Air France-KLM has warned that, with no sign of a recovery from currently dire trading conditions, it plans to shrink and become a leaner, more efficient outfit.
Announcing its results for full year 2020, the airline notes that earnings in the first quarter of this year will be even worse than in the fourth quarter of 2020, when passenger numbers fell 75% year on year.
It plans to ramp up capacity as lockdowns ease into the summer, but it will not return to 2019 levels until 2024, and will operate 7% fewer aircraft in 2022 compared with 2019.
Air France began pivoting its operations to domestic services last year, including to French overseas territories, but this has not been nearly enough to compensate for the loss of international travel.
The massive reduction in its services also resulted in a €595 million cost for fuel over-hedging in the period.
Only cargo revenues stand out positively for the group, rising 77% in 2020. Although this contributed €2.6 billion to the group’s earnings, a fifth more than in 2019, overall revenues declined by €4.3 billion.
At the end of December the group had €9.8 billion of liquidity and credit lines. It is examining “quasi-equity and equity solutions” to improve its liquidity, and expects progress in the coming weeks.