The fallout from the actual strike stands at 320 million euros to 350 million euros. That figure represents lost revenue and additional costs minus expenses avoided such as a fuel, it said. The total shortfall is higher because the strike has led some passengers to delay bookings, though the airline, Europe’s largest, said it was difficult to know to what extent poorer-than-expected bookings are related to the strike, and to what extent, a general weakness in demand.
Air France pilots initiated a strike after Chief Executive
Officer Alexandre de Juniac announced plans to compete more effectively with lower-cost airlines by creating a pan-European discount unit based outside France. September traffic slumped 15.9 percent, and fourth-quarter bookings show seat occupancy rates at one to two percentage points lower, the company said.
“Perhaps more concerning than the one-off strike impact are comments that fourth quarter booking trends are one to two points behind expectations,” Mark Irvine-Fortescue, an analyst at Jefferies International Ltd. in London, wrote in a note, calling the 500 million-euro figure worse than expected.
Pierre-Francois Riolacci, Chief Financial Officer of Air France-KLM Group, left,... Read More
Lowered Forecast
Air France dropped as much as 42 cents, or 6.3 percent, to 6.26 euros. Before today, the stock had lost 12 percent this year, making it one of the 10 worst performers on the Bloomberg World Airlines Index, which has gained 4.7 percent.The airline cut its full-year earnings forecast in July amid overcapacity on North American and Asian routes and poor demand for freight. Air France predicted earnings before interest, tax, depreciation and amortization at 2.2 billion euros to 2.3 billion euros this year, compared with a previous target of as much as 2.5 billion euros.
In 2013, the airline group reported Ebitda of 1.86 billion euros. The carrier said at the time it aimed for the Air France unit to at least break even.
Executive Departure
Pilots only ended their walkout when the company dropped the plans for the low-cost unit outside France. Management was set to meet with pilot unions yesterday to discuss how to proceed with an existing discount unit, called Transavia France. Talks were suspended after members of smaller unions not invited showed up anyway and refused to leave. Negotiations will instead proceed with smaller groups starting again today.Separately, Bruno Matheu, an Air France veteran of two decades who heads Air France’s long-haul operations, plans to take a job at Etihad Airways PJSC in December, the Abu Dhabi-based carrier said in a statement.
Matheu, 51, will join Etihad as chief operating officer for the airline’s so-called equity partners to manage collaboration between the carrier and airlines in which it has stakes.
Among the airlines in which Etihad has invested is Alitalia, which was previously 25 percent owned by Air France-KLM. The French airline had declined to invest further in Alitalia when the carrier was raising money, though still has commercial ties with it through the SkyTeam alliance.
Besides running long-haul operations, Matheu is special assistant to Juniac. Mathieu was a key architect of Air France’s hub operation at Charles de Gaulle Airport, developed in the mid 1990s, and was also involved in setting up the carrier’s revenue-management system.
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