Air France-KLM cuts year-end capacity

The latest lockdown in France adds to the difficulties the group faces.

Air France-KLM Group has said Air France expects to operate around 35% of its 2019 network passenger capacity and KLM about 45% in the fourth quarter, as the group reported a 2020 third quarter (Q3) loss of €1.67 billion ($1.95 billion).  

The Franco-Dutch airline group is expecting a “challenging” fourth quarter, with a substantially worse operating loss than the €442 million recorded for the third quarter. For the full year, Air France-KLM expects network passenger activity to be less than half of 2019 levels. 

The group said it saw a positive recovery trend until mid-August, after which passenger activity began to decrease, leading to the lower capacity outlook for fall and winter. 

“There is limited visibility on the demand recovery curve as customer booking behavior is much more short-term-oriented and also highly dependent on the imposed travel restrictions, especially on the long-haul network,” Air France-KLM said.

“The period of lockdown starting today [Oct. 30] in France is a new difficulty that will weigh on the group’s activities.”

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Load factors are expected to decline in the fourth quarter, particularly for the long-haul network, and the airline group expects negative yields because of the delayed recovery in business traffic. 

Air France-KLM CEO Ben Smith said: “We expect a challenging fourth-quarter 2020, with current forward bookings sharply down compared to last year.” 

At its last set of financial results in July, Air France-KLM had said it was targeting 65% of capacity across the group in the fourth quarter.

As the crisis has progressed, the group has accelerated its cost-reduction and cash-preservation measures and is working with partners on various fronts, such as the development of rapid virus-detection tests that would allow traffic to recover, Smith said. 

“Beyond these immediate and 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,” Smith said.

“Air transport will continue to connect people and cultures, but we foresee changes in customers’ expectations that we anticipate too.”

Photo credit: Air France-KLM