Air France-KLM Lowers 2024 Capacity Outlook as Geopolitical Risks Rise
Air France-KLM Revises Forecasts Amid Geopolitical and Economic Uncertainty
By Joanna Plucinska
First-Quarter Performance and Capacity Outlook
LONDON, April 30 (Reuters) - Air France-KLM on Thursday reported a smaller first-quarter loss than expected, but downgraded its capacity outlook on the basis of geopolitical uncertainty tied to the U.S.-Israeli war with Iran and rising jet fuel costs.
Impact on European Airlines
European airlines, including easyJet and TUI, have revised their outlooks as their jet fuel hedges shrink over time. They expect to feel the impact of the closure of the Strait of Hormuz more acutely in the coming months.
Fuel Prices and Future Projections
"While fuel price increases are not yet reflected in the results we present today, they are expected to weigh on the coming quarters," Air France-KLM Chief Executive Ben Smith said in a statement.
The company said its group capacity was now set to increase by 2% to 4% this year over 2025. It previously expected an increase of 3% to 5%. It also said it expects a 2.4 billion euro ($2.80 billion) increase in its fuel bill in 2026 compared with 2025.
Financial Results and Market Response
Air France-KLM reported a first-quarter operating loss of 27 million euros ($31.55 million), compared with a loss of 389 million euros ($454.51 million) projected by analysts polled by LSEG. That represents a 301 million euro improvement over last year, with fuel price increases not yet affecting first-quarter results.
Travel Demand and Strategic Adjustments
It said it had seen an initial boost after the Iran war broke out as more travellers booked on European carriers for flights to Asia, but was planning to expand its long-haul capacity in a more muted way as people were postponing travel plans or booking closer to the date of travel, concerned by the financial risk tied to long-haul trips.
Exchange Rate Information
($1 = 0.8559 euros)
(Reporting by Joanna Plucinska; Editing by Edmund Klamann)
