Why Air France-KLM is reeling on the stock market
Shares of Air France-KLM fell nearly 10% in morning trade after the company reported a fourth-quarter loss of 256 million euros, blamed on rising costs and geopolitical uncertainty in Africa and the Middle East .
Headwinds for Air France-KLM on the Paris Stock Exchange due to the red in the fourth quarter.
Today the Franco-Dutch airline reported its results for the 2023 financial year: record revenues (equal to 30 billion euros, up by +15.1%) and an operating profit of 1.7 billion euros, an increase compared to to 1.19 billion from the previous year and in line with expectations, but in the fourth quarter the group's results are tinged with red, due to the difficulties of the cargo activity and an increase in unit costs. A performance not appreciated by investors.
Around 10am the carrier's stock fell by 8.7% to 10.42 euros while the Cac 40 index was trading at parity.
In particular, the market poorly received the operating loss of 56 million euros in the last quarter of 2023, against the profit of 88 million expected by analysts based on the consensus provided by the company, with a deterioration of 190 million compared to the profit of 134 million in the same period of 2022, underlines Radiocor .
Profitability – explained the group – was affected by the geopolitical situation in Africa and the Middle East which led to the cancellation of some destinations and operational difficulties caused above all by the lack of spare parts, although partly offset by the lower cost of fuel. The difficulties will still be felt in the first quarter of this year, underlined the group's CFO Stevan Zaat, during a conference call.
As Reuters recalls, European airlines have reported strong demand for next year, but supply chain constraints have led to higher costs and maintenance delays.
All the details.
AIR FRANCE-KLM RECORD NUMBERS IN 2023
The airline Air France-KLM closed 2023 with record results, both in terms of turnover, which reached 30 billion euros for a growth of 15%, and for Ebitda equal to 4.2 billion (+16 %) and operating profit of 1.7 billion (+44%). The profit of 934 million euros, however, was lower than expected, with the consensus being for a net profit above 1 billion euros.
DEBT REDUCING
At the same time, Air France-KLM continued to reduce debt by 1.3 billion, falling from 6.33 billion euros at the end of 2022 to 5.04 billion at the end of 2023.
HOW THE FOURTH QUARTER WENT
But it is the results of the fourth quarter (both the operating one at -56 million euros and the net one at -256 million euros) that are causing the turbulence on the stock market this morning.
In the fourth quarter of 2023, Air France-KLM recorded revenues of 7.4 billion, up 4%, with an Ebitda of 601 million, down 24% and a net loss of 256 million against a profit of 504 million . Air France-KLM's operating loss is well below expectations for the fourth quarter, Bernstein analysts write in a note to clients echoed by Radiocor , noting that the group estimates that the geopolitical situation in Africa and the Middle East has wiped €65 million from its operating profit and faced increased disruption costs of €70 million, plus a €30 million impact related to its employee share ownership plan. “Excluding these factors, operating profit would have been positive,” the analysts conclude.
Although the company said in October that flight disruptions resulting from the conflict in the Middle East would not have a significant impact on the group, it also warned of a slight decline in demand for some destinations it serves in Israel.
THE CEO'S POSITION
So war in the Middle East and disruption costs especially hurt fourth-quarter results, the company says.
“In 2023, we delivered on our commitments by achieving strong operational and financial performance,” said Air France-KLM CEO Benjamin Smith. These results were obtained despite the fact that the number of passengers transported has not yet returned to pre-crisis levels: 93.6 million travelers in total on Air France, KLM and Transavia aircraft last year, or 10.3 million more than in 2022, but still 10.4 million less than in 2019.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/perche-air-france-klm-barcolla-in-borsa/ on Thu, 29 Feb 2024 15:06:55 +0000.