According to a company-provided consensus, Air France-KLM is expected to report revenue of €8.72 billion ($9.21 billion) for the third quarter of this year. This forecast surpasses the €8.11 billion revenue reported in the same period last year.
Net profit is anticipated to jump to €957 million, as per the company-provided consensus, up from €460 million in the previous year. Additionally, operating profit is projected to increase to €1.37 billion from €1.02 billion.
Key Factors to Watch
Capacity and Demand
Air France-KLM announced in July that it expected capacity to reach approximately 95% of pre-pandemic levels by the end of this year. Analysts anticipate a strong summer season for the industry and will closely monitor any potential changes to this forecast. With passengers starting to make bookings for the upcoming holiday season, demand levels will be crucial.
UBS analysts stated, “We expect to see a strong set of Q3 results driven by pricing. Nevertheless, demand uncertainty remains, with headwinds growing on the cost side and uncertainty if these pressures can be passed on through price.”
The carrier group experienced rising costs in the second quarter, primarily due to increased salaries, air traffic control charges, and airport fees. Air France-KLM has forecasted a low single-digit year-on-year increase in costs for this year. Investors will be interested in any commentary regarding costs and how inflation is impacting both the airline and passengers.
Last month, Air France-KLM expressed interest in acquiring a majority stake in TAP Air Portugal following the Portuguese government’s decision to sell. Moreover, the airline recently invested $144.5 million to acquire a stake of up to 19.9% in SAS, the struggling Scandinavian airline group. Analysts, particularly UBS’s Jarrod Castle, expect the SAS investment to be a focal point for investors.