Air France blames attacks and strikes as bookings decline

Company has struggled to cut costs to compete more effectively

Air France’s bookings were down 5 per cent in July and August and the drop had accelerated to 5-10 per cent for the rest of the year

Air France’s bookings were down 5 per cent in July and August and the drop had accelerated to 5-10 per cent for the rest of the year

 

Air France expects a further decline in bookings over the coming months as a result of Islamist militant attacks and a cabin crew strike that took place during the summer, the airline’s boss, Jean-Marc Janaillac, has said.

Bookings were down 5 per cent in July and August and the drop had accelerated to between five and 10 per cent for the remainder of the year, he said at a travel conference in Paris. He said the biggest drop in demand was coming from travellers from China, Japan and the United States,

Militant attacks in France have hit tourism in the country since last year. In July, a gunman drove a truck into crowds celebrating Bastille Day in the Riviera city of Nice, killing 86 people. Later the same month, a priest had his throat slit in a church. Both were claimed by Islamic State.

“We can see the effect on Air France already, we will feel it even more in the coming months,” said Mr Janaillac, who is head of the Franco-Dutch Air France-KLM group, of which Air France forms the major part.

Struggling

The slump in ticket sales piles more pressure on Janaillac, who took over in July, to turn around the group, which has struggled to cut costs to compete more effectively with low-cost rivals on short-haul flights and Gulf carriers on long-haul.

After plans by previous chief executive Alexandre de Juniac met with fierce resistance from unions and resulted in costly strikes, Mr Janaillac hopes to smooth relations and plans to launch a new project called “Trust together” in early November.

Rival Lufthansa has also faced strikes as it tries to cut costs.

The two carriers have not been helped in their efforts to persuade staff of the need to lower costs by their recent improvements in earnings, HSBC analysts said in a note on Tuesday, in which they kept a “reduce” rating across the European airline sector.

“We, and indeed the airlines, do not yet have clarity on just how weak trading will be as we close out 2016,” they wrote.

Shares in European airlines dropped on Tuesday, with Air France-KLM, IAG, Lufthansa, Ryanair and EasyJet down by between 1.4 and 2.6 per cent.

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