Air France-KLM Reduces Operating Loss but Lowers 2026 Outlook
Air France-KLM reduced its operating deficit in the first quarter of 2026 by 301 million euros year-over-year. However, the group recorded a net loss of 252 million euros and anticipates a $2.4 billion increase in its fuel bill for the year, with the major impact concentrated in the second quarter. This deterioration forces the group to revise its 2026 guidance downwards.
Revenue Increase of 4.4% and Operational Improvement of 301 Million Euros
The group generated revenue of 7.5 billion euros in the first quarter of 2026, up 4.4% compared to the same period in 2025. This growth is mainly due to the Passenger network, supported by a 3.4% increase in unit revenue at constant exchange rates. This increase was driven by ongoing premiumization and a decrease in sector capacity in March, linked to the conflict in the Middle East. The operating result was –27 million euros, marking an improvement of 301 million euros compared to the first quarter of 2025, where it was –328 million euros. This improvement reflects the increase in unit revenues (contribution of 214 million euros) and a decrease in fuel prices (86 million euros), partially offset by an increase in unit cost of 30 million euros. The operating margin was –0.4%, an improvement of 4.2 points compared to the previous year. This performance was supported by the reduction in sector supply in March, although the January snow episode weighed with about 90 million euros of exceptional charges on the group.
Net Result Remained Negative Despite Operational Improvement
The group's net result was –252 million euros in the first quarter of 2026, compared to –249 million euros a year earlier. This near-stagnation at a deficit level contrasts with the operational improvement, mainly due to the cost of net financial debt and other financial charges. In terms of cash flow, the group generated a positive recurring adjusted operating cash flow of 884 million euros, up 101 million euros year-over-year. The net debt was reduced to 8.0 billion euros (compared to 8.4 billion at the end of December 2025), with the leverage ratio standing at 1.5x, in line with the group's ambition to maintain it between 1.5x and 2.0x. Liquidity was established at 10.6 billion euros at the end of March 2026, above the target range of 6 to 8 billion euros.
2026 Guidance Revised Downwards: Fuel Increase of $2.4 Billion with $1.1 Billion in Q2
Air France-KLM has revised its 2026 guidance downwards, mainly due to the impact of rising fuel prices linked to geopolitical tensions in the Middle East. The total fuel bill for fiscal year 2026 is now estimated at $9.3 billion, an increase of $2.4 billion compared to 2025. The impact of this increase was not reflected in the first quarter due to a timing difference in accounting, but about $1.1 billion of additional impact is expected in the second quarter. The group plans a capacity increase of 2% to 4% in 2026 (compared to +3% to +5% previously), an increase in unit cost between 0% and +2% (including +0.5% related to premiumization), and net investment expenditures below 3 billion euros (compared to about 3 billion previously). The leverage ratio is expected to be between 1.5x and 2.0x. Despite geopolitical uncertainties, the group continues to reallocate its capacities towards Asia and East Africa in response to capacity reductions by Middle Eastern companies. It has also implemented mitigation measures including an increase in carrier surcharges per ticket and a reduction in discretionary spending.
