Air France-KLM
Note: This is a daily stock update and the information stands true as of 02/10/24, 09:00 CET.
Company Update:
According to an article in French newspaper Les Echos, the government is planning to increase substantially one of the tax on airfare. Currently, French taxes on airfares represent c 40% of the total cost of the ticket.
The planned increase would increase the tax collection for this specific tax from €460m currently to around €1.5bn.
This will obviously impact more French airlines (and especially Air France) and will likely divert some international traffic to other airports.
In France, airlines will also face additional tax levied on airports, increased income tax (from 25% to 33.5%) and the obligation to add more synthetic jet fuel (up to 10% by 2030) in their mix which will increase their cost.
Expert Opinion:
I am of the opinion that airlines and especially legacy national airlines are structurally a value destroying segment. This is a no-go segment for me especially if the government is willing to further increase taxes. Air France is still facing massive operational (and balance sheet) issues.
Note that these tax increases are also a negative for airport’s operators like ADP and to a lesser extent Vinci. Conversely adding traffic would be beneficial for other international airports operators. Fraport could benefit from the arbitrage made by passengers.
For daily updates, subscribe to our newsletter and for detailed daily updates, reach out to us at sales@alphavalue.eu
Company Update:
According to an article in French newspaper Les Echos, the government is planning to increase substantially one of the tax on airfare. Currently, French taxes on airfares represent c 40% of the total cost of the ticket.
The planned increase would increase the tax collection for this specific tax from €460m currently to around €1.5bn.
This will obviously impact more French airlines (and especially Air France) and will likely divert some international traffic to other airports.
In France, airlines will also face additional tax levied on airports, increased income tax (from 25% to 33.5%) and the obligation to add more synthetic jet fuel (up to 10% by 2030) in their mix which will increase their cost.
Expert Opinion:
I am of the opinion that airlines and especially legacy national airlines are structurally a value destroying segment. This is a no-go segment for me especially if the government is willing to further increase taxes. Air France is still facing massive operational (and balance sheet) issues.
Note that these tax increases are also a negative for airport’s operators like ADP and to a lesser extent Vinci. Conversely adding traffic would be beneficial for other international airports operators. Fraport could benefit from the arbitrage made by passengers.
For daily updates, subscribe to our newsletter and for detailed daily updates, reach out to us at sales@alphavalue.eu
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