Air France-KLM posts Q1 rebound

AIR France-KLM posted a stronger-than-expected recovery in the first quarter due in part to low oil prices, but warned of geopolitical risks and airline overcapacity.

The airline group reported earnings before interest, tax, depreciation and amortisation (EBITDA) of EUR€266 million, compared with a loss of EUR€26 million in the first quarter of last year.

The carrier also reduced its operating loss to EUR€99 million from EUR€417 million a year earlier, as revenue rose 0.4 percent to EUR€5.605 billion.

The airline said the benefit of recent fuel savings could be “significantly offset” in coming quarters by pressure on unit revenue and negative currency swings.

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“We see a market under pressure, which has gradually become more under pressure, and we are being very, very cautious, particularly regarding the second quarter,” finance director Pierre-Francois Riolacci said.

Airlines are already boosting long-haul capacity ahead of the summer season, particularly in Europe and North America, while the fallout from last November’s Paris attacks continues to affect demand, especially in Japan, Riolacci added.

Air France said it was dropping plans to increase its long-haul network by 10 percent by 2020. It also decided to introduce EUR€20 million – EUR€30 million of annual savings left over from its Transform 2015 restructuring plan, a move which could trigger renewed tensions with pilot unions.