Air France-KLM said on Friday its 2023 bookings were almost back to pre-pandemic levels as it reported a better-than expected fourth-quarter operating profit with global travel demand seeing a rebound. The airline’s shares rose more than 6% in early trade, hitting their highest since June and outperforming the broader weak stock market. The pan-European Stoxx 600 was down 0.85% at 8:05 a.m. London time. The carrier reported its highest Q4 revenue at E7.1b ($7.55b), up almost 50% year-on-year. Operating profit fell 45% to E134m on the back of higher costs including fuel, but it beat estimates. “Early 2022 was a bit difficult with Omicron and the issues in Ukraine, but we had a fantastic summer, especially across the Atlantic,” Air France-KLM CEO Benjamin Smith told CNBC’s Charlotte Reed. “We had more capacity on the Atlantic than we did in 2019, Africa was always a market that was resilient throughout the crisis.” He added that the premium leisure market had “exploded” and was filling business class, first class and premium economy cabins, bridging the gap left by a lag in the return of business travel. Looking ahead, he said: “Demand is still strong, yields are good, capacity is quite tight in many of our markets, Paris is a very attractive market.” Last year was a difficult one with the travel industry struggling with pandemic-related restrictions and as prices of jet fuel and other key products soared due to the Russia-Ukraine conflict, CFO Steven Zaat said. Air France also lost E170m in revenue last year due to travel disruptions at Amsterdam’s Schiphol airport after the airport restricted capacity last year due to staff shortages. “I’m very happy that we can say now that 2022 Q4 ended better than where we ended in Q4 2019,” Zaat added. The company said it was on track to fully pay back French state aid by April 2023, reporting a net debt of E6.3b, down E1.9b from the previous year. Zaat, however, said staffing shortages at Schiphol airport may not be resolved before end-June.<br/>
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While other carriers enjoy a long-awaited rebound, Korean Air Lines is expected to see profits descend from their pandemic-era highs as the industry's recent expansion of passenger flights works against the company's cargo-focused strategy. The South Korean flag carrier had enjoyed two straight years of record profits in 2021 and 2022 even as peers like THAI and Virgin Australia went through bankruptcy. Its operating profit nearly doubled to 2.88t won ($2.22b) last year, while sales jumped by 53% to 13.41t won. This owed in large part to the unusually large role of Korean Air's cargo business, which accounted for the majority of its sales in 2022. Around 50% to 60% of airfreight is carried in cargo holds on passenger flights. This capacity was reduced drastically during the pandemic as airlines slashed service, sending cargo rates soaring. Hanwha Investment & Securities estimates that Korean Air's cargo rates more than doubled between 2019 and 2022. The carrier was able to absorb higher costs by raising prices. But this focus on freight is starting to work against the company. As airlines ramp up passenger service, more space is becoming available for cargo, driving shipping prices back down. Korean Air's rates peaked in the April-June quarter and have been falling since. Meanwhile, the carrier's passenger traffic has been relatively slow to recover because of its heavy tilt toward international flights, which generated more than 90% of its revenue in the segment before COVID-19. Government data shows that passenger volume on domestic routes in South Korea had already recovered to 2019 levels in 2022 but that cross-border traffic was still down more than 80%. Numerous setbacks led Korean Air's revenue to decline on the quarter in the October-December period. Operating profit also fell 38% from the previous quarter amid weak cargo demand. Analysts see Korean Air's operating profit halving in 2023 even as other airlines start recovering from the coronavirus.<br/>