Air France-KLM: FVE Raised to EUR 10.40 as We Revise Our Expectations for Short-Term Revenue Yields

We raise our fair value estimate for no-moat Air France-KLM to EUR 10.40 from EUR 9, reflecting continued support for revenue per passenger kilometer from capacity constraints. Since the pandemic, European airlines have enjoyed record-high passenger yields and Air France-KLM is no exception. In 2024, the group reported RPK of EUR 9.59 cents, up from EUR 7.78 cents in 2019. Revenue per available seat kilometer also rose significantly, from EUR 9.30 cents in 2019 to EUR 11.12 cents in 2024. This was driven by strong travel demand exceeding available capacity, enabling airlines to pass on higher costs to customers.