French-Dutch aviation giant Air France-KLM on Thursday said its net loss narrowed by more than half last year but would need more capital strengthening measures due to the pandemic.
The airline’s losses totalled 3.3 billion euros ($3.8 billion) last year.
It said the capital strengthening measures could amount to some 4.0 billion euros and acknowledged that the Omicron Covid-19 variant had hampered positive trends after a good start to the fourth quarter.
“This new step in the recapitalisation plan measures intends to further restore the equity position,” it said.
The company said it would not be giving guidance for 2022 due to the uncertainty over the pandemic and over when Japan and China would fully reopen to travel.
“After a good start of the fourth quarter and the reopening of the United States early November, the rise of the Omicron variant hampered in December the continuous increase in load factors for the medium haul and domestic traffic,” it said.
Omicron also led to a spate of flight cancellations through January after a better than expected 4th quarter showing which brought operating profits of 178 million euros for that period — better than the corresponding period of 2019 before the health crisis hit.
Despite the final quarter chink of light and the cutting back of losses compared with 2020’s 7.1 billion euros, the carrier’s net debt remains high, at 8.2 billion euros.
The Delta virus variant seriously undermined the first half of 2021 to the extent that full-year sales came in at a disappointing 14.3 billion euros — 29 percent better than 2020 but down a massive 47.5 percent on a year earlier.
Group director general Benjamin Smith saw the final quarter take-off as representing “a turning point” but warned that “the crisis is not yet over” with the Omicron virus variant having further buffeted the industry.
The airline has drastically slimmed down personnel in the face of the crisis with Air France cutting 8,500 posts and KLM 5,500.
The group underpinned its faith in an eventual long-term upturn notably by ordering in December 100 Airbus A320neo medium-haul jets — with purchase rights for an additional 60.
– Second recapitalisation –
For the first half of the current year Air France-KLM will provide seat capacity of between 73 and 78 percent of 2019 levels and by 2024 expects a return to pre-pandemic levels, notwithstanding the further headwinds of strongly rising oil prices, on which it has hedged purchases in advance.
As it looks to pare down debt Air France-KLM said it was ready to launch a second round of recapitalisation, following a first last April, to the tune of as much as four billion euros.
That would likely prioritise current stakeholders who include, with a 28.6 percent stake, the French state.
Air France-KLM indicated that both the French and Dutch states could participate on a prorata basis. The Dutch stake is 9.3 percent.
France put four billion euros on the table for the first round of recapitalisation — though any state injections will come under European Commission scrutiny.
