Air France-KLM shares get a lift from long-term profit outlook

Shares in French airline company Air France-KLM were flying high on Thursday after the company laid out new long-term profit targets for the next five years.

The company said operating profits are expected to improve by €2.0bn by 2028 due to a "further acceleration of its transformation program and an enhanced cost effectiveness", along with an operating margin above 8%.

It also forecasted a continued improvement on cash generation, and expected to deliver a significantly positive adjusted operating free cash-flow by the end of the period.

In the 2022 financial year the company booked an operating profit of €134m and operating margins were just 1.9%.

Chief executive Benjamin Smith said: “The transformation we have embarked on since 2019 at Air France-KLM has produced solid results, enabling us to rejoin the top tier of European leaders in the airline industry.

"We have delivered on our commitments, and I am particularly proud of the hard work carried out by all our teams to achieve these results, in a context marked by powerful headwinds."

The company is expecting to spend €3.0-3.5bn each year between 2024 and 2026 in net capital expenditures as it continues to invest in fleet renewal and maintenance to "improve its economic performance and reduce its C02 emissions and noise pollution". Net capital expenditures will rise to between €3.5-3.8bn a year in 2027 and 2028.

The stock was up 7.2% at €13.07 by 1250 CET.