The Air France-KLM group has made its largest loss since the COVID-19 pandemic, according to new data revealed by the company. In the past quarter, the group made an operating loss of 480 million euros, in large part due to geopolitical tensions, increases in salaries and a decline in income from freight transport.
Unsurprisingly, growing geopolitical uncertainty is already having a strong impact on the aviation industry, and Air France-KLM is no exception. Due to security risks over countries such as Ukraine, or regions such as the Gulf of Aden and no-fly restrictions over Russia, many airlines have needed to take longer routes to travel between destinations. This has not only increased flight times, requiring airlines to ask their staff to work longer hours, but has also increased the costs of operating the planes themselves, for example the cost of carrying extra fuel or undertaking more aircraft maintenance.
Despite this, the group has maintained its business forecasts for the rest of the year. "As anticipated, our operating income was impacted by disruption costs and a slower cargo business. We nonetheless remain confident in our ability to achieve our 2024 unit cost outlook," Chief Executive Ben Smith said in a statement.
In the first quarter of 2024, Air France managed to carry 18 percent more passengers than in the same period last year, but even this could not mitigate the losses caused by salary increases, geopolitical issues and declining freight income. "On the one hand, we have had to deal with a lot of bad weather, which leads to cancellations and re-bookings. At the same time, we suffer from the long delivery time of parts. They are difficult to obtain, and we also do not have all the people in-house," Marjan Rintel, KLM's chief executive, told NOS.
The pandemic also caused issues with the supply of parts for aircraft maintenance on top of these issues. "You sometimes have to wait between 80 and 300 days before a part is available. We can no longer fly over Russia. So we always have to detour to Asia. This means you need more fuel and pilots. You also see this with the geopolitical tensions in the Middle East and Africa," Rintel added.
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