Covid pandemic leaves Air France-KLM with huge financial hole

Air France-KLM has posted huge first-quarter losses of 1.5 billion euros and warned that the situation will not improve much in the next few months as global travel restrictions persist due to the coronavirus pandemic.

Air France has already received billions in state aid and needs more as the outlook remains bleak. STEPHANE DE SAKUTIN AFP/File

Passenger numbers for the first three months of this year were down 73 percent compared to a year earlier.

The Franco-Dutch group lost 1.5 billion euros after tax in the first quarter, while revenues were down 57 percent on a year earlier.

Air France-KLM recorded a net loss of 7.1 billion euros in 2020.

The French and Dutch governments have propped up the airline with loans totalling 10 billion euros since the start of the pandemic, with Paris coming to the rescue again last month.

French state tightens grip on Air France-KLM by taking 29% stake https://t.co/8KGo4RWhxZ

— Bloomberg (@business) April 20, 2021

In April, the French state doubled its stake in the company to nearly 30 percent. The airline also raised just over one billion euros in a separate share issue.

An 'ever-challenging' environment

"A year into the Covid crisis, lockdown measures and travel restrictions in our home markets and around the world continue to strongly impact the group's activity," chief executive Benjamin Smith said in a statement, describing the environment as "ever-challenging".

The air company's chief financial officer, Frédéric Gagey, warned that the start of the second quarter was "not showing any notable improvement" so far, with international flights still heavily restricted.

Smith, however, insisted the company was looking forward "to the summer season with greater confidence, hoping that the progress of the vaccination roll-out worldwide and the implementation of travel passes will allow borders to reopen and traffic to recover".

In the meantime, the airline is continuing with cost-cutting measures, including voluntary redundancies.

A controversy erupted in the Netherlands last month over a two-million-euro payout to company boss Smith in 2020 despite the losses.

Dutch lawmakers backed a motion demanding the withdrawal of the payment to the Franco-Dutch company's chief executive, threatening to block any future aid to the group