In a recent note, ING provided a pre-earnings update following a briefing with Michiel Klinkers from the group's investor relations department. Analysts believe the "narrative remains consistent" with their expectations, noting minor tailwinds such as increased Europe-Asia flight volumes and the grounding of Middle Eastern carriers, set against one major headwind: jet fuel costs.

Despite the two-week ceasefire now in effect, ING estimated that the impact of higher kerosene prices could cost between 2 and 3 billion dollars should the conflict persist through the remainder of fiscal year 2026. Analysts pointed out that Air France-KLM typically rolls over hedges for approximately two-thirds of its fuel requirements, whereas U.S. carriers do not hedge and Asian players do so only minimally. According to ING, this provides Air France-KLM with a serious competitive advantage on North Atlantic and Far East routes. Furthermore, the group has been applying a fuel surcharge of 100 euros on long-haul flights and 50 euros on short/medium-haul flights since mid-March.

Regarding destinations, Air France-KLM has suspended service to most of its Middle Eastern destinations (Tel Aviv, Dubai, Riyadh, Beirut, etc.), representing roughly 2.5% of fleet capacity. Additionally, the group is losing its role as a traffic feeder at its primary hubs in Amsterdam and Paris for travel toward the Americas. Consequently, ING analysts estimate the actual impact on capacity at 5%. Finally, high prices and security concerns remain factors that could dampen the appetite for travel.

The final point raised by ING is that the three major Gulf carriers (Emirates, Etihad Airways, and Qatar Airways) are virtually grounded, offering European legacy carriers the opportunity to be more competitive on routes to Southeast Asia. Air France-KLM specifically noted rapid demand growth for India, Singapore, Malaysia, and Thailand, and has subsequently decided to increase capacity on these axes using larger and more frequent aircraft.

In conclusion, ING reiterated its Neutral rating on the stock with a price target of 12.2 euros, implying a 37.40% upside potential relative to Tuesday's closing price. Excluding today's rally, Air France-KLM shares had plummeted 27.80% since the onset of the Middle East conflict.