DAVY VIEW

Air France KLM has reported a Q3 operating result of €1,203m, 5% behind consensus of €1,265m (Davy: €1,265m). On 5% capacity increases, group unit revenues were down 0.5%, while unit costs were up 1.3% for the quarter. Free cash flow year-to-date has improved significantly to €715m (up from €23m at this point last year), with the resulting leverage ratio improving to 1.6x (from 1.7x at the end of 2024). The company has reconfirmed its full-year outlook of capacity +4-5%, single-digit unit cost inflation, net capex €3.2-3.4bn and target leverage ratio of 1.5-2.0x. FY25 VA consensus €1,996m (Davy: €2,035m). We expect a modest consensus reduction based on the light Q3 result.