The announcement by Donald Trump of the closure of borders to travelers from the 26 European countries of the Schengen area from Friday evening, for a period of 30 days, is particularly harsh for Air France-KLM. The action of the Franco-Dutch group also unscrewed this March 13 in the morning by 15%, falling below the 2 billion cap mark after having already lost more than 40% of its value in a month. Lufthansa fell by almost 12%, as did the IAG group, the parent company of British Airways and Iberia. At the close, the Air France-KLM share lost 12.69% on Thursday.
Several reasons for this: first, the transatlantic axis is the most important of the company's long-haul activity. Air France alone serves 11 American cities and operates 121 weekly flights. “The USA zone represents 15% of our turnover for passenger activity”, specifies the company. And profitability estimated by industry analysts close to 20%. According to them, the group could lose nearly 10 million euros in turnover per day. The group is particularly exposed, in particular via its alliance with Delta and Virgin Atlantic which weighs 12 billion dollars in turnover.
It is also a serious blow in the measure, where the company had redeployed across the Atlantic part of the Asian flights affected by the impact of the coronavirus. Air France had indeed decided to increase its capacity to New York in March, then, in April and May, to add capacity to New York, San Francisco, Seattle, Washington and Los Angeles. Even if “the redeployment is also carried out in the Indian Ocean, Caribbean and African zone,” specifies the direction.
If the Air France-KLM share is particularly rowdy on the stock market, it is also that the group is more financially fragile than its European competitors, argue analysts. “The Lufthansa and IAG (British Airways) groups benefit from a more solid cash flow and are less indebted, explains Yan Derocles, analyst at Oddo Securities, recalling that the period is all the more problematic when it falls when normally bookings for the summer. “
Another element of fragility: unlike Lufthansa, the three-color flagship store is less able to ground its devices to save money. The fleet of the German carrier is indeed “depreciated by planes owned 90% in own, said Yan Derocles, which is not the case with Air France which must continue to pay rents”.
What will be the total bill? In the 2019 annual results published in February, the carrier had estimated at more than 150 million euros the loss of profit related to the reduction of airfoil on China. Before raising it to nearly 200 million euros in early March. But that was before Donald Trump’s announcements.
Falling oil prices
Only small positive point: the oil prices which fell to 30 dollars per barrel and which are a source of very significant savings for the aviation sector. But you still have to fly the planes ..
In Bercy, we are monitoring the situation closely. “We are extraordinarily vigilant about the situation of Air France and we have all the means available to support the airline,” said Bruno Le Maire. And if there is a need for additional measures, we will take additional measures, “he added.