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Coronavirus

Air France-KLM faces more challenge from renewed lockdowns

Renewed COVID-19 lockdowns may force Air France-KLM to count losses.

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KLM, Air France to resume flight operations in Nigeria from December 7

The renewed COVID-19 lockdowns are seriously challenging the Air France-KLM Group as it goes deeper into the red, with the group recording a 7.1 billion euro ($8.5 billion) net loss in 2020.

According to Reuter news report,

  • “The airline group expects to fly 40% of its pre-crisis capacity in January-March, as tougher travel curbs in France and beyond widen losses from the 407 million euros in negative earnings before interest, taxes, depreciation and amortization (EBITDA) recorded in the fourth quarter.
  • “Air France business recorded a 989 million-euro operating loss last quarter, more than six times wider than KLM’s 152 million-euro deficit. Performance disparities have in the past sharpened Franco-Dutch tensions between the airlines and their government shareholders.”

READ: KLM, Air France to resume flight operations in Nigeria from December 7

According to the Chief Executive, Ben Smith,The past year has tested the Air France-KLM Group with the most severe crisis ever experienced by the air transport industry.

Analysts warn that the worsening travel outlook threatens to ruin Europe’s critical summer season and leave major carriers in need of another round of funding support.

READ: Pfizer vaccine records 94% drop in symptomatic COVID-19 cases in Israel

What you should know

  • France–KLM is the product of the merger in 2004 between Air France and KLM. Both Air France and KLM are members of the SkyTeam airline alliance.
  • In 2020, Air France-KLM received 10.4 billion euros in loans and guarantees from France and the Netherlands
  • It is as well negotiating the terms of a state-backed recapitalization, with EU regulators pushing for airport slot concessions.
  • Air France-KLM cut its workforce by 10% or 8,700 full-time equivalent positions in 2020 and expects to eliminate a further 6,000 in coming years, if conditions remain the same

Johnson is a risk management professional and banker with unbridled passion for research and writing. He graduated top of the class with B.sc Statistics from the University of Nigeria and an MBA degree with specialization in Finance from Ambrose Alli University Ekpoma, with fellowships from the Association of Enterprise Risk management Professionals(FERP) and Institute of Credit and Collections management of Nigeria (FICCM). He is currently pursuing his PhD in Risk management in one of the top-rated universities in the UK.

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