On Wednesday, Air France-KLM (AF:FP) (OTC: AFLYY (OTC:AFLYY)) received an upgrade in its stock rating from JPMorgan (NYSE:JPM), moving from Underweight to Overweight. The firm also raised the airline's price target to EUR12.00, a significant increase from the previous EUR8.60. The upgrade comes with a positive outlook on the airline's potential for earnings growth and a recovery from its current low share price, which has seen a 40% decline year-to-date.
JPMorgan's analysis indicates that Air France-KLM's underlying pricing remains resilient, excluding the impact of the Olympics. Moreover, the anticipated capacity growth on the airline's routes is expected to be manageable as the winter season approaches.
These factors, along with a decrease in fuel costs and the annualization of €600 million in one-off costs from the fourth quarter of this year, are seen as setting the stage for a notable improvement in margins for the next year.
The financial institution's projections for Air France-KLM's earnings before interest and taxes (EBIT) in 2025 are approximately 12% higher than the current Bloomberg consensus. This optimistic forecast underscores the potential for an inflection point in the airline's earnings momentum, which could lead to a substantial upside for investors.
The airline industry has faced significant challenges in recent times, but the analyst's comments suggest a turning point for Air France-KLM. The combination of manageable market-level capacity growth, lower operational costs, and the resolution of previous one-off financial drags is expected to contribute to the airline's financial recovery and growth in the forthcoming year.
Investors and market watchers will likely keep a close eye on Air France-KLM's performance in the coming months, as the airline aims to capitalize on these favorable conditions and deliver on the improved earnings and margin expansion forecasted by JPMorgan.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.