Increase in demand until mid-August, then new governmental restrictions impacted the expected level of demand recovery.
The continuation of the Covid-19 crisis severely impacted the Third quarter 2020 results:
- Revenue at 2,524 million euros, down 67% compared to last year
- EBITDA loss at -442 million euros, limited thanks to cost control and state aid
- Operating result at –1,046 million euros, down 1,955 million euros compared to last year
- Net income at -1,665 million euros, including restructuring provision at -565 million euros, Covid-19 related over-hedging at -39 million euros and fleet impairment at -31 million euros
- Net debt at 9,308 million euros, up 3,161 million compared to end of 2019
- At 30 September 2020, the Group has 12.4 billion euros of liquidity or credit lines at disposal
Air France and KLM have agreed with labour representatives on substantial restructuring plans and submitted them for final validation to the French and Dutch states.
Air France-KLM Group continues to implement the highest safety standards for its customers and employees to counter virus transmission risks. After the lockdown, the Group observed a positive demand recovery trend until mid-August.
Then, the negative trend reversal for the Passenger activity led the airlines of the Group to adjust downwards the capacity planned for the fall and winter period.
There is limited visibility on the demand recovery curve as customer booking behaviour is much more short-term oriented and also highly dependent on the imposed travel restrictions, especially on the Long Haul network.
The period of lockdown starting today in France is a new difficulty that will weigh on the Group’s activities. In this context the Group expects:
- Capacity in Available Seat kilometres circa index 45 for KLM and inferior to index 35 for Air France in the Fourth quarter 2020 compared to 2019 for the Network passenger activity
- Negative load factor developments for the Fourth quarter of 2020, particularly on the long-haul network, and negative yield mix effects due to a delayed recovery in business traffic
The Group anticipates a challenging fourth quarter of 2020, with a substantial lower EBITDA compared to Q3 2020.
The Board of Directors of Air France-KLM, chaired by Anne-Marie Couderc, met on 29 October 2020 to approve the financial statements for the nine months 2020.
Group CEO Mr. Benjamin Smith said: After a promising recovery during the summer, the gradual closure of international borders in the second half of August and the resurgence of the pandemic strongly impacted our results in the Third Quarter, with the Group reporting an operating loss of 1.0 billion euros. We have accelerated the implementation of cost reduction and cash preservation measures. We are also working closely with our partners on various means, such as rapid detection tests, that would allow traffic within the best sanitary conditions for our customers and employees.
Beyond these immediate necessary measures, we are engaged in a more profound transformation of our Group, with the objective of exiting this crisis in a stronger position, ready to address the future challenges of our industry. Air transport will continue to connect people and cultures, but we foresee changes in customers’ expectations that we anticipate too. We expect a challenging Fourth quarter 2020, with current forward booking sharply down compared to last year.