Shares of Air France-KLM rose 2% in early Paris trading on Tuesday after Kepler Cheuvreux upgraded its rating to Hold, citing fair valuation at €11.50 per share.
The upgrade follows a 12% decline in the stock over the prior month, which Kepler attributed to an "ambitious" share price after the onset of the Iran crisis. Analysts at Kepler stated that, absent a material escalation in the conflict, the current share price accurately reflects the company's business prospects.
Kepler also raised its current-year profit estimates by 20%, though mid-term estimates were adjusted by only about 1%. The firm's forecasts remain modestly below Visible Alpha consensus by a low- to mid-single-digit percentage.
Air France-KLM reported adjusted operating profit of €484 million for the second quarter, down from €736 million a year earlier but ahead of the €327 million consensus estimate. The carrier also trimmed its full-year capacity guidance, now projecting a 1% decline in short- and medium-haul flights and group-wide growth of between 2% and 3%. This marks the second reduction in outlook, following an earlier forecast of 3% to 5% growth.
KLM Chief Executive Marjan Rintel noted that global uncertainty, rising costs, and heightened competition would remain structural challenges for the airline, with the Iran war adding further pressure on finances. The conflict in the Middle East began in February, when the initial growth forecast was set.
