Air France-KLM S.A.

Air France-KLM said Q2 2026 group revenue increased nearly 10% to EUR 9.3 billion, adjusted operating profit was EUR 484 million, and operating margin was 5.2%. Management said passenger demand remained robust, with more than 28 million customers during the quarter. For the first half, recurring adjusted operating free cash flow was EUR 928 million, and cash at hand was more than EUR 10 billion. On the cost side, unit costs were up 1%, within full-year guidance, while the fuel bill increased by approximately EUR 900 million versus last year in Q2 and the company said it recaptured approximately 86% of that additional fuel bill. For the full year, management now expects fuel to be roughly USD 1.9 billion higher than in 2025, group capacity growth of 2% to 3%, unit cost growth of 0% to 2%, capex below EUR 3 billion, and leverage between 1.5 and 2.

Benjamin Smith emphasized that the quarter showed the resilience of the model despite a volatile environment and higher fuel prices. He highlighted premiumization, strong demand in the Americas and Asia, brand-building initiatives, and fleet renewal as central to improving both financial and environmental performance. He also framed consolidation as a long-term strategic priority, pointing to the planned increase in SAS ownership and the binding offer for TAP as part of building a pan-European champion.

Steven Zaat focused on revenue outperformance, noting unit revenues were up 9%, cargo unit revenues were up 26.7%, passenger unit revenues were 8.9% higher, and Transavia unit revenue was up 1.6% despite a EUR 100 million fuel bill increase there. He said unit costs rose 1%, with maintenance and spare-part shortages offsetting savings from fewer wet leases and better fleet efficiency, but still within the 0% to 2% guide. On the balance sheet, he highlighted cash at hand of EUR 10.3 billion, the refinancing of expensive debt, reaffirmed credit ratings, and a declining leverage ratio. He also said recurring adjusted operating free cash flow was above EUR 800 million and that net debt was broadly flat despite EUR 250 million of deferred social charges and wage tax plus cargo claims.

Analysts pressed management on premium yield durability, TAP’s strategic logic, ETS expansion, cargo profitability, KLM’s path to its margin target, and whether higher fuel costs could force winter capacity cuts. Management said premium demand remains strong because of retrofits, new aircraft configurations, brand strength, and a low starting base at KLM for Premium Comfort. On TAP, they said Lisbon would be strategically important for Latin America and Brazil and that synergies in network, cargo, and MRO are the key rationale. They added that cargo contributed about EUR 100 million to the group and that any winter capacity rationalization would more likely be on European routes than long-haul, while the ETS proposal is being assessed because benefits and added costs are still being calculated.