Supply chain issues squeezed profitability at AFI KLM E&M last year, although the airline MRO was able to grow its third-party business again thanks to strong demand for engine maintenance.
Operating profit for the year improved by €20 million ($22 million) to €170 million on a margin of 3.3%—slightly lower than in 2023—with third-party revenue climbing 22% to €2.1 billion. Overall revenue, which includes sales within the Air France-KLM airline group, grew 20% to €5.1 billion.
In the fourth quarter of last year, meanwhile, external sales grew 11%.
“The maintenance segment continued its strong growth of third-party revenues in the fourth quarter 2024 by a double-digit increase of +10.9%, especially showing a strong recovery especially on the engine side,” stated AFI KLM E&M.
“During the fourth quarter, the supply chain disruptions were still impacting the operations, resulting in higher cost and loans on components,” the MRO provider added.
Air France-KLM has said it plans to renegotiate its Boeing 787 component contracts, with higher maintenance costs at KLM contributing to the group raising its unit cost growth guidance for the year to 3%.
The group also highlighted supply chain issues and higher external repair costs as profit headwinds.
Rival airline group Lufthansa also highlighted these issues in its nine-month result, noting that external MRO expenses had increased by 21% to €1.94 billion due to Lufthansa Group airlines being forced to contract out more work.
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