AIR France KLM (AF) AI Stock Analysis

• Market Cap: €3.67B
• Dividend Yield: N/A
• Average Volume (3M): 1.44M
• Price to Earnings (P/E): 4.0
• Beta (1Y): 1.58
• 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: 1,800,479
• 30 Day Avg. Volume: 1,439,606
• PEG Ratio: -0.09
• Price to Book (P/B): -1.21
• Price to Sales (P/S): 0.07
• P/FCF Ratio: -9.19
• 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: €11.68
• Price Target Upside: -19.06% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 7

• Rating: 70 Outperform
• Price Target: €14.00 ▼(-2.98% Downside)

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.

Growth Expectations

Air France-KLM plans to increase capacity by 4-5%, indicating growth expectations for the coming year.

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.

Negative Factors

Macroeconomic Factors

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

Operational Costs

Costs remain a challenge, with Q4 unit costs increasing by 4.0%, exceeding prior targets.

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 a strong recovery in revenue and operational efficiency, with improving profitability margins. However, the balance sheet is concerning due to high leverage and negative equity, posing significant financial risk. Cash flow improvements are promising but need sustained stability. The company's financial health is improving but remains vulnerable to external shocks.

Income Statement

The company shows a solid recovery in revenue with a notable growth rate from 2021 to 2025, driven by post-pandemic recovery in the transportation industry. The Gross Profit Margin is improving, currently at 18.15% for TTM, indicating efficient cost management. The Net Profit Margin for TTM is at 1.71%, showing profitability challenges but positive improvement from previous years of losses. EBIT and EBITDA margins are also improving, suggesting operational efficiencies. However, the net income remains volatile.

Balance Sheet

The balance sheet reflects a high Debt-to-Equity ratio due to negative equity, raising concerns about financial leverage and risk. The company's equity ratio is negative, indicating liabilities exceed assets, a significant financial risk. The Return on Equity cannot be calculated due to negative equity. Despite these issues, the company maintains a substantial asset base.

Cash Flow

The cash flow statement shows positive operating cash flow, with a strong Operating Cash Flow to Net Income ratio of 8.47 for TTM, highlighting effective cash generation from operations. Free Cash Flow has turned positive in TTM, indicating improved financial health. However, historical volatility in Free Cash Flow suggests past challenges in financial management.

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: 14.43
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 14.43 is above the 20-day moving average (MA) of 12.31, above the 50-day MA of 10.63, and above the 200-day MA of 8.88, indicating a bullish trend. The MACD of 0.98 indicates Negative momentum. The RSI at 85.43 is Negative, neither overbought nor oversold. The STOCH value of 97.84 is Negative, 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	€3.67B	3.96		―	5.85%	256.22%
Sector *	66 Neutral	€7.28B	13.20	35.20%	3.67%	2.14%	-121.84%
EADSF	―	$170.28B	31.82	23.80%	1.56%	―	―
0NWF	―	€103.11B	30.05	13.92%	―	―	―
0NQF	―	€9.45B	12.39	-46.54%	―	―	―
0KBZ	―	€8.12B	32.32	4.63%	―	―	―
0IU8	―	€122.36B	28.41	35.36%	―	―	―