Air France-KLM ramps up capacity as Omicron recedes

Bloomberg

Air France-KLM plans to cautiously ramp up capacity in coming months as the latest coronavirus wave fades, while exploring new ways to raise funds to pay back a government pandemic bailout.
The struggling carrier forecast network capacity of 73% to 78% of 2019 levels during the first three months of this year, according to a statement. That would just exceed the 72% range achieved in the October-to-December period.
The increase coincides with improving financial results, with earnings before interest, taxes depreciation and amortisation reaching 827 million euros ($940 million) in the fourth quarter from a loss the previous year. That figure is expected to be “around break even” in the seasonally weaker first quarter.
“I’m pretty happy with the results,” Chief Financial Officer Steven Zaat said on an analyst call, adding that an improvement in transatlantic travel offset the omicron wave of the pandemic.
“If people can fly, people will fly,” he said.
The shares declined 3.5% as of 9:10 am in Paris, and are just below half the pre-pandemic level of two years ago.
Air France-KLM is the first of Europe’s major network carriers to report earnings after budget airlines Ryanair Holdings Plc and EasyJet Plc outlined plans to raise their own capacities to near normal this summer as ticket sales increase. While the Franco-Dutch operator is making progress toward recovery, its balance sheet is still debt heavy after relying on state bailouts to get through the pandemic.
Air France-KLM pushed back repayment of state aid last year amid a surge in the omicron variant of Covid-19, a move that will keep the airline under European rules restricting acquisitions and executive pay.
The carrier is now considering more fund-raising measures that could help repay the state, including a rights issue and quasi equity instruments. Another option would be a refinancing of assets for as much as 500 million euros.
“We need to strengthen our balance sheet and we are working on that day and night,” Zaat said. “We just need to find the right moment.” The carrier has 10.2 billion euros of available liquidity and credit lines at its disposal, the airline said.