(BFM Stock Exchange) – The British bank has gone from “underperformance” to “market performance” on the title, which amounts to no adviser to sell the title. The establishment underlines the good dynamic of Air France thanks to its exhibition to the “Premium” category on leisure customers.
Air France-KLM has found unpublished altitudes for a year and a half. The Franco-Dutch Air Transport Group climbs 10.3% on Monday, August 4 in the middle of the afternoon. The title has reached, at the highest of the session, 12.31 euros, which is a record on 2025, and an unprecedented summit since the beginning of 2024.
The company led by Ben Smith is propelled by Barclays which noted its “sub-poveration” council to “online weighting” on the action, which amounts to moving from “selling” to “neutral”, while raising its price of course to 10.50 euros against 5.4 euros previously.
In a sectoral note published this Monday, the British establishment recalls that it had previously warned of a degradation of demand on transatlantic lines, a real “chicken with gold eggs” for European “Legacy” companies, as opposed to those low-cost, that is to say Lufthansa, Air France-KLM and IAG. This is due to geopolitical and economic uncertainty in the United States.
Now now that American and European companies have delivered their results in the second quarter, the bank notes that “the income and profits of transatlantic flights are decreasing, but more moderate than expected”.
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The “Premium” is well resistant to transatlantic flights
Barclays notes that the impact on business trips has so far been “modest”. “At the same time, the leisure market ‘Premium’, which has played such an important role in the profitability of airlines from the pandemic, seems in great shape.
Air France-KLM and Lufthansa both underlined an unprecedented demand for the first class, which is stronger than that for business class, which exceeds that for the premium economical class “, reports Barclays.
“This is where our thesis seems to have failed. We expected that the volatility of the financial markets weaken the demand for premium ‘leisure trips’ due to a wealth effect (American consumption expenses, including the wealthiest, are closely correlated with the health of Wall Street, editor’s note). However, the financial markets have been recovered and Planned has not occurred, “says Barclays.
Besides the American market, the other regions display stable or even slightly positive trends, while the weakness of oil prices but also of the dollar alleges the fuel bill for companies.
An impact of the Olympics which reverses
These elements prompted Barclays to enhance his forecasts. In the case of Air France-KLM, the bank noted from a percentage point its forecast of unit passengers for 2025 which, due to the modest margins of the company, results in a 29% leap of its forecast of operating profit.
If the company should nevertheless see the request on its transatlantic flights to be complying, its assets have an advantageous basic effect, for the third quarter of 2025.
Over the same period of 2024, the company had seen its unitary recipe be amputated by 160 million euros due to an impact linked to the 2024 Olympic Games. This sporting event had created “a significant behavior of avoidance” of the French capital on the international markets, while the French had postponed their holidays after the Olympic period.
The “overthrow” of this impact will allow Air France-KLM to “moderate” a slowdown in American demand, underlines Barclays.
By the way, the British bank writes that the Air France company is currently “flourishing”. “Air France clearly displays solid performance, operating in a very favorable sector and benefiting from a strong exhibition at the Premium Leisure market, which is dynamic,” argues Barclays. “”
Conversely, KLM is struggling to cope with the 40% increase in airport royalties in Schiphol and has trouble obtaining unions agreement for its objective of productivity wage agreement, “continues the establishment.
The Bank also stresses that Transavia France will grow strongly because the company will resume the operations of the “Air France shuttle” which connects Orly airport to those of several metropolises (Nice, Marseille, Toulouse).
Post-pandemic traffic has dropped on these domestic lines, digging Air France’s losses on short-Courrier lines. Hence the group’s decision, in 2023, to entrust these services to Transavia, a low -cost subsidiary.
“We are convinced that this is a beneficial decision for Air France-KLM, but it will weigh on the profitability of Transavia while strengthening the results of Air France”, writes Barclays.
The Bank also stresses that the hybrid obligations issued by the company “weigh” on “Equity Story” (the story that a company tells the market to convince it) of Air France-KLM. The group notably resorted to this type of bond at the end of 2022 in late 2022 between debt and capital, to reimburse super subordinate loan titles from the French State.
This helped the Company to comply with the European Commission requirements in terms of reimbursement of state aid during the pandemic. But this type of bonds has high interest, from 6.5% until next November and then 13 percentage points above a market reference (the so-called “mid-swap” rate).
Julien Marion – © 2025 BFM Bourse
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