Air France and Airbus record significant losses due to Covid-19

Air France-KLM lost 7.1 billion euros in 2020, a shock ” unprecedented “ caused by Covid-19 which has severely affected the air transport sector and deprived the Franco-Dutch group of two thirds of its customers. Same causes, same consequences for the aircraft manufacturer Airbus, which posted a net loss of 1.1 billion euros last year, the aircraft manufacturer however limiting the breakage a little better.

Air France: in the midst of the disaster, little reasons for hope

Air France-KLM’s turnover collapsed by 59% compared to 2019, to 11.1 billion euros, the group said Thursday, February 18 in a press release, warning that the first quarter of 2021 would be ” difficult “ and that the visibility of a recovery remained “Limited”, although he expects a surge in traffic in the second and third quarters thanks to the vaccines.

These losses and falls in activity, “These are orders of magnitude that make you dizzy”, acknowledged the group’s chief financial officer, Frédéric Gagey. The crisis has caused Air France-KLM to suffer “An unprecedented impact”, summarized the company in its press release.

Thousands of jobs deleted

The profitability of airlines depends on their ability to fly their expensive aircraft as full as possible, an equation that became insoluble at the start of the crisis and which led the French and Dutch governments to grant direct or guaranteed loans to Air. France-KLM, for more than 10 billion euros in total.

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The net loss is in line with the expectations of financial analysts. It includes a restructuring provision of 822 million euros, largely a consequence of voluntary departure plans initiated by the group, detailed Frédéric Gagey during a press conference call.

Still at 83,000 at the end of 2019, the workforce has shrunk by more than 10% in one year: 5,000 less at KLM and 3,600 at Air France. “Plans underway will still make it possible to support around 900 departures at KLM and around 4,900 at Air France”, some efforts ” indispensable “ to overcome the crisis, according to Frédéric Gagey.

The loss was inflated by a depreciation of the aircraft fleet of 672 million euros, due to the end of the operation of the wide-bodied Airbus A380, A340 and Boeing 747. And the group also suffered a loss ” huge “ of 595 million euros due to advance purchases of kerosene, a common transaction for companies wishing to better plan their costs, but a bet that has been lost as oil prices collapsed.

67% fewer passengers

Over the full year, Air France-KLM lost 67.3% of passengers in 2019, a trend worsened in the fourth quarter alone (-75.9%).

And the group warned against “A difficult first quarter of 2021” because of “Tightened travel restrictions”. Its passenger carrying capacity will only reach 40% of that of the same period of 2019.

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In addition, “Visibility on the upturn in demand is still limited”, added the company, which nevertheless expects “A resumption of traffic during the second and third quarters of 2021 thanks to the deployment of the vaccine”.

Airbus, collateral victim

For its part, Airbus, a collateral victim of financially drained airline customers, saw its turnover decline by 29%, to 49.9 billion euros. This reflects the “Difficult market impacting commercial aircraft activity”, judges the group, which in 2020 delivered 566 devices, a third less than the previous year.

Sign that the European aircraft manufacturer does not expect an immediate rebound in the market, Airbus plans in 2021 to deliver the “Same number of commercial aircraft as in 2020”.

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“The 2020 results testify to the resilience of Airbus in the most severe crisis experienced by the aerospace industry”, believes its executive chairman Guillaume Faury, quoted in the press release. And add:

“Many uncertainties remain for our industry in 2021 as the pandemic continues to impact our lives, our economies and our societies. “

Like last year, the group indicates that it will therefore not propose a dividend for the year 2020.

Less bad results than Boeing

However, the European aircraft manufacturer is doing better than its competitor Boeing. The American giant suffered a loss of 11.9 billion dollars in 2020, weighed down by the setbacks of the 737 MAX and the delay of the first deliveries of the 777X at the end of 2023.

Airbus’ net loss is even slightly lower than last year, marked by a fine of 3.6 billion euros in a corruption case. Despite sluggish deliveries, Airbus managed to generate an adjusted operating profit of 1.7 billion euros and forecasts 2 billion for 2021.

This desire to resuscitate our snippets of life before the Covid

But several charges lead to the final loss: Airbus has set aside 1.2 billion euros to finance its restructuring plan and recorded 385 million costs related to the end of the very large A380 aircraft program and 480 million for accounting revaluations.

The aircraft manufacturer, which has reduced its production rates by nearly 40%, announced in June 15,000 job cuts, including 5,000 in France and 5,100 in Germany, out of the 134,000 that the group then had.

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