Paris Olympics slam profits at Air France-KLM
PARIS – Air France-KLM said Thursday that a drop in passenger traffic ahead of the Paris Summer Olympics had battered profits in its most recent quarter, forcing it to trim annual forecasts and step up cost-saving efforts.
The Franco-Dutch airline had already warned in early July that the Games would hammer revenues as many tourists avoided one of the world's most visited cities during the crowded competitions.
But the negative impact for the quarter is now set at 200 million euros ($217 million), above the 160-180 million euros forecast a few weeks ago, the carrier said in a statement.
For June alone, the impact of lost ticket sales was estimated at 40 million euros.
As a result, second-quarter profit stood at 165 million euros -- well below the 308 million estimated by an average of analyst forecasts by FactSet.
The quarterly profit was also just over one-fourth of the 612 million euros booked in the same quarter last year, even as revenues rose 4.3 percent over the period to 7.95 billion euros.
The airline cited higher fuel and salary costs as also weighing on profits, even as traffic increased by 4.4 percent over the year to 25.7 million passengers.
In response, it lowered its forecast of capacity in available seat kilometres (ASK) -- a key profitability metric for money generated per flight -- to growth of four percent, down from five percent previously.
And after a hiring freeze imposed after a net loss of 522 million euros in the first quarter, it will now also cut advertising budgets and trim non-essential spending by 20 percent.
