News Column

Air France KLM joins European peers to warn of lower earnings

July 9, 2014

MARION DAKERS



AIR FRANCE KLM rocked aviation stocks yesterday by warning that a glut of spare seats on its routes would dent its profits this year, just weeks after German rival Lufthansa made a similarly gloomy prediction.


The Franco-Dutch airline said that over-capacity on some longhaul routes this summer was dampening ticket and cargo prices, prompting the firm to revise down its 2014 earnings forecast from 2.5bn (2bn) to between 2.3bn and 2.2bn.


Shares in Air France fell 8.7 per cent to 8.58 yesterday, dragging down London-listed peer IAG, which declined seven per cent to 335.9p, as well as US rival Delta, whose stock opened almost six per cent lower.


Air France joins a growing list of airlines to blame over-capacity for disappointing performances, following several years of growing traffic and favourable fuel prices. Lufthansa has cut its 2014 and 2015 outlook, while low-cost carrier Ryanair has slashed prices on some routes to compete, putting pressure on its yields.


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Source: City A.M. (UK)


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