Third-party sales of Air France Industries KLM Engineering & Maintenance (AFI KLM E&M) grew again in the third quarter, although costs related to the supply chain kept a lid on profits.
Helped by booming engine maintenance business, the MRO provider’s sales to customers outside its parent airline grew 16% to €507 million ($547.2 million) in the three months to Sept. 30, and were up 27% for the first nine months of the year.
This followed a strong 2023 in which third-party sales climbed 23% and accounted for 40% of all revenue at AFI KLM E&M. So far this year, third-party work accounts for a little more than 41%.
However, AFI KLM E&M’s third-quarter operating profit shrunk slightly year on year to €58 million ($62.4 million) as “supply chain disruptions were still strongly impacting the operations, resulting in higher cost and loans on components.”
Air France-KLM has said it plans to renegotiate its Boeing 787 component contracts, with the related higher maintenance costs at KLM contributing to the group raising its unit cost growth guidance for the year to 3%.
The group also highlighted supply chain issues and higher external repair costs as profit headwinds.
Rival airline group Lufthansa also highlighted these issues in its nine-month results, noting that external MRO expenses had increased by 21% to €1.94 billion ($2.08 billion) due to Lufthansa Group airlines being forced to contract out more work.
Meanwhile, its in-house maintenance arm, Lufthansa Technik saw third-party sales rise 14% in the first nine months—as compared with the prior-year period—reaching €3.7 billion ($3.98 billion) or 67% of its total revenues.
Adjusted operating profit was €486 million ($522.9 million), up 6%.
“The continuing high level of demand for flights prompted a further rise in demand for maintenance and repair services, leading to Lufthansa Technik posting a record result in the reporting period,” stated Lufthansa.
Related Content
