By Laurence Frost and Toby Sterling
PARIS/AMSTERDAM (Reuters) -Air France-KLM sales are showing little sign so far of the travel recovery it still hopes to see by summer, the airline group said on Thursday, as it posted a wider first-quarter operating loss.
The group also confirmed its intention to raise more capital within months – a prospect that has weighed on its shares. The stock fell 1.1% to 4.51 euros at 0850 GMT — less than half its peak of 9.81 euros early last year before the crisis.
Air France-KLM expects to operate 50% of its pre-pandemic flight capacity in the second quarter under way, picking up to 55% to 65% in July-September.
“We’re waiting to see the first effects of vaccination,” Chief Financial Officer Frederic Gagey said. Demand is showing “no noticeable improvement so far”, he added, with customers often waiting to book at the last minute.
While rebounding U.S. and Chinese domestic markets are already benefiting airlines there, carriers in Europe are stuck waiting for the region’s slower vaccine rollouts to give way to looser curbs and an anticipated recovery.
Lufthansa cut its 2021 capacity forecast last week while narrowing its first-quarter loss with a 19% workforce reduction. British Airways parent IAG posts quarterly earnings on Friday.
The operating loss increased to 1.18 billion euros ($1.42 billion) from 815 million in the first quarter of 2020, which was only partially affected by the pandemic. Revenue fell 57% to 2.16 billion euros.
“The Q1 results showed the impact of depressed demand in the face of ongoing lockdowns and travel restrictions,” Liberum analyst Gerald Khoo said.
The group, which took a 10.4-billion-euro government-backed bailout last year, raised 1 billion euros in an April share issue that saw the French state double its holding to 28.6%.
It also converted a 3 billion-euro French government loan into hybrid capital and is seeking European Union approval for a conversion of 1 billion euros in Dutch support. Dutch arm KLM said on Thursday it would not need further cash injections.
Air France-KLM nonetheless plans to raise further capital in a process its CFO said would see debt and state support “gradually transformed into market-credible products”.
Until then, investor focus “will remain on its balance sheet, with today’s update confirming (that) additional costly financing and/or a further dilution for existing shareholders is imminent,” Goodbody analyst Mark Simpson said.
The net loss narrowed to 1.48 billion euros from 1.8 billion a year earlier, which included a large fuel-hedging deficit as traffic collapsed. Net debt rose by 1.5 billion euros over the quarter to 12.5 billion at March 31, when liquidity and available credit stood at 8.5 billion euros.
Gagey, 64, is due to retire at the end of June and will be replaced in the group role by current Air France finance chief Steven Zaat, the company announced on Thursday. ($1 = 0.8330 euros)
(Reporting by Laurence Frost and Toby Sterling; Editing by Cynthia Osterman and Keith Weir)