Air France-KLM: 2.5x EV/Ebitda Looks Cheap, But Risks Remain (Rating Upgrade)

Dhierin BechaiInvesting Group LeaderFollow5ShareSavePlay(13min)CommentsSummaryAir France-KLM is upgraded to a buy, reflecting 32% upside potential despite persistent operational volatility and structural cost pressures.Q4 2025 results showed modest revenue growth but unimpressive earnings, with margin compression and negative unit revenue development offset by currency tailwinds.2026 guidance targets 3-5% capacity growth, up to 2% unit cost increase, €3B CapEx, and leverage between 1.5x-2x, but forward booking factors are weaker.Valuation at 2.5x EV/EBITDA is a discount to peers, but sustainable rerating depends on delivering operational excellence and consistent efficiency improvements.Looking for a helping hand in the market? Members of The Aerospace Forum get exclusive ideas and guidance to navigate any climate. Learn More »Sjo/iStock Unreleased via Getty Images Air France-KLM (AFRAF, AFLYY) has reported its fourth quarter and full year 2025 earnings. I covered Air France-KLM in March 2025 with a hold rating. In my view, the risk-reward profile was notThis article was written byDhierin Bechai23.04K FollowersFollowDhierin-Perkash Bechai is an aerospace, defense and airline analyst. Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.