Air France-KLM in free fall: profits disappoint amid strikes and rising taxes

The Franco-Dutch group loses more than 14% on the stock market after quarterly results fall short of expectations. Summer strikes, higher taxes, and weak demand for travel to Southern Europe take their toll.

Air France-KLM plunged on the Paris Stock Exchange, dropping as much as 14% — its worst session since November 2022. The airline reported an operating profit of €1.2 billion in the third quarter, below analysts’ estimates of €1.29 billion. Revenue also missed expectations, weighed down by external factors and a more uncertain economic environment.

Strikes by air traffic controllers in France and ground staff in the Netherlands had an impact of around €50 million, while the unusually hot summer in Northern Europe dampened demand for travel to the south of the continent. Further pressure came from higher air ticket taxes in France and increased airport fees in the Netherlands, which eroded KLM’s margins, down from 11.1% to 9.5%.

Despite this, Air France saw its operating margin rise, supported by the strong performance of its premium cabins — increasingly central to the group’s “premiumization” strategy.

Low-cost carrier Transavia, on the other hand, suffered from intensifying competition in the Dutch market and pricing pressures caused by higher airport costs and ticket taxes, which prompted some passengers to choose German airports instead.

Air France-KLM confirmed its 2025 guidance for capacity growth between 4% and 5% and investments of up to €3.4 billion, while maintaining a solid liquidity position of €9.5 billion. But the markets’ message is clear: in a volatile sector like air transport, even a small misstep can come at a very high price.

Andrea Pelucchi