--Air France-KLM posted an operating loss of EUR815 million in its first quarter

--The carrier expects a much wider loss in its next quarter, while Ebitda should be negative in 2020 for the first time since the 2004 merger

--Air France-KLM will announce a new plan this summer to regain competitiveness amid the coronavirus crisis


By Olivia Bugault


Air France-KLM said Thursday that its second quarter is expected to be the hardest hit by the coronavirus, and that it posted a widened loss in the first three months of 2020 on the back of the pandemic, which has crippled the aviation industry world-wide.

At 0820 GMT, Air France-KLM traded down 4.1% at EUR4.03.

The Franco-Dutch airline reported a net loss of 1.8 billion euros ($1.95 billion) compared with a loss of EUR324 million a year earlier, while revenue fell 15.5% to EUR5.02 billion. The operating result fell by EUR529 million for a total loss of EUR815 million, entirely due to a bad performance in March caused by the coronavirus crisis, it said.

Travel restrictions started to hit the carrier in March with revenue down 46% in this month alone, chief financial official Frederic Gagey said during a conference call late Wednesday. Capacity was down 35% during the month, while Air France-KLM expects a sharp deterioration in capacity during its second and third quarter, with a decline of 95% and 80% respectively.

Air France-KLM therefore warned that its current operating income loss should be significantly higher in its second quarter compared with the loss posted in its first quarter, while earnings before interest, taxes, depreciation and amortization should be negative in 2020. It would be the first time since the merger between KLM and Air France in 2004 that the group would post a negative Ebitda, Mr. Gagey said during the call.

The company also withdrew its initial guidance and said that it doesn't expect passenger demand to recover in several years.

The carrier detailed the cost-cutting measures that it has implemented since the beginning of the crisis in order to mitigate the effects of the pandemic on its results. It expects to save roughly EUR350 million per month in liquidity in its second quarter due to partial activity and pay reduction, meaning that it would reduce its operational cash burn to roughly EUR400 million monthly during the period. Meanwhile, it has reduced its capital expenditure by EUR1.2 billion this year to EUR2.4 billion, it said.

At the end of April, the group's French arm has secured EUR7 billion in state-backed loans, while Dutch fellow KLM is still in discussions for state aid, the amount of which will be between EUR2 billion and EUR4 billion. The deal should be settled soon.

"We are working on a renewal plan to ensure that the Air France-KLM group regains its competitiveness in a deeply shaken world and reaffirms its leadership in the sustainable transition of air transport," chief executive Benjamin Smith said in the statement. The plan--which will be presented this summer--will help ensure financial sustainability over the medium and long term and will include new environmental goals, the company said.

Airlines world-wide have been battling the worst crisis in their history, in which they have been forced to ground the majority of their fleet, cut costs and seek financial help to survive. Several carriers have already announced structural measures. Deutsche Lufthansa AG said last week that it would emerge smaller from the crisis by reducing its fleet by roughly 100 aircraft.


Write to Olivia Bugault at olivia.bugault@wsj.com


(END) Dow Jones Newswires

May 07, 2020 04:40 ET (08:40 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
Deutsche Lufthansa (XE:LHA)
Historical Stock Chart
From Nov 2020 to Dec 2020 Click Here for more Deutsche Lufthansa Charts.
Deutsche Lufthansa (XE:LHA)
Historical Stock Chart
From Dec 2019 to Dec 2020 Click Here for more Deutsche Lufthansa Charts.