AIR France KLM (AF) AI Stock Analysis

• Market Cap: €3.45B
• Dividend Yield: N/A
• Average Volume (3M): 1.46M
• Price to Earnings (P/E): 3.6
• Beta (1Y): 1.63
• Revenue Growth: 5.85%
• EPS Growth: 256.22%
• Country: FR
• Employees: 78,399
• Sector: Services
• Sector Strength: N/A
• Industry: Airlines, Airports & Air Services
• EPS (TTM): 1.39
• Shares Outstanding: 262,769,870
• 10 Day Avg. Volume: 1,164,782
• 30 Day Avg. Volume: 1,457,497
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €11.29
• Price Target Upside: -14.40% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 6

• Rating: 70 Outperform
• Price Target: €14.00 ▲(6.14% Upside)

Air France KLM's stock score is driven by strong technical momentum and attractive valuation, despite financial risks from high leverage and negative equity. The lack of earnings call data and corporate events limits the assessment to these key factors.

Positive Factors

Earnings

Air France-KLM reported a strong EBIT beat on higher revenues, with operating income significantly ahead of expectations.

Market Position

Air France KLM is a dominant player in the European aviation market undergoing a major transformation to unlock more cost savings and revenue streams.

Revenue Growth

Higher passenger load factor and stronger yields contributed to revenue growth.

Negative Factors

Cost Pressures

Air France KLM's 4Q23 results fell short of expectations amid rising costs, and the group is anticipated to grapple with sustained cost pressures stemming from ongoing operational and geopolitical disruptions, which will weigh on its profitability.

Macroeconomic Factors

Macroeconomic weakness and geopolitical tensions could curb discretionary spending on travel, affecting the company's growth.

Shareholder Returns

Potential for shareholder returns is dismal compared to peers, with uncertainty in free cash flow generation.

AIR France KLM Business Overview & Revenue Model

Company Description

Air France-KLM SA, together with its subsidiaries, provides passenger and cargo transportation services on scheduled flights in Metropolitan France, Benelux, rest of Europe, and internationally. The company operates through Network, Maintenance, Transavia, and Other segments. It also offers airframe and engine maintenance services; component support services comprising electronic, mechanical, pneumatic, hydraulic, etc.; and other services, as well as operates point-to-point flights to/from the Netherlands and France. As of December 31, 2021, it operated a fleet of 332 aircraft. The company was founded in 1919 and is headquartered in Paris, France.

How the Company Makes Money

Air France-KLM generates revenue primarily through the sale of airline tickets for both passenger and cargo services. Key revenue streams include passenger fare income, which is derived from ticket sales across its extensive domestic and international routes, and cargo revenue from the transportation of goods. Additionally, the airline benefits from ancillary revenues obtained through services such as baggage fees, seat selection, and in-flight sales. The company also engages in partnerships and code-sharing agreements with other airlines, enhancing its market reach and operational efficiency. Loyalty programs, such as Flying Blue, contribute to revenue by encouraging repeat business and customer retention. Moreover, the airline's participation in global airline alliances, like the SkyTeam alliance, allows for expanded service offerings and revenue-sharing opportunities across member airlines.

AIR France KLM Financial Statement Overview

Summary

Air France KLM shows improving revenue and profitability metrics, with a gross profit margin of 22.76% and a net profit margin of 3.18%. However, the high leverage and negative equity position pose significant financial risks, necessitating a focus on balance sheet strengthening.

Income Statement

The income statement shows a positive trend with revenue growth and improving margins. The TTM data indicates a gross profit margin of 22.76% and a net profit margin of 3.18%, which are improvements over previous years. However, the airline industry faces challenges with fluctuating fuel costs and economic conditions, which can impact profitability.

Balance Sheet

The balance sheet reveals significant leverage with a high debt-to-equity ratio of -15.69 in the TTM period, indicating financial risk. The negative stockholders' equity suggests potential solvency issues. Despite this, the company has managed to reduce its debt over time, which is a positive sign.

Cash Flow

Cash flow analysis shows strong free cash flow growth of 290% in the TTM period, indicating improved cash generation. However, the free cash flow to net income ratio is relatively low at 18.41%, suggesting limited cash conversion efficiency. The operating cash flow to net income ratio is also modest at 26.53%.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	32.47B	31.46B	30.02B	26.39B	14.31B	11.09B
Gross Profit	7.39B	4.99B	6.17B	7.97B	3.10B	1.00M
EBITDA	5.31B	4.02B	4.64B	3.73B	-371.00M	-3.65B
Net Income	1.03B	317.00M	934.00M	728.00M	-3.27B	-7.03B
Balance Sheet
Total Assets	38.35B	36.16B	34.49B	32.30B	30.68B	30.21B
Cash, Cash Equivalents and Short-Term Investments	6.31B	5.98B	7.38B	7.23B	6.80B	6.71B
Total Debt	12.80B	14.53B	13.53B	14.71B	16.24B	18.75B
Total Liabilities	37.04B	35.36B	33.99B	34.78B	34.50B	35.63B
Stockholders Equity	-816.00M	-1.76B	-2.05B	-3.00B	-3.82B	-5.43B
Cash Flow
Free Cash Flow	897.00M	-232.00M	-426.00M	1.88B	-668.00M	-4.92B
Operating Cash Flow	4.87B	3.50B	3.13B	4.86B	1.53B	-2.83B
Investing Cash Flow	-3.01B	-2.77B	-3.24B	-2.15B	-1.24B	-1.58B
Financing Cash Flow	-2.31B	-2.11B	-285.00M	-2.76B	-77.00M	7.15B

AIR France KLM Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 13.19
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:AF, the sentiment is Positive. The current price of 13.19 is below the 20-day moving average (MA) of 13.80, above the 50-day MA of 12.29, and above the 200-day MA of 9.35, indicating a neutral trend. The MACD of 0.18 indicates Positive momentum. The RSI at 51.02 is Neutral, neither overbought nor oversold. The STOCH value of 33.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FR:AF.

AIR France KLM Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AF	70 Outperform	€3.45B	3.62		―	5.85%	256.22%
Sector *	56 Neutral	$13.56B	17.98	10.03%	0.93%	7.13%	-12.93%
EADSF	―	$170.44B	32.18	23.80%	1.59%	―	―
0NWF	―	€101.24B	29.51	13.92%	―	―	―
0NQF	―	€9.56B	12.39	-46.54%	―	―	―
0KBZ	―	€8.17B	33.00	4.63%	―	―	―
0IU8	―	€115.94B	26.92	35.36%	―	―	―