressure on costs," Smith said in a statement. "In this context, KLM and Transavia delivered a stable yet sluggish performance, while Air France was in addition impacted by exceptional events," including the Games.
The company has taken measures to address the situation, including a hiring freeze and additional cost cuts, according to Smith, who added that it is "preserving its major investments to renew its fleet. … Our business model is robust and resilient, and we remain confident in our ability to achieve our mid- and long-term objectives, notably by leveraging our strong assets and unique competitive position."
Air France-KLM Q2 Metrics
Air France-KLM reported second-quarter passenger revenue of €6.1 billion, up 2.8 percent year over year, or 3.2 percent on a constant currency basis. The group's total revenue was more than €7.9 billion, up 4.3 percent year over year, or 4.6 percent in constant currency. Net income was €165 million, down €447 million from Q2 2023.
The company's group capacity increased 4.1 percent year over year and had a load factor of 88 percent. During the quarter, the company's carriers transported 25.7 million passengers, 4.4 percent more than a year prior. Group passenger unit revenue per available seat kilometer was up 0.2 percent in constant currency to €8.30 despite less international inbound traffic.
Air France-KLM projects capacity to increase 4 percent for full-year 2024 compared with 2023. The previous guidance was for a 5 percent increase.
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