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Research Tree provides access to ongoing research coverage, media content and regulatory news on AIR FRANCE-KLM. We currently have 9 research reports from 1 professional analysts.
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Strong performance despite headwinds in France and a promising but uncertain future
17 Feb 17
Air France-KLM published very strong annual results, at a level not seen since 2007. Indeed, except for revenues which slightly declined (-3.3%), EBITDAR, EBITDA, operating income, net result and FCF are all growing quite strongly, bringing the lease adjusted operating margin to 5.7%, when it was only 4.4% a year ago. Moreover, the good FCF generation has enabled the group to reduce its debt to a reasonable level, lowering financial costs. The strict cost management coupled with a favourable fuel price environment have helped increase the group’s operating margin, despite the pressured demand. Finally, Transavia has, as expected, found a way to operate at breakeven, while the maintenance activity continues to bring satisfaction. For 2017, the company remains quite prudent on the back of expected increasing fuel costs, the uncertain geopolitical environment and negotiations with the unions for the creation of a new company (i.e. the Boost project).
Air France's encouraging traffic figures
09 Jan 17
Air France released very good traffic figures for December (after the good ones in November) with traffic increasing more than capacity in almost all destinations and in all divisions. Indeed, the whole group observed a 7.6% increase in the number of passengers to 7.2m in December, coupled with a strong increase in its load factor. Even the cargo activity, despite seeing a traffic decrease as usual at this time of the year, saw the load factor increase yoy for the first time since April 2016. So, promising figures but what is still unknown is whether important discounts were offered on fares to reach this performance.
Fortunately there is Transavia!
09 Nov 16
Air France-KLM group reported its October traffic figures which showed a total group capacity increase (+2.9%) that was higher than the traffic increase (+1.5%), leading to a lower occupancy rate (85.3% and 1.2 points yoy). In October, the group carried 8.4m passengers (+3.7% yoy) but this strong increase is mainly thanks to the Transavia airline’s performance with 1.3m passengers carried (+25%) while the other airlines saw a traffic increase of 0.5% yoy to 7.1m passengers. The RPK is slightly increasing yoy (+1.5%) to 22,788m and slightly decreasing since last September but the trend is normal at this time of the year, while the occupancy rate also follows the same trend seen in the summer. The main group’s airlines (Air France, KLM, HOP!) have seen their capacity increase by 1.6% globally, although variable in different geographic areas (Caribbean +9.9%, North America +4.1% but LatAm -5%). At the same time, traffic was up only 0.2%, while the geographic areas’ trends were similar to the capacity variations. Globally, the occupancy rate decreased by 1.2 points to 85%, dragged down by short- and medium-haul and by the Africa/Middle East region. The Transavia airline showed a capacity increase of 16.8% while its traffic only grew by 14.9%, leading to a decreasing occupancy rate yoy of 88.6%. This strong growth was mainly thanks to the French part of Transavia and to the Munich base development. Cargo still shows disappointing figures with traffic decreasing by 3.5%, while capacity decreased by 3%. The occupancy rate is also down yoy to 61.9%, continuing the downward trend initiated in 2011.
New plan and new airline for cost reduction, without conflict this time
04 Nov 16
Air France unveiled a quite weak Q3 but it also presented its new strategic plan called “Trust Together” which concerns the creation of a new reduced cost airline. Q3 revenues were still impacted by the weak demand to travel to France following the attacks in France. Geopolitical uncertainties also impacted the traffic which decreased by 1.2% in Q3 yoy. During the quarter, revenues were down 4.1% yoy (-5.1% reported), while the EBITDA decreased to €1,419m (€-174m reported and €-84m on a comparable basis). Restated EPS also decreased to €1.49 (€-0.22).
Must capitalise on "fuel bonus"
19 Feb 16
h1. Headline figures: Air France-KLM saw its revenues climb to €26.1bn, up 4.6% on a reported basis but down 3.2% lfl. Group EBITDA stood at €2,447m, a reported increase of €858m and up €576m lfl. The operating result sky-rocketed to €816m, up €945m and up €698m lfl. Finally net income was positive for the first time in many years at €118m. The group reduced unit costs by 0.6%, somewhat shy of its original 1% target. The significant boost from the fuel price fall means that the group managed a significant reduction in net debt, from €5.4bn at end 2014 down to €4.3bn at 31 December, which means that the group's debt has fallen by some €2.2bn over the last four years. h1. Results by segment: h2. Passenger network: 2015 revenues of €20.5bn up from €19.6bn and an operating profit of €842m (-€83m in 2014). Overall the group increased capacity by 0.7% during the year with traffic growing 2.8% thanks to an improved load factor at 85.1% vs 84.7%. Unit revenues however came under pressure in 2015, down 3.3% at constant currency, especially in the long haul segment (-4.4%) while medium haul unit's revenues were flat. The fall came from falling demand out of Brazil and Japan (10% of group capacity), in addition to a drop in Oil & Gas related customers mainly out of Africa and an impact from the Paris November terrorist attacks that the group estimates at €120m. h2. Cargo: 2015 revenues of €2.4bn down from €2.7bn and an operating profit of -€245m (-€212m in 2014). The Cargo activity continued to be affected by generally weak global trade and structural market overcapacity. The division cut full freighters' capacity by 23% (halving the full freighters' loss to €42m from €97m in 2014) so that overall capacity fell by 5.8%. Revenues per available ton kilometre fell by 12.8% on a lfl basis. Despite the sharp fall, unit cost fell 10.8% partially mitigating the drop in demand thanks to falling fuel prices as well as a headcount reduction of 8.8%. h2. Maintenance: 2015 revenues of €4bn (of €1.58bn from third parties) up from €3.39bn and an operating profit of €214m (€174m in 2014). Third-party revenues increased 7.3% on a lfl basis but 26% on a reported basis to €1.58bn from €1.25bn thanks mainly to the strong dollar but also from the numerous contracts signed in prior years. h2. Transavia: 2015 revenues of €1.1bn up from €1.06bn and an operating loss of €35m (-€36m in 2014). Transavia increased capacity by 5.3% with Transavia France capacity up 25% and Transavia Netherlands shifting its capacity from charter flights (-13%) to scheduled flights +17%. Traffic increased by 5.4% with load factors remaining stable at 89.9%. Unit revenues fell by 1.6% while unit costs fell by 1.8%, resulting in a stable loss of €35m as Transavia continues to seek out scale. 2016 will see ASK’s increase by 15% with additional capacity in France and a new base opening in Munich. h1. OUTLOOK: Air France-KLM suggests that the high level of uncertainty regarding the fuel price as well as the unit revenue evolution due to geopolitical contexts and the industry capacity environment means that a significant part of fuel savings on the P&L are expected to be offset by the downward pressure on unit revenue and negative currency impacts. The group will look to reduce unit costs by 1% in 2016. Free operating cash flow generation after disposals is expected to be between €0.6bn and €1.0bn in 2016 and with a continuing reduction in net debt as a result.
Strong Q3 thanks to market improvement but structural issues remain
29 Oct 15
Revenues for Q3 15 were down 2.4% to €7.42bn lfl but up 10.4% on a reported basis. Importantly, capacity grew by +1.2% which is lower than the RPK at +2.2%. Revenues were boosted by solid peak season passenger numbers, while the Cargo activity continued to suffer from the structural overcapacity on the segment but AF-KLM’s capacity has been adjusted with the retirement of part of the fleet. Group operating result stood at €898m, up €304m on a lfl basis, but up €651m on a reported basis. Mainly thanks to the non-recurrence of last year’s strikes (estimated to have had a negative impact of €330m) and decreased fuel costs combined with solid passenger numbers. Adjusted net income came in at €624m, up €518m on Q3 14. Importantly, net debt fell by €1.77bn to €4.3bn so that the company’s net debt/EBITDA ratio fell to 3.4x from 4x. The full-year net debt reduction objective is maintained at €4.4bn, implying a €100m increase in net debt over Q4. The guidance for full-year unit cost reduction objective has been revised downward to -0.5%-0.7% from -1%-1.3%. Management is keen to stress that the Q3 performance is not linked to structural changes in the business but that the company had benefited from the improvement in the market environment. The talks with unions must resume to agree further savings and reduce the gap with competitors. This is particularly highlighted by the difference in the operating result for 9M 15 (€666m) vs 9M 14 (€370m strike adjusted). The €294m improvement is almost exclusively due to the reduced fuel bill improvements of €1.18bn which compensate for negative currency impacts of €118m, decreased unit revenues of 4.2% (€770m) and a slight improvement in unit costs of €86m, which is cancelled out by a €89m increase in P&L pension related expenses.
20 Feb 17
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The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
N+1 Singer - Morning Song 22-02-2017
22 Feb 17
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N+1 Singer - Carpetright - Recovery has just begun
17 Feb 17
With UK LFLs up 6.8% in Jan against tough comparatives, and Europe LFLs up 5.4% in Q3, the first clear evidence is now visible that the transformation strategy is gaining momentum. Given some uncertainties, market forecasts are yet to reflect this, but upgrades seem likely as further initiatives are rolled out. Despite a recent bounce from its all time low, the valuation is still very low on consensus assumptions, where risk now appears to be shifting to the upside. With scope for re-rating too, our 300p target price has the scope to grow to 500p over 18 months. We re-initiate with a Buy.
The Crown Joules
15 Feb 17
We believe that own-brand retailers that operate a balanced multi-channel proposition will be well placed to prosper in a competitive apparel market going forward. Joules is one company in particular which we believe will outperform the sector given its loyal and growing customer base, distinctive brand and strong track record of opening profitable space. We initiate coverage on the shares with a buy recommendation and price target of 249p, implying upside of 16.9% over the prevailing market price.
Panmure Morning Note 19-01-2017
19 Jan 17
Pets at Home have released a Q3 trading update this morning that will disappoint the market. Group like-for-like revenue growth was just +0.1% through 3Q16 as subdued trading across the Merchandise business weighed on continued strong growth in Veterinary Services. Profit outlook for FY17 remains in line with expectations. Suspect the shares will come under pressure.