Air France-KLM is the most vulnerable of Europe’s major legacy carriers to an extended slump in passenger traffic and its share price could fall to one euro, according to analysts at Bernstein. The Franco-Dutch airline is in need of another multi-billion euro bailout and “likely has insufficient liquidity to continue into 2022,” the analysts including Daniel Roeska wrote in a study published Tuesday. “The scale of the hole in AF-KLM’s balance sheet is large, and incremental debt-carrying capacity so small, that a substantial dilution looks highly probable,” they said. While BA IAG and Lufthansa may also need to raise equity should travel fail to rebound during the summer months, Air France-KLM is facing the most imminent crunch. A capital raise could push the stock to a fraction of current levels, the analysts said, and the stock fell as much as 2.4% to 4.8 euros in Paris before paring losses. The French and Dutch governments have been in talks for months on a fresh bailout package for the airline, in which they own a combined 28% stake. Bruno Le Maire, France’s finance minister, on Monday said “intense” discussions are also underway with the EC, which is demanding so-called remedies that would allow more competition in exchange for additional state aid.<br/>
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Aeromexico, which is undergoing a Chapter 11 restructuring process, on Tuesday posted a loss in Q4 of last year, taking yet another hit from the coronavirus pandemic’s drain on global tourism. The company reported a net loss of 9.72b pesos ($487m) in the October to December period, with passenger capacity down nearly 48% from the same quarter a year earlier. It also reported losses in the first three quarters of 2020, including a slimmer loss of $130m in the prior period. Still, Aeromexico said it transported 56% more people than in Q3, with 2.9m passengers. “The market showed signs of a modest recovery in the demand for trips,” the company said in a statement, attributing the increase in part to more flights between Mexico and the United States.<br/>
The deepest crisis in aviation history might seem the worst time to relaunch an airline. But for Alitalia the turmoil could provide just the opportunity to drive through reforms that politicians and unions have refused to accept in the past. Under plans shown to lawmakers, the chronically loss-making Italian airline wants to surrender domestic routes to low-cost rivals as it tries to pull out of its fourth stall in a decade. Despite political and EU regulatory hurdles, new management led by a veteran of Gulf airline Emirates sees the COVID-19 crisis as a chance to reset the business on a profitable footing, according to a detailed presentation seen by Reuters. “Alitalia has tried in the past to cut domestic point-to-point routes, but local politicians or the government always demanded they be restored,” said a company source close to CEO Fabio Lazzerini, named in November to lead the revival. The pandemic offers “the first real big opportunity” to make Alitalia competitive, the source said – thanks also to cheap plane deals and rival airlines’ rising debt piles. But there’s still a mountain to climb, with travel likely to remain subdued for some time to come, low-cost airlines vowing to come out of the downturn fighting, and a new Italian prime minister bringing fresh uncertainty to the political backdrop.<br/>