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French skies turn scarlet red with the abyssal losses of Air France, ADP and Airbus




Air France-KLM aircraft grounded have weighed on the 2020 results (photo: F.Dubessy)
Air France-KLM aircraft grounded have weighed on the 2020 results (photo: F.Dubessy)
FRANCE. The Covid-19 has come to lead every part of the French air transport industry as proven by the successive publications of results of the last twenty-four hours. Already on the brink of collapse, the Air France-KLM group announced, on Thursday 18 February 2021, a loss of €7.078 billion for its 2020 fiscal year for a turnover of €11.088 billion, a 59.2% drop in turnover. Net debt has fallen in one year from €6.147 billion to €11.049 billion. To give an accurate figure of €1 billion, this represents the total amount of loans and guarantees obtained by the Group from the French and Dutch governments in 2020, i.e. €10.44 billion.

The main reasons for this shortfall are, firstly, the pandemic which has grounded aircraft, but also a €672 million depreciation of its fleet resulting from the end of operations of the Airbus (A380 and A340) and Boeing (747) wide-bodied jets, as well as early purchases of kerosene (as oil prices collapsed) which add €595 million to the already high note.

According to a press release, the Franco-Dutch group lost 67.3% of its 2019 passengers (and even 75.9% in the fourth quarter of 2020 compared to the fourth quarter of 2019). "2020 has put the Air France-KLM group to the test with the most serious crisis ever experienced by air transport," commented Benjamin Smith, its CEO.

€822 million in provisions to finance the restructuring of Air France-KLM

2021 does not yet offer any glimmer of hope in an agenda for a recovery of tourism without any visibility. On the contrary. The group envisages the elimination of 6,000 additional full-time equivalent positions "in the coming years", the company says. It had already reduced its workforce by 10% (8,600 jobs, including 5,000 at KLM and 3,600 at Air France) by 2020. "Plans are underway to support about 900 departures at KLM and about 4,900 at Air France," said Frédéric Gagey, the group's Chief Financial Officer.


Of the €7.1bn loss, €822m relates to provisions to finance restructuring. At December 31, 2020, the Group had €9.8bn in cash and credit facilities. "In the coming months, we will continue to strengthen the Group's fundamentals, improving its economic and environmental performance, so that Air France-KLM is in a position to fully seize the opportunities of the recovery. We start 2021 with the hope that this year will see a resumption of traffic as soon as the vaccination is widely deployed and borders are opened again. Our customers are looking forward to being able to travel again and their commitment to Air France, KLM and Transavia has grown stronger during this crisis," said Benjamin Smith.

ADP and its 20 or so airports in sharp decline

Echoing the difficulties of the airlines, airports have been hit hard by travel restrictions. On Wednesday, February 17, 2021, the French group ADP, manager of twenty-four airports, published accounts showing a turnover for 2020 of €2.137 billion (-54.5% compared to 2019) and a net income group share of €1.169 billion. Net financial debt amounted to €7.484 billion, an increase of 40.5% compared to 2019.

The 20 or so airports worldwide welcomed 96.3 million passengers in 2020, a loss of 60.4% compared to 2019. Paris airports alone (Charles-de-Gaulle and Orly) accounted for 33.05 million passengers (-69.4%), those of TAV Airports (excluding Istanbul Atatürk whose traffic was transferred in April 2019 to the new airport of the Turkish economic capital not managed by ADP) 26.98 million (-69.7%). The Turkish TAV Airports is majority owned by the ADP group since May 2012. It manages Turkish airports (Antalya, Ankara, Izmir, Bodrum, Gazipaşa Alanya), those of Northern Macedonia, Tunisia, Georgia, Zagreb and Medina. To these should be added the hubs of Ammam (2.04 millions/-77.0%), Santiago de Chile and those of GMR Airports (40.77 millions/-60.6%) with New Delhi, Hyderabad and Cebu. In July 2020, ADP finalized the acquisition of 49% of this Indian group, which owns seven airports in India, the Philippines and Greece.

In 2021, the group estimates that passenger traffic will only reach between 35 and 45% of the 2019 level. According to a press release, it will be necessary to wait between 2024 and 2027 to find the results of before the pandemic on the Parisian platforms.

Majority owned by the French State, ADP has already announced the temporary closure of several terminals and is working on a voluntary departure plan to reduce its workforce by 11%.

Falling order intake at Airbus

Among the builders too, the sky is still very cloudy and the storm is still coming. Airbus' sales (131,349 employees) are expected to fall by 29% in 2020. It reaches €49.9 billion and a net loss of €1.13 billion including €1.1 billion directly related to Covid-19. It should be noted that in 2019, the Toulouse group already posted a similar loss (€1.36 billion) but attributed to several fines totalling €3.6 billion for corruption and the additional cost of the A400M military aircraft (€1.2 billion).

While its Aircraft Division recorded a 34% drop in deliveries in 2020 (566 aircraft), Airbus does not expect any increase in aircraft deliveries in 2021. Order intake increased from €81.2 billion in 2019 to €33.3 billion in 2020.

In October 2020, the manufacturer signed two agreements with the unions as part of its job protection plan adopted in July 2020, which now provides for 15,000 job cuts, including 4,200 in France, mainly in Toulouse (3,400).

 

Eric Apim


Thursday, February 18th 2021



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