AFI KLM E&M Takes Second Quarter Hit

Last year the MRO provider’s total revenues fell 38% and it recorded an operating loss of €543 million.
Credit: AFI KLM E&M

With the novel coronavirus heavily impacting the bottom lines of some of the aviation industry’s biggest companies, one of its largest MRO providers in the form of Air France Industries KLM Engineering & Maintenance (AFI KLM E&M) suffered a €318 million ($374.6 million) loss in the second quarter of 2020.

In results which illustrate the severe impact of the COVID-19 pandemic, AFI KLM E&M’s revenues were down 55% year-on-year in Q2, posting €501 million for the three months up to June 30 compared to the same period in 2019. The company says this fall in numbers is mostly due to lost maintenance work generated by carriers associated with its Air France-KLM parent group.

Third-party revenues typically generated from airline customers fell 57% to €222 million for the second quarter. For half of the year from January to June, third-party MRO services are down by 33%.

The company’s order book is estimated a $9.6 billion dollars at the end of June, representing a $1.9 billion decreased compared to the end of December 2019. 

In a bid to reduce operating costs, AFI KLM E&M has implemented measures including reduced maintenance activity levels and partial activity pay schemes for staff along with other initiatives. 

However, the company says it has access to strong liquidity to weather the crisis, owing to assistance from both the French and Dutch governments which have attached objectives related to better competitiveness and sustainability. In total, the MRO’s Air France-KLM parent group confirmed it has €14.2 billion of liquidity or credit lines available. 

Air France-KLM plans to further reduce capital expenditure plan for 2020 by an additional €300 million to 2.1 billion euros. Overall, its spending plans have decreased by €1.5 billion with the airline entering 2020 with a guidance of €3.6 billion.

James Pozzi

As Aviation Week's European MRO editor, James Pozzi covers the latest industry news from the European region and beyond. He also writes in-depth features on the commercial aftermarket for Inside MRO.