JPMorgan turns positive ahead of second-quarter results
Shares of Air France-KLM (EU:AF) rose almost 4% on Tuesday after JPMorgan added the airline to its Positive Catalyst Watch list ahead of its second-quarter results, due on July 30.
The investment bank also increased its price target to €16 from €15 while reiterating its Overweight recommendation.
Analysts led by Harry Gowers said their forecasts are “materially ahead of Q2 and full-year consensus estimates, with potential for earnings upgrades.”
Bank forecasts earnings above market expectations
JPMorgan lifted its 2026 EBIT forecast by 16% to €1.91 billion, placing its estimate around 23% above the current Bloomberg consensus.
For the second quarter, the bank expects group EBIT of €408 million, significantly above the Bloomberg consensus estimate of €301 million. Although this would remain below the €736 million reported a year earlier because of higher fuel costs, JPMorgan believes stronger pricing across the airline’s network should partly offset that pressure.
The bank also forecasts Network Revenue per Available Seat Kilometre (RASK) to increase 9% at constant currency, in line with previous management guidance.
In addition, analysts expect fuel cost recovery to reach approximately 65% to 70%, compared with management’s earlier indication of around 60%, reflecting lower fuel prices than previously anticipated.
Strong pricing expected to support performance
“For Air France-KLM, we then see the best opportunity to beat consensus numbers for the Q2 amongst the European flag carriers,” the analysts wrote.
JPMorgan noted that while airline capacity from Middle Eastern carriers has gradually returned to the market, premium demand and limited long-haul capacity should continue supporting ticket pricing through the second and third quarters.
The bank estimates that overall market capacity on Air France-KLM’s routes will remain about 2% below last year’s levels during the summer season.
Investors to focus on guidance and costs
According to JPMorgan, investors will pay close attention to management’s comments on short-term travel demand, fuel cost recovery, capacity trends in Asia and the Middle East, and progress in controlling unit costs excluding fuel.
The bank noted that Air France-KLM previously guided for approximately 60% fuel cost recovery during the second quarter without providing an outlook beyond that period.
By comparison, Lufthansa has projected fuel pass-through of more than 100% during the second half of the year, benefiting from stronger exposure to Asian markets despite having only “a slightly higher % of group capacity than Air France-KLM,” according to the analysts.
JPMorgan added that previous estimates for 2026 fuel expenses were based on significantly higher fuel prices than current market levels and does not expect the airline to change its full-year guidance for ex-fuel unit costs, which remains in a range of 0% to 2%.
The bank forecasts second-quarter ex-fuel unit costs to rise by around 1%, although it suggested that estimate “may also end up too conservative given comps and recent execution.”
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