Airports might seem like frenetic, disorienting places, but there’s a lot of very precise orchestration taking place behind the scenes.
01.03.2024 - 00:11 / skift.com / Air France / Gordon Smith
As one of Europe’s largest airline supergroups, what’s happening at Air France-KLM matters.
It posted its full-year results for 2023 on Thursday and there was plenty to celebrate. The company chalked up €30 billion in revenue last year – the highest in its history – and is progressing well across multiple transformation programs.
However, there were also some major challenges, including an unexpected operating loss in the fourth quarter. Here are three key things we learned from Air France-KLM’s latest results:
In line with most other international operators, Air France-KLM halted all flights to Tel Aviv after the start of the Israel-Gaza war in early October 2023.
While Air France restarted services to Israel in late January, KLM has yet to do so. The Franco-Dutch group said the situation had a knock-on impact across the wider region, including Lebanon and Egypt.
The conflict in Gaza is just one of several geopolitical flashpoints that impacted its most recent results. Instability in Niger, Mali, and Burkina Faso was highlighted by the company as an additional drag on performance. Air France in particular has a significant exposure to the West African market.
While the closure of Russian airspace continues to result in longer journey times to and from Asia, Group CEO Ben Smith did identify one brighter spot.
He reported that demand to and from India has been especially strong, with improved revenues due to the changing travel patterns. Smith acknowledged that this “could change at any moment,” and said, “We are enjoying that while it is there.”
Overall, the group estimates that the geopolitical situation in Africa and the Middle East wiped €65 million ($70 million) from its operating result.
The arrival of the world’s biggest sporting event should be a guaranteed cash generator, but this isn’t always the case. Host cities for the Olympic and Paralympic Games can often see regular tourists stay away. Lucrative business travelers may also postpone non-essential visits until after the competition to dodge the crowds and inflated prices.
As Paris in July and August is usually awash with tourists from all over the world, is Air France worried about the opportunity cost of the Games? Not so, according to Smith.
The CEO said that as the company already operates its full fleet during the peak summer months, it couldn’t add additional passenger capacity during the Olympics.
However, he acknowledged that there may be a slight increase in the amount the airline earns from each passenger flown. Smith pointed to previous major sporting tournaments hosted in France as evidence for this.
In terms of actual bookings during the Olympic period, Smith said there were “no worrying trends”, adding that there was
Airports might seem like frenetic, disorienting places, but there’s a lot of very precise orchestration taking place behind the scenes.
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