Air France-KLM posts near-breakeven Q1 as $2.4bn fuel shock waits

Air France-KLM reported a near-breakeven first quarter on Wednesday, with an operating loss of just $32mn (€27mn), an improvement of $352mn (€301mn) on the same period of 2025, as strong premium yields and a well-timed hedging programme temporarily shielded the group from the full force of the Iran conflict's effect on jet fuel prices.

The relief is short-lived. The fuel price surge that followed the start of the conflict in late February did not appear in the Q1 fuel bill due to a standard delay in pricing, but a $1.1bn increase is now expected to land in Q2 alone. For the full year, Air France-KLM expects a total fuel bill of $9.3bn, an increase of $2.4bn compared to 2025, with hedging forecast to soften the blow by $1.5bn.

Group revenues reached $8.8bn (€7.5bn), up 4.4% year on year, beating analyst consensus. Unit revenue per available seat kilometre rose 3.4% at constant currency, supported by premiumisation and reduced industry capacity in March as Middle East carriers pulled back from long-haul flying. The passenger network was the standout driver, with unit revenue up 5.1% at constant currency as North Atlantic, Central and South America and Asia all performed strongly.

The picture across the group's individual businesses was uneven. Air France returned to a marginal operating profit of $13mn (€11mn), up $226mn (€193mn) on a year earlier. KLM remained in the red at -$133mn (-€114mn), bearing the brunt of a January snowstorm in Amsterdam that cost the group $105mn (€90mn) in total disruption costs. Transavia posted the weakest result of the portfolio, with an operating loss of $271mn (€232mn) and a margin of -40.7%, dragged down by the handover of Air France's Paris-Orly slots and cancellations across Middle East leisure routes to Israel, Lebanon and Saudi Arabia.

The hedging position is the number that matters most for what comes next. Air France-KLM revised its hedging policy at the start of 2026, extending the horizon from six to eight quarters and lifting one-year coverage from 68% to 87% — a decision that now looks well-timed against the fuel reckoning facing less-prepared carriers. For Q2 specifically, the group has 70% of its consumption hedged at an effective price of $1,260 per metric tonne against a market price of $1,559 per metric tonne — a saving of roughly $299 per tonne on two-thirds of its volume. The gap still leaves a $1.1bn year-on-year increase in Q2 alone.

The group said it had seen an initial demand boost after the Iran conflict began as travellers shifted bookings to European carriers for Asia flights, but was planning long-haul expansion more cautiously as passengers began postponing travel or booking closer to departure, wary of financial risk on long-haul itineraries. Full-year capacity guidance was trimmed to +2–4% from +3–5%.

Shares in Air France-KLM rose 1.3% in morning trading in Paris, while the broader CAC 40 fell 1.1% — a market reading that the Q1 result was better than feared, even if the Q2 outlook is not. Net debt closed the quarter at $9.4bn (€8.0bn), down $428mn from the end of 2025, with cash at hand of $12.4bn (€10.6bn) sitting well above the group's €6bn–€8bn target floor. The balance sheet gives room to absorb the fuel shock. Whether demand holds long enough to push higher fares through is the question Q2 will answer.