Airline industry to return to profitability in 2022

3 min reading time

Published on 31 October 2022

Q3 2022 aérien

As the third quarter of the year draws to a close, major airlines such as Air France-KLM, Airbus, Finnair and Air Canada are reporting financial results that are clearly up on the previous two years. These performances demonstrate once again the effective recovery of international tourism.

The Franco-Dutch group Air France - KLM has unveiled its quarterly results and has recorded a second consecutive quarter in the black, despite the current inflationary context which is strongly impacting fuel costs. This performance will enable the group to repay one billion euros of the 3.5 billion euros of state-guaranteed loans still due.

During the summer period, the group transported 25 million passengers, an increase of 47.6% compared to the third quarter of 2021. However, the company only deployed 89% of its 2019 seat capacity this summer, with a load factor of 88%. Turnover jumped by 77.6% to €8.11 billion, €500 million higher than in the third quarter of 2019.

Thanks to the third quarter profit, the company is in the black for the first nine months of the year, with a net profit of 232 million euros. As a reminder, it had lost 7.1 billion euros in 2020 and 3.3 billion in 2021. Its net debt has thus decreased by €2.2 billion since the end of 2021, to €5.9 billion.

Finally, "in response to rising fuel prices and other external costs, the group has implemented several fare increases on all its long-haul flights in the first half of 2022". The profitability per seat in the coming months should therefore increase further.

For Airbus, third quarter revenues increased by 27% compared to the third quarter of 2021. This increase is mainly due to "higher deliveries of commercial aircraft, a favourable mix and increased contribution from Airbus Defence and Space and Airbus Helicopters, as well as the appreciation of the US dollar". Quarterly profits also jumped from €404 million in Q3 2021 to €667 million in Q3 2022, an increase of 65%.

The group's year-to-date turnover is €38.1 billion. This compares with €35.2 billion in 2021 at the same time. In addition, orders are also up significantly with 647 net aircraft orders, compared to only 133 in September 2021. The order book now stands at 7 294 commercial aircraft. The same is true for Airbus Helicopters, where the number of orders rose from 185 in September 2021 to 246 in September 2022.

Finland's national airline, Finnair, recently reported its first positive quarterly operating profit since 2019 and said it expects strong demand to continue as it reshapes its strategy to be back in the green. The company reported a comparative quarterly operating profit of 35.2 million euros for the third quarter, compared with a loss of 109.1 million euros a year earlier. The net result for the period remains negative, a loss of 37.2 million euros, "due to high financial charges resulting from high indebtedness and foreign exchange losses due to the strong dollar".

Finnair said its operating profit was also burdened by high fuel prices, the residual effects of the pandemic, including travel restrictions in China and the Ukrainian conflict. However, turnover increased by 261% in July-September 2022 compared to the previous year to €719.2 million.

In addition, Finnair has started to look for new commercially viable routes after the closure of Russian airspace due to the war in Ukraine cut off its previously lucrative Asian routes. The company said it was working to build a more geographically balanced network by strengthening its cooperation with partner airlines and adding flights to India, the Middle East and North America.

Air Canada's results for the third quarter of this year included an operating margin of 12.1%, the airline's first positive quarterly operating margin since the start of the pandemic. Operating revenues for the quarter totalled $5.322 billion, more than double the third quarter of 2021.

While total cash is over $10.2 billion as of September 30, 2022, the airline's net loss was $508 million, compared to a net loss of $640 million in the third quarter of 2021. Finally, expected ticket sales in the quarter were 95% of Q3 2019 levels. 

Air Canada's strong third quarter results are the result of the continued restoration of our extensive network, improved operational performance, modern and efficient fleet, leading-edge products and services, and an incredible team of employees. [...] Thanks to the hard work and commitment of our employees, after a challenging June and July, we have seen significant operational improvement throughout August and September, with operations now at pre-pandemic levels. 

Michael Rousseau, President and Chief Executive Officer, Air Canada

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