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Air France-KLM plans to raise capacity closer to pre-pandemic levels by the end of the year after posting its first quarterly profit since before the health crisis. The Franco-Dutch carrier reported better-than-expected net income of E324m in the three months through June, according to a statement Friday. That’s the group’s first positive result since the end of 2019. The earnings were fueled by a surge in demand for air travel that has since overwhelmed the industry, especially in Europe where airport staff shortages and strikes have created periods of chaos at major hubs. “The strong recovery we see this summer is putting the entire aviation industry to the test,” CEO Ben Smith said. The group will pay E70m in compensation costs to travelers caught in the disruption. Air France-KLM was forced to dial back its ambitions to raise capacity in the ongoing peak summer months, but plans to do so in the last quarter of the year. The company will operate 80% to 85% of pre-pandemic flight volumes during the current period, a drop from the up to 90% forecast in May. It’s planning to reach as much as 90% in the last three months of 2022 instead. Air France-KLM had to cancel flights this month at budget carrier Transavia because of a strike, while its French arm pared back operations at its Paris hub due to labor strife. The group has also been hit by severe personnel constraints at its second hub in Amsterdam, which has capped the number of passengers that can fly through the airport. <br/>

Air France-KLM may take legal action over the Dutch government’s recent decision to permanently cap the number of flights from Amsterdam Schiphol airport. KLM warned in late June of “dramatic consequences” for its hub operations after the government moved to permanently cut the annual flight limit from the airport by 12% amid concerns about noise pollution and other environmental issues. Speaking during an earnings call on 29 July, Air France-KLM chief executive Ben Smith said the group was keeping its options open regarding its response. “We’ve had a request by Schiphol airport to reduce capacity and we are having an ongoing debate and dispute, and potentially lawsuit, about whether we will have to permanently reduce capacity,” Smith states. “We are going to fight this as best we can to ensure it will not have a negative impact on our activities.” Speaking on the same call, recently appointed KLM chief executive Marjan Rintel notes that “it took us by surprise” when the Dutch government announced the cap. “We were not included when these plans were made,” she states. Acknowledging that KLM takes “climate and the inconvenience for local residents into account”, Rintel says the carrier is nevertheless “mapping out what the consequences are for KLM and Schiphol”. The Dutch operator expects to have its “first review” ready in September, she says, “and then we will discuss this with the minister for infrastructure”. The government announced on 24 June that from late November, Schiphol would be permitted to handle a maximum of 440,000 flights per year instead of the 500,000 currently allowed.<br/>

The owner of British Airways has returned to profit for the first time since the start of the pandemic, but warned of the “acute” challenges of scaling up operations particularly at London’s Heathrow airport. IAG said bookings showed “sustained strength and north Atlantic demand [continued] to grow following the lifting of the US [coronavirus] testing requirements”. In results on Friday, it reported an operating profit of E293mn in Q2, compared with a loss of E967mn in the same period last year. Its first half operating loss before exceptional items fell to E467mn, from a loss of E2.18b in the same period of 2021. “In the second quarter we returned to profit for the first time since the start of the pandemic, following a strong recovery in demand across all our airlines,” said chief executive Luis Gallego. “This result supports our outlook for a full-year operating profit.” He added that the industry continued to face “historic challenges due to the unprecedented scaling up in operations, especially in the UK where the operational challenges of Heathrow airport have been acute”. “We will continue working with the industry to address these issues as aviation emerges from its biggest crisis ever,” Gallego said. British Airways — typically IAG’s profit engine — has suffered severe disruption so far this summer. IAG said the “challenging operational environment” at Heathrow reduced British Airways’ capacity to 69.1% in Q2, an improvement on the 57.4% capacity achieved in the previous three months. BA has been forced to cancel about 30,000 flights or 13 per cent of its schedule. However, it swung to an operating profit of GBP54m in the three months to June, it’s first since 2019.<br/>