Air France-KLM beats profit forecasts, but KLM plans 1,000 job cuts

Air France-KLM’s adjusted operating profit rose by €126 million ($142 million) year-on-year to €1.35 billion ($1.52 billion) in the third quarter of 2026, the airline group reported on November 5, 2026, as higher ticket revenue and strong cargo demand offset rising fuel costs.

Though the result exceeded analysts’ expectations of €1.1 billion ($1.24 billion), the group raised its annual fuel cost forecast again, while its Dutch subsidiary KLM announced a restructuring that will leave it with approximately 1,000 fewer positions over the coming years.

Revenue rose 7.6% to €9.9 billion ($11.2 billion), and the operating margin edged up 0.3 percentage points to 13.6%, according to the group’s quarterly results. Unit revenue grew 7% at constant currency, with passenger unit revenue up 6.9% and cargo up 21.9%. Unit costs, measured at constant fuel prices and exchange rates and excluding emissions trading costs, increased just 0.1%. Net income rose €170 million ($192 million) to €938 million ($1.06 billion).

Air France-KLM raises 2026 fuel bill forecast to $9.2 billion

Air France-KLM now expects a 2026 fuel bill of $9.2 billion (€8.17 billion) after an estimated $2 billion (€1.78 billion) gain from hedging. That is $300 million (€266 million) more than it projected on July 30, 2026, and $2.3 billion (€2.04 billion) above its 2025 fuel bill.

Higher fuel prices added €436 million ($491 million) to third-quarter costs after hedging compared with 2025. The group attributed the increase to the crisis in the Middle East, which had already prompted it to cut its capacity outlook in April 2026.

Demand for nonstop flights to Asia and India benefited from passengers avoiding connections through Gulf hubs, while cargo revenue was supported by disruptions to maritime trade routes. The group also increased passenger surcharges to recover part of the additional fuel expense.

The group’s investor presentation projects a fuel bill of about $10.4 billion (€9.23 billion) in 2027. Air France-KLM said it has already hedged 54% of its expected fuel consumption for that year.

Air France’s adjusted operating profit rose just €5 million (5.6million) to €811 million (914 million), while its margin slipped 0.7 percentage points to 13.5% as unit costs outpaced unit revenue. KLM performed better, with profit rising €106 million (119million) to €458 million (516 million) and its quarterly operating margin reaching 11.4%.

KLM plans 1,000 job cuts in wider restructuring

Despite the quarterly improvement, KLM said its existing cost-cutting measures have not been enough to address its structural problems.

Its Back on Track program, launched in October 2024, has delivered more than €750 million ($845 million) in structural improvements. However, KLM remains short of the group’s target of an annual operating margin above 8%.

KLM Chief Financial Officer Bas Brouns said the airline needs to improve its annual earnings by a further €1 billion ($1.13 billion) to finance fleet renewal, customer service improvements and other investments.

In its restructuring announcement issued on November 5, 2026, KLM said the number of positions at the airline would fall by almost another 15%. Approximately 5,000 positions have been or will be affected by the wider reorganization, including outsourcing, transfers within Air France-KLM and productivity improvements.

The airline specifically expects approximately 1,000 positions to disappear through productivity gains over the coming years. KLM said it would seek to limit the impact on employees through natural attrition, voluntary arrangements, and transfers to other roles.

The broader restructuring also covers 1,250 positions at KLM Catering Services, where work has been carried out in partnership with gategroup since spring 2026, and around 800 Ground Services positions whose activities will move to external providers.

Another 2,000 positions, including 1,500 at customer contact center Cygnific, will transfer to Air France-KLM.

KLM is also seeking new labor agreements that would deliver productivity gains of at least 8% by 2028, alongside restrained wage growth.

KLM shifts toward smaller Embraer jets

Fleet changes form another part of KLM’s restructuring, particularly on its European network.

The airline plans to replace its previously planned Airbus A320 aircraft with smaller Embraer E195-E2 jets, while retaining the A321neo. Its Boeing 737s and Embraer E190s will be phased out over the coming years, giving KLM Cityhopper a larger role in European operations.

The aim is to match aircraft capacity more closely to demand, particularly on routes where larger narrowbody aircraft are less profitable.

The decision follows a review of regional jet options by KLM Cityhopper, which was considering the Embraer E2 family and Airbus A220 in May 2026.

KLM also plans to reorganize ground handling, consolidate cargo activities at Schiphol (AMS), and adjust its maintenance operations as older aircraft types leave the fleet.

Air France-KLM narrows capacity outlook for 2026

Air France-KLM now expects capacity to grow by about 2% in 2026, at the bottom of its previous forecast range of 2% to 3%. Unit costs are expected to rise by about 1%.

As of October 28, 2026, fourth-quarter booked load factors were approximately one percentage point below 2025 levels across long-haul, short- and medium-haul, and Transavia operations, according to the group’s investor presentation.

The presentation also addressed Portugal, where Lufthansa was selected over Air France-KLM for a stake in TAP Air Portugal on October 14, 2026.

Air France-KLM said it would instead pursue organic growth in the Portuguese market through Transavia, pointing to potential opportunities arising from competition remedies under consideration at Lisbon Airport (LIS).

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