22 Juli 2016

[220716.EN.BIZ] Air France-KLM Says Recent Terror Spree Is Hurting Business

AIR France-KLM Group said the succession of terrorist attacks that have spanned Paris to the Riviera are affecting its markets as fares fall and France's standing as a tourist hotspot is undermined.

Europe's largest airline said earlier this week that there is "special concern about France as a destination" amid the Islamic State-inspired killings. Fuel savings that lifted second-quarter operating profit 77 per cent will also be "more than offset" over the year as a fare drop prompted by overcapacity clips revenue, Bloomberg reported.

Demand for travel from countries including Japan and China is ebbing away, and sluggish growth in markets such as Brazil is also hurting passenger numbers, while Britain's vote to quit the European Union may prove a further drag.

"If the question is, do we see a deteriorating environment, the answer is yes," chief financial officer Pierre-Francois Riolacci said.

"As the months have gone by we've seen a significant drop in demand for inbound travel to Europe, especially France. This pressure is happening in the context of capacity growth that is very high for the summer season," he said.

Second-quarter operating income increased to EUR317 million (US$348 million) from EUR179 million a year earlier as the Franco-Dutch group's fuel bill shrank by 30 per cent. At the same time, the fare slide led sales to slip 5.2 per cent to EUR6.22 billion, and a four-day pilot strike timed to disrupt the Euro 2016 soccer championships wiped EUR40 million from earnings.

Source : HKSG.

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