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 Europe's second-biggest network carrier by revenue had already in
July revised down its target for 2014 earnings before interest, tax,
depreciation and amortization from 2.5 billion euros to
between 2.2 and 2.3 billion.
At the time, it mainly cited overcapacity on long-haul routes and
weak cargo demand. The strike, combined with a warning note on
forward demand, have added to its woes.
The Franco-Dutch group said on Wednesday total passenger traffic
fell 15.9 percent in September compared with the year before, adding
that bookings for the fourth quarter were down by between 1 and 2
percentage points.
The 500 million euro strike cost estimate included a direct impact
of between 320 million euros and 350 million, reflecting lower
receipts and the purchase of tickets for customers on rival
airlines, with costs partly offset by savings on fuel and other
costs. The remainder was down to the delay in bookings.
Chief Financial Officer Pierre-Francois Riolacci told reporters the
airline had sold some 28 percent of capacity for the fourth quarter,
compared with 30 percent normally at this stage of the year.
"The group estimates that part of this delay could be progressively
reduced over the coming weeks," the carrier said in a statement,
adding it was difficult to exactly quantify the adjustment given the
exceptional nature of the event.
Shares in the Franco-Dutch airline group, which had lost 22 percent
since the strike began in mid-September, fell more than 5 percent to
touch a low of 6.26 euros, their lowest since September last year.
FURTHER TENSIONS
U.S. securities firm Jefferies said the 500 million euro hit to 2014
gross earnings was worse than expected and highlighted concerns over
the dip in forward bookings, even though it was too early to say how
much of this was due to the strike and how much to the general state
of the economy.
France, the euro zone's second-biggest economy, posted zero growth
in the first two quarters of the year, while statistics office INSEE
last week predicted growth of just 0.1 percent for both the third
and fourth quarters.
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Pilots ended the airline's longest strike since 1998 in late
September after managers agreed to drop plans to set up a new
European arm for low-cost unit Transavia. Air France plans to press
ahead with the expansion of Transavia France. Air France-KLM said
that for the winter season, its capacity would grow by 0.7 percent,
including 0.1 percent for the passenger business at its two main
brands, Air France and KLM, as well as regional carrier Hop, and
13.3 percent for Transavia.
In a sign of continued tensions in the aftermath of the dispute, Air
France said it had been forced to cancel a meeting with unions on
Tuesday on its plans for Transavia due to the absence of unions
representing a minority of staff.
"Whilst pilots have returned to work, for now, there has not been a
clear resolution, and uncertainty (regarding) the Transavia strategy
prevails," Jefferies analysts said in a note.
Air France pilots are seeking the right for future pilots to be
recruited on the same conditions as those currently working for the
main airline, a point on which management says it will not give way.
Abu Dhabi's Etihad Airways, which is expanding its global reach with
acquisitions of stakes in other airlines, meanwhile said it had
hired Air France veteran Bruno Matheu as chief operating officer for
these overseas partners.
(Additional reporting by Tim Hepher; Editing by James Regan and
David Holmes)
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