Air France-KLM margin trails airline rivals - and Air France lags its successful KLM partner
Air France-KLM has slowly managed to improve its profitability since the worst years in the aftermath of the global financial crisis. Its 2017 operating profit margin, announced on 16-Feb-2018, was finally back to the 5.8% achieved in the last year before the global financial crisis.
More than profitability, Air France-KLM's biggest focus – and perhaps its greatest financial achievement in recent years – has been to reduce its net debt while maintaining comfortable levels of liquidity. With fairly weak margins from which to generate operating cash flow, the focus has been on ensuring that capital investment is limited to levels below cash flow generation.
This has allowed only cautious growth, focused mainly on the more profitable of Air France-KLM's two main subsidiary airline groups.
Both improved their operating result in 2017, but KLM continued to outperform Air France both in absolute profit levels and in profit margins. Air France is hoping that Joon, its new lower cost airline with millennial-focused branding, will improve its fortunes.
However, as CAPA has previously noted, Joon is relatively limited in its scope, constrained by union pressures, whereas KLM already has lower unit costs and better labour productivity than Air France.
To access CAPA Premium Analysis you need a CAPA Membership
Your window into the latest insights
CAPA employs an industry-leading Analyst team based in Europe, North America, Asia and Australia who offer unique perspectives and independent and accurate commentary of critical industry developments globally. CAPA Members rely on our Analysis to unlock valuable insights and actionable intelligence to keep ahead of the game.
Big picture strategic view
Our Analysts don’t just report the news - they take a big picture strategic view of aviation dynamics, issues and trends and analyse the implications of these developments for you.
The CAPA Analyst team is based globally to ensure our CAPA Members have access to independent, unique perspectives covering an entire spectrum of daily, worldwide commercial aviation developments.
Customise your Alerts
CAPA Members can use CAPA Alerts to receive daily, weekly or monthly and customised updates on our Analysis.
I'm very impressed by the factual and detailed analysis CAPA is always doing.- CEO, Airline Member
Phone: +61 2 9241 3200 | Email: firstname.lastname@example.org