Air France-KLM shares jumped almost 4% on Tuesday following a note from JPMorgan that placed the airline on Positive Catalyst Watch ahead of its second-quarter results, due July 30. JPMorgan also raised its price target on the stock to €16 from €15 and retained an Overweight rating.
Analysts led by Harry Gowers told clients that their internal projections are "materially ahead of Q2 and full-year consensus estimates, with potential for earnings upgrades." The bank lifted its 2026 EBIT estimate by 16% to €1.91 billion, a figure it says is roughly 23% above the Bloomberg consensus.
For the second quarter specifically, JPMorgan models group EBIT of €408 million, about 36% higher than the Bloomberg consensus of €301 million. That forecast remains well below the €736 million reported in the prior-year period, a gap JPMorgan attributes in part to elevated fuel costs that have weighed on results, even as strong Network pricing provides a partial offset.
On unit-revenue metrics, the bank expects Q2 Network Revenue per Available Seat Kilometer, or RASK, to be up about 9% at constant currency, a view consistent with prior management commentary. JPMorgan also updated its view on fuel pass-through, anticipating roughly 65-70% in Q2 versus management's previous guidance of about 60% at the Q1 call. The change reflects slightly lower fuel cost assumptions in the bank's model compared with those used earlier.
"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, underlining JPMorgan's more optimistic positioning relative to peers.
The note highlights several industry dynamics JPMorgan expects investors to scrutinize when results are released, including the near-term demand environment, fuel pass-through expectations, capacity from Asia and the Middle East, and execution on ex-fuel unit costs. The bank observed that Middle East carrier capacity has gradually re-entered the market, but it still expects long-haul pricing to remain supported through Q2 and Q3 because of strong premium demand and constrained capacity.
JPMorgan estimates that market-level capacity on Air France-KLM routes this summer will be approximately 2% below year-ago levels. The bank contrasted Air France-KLM's fuel pass-through guidance with that of Lufthansa, noting Lufthansa expects pass-through of more than 100% through the second half of the year. JPMorgan added that Lufthansa has seen a larger benefit from Asia, despite the region accounting for only a slightly higher percentage of group capacity than Air France-KLM.
On costs, the bank said 2026 fuel expenses had previously been projected at about $9.3 billion, a figure that included a $2.4 billion increase tied to the Middle East. JPMorgan noted that projection was set in mid-to-late April when the fuel price was around 60% higher than current levels. The bank does not expect revisions to full-year ex-fuel unit cost guidance of 0-2%, and it models a +1% ex-fuel unit cost for the second quarter. JPMorgan also flagged that this second-quarter ex-fuel unit cost assumption "may also end up too conservative given comps and recent execution."
Context for investors
- JPMorgan's upward revisions to earnings and a higher price target help explain Tuesday's near 4% share price gain for Air France-KLM.
- The bank's Q2 and 2026 EBIT estimates sit materially above Bloomberg consensus, signaling potential for analyst upgrades if the company reports in line with JPMorgan's view.
- Key drivers to watch in the upcoming results are RASK performance, fuel pass-through rates, regional capacity trends, and execution on ex-fuel unit costs.
What to watch ahead of the earnings release
- Whether Air France-KLM reports group EBIT closer to JPMorgan's €408 million forecast or closer to the Bloomberg consensus of €301 million.
- Actual fuel pass-through realized in Q2 and any commentary that updates or clarifies management's previous guidance of about 60%.
- Information on capacity dynamics to and from Asia and the Middle East and how those flows affect long-haul pricing trends.