Air France-KLM cut its 2026 capacity outlook on April 30, 2026, and warned that the Middle East conflict would inflict a €940 million ($1.1 billion) fuel shock on the group in the second quarter alone, even as the Franco-Dutch carrier reported a near-breakeven Q1 operating result that improved by €301 million ($352 million) year-on-year.
The group posted an operating result of -€27 million (-$32 million) on revenues of €7.5 billion ($8.8 billion), up 4.4% on the same period of 2025. The improvement was driven almost entirely by the passenger network, where unit revenue rose 5.1% at constant currency and yields climbed by mid-single digits across all front cabins. Group net loss was effectively unchanged at €252 million ($295 million).
Fuel pricing lag flatters the quarter
Jet fuel prices have more than doubled since the start of Operation Epic Fury on February 28, 2026, with northwest European jet fuel reaching a record $1,840 (€1,576) per metric ton on April 3, 2026.
None of that surge appeared in Air France-KLM’s Q1 fuel bill, which actually fell. The group attributed the disconnect to a “standard delay in pricing” and warned that the impact will land in Q2 in the form of a USD 1.1 billion (€942 million) fuel cost increase.
For full-year 2026, the group now expects a fuel bill of $9.3 billion (€8.0 billion), an increase of $2.4 billion (€2.1 billion) compared to 2025. Hedging is forecast to soften the blow by $1.5 billion (€1.3 billion). Air France-KLM revised its hedging policy at the start of 2026, extending the horizon from six to eight quarters and lifting one-year hedge coverage from 68% to 87%, a decision that, with hindsight, looks well-timed against the broader fuel hedging reckoning facing the industry.
CEO Benjamin Smith said the group had “already introduced measures to support our financial performance through disciplined cost management.”
Hiring of non-operational staff has been put on hold, discretionary spending has been minimized, and Air France-KLM has raised carrier-imposed surcharges per ticket, mirroring moves seen across the industry as carriers from Lufthansa to Cathay Pacific cut their summer schedules.
Capacity outlook trimmed
Alongside the results, the group revised its 2026 capacity guidance downwards. Total available seat kilometers are now expected to grow between 2% and 4% compared to 2025, against a previous range of 3% to 5%. Long-haul growth was cut to a 2% to 4% range from circa 4%, short and medium-haul capacity is expected to remain stable, and Transavia growth was capped at 8% to 10% from circa 10%.
Net capital expenditure was also trimmed, to “below €3 billion” ($3.5 billion) from circa €3 billion previously. The unit cost outlook for the year was left unchanged at 0% to +2%, with disciplined cost management offsetting the labor and airport-fee pressures already in the system.
The group’s leverage ratio guidance of 1.5x to 2.0x was held firm. Net debt closed Q1 at €8.0 billion ($9.4 billion), down €366 million ($428 million) from the end of 2025, and cash at hand stood at €10.6 billion ($12.4 billion), comfortably above the €6 billion to €8 billion target range. In early January 2026, the group placed €650 million ($760 million) in senior unsecured notes at a 3.875% coupon, with proceeds earmarked to redeem the first tranche of its Sustainability Linked Bonds in May 2026.
KLM still loss-making, Transavia loss widens
Behind the group-level improvement, the picture remained uneven across the portfolio. Air France returned to a marginal operating profit of €11 million ($13 million), up €193 million ($226 million) on Q1 2025, with a 0.2% margin. The carrier confirmed that, from summer 2026, it will centralize all Paris operations at Charles de Gaulle Airport (CDG), with the exception of Corsica services covered by public service obligation that will remain at Orly Airport (ORY).
KLM remained in the red with an operating loss of -€114 million (-$133 million), although that figure represented an €84 million ($98 million) improvement on the prior year. The Dutch carrier bore the brunt of the early January snowstorm in Amsterdam and Paris, which cost the group €90 million ($105 million) in total, mostly attributed to KLM and Transavia Netherlands.
Transavia posted the worst-performing result of the group, with operating losses widening by €27 million to -€232 million (-$271 million) and a margin of -40.7%. The low-cost subsidiary’s first quarter was dragged down by the transfer of Air France’s Paris-Orly slots, finalized at the end of March, alongside cancellations to Israel, Lebanon and Saudi Arabia, and weakening bookings to Egypt, Cyprus and Turkey.
The Network division posted a €148 million ($173 million) operating profit, up €291 million at constant currency. Cargo unit revenues fell 0.7% at constant currency on a tough comparison base from early 2025 but recovered in March 2026 as Middle East carriers slashed long-haul capacity, redirecting demand to the group’s hubs and lifting yields on Asia, India and East Africa routes.
TAP process advances, cargo cartel fines settled
Two significant post-quarter developments were also confirmed. On April 23, 2026, the Portuguese government selected Air France-KLM as one of two remaining bidders to submit a binding offer for a minority stake in TAP Air Portugal, following the non-binding offer submitted on April 2, 2026. The group reiterated its position that Lisbon could become its “unique Southern European hub” if the bid succeeds, with particular value placed on TAP’s Brazilian and Portuguese-speaking African networks.
Separately, the group paid €368 million ($431 million) in March 2026 to settle cargo cartel fines after the Court of Justice of the European Union rejected an appeal by Air France, KLM and Martinair against a European Commission decision dating back to 2017. Provisions of €366 million ($428 million) had previously been booked against the case.
Fleet renewal continued, with new-generation aircraft now accounting for 36% of the group’s fleet, up eight points year-on-year. Air France-KLM continues to target an 80% share by 2030.