Air France-KLM has slashed its capacity growth forecast for 2026 to between 2% and 4%, down from an earlier estimate of 3% to 5%. This adjustment stems from a projected $2.4 billion rise in fuel costs, largely influenced by ongoing geopolitical tensions, particularly the Iran war.
The airline’s total fuel expenditure for 2026 is expected to reach $9.3 billion, marking a substantial increase compared to the previous year. The sharp rise in fuel prices—driven by concerns over the blockage of the Strait of Hormuz—has pushed Brent crude prices to a four-year high of $126 per barrel.
In the first quarter of 2026, Air France-KLM reported an operating loss of €27 million, which, while better than the anticipated €389 million loss, still highlights the pressure on profitability. KLM CEO Marjan Rintel acknowledged that ongoing geopolitical uncertainty and soaring fuel prices will continue to exert pressure on results moving forward.
Key financial highlights:
- The capacity growth forecast for 2026 is now set between 2% and 4%.
- The airline anticipates an increase of $2.4 billion in fuel costs due to geopolitical factors.
- KLM’s total fuel bill for 2026 is projected at $9.3 billion.
- The first-quarter operating loss was reported at €27 million, significantly better than analyst predictions.
- KLM’s Back on Track improvement program yielded €159 million in savings during the same period.
Bas Brouns, another executive at KLM, expressed concern over the inability to fully transfer these heightened fuel costs to customers, which complicates efforts toward cost control and profitability. The airline industry as a whole faces similar challenges as geopolitical uncertainties continue to loom large.
Looking ahead, analysts remain cautious about how these factors will shape KLM’s financial outlook as they navigate this turbulent operating environment.