Air France-KLM remains interested in the privatisation of TAP Air Portugal (TP, Lisbon) despite the group posting lower-than-expected results for the second quarter of 2024 resulting in cost-cutting measures and a moratorium on new jobs, CEO Benjamin Smith said during a conference call with journalists on July 25.
"In strategic terms, and depending on the sales conditions [such as price], TAP continues to be interesting for us," he said, as quoted by Portuguese business daily Jornal de Negócios, adding that the group had not received any recent news about the privatisation process.
In a statement commenting on the results, Smith said the quarterly results reflected "an increasingly challenging environment for aviation, with rising fuel prices and a continued pressure on costs". In this context, KLM Royal Dutch Airlines and Transavia Airlines delivered a "stable yet sluggish performance", he said, while Air France was also negatively impacted by the Olympic Games as international markets avoid Paris.
The group has already taken "strong measures to adapt to this situation, including a hiring freeze and additional cost cuts," he said. "The group is preserving its major investments to renew its fleet, which is a strategic lever to improve our financial and environmental performance. Going forward, we will continue to execute our strategy and deploy our transformation plan. Our business model is robust and resilient, and we remain confident in our ability to achieve our mid- and long-term objectives, notably by leveraging our strong assets and unique competitive position."
The group reported an operating result of EUR513 million euros (USD556 million) for the quarter, EUR220 million (USD238 million) down on the same period last year. This resulted from EUR109 million (USD118 million) in fuel costs and a EUR21 million (USD22.8 million) decrease in cargo unit revenues, while the impact of the Olympic Games was cited at EUR40 million (USD43.4 million). Operating margins were 6.5%. Still, the results showed an improvement on the previous quarter, which saw a net loss of EUR480 million (USD520 million).
Air France-KLM reiterated its commitment to renewing its fleet with more fuel-efficient and less noisy aircraft. By the end of June, 23% of its fleet was composed of new-generation aircraft, compared to 18% at the same point last year. The group aims to raise this ratio to 80% by 2030. It said that five A350s, three A320neo, five A321neo, and four A220s had been phased in since December, while older-generation aircraft were phased out, namely one B737-800, two A319-100s, and one CRJ1000.
