By Joanna Plucinska
LONDON (Reuters) -Airline group Air France-KLM reported better than expected results on Wednesday, helped by strong revenues and a drop in jet fuel costs, despite worries about the knock-on effects of U.S. President Donald Trump’s tariff policies.
Shares in the Franco-Dutch group were up 4.3% at 1008 GMT.
European airlines have been on alert for possible repercussions from global economic uncertainty tied to tariffs, although carriers like Lufthansa have said they’ve yet to see a notable impact on demand or earnings.
Air France-KLM said earlier this month that it would consider dropping economy ticket prices on its transatlantic routes if needed. Still, it maintained its outlook for 2025, easing analyst and investor concerns.
“The increasingly uncertain context may bring additional headwinds going forward, yet we believe Air France-KLM is uniquely positioned to adapt and perform, thanks to its diversified network,” Chief Executive Ben Smith said in a statement.
The company said it benefited from ongoing travel demand to its Paris hub and more broadly to Europe, and that it planned to mitigate tariff risks by diversifying its routes and shifting capacity if needed, but only in the fourth quarter.
Premium economy bookings were also doing particularly well, with growth in bookings seen to destinations like Canada and Latin America, Smith told analysts on a call, even though there was some softness in bookings from Europe to the United States.
Lower jet fuel prices also helped its results. Revenues jumped 7.7% from the same quarter last year to 7.2 billion euros ($8.2 billion).
The group reported an operating loss of 328 million euros for the first quarter, compared with the 370-million-euro loss expected by analysts polled by LSEG. That’s an improvement of 161 million euros over the same quarter last year.
The first quarter is often the weakest for airlines given lower bookings between January and March. Airlines make up revenues in the busy summer travel season.
Capacity was also up 4-5% compared to 2024, while the company’s planes remained relatively full, with a so-called load factor of 86%.
Air France-KLM has seen a turnaround since last year, when it struggled with spiralling costs and difficulties in particular at its Dutch airline KLM.
It hopes to continue that stability, with the option to change capacity in the fourth quarter if necessary and to drop economy class ticket prices to drive demand on transatlantic travel.
Chief Financial Officer Steven Zaat warned on an analyst call that cost rises may peak in the high single-digits in the second quarter due to fees at Amsterdam’s Schiphol airport, but otherwise the company expects costs to remain under control.
($1 = 0.8773 euros)
(Reporting by Joanna Plucinska. Editing by Sharon Singleton, Raju Gopalakrishnan and Mark POtter)
