Air France-KLM says militant attacks hitting revenue

Airline says market getting tougher as attacks and political uncertainty impact

The carrier maintained financial targets to cut unit costs by about 1 per cent in 2016 and significantly reduce net debt.

The carrier maintained financial targets to cut unit costs by about 1 per cent in 2016 and significantly reduce net debt.

 

Air France-KLM joined other European airlines in warning of the impact on revenue this year of recent militant attacks in France and political uncertainties elsewhere as it reported a drop in sales and braced for a strike by its staff.

The second-quarter results were issued hours after a priest was killed by Islamist militants in France, adding to a spate of attacks in Europe that has knocked demand for travel and coming on top of the aftermath of Britain’s vote to leave the European Union.

EasyJet last week said it was unable to give an earnings forecast, while Germany’s Lufthansa warned on profit.

Ryanair and Wizz Air

Low-cost carriers Ryanair and Wizz Air have maintained their targets, but said they would shift capacity away from Britain after its vote to quit the European Union.

Air France-KLM said it had seen the market get tougher over the last few months and that it was concerned about the attractiveness of France as a destination, with travellers from China and Japan staying away.

“We are seeing pressure for July and August,” chief financial officer Pierre-François Riolacci told journalists, saying he expected unit revenues – a measure of pricing – to decline in those months.

Industry overcapacity on long-haul routes to and from Europe was not helping, he said.

Strikes

The Franco-Dutch group is also dealing with more strikes after its two main cabin crew unions called for a week of walkouts, starting Wednesday.

It said revenue in the second quarter fell 5.2 per cent to €6.22 billion, while earnings before interest, tax, depreciation and amortisation (ebitda) improved to €728 million from €557 million last year thanks to lower costs.

Analysts had on average expected revenue of €6.27 billion and ebitda of €629 million, according to a Reuters poll.

The carrier maintained financial targets to cut unit costs by about 1 per cent in 2016 and significantly reduce net debt. – (Reuters)

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