MIAMI – Air France (AF) Group has published the First Quarter (Q1) 2021 financial results and the figures are not very promising, as the global pandemic and travel restrictions continue to affect the airline and the industry.

According to a press release issued by AF on May 6, the first three months of 2021 were negatively impacted by travel restrictions and the downturn in passenger traffic. The toll was felt by AF’s Q1 revenue, which stood at US$2.6bn (€2.2bn) down by 57% when compared to Q 2020.

“A year into the COVID crisis, lockdown measures and travel restrictions in our home markets and around the world continue to strongly impact the Group’s activity." Benjamin Smith, CEO of Air France–KLM Click To Tweet
Air France Airbus A350-900 F-HTYD – Photo : Tony Bordelais/Airways

EBITDA, Net Income

The EBITDA (Earnings Before Interests Tax Depreciation Amortization) stands at minus US$708m (€600m) notwithstanding a strict cost control and partial national activity reduction. The operating result shows a loss of US$472m (€400m) and stands at US$1.41bn (€1.2bn).

Q1 2021 net income, when interest charges are taken into consideration, showed a negative figure of US$1.77bn (€1.5bn). The net debt posted a US$14.7bn (€12.5bn) and has grown by US$1.77bn (€1.5bn) hen compared to the Q1 2020 figures. As far as liquidity is concerned, the AF Group had by the end of March, US$10bn (€8.5bn) and credit lines are available.

At the beginning of April, the first series of measures to strengthen the balance sheet was successfully implemented, resulting in an increase in equity of €4bn and an improvement in the cash position of €1bn.

Air France Airbus 330-200 F-GZCM – Photo: Casey Groulx/Airways

Awaiting Better Days

No good news is in view for the forthcoming months as travel restrictions remain in effect on a worldwide basis, bookings show no progress, and remain short-term oriented. As a result, the AF Group does not expect a better outlook for the Second Quarter 2021 and anticipates results similar to those presented in the Q1 report.

The AF Group estimates that the return to normality, by doing away with restrictions and border re-opening, will depend on wide upscaled vaccinations, citing the signs of recovery by the US domestic traffic as being linked to a speedy vaccination campaign.

Air France Boeing 777-300ER F-GSQT – Photo : Tony Bordelais/Airways

Mitigated Outlook

With the actual situation taken into account, the AF Group expects, for Q2 2021, an AF-KL ASK (Available Seats Kilometer) index at 50% when compared to the 2019 passenger network. An increase in capacity will be put into action toward the second half of Q2, phased on the vaccination progress in Europe.

The outlook for Q3 2021, considering an estimated increase in demand, is foreseen between 55% and 65% of ASK when compared to 2019 levels. The AF Group continues with actions aimed at strengtening its balance sheet by considering equity or quasi-equity instruments. New extraordinary resolutions will be presented to the Annual General Meeting so to give the Board of Directors the possibility to restore equity.

Air France G-FSPY Boeing 777-228(ER). Photo: Max Langley/Airways

Comments from AF-KLM’s CEO

Benjamin Smith, CEO of Air France – KLM commented the report by stating “A year into the COVID crisis, lockdown measures and travel restrictions in our home markets and around the world continue to strongly impact the Group’s activity. In this ever-challenging environment, the Group has nevertheless shown its resilience, maintaining a strict control of its capacity and costs”.

He added, “The success of the first set of capital-strengthening measures completed in April, allows us to look forward to the summer season with greater confidence, hoping that the progress of the vaccination roll-out worldwide and the implementation of travel passes will allow borders to reopen and traffic to recover”.

He then concluded, “In the meantime, we have accelerated the implementation of our transformation plan to build a solid post-crisis model. This includes the execution of our voluntary departure plans, which are progressing as expected. In the coming months, we will continue our strict cost control approach while reinforcing our sustainability commitments, in line with our ambitious environmental roadmap.”

Featured image: Air France Boeing 777 Tail – Photo: Fabrizio Spicuglia/Airways