Shares of British Airways owner IAG and Air France-KLM have declined owing to concerns about prices, new aircraft supply, and geopolitical risks. Despite excellent summer reservations, European airlines are reporting great summer bookings; but, high jet fuel prices, global flashpoints, troubles at plane makers, and wage negotiations are clouding hopes.
.gif)
Air France-KLM reported an unexpected loss in the fourth quarter owing to rising expenses and disruptions caused by the Middle East crisis, sending its stock down as much as 10.7%. Analysts are also concerned about manufacturers' capacity to meet robust demand for new planes despite ongoing supply chain challenges, particularly as Boeing deals with quality issues and a regulatory crackdown following the burst of a panel on one of its MAX 9 airplanes during a flight on January 5.
Emirates Airlines President Tim Clark raised reservations that the firm would get its Boeing aircraft order by the end of next year, citing regulatory scrutiny in the United States. Both IAG and Air France-KLM indicated that poor weather increased costs. Air France-KLM announced a 2023 operational profit of 1.7 billion euros, which was in line with forecasts; but, its fourth-quarter operating loss of 56 million euros fell far short of analysts' average prediction of 88 million euros.
However, Air France-KLM was able to pay off 1.3 billion euros in debt, the majority of which was accumulated during the pandemic travel suspension, leaving a net debt of 5 billion euros. The firm stated that it expected expenses to rise more slowly than it did in 2023 and that its capacity would be close to 2019 levels by the summer of 2024. According to Bernstein analysts, Air France-KLM's fourth-quarter deficit was driven by one-time interruption expenses and the introduction of an employee ownership scheme. "Importantly, real-terms cost reduction looks set to continue, supporting margin expansion ahead," they went on to say.