(Bloomberg) -- Air France-KLM reported second-quarter earnings that beat expectations amid strong demand for air travel that the airline group said shows no sign of abating.
Operating income rose 90% to €733 million ($806 million), exceeding analyst expectations of €649 million, as the number of passengers carried increased alongside higher load factors and strong yields, the group said on Friday. Sales rose 14% to €7.6 billion, also ahead of estimates.
The Franco-Dutch group said the booking environment remains robust, even for budget subsidiary Transavia, which in recent months was hurt by French air-traffic controller strikes and a fleet shortage in the Netherlands.
“For us it’s still going strong,” Chief Financial Officer Steven Zaat said in an interview with Bloomberg Television. “We see more premium traffic. As long as unemployment is not there, this demand will stay,” with a continued mismatch between supply and demand particularly on long-haul travel, he said.
Air France-KLM is not the only group still benefiting from robust demand for air travel that helped boost balance sheets after a prolonged period of restrictions during the pandemic. EasyJet Plc said a week ago that it continues to see strong booking momentum into the winter, and British Airways parent IAG SA on Friday reported better-than-expected profit in the second quarter on a surging demand.
Expansion Plans
Still, concerns are mounting about the longer-term sustainability of demand as consumers struggle amid spiraling inflation and mortgage costs. Ryanair Holdings Plc on Monday lowered its full-year traffic prediction and said it would consider cutting ticket prices to fill seats this winter as passengers become more cost-sensitive.
The airline group expects to be at 95% capacity this year versus 2019 levels, and return to pre-pandemic levels as of 2024. At the Dutch KLM subsidiary, operations have “stabilized” in spite of supply chain snags, a tight labor market and fleet issues, the company said.
Meanwhile, the group continues studying a possible bid Portuguese flag carrier TAP SA as the government in Lisbon seeks an industry backer for an airline it was forced to rescue during the pandemic.
“We are watching that very carefully,” Zaat said in the interview. “We are preparing for it, we are hiring advisers, we are waiting” for the process to start and “it will probably start after the summer.”
The company also said it entered exclusive talks with Apollo Global Management over a potential €1.5 billion financing for its loyalty program.
--With assistance from Lizzy Burden.
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Author: Albertina Torsoli