Air France-KLM says Iran war to add $2.4B to 2026 fuel bill

Air France-KLM expects its 2026 fuel bill to rise by $2.4 billion due to higher jet fuel prices linked to the Middle East conflict, the airline group said Thursday.

The Franco-Dutch carrier said its fuel bill is now projected to reach $9.3 billion this year, based on current hedging and forward fuel price estimates.

The group added that about $1.1 billion of the increase is expected to be recorded in the second quarter, while higher fuel prices have not yet been reflected in its first-quarter results.

“While fuel price increases are not yet reflected in the results we present today, they are expected to weigh on the coming quarters,” CEO Ben Smith said in the company’s earnings statement.

Air France-KLM lowered its full-year capacity growth forecast to 2%-4%, compared to a previous estimate of 3%-5%, as geopolitical uncertainty and higher energy costs weigh on operations.

The company said it is minimizing discretionary spending, including travel expenses, and has frozen hiring for non-operational staff, while continuing recruitment for operational roles such as mechanics.

The airline group said its fuel hedging strategy remains in place and that it is already 33% hedged for 2027.

Despite pressure from fuel costs, Air France-KLM said summer travel demand remains strong, with European destinations such as Italy and Spain, seeing increased demand, as travel to parts of the Middle East remains constrained.

In the first quarter, the group reported an operating loss of €27 million ($30.7 million), improving from a €328 million loss in the same period last year.

Revenue rose 4.4% year-on-year to €7.5 billion, while the company said weather-related disruptions in January, mainly in Amsterdam, had a €90 million impact on its operating results.