Air France-KLM’s quarterly results on Friday beat market expectations as demand for summer travel surged despite ongoing operational problems in the airport sector.
“Air France-KLM continues to impress,” Bernstein analyst Alex Irving wrote in a note to clients, adding that the airline “appears to have undergone an amazing transformation.”
The company’s second-quarter core and net results showed earnings of 386 million euros ($394.38 million) and 324 million euros, respectively, significantly ahead of analysts’ forecasts.
Shares were up 5.7% by 1001 GMT.
“The group is moving quickly in the right direction,” Irving added, noting an “optimistic outlook.”
“While the company has revised downwards its Q3 capacity forecast (…), overall commentary for the rest of the year sounds positive,” Stifel’s analysts said.
Air France-KLM expects third-quarter capacity to be between 80% and 85% of pre-pandemic levels in 2019, down from a 85% to 90% forecast issued in May.
AVIATION TEST
Airlines across Europe have faced industrial action this summer as the rapid recovery in tourism has led to staff shortages and rising inflation has prompted workers to demand higher wages.
“This booming demand has surprised many,” Chief Executive Officer Ben Smith told analysts on a call.
“The strong recovery we’re seeing this summer is testing the entire aviation industry,” he said in a earnings release. “Our airlines are not immune to the major operational challenges around the world.”
To cope with the disruptions, KLM has cut flights alongside Lufthansa, British Airways and easyJet and has been forced to limit ticket sales.
However, Stifel analysts say Air France is increasing capacity faster than its European rivals while Paris remains “one of Europe’s healthiest air travel markets”. ($1 = €0.9788) (Reporting by Dina Kartit and Juliette Portala, Editing by David Gregorio, Jason Neely and Louise Heavens)
Reuters
