By Joanna Plucinska and Diana Mandia
LONDON/GDANSK (Reuters) -Air France-KLM swung to an unexpected loss in the last quarter of 2023, hit by higher costs and disruptions caused by conflict in the Middle East, sending its shares down 10% in early Thursday trade.
European airlines have reported strong demand for the coming year, but supply chain constraints have led to higher costs and maintenance delays, and geopolitical tensions have also disrupted plans and schedules.
The Franco-Dutch airline group reported record revenues for 2023 and an operating profit of 1.7 billion euros ($1.8 billion), in line with expectations,
However, it also posted a fourth-quarter operating loss of 56 million euros, missing analysts’ consensus forecast for a profit of 88 million euros, according to a company poll.
A rise in unit costs was only partly compensated by a lower jet fuel price.
Ticket sales were high in 2023, helping push up revenues 14% year-over-year to 30 billion euros.
The annual operating margin rose to 5.7%, up 1.2 percentage points year-on-year.
But a scarcity of spare parts and a shortage of engineering labour has proved challenging for the group.
Still, Air France-KLM was able to pay down 1.3 billion euros in debt, much of which was amassed during the pandemic travel shutdown, leaving outstanding net debt at 5 billion euros.
“We can be satisfied of our efforts to further strengthen our balance sheet and restore the Group’s equity,” Chief Executive Ben Smith said in a statement.
($1 = 0.9230 euros)
(Reporting by Joanna Plucinska and Diana Mandiá, editing by Deepa Babington and Mark Potter)
