AIR FRANCE WARNS OF REVENUE HIT AS FLIERS AVOID PARIS GAMES

(Bloomberg) -- Air France-KLM warned of a revenue shortfall at its French operations this summer because passengers are avoiding Paris to skirt possible disruptions and high prices during the Olympic Games. 

The issues will curtail revenue at Air France and the French arm of the low-cost Transavia unit by between €160 million ($172 million) and €180 million from June to August, the carrier group said in a statement. French residents are postponing holidays until after the Olympics, while international customers are staying away, the company said. 

Airlines have poured capacity into Paris in the run-up to the games, with Air France, Transavia and Ryanair Holdings Plc leading the charge. After the Olympics, Air France said it expects travel to and from France will likely go back to normal. It’s seeing “encouraging demand” for the end of August and for September, and won’t pull back on its schedule for now, it said. 

While it’s typical for corporate travelers to avoid a host city during the Olympics, Air France-KLM’s warning was “more surprising on an aggregate basis,” Bernstein analyst Alex Irving said in a research note.

Shares of the Franco-Dutch carrier fell 1% as of 3:35 p.m. in Paris, amid gains for other French stocks after the far right recorded a smaller margin of victory than expected in weekend elections. Air France-KLM has declined 40% this year. 

Collectively, the five biggest airlines are selling 1.35 million more round-trip tickets to Paris from July to September than they did last year, based on data from aviation analytics firm Cirium. More than half of that extra capacity has been added by Air France and Transavia. 

Ryanair, meanwhile, accounts for much of the rest with a 25% increase compared with the third quarter of 2023, as the low-cost leader expands at Beauvais Airport north of Paris.

--With assistance from Kate Duffy.

(Updates with analyst comment in fourth paragraph)

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2024-07-01T08:20:14Z dg43tfdfdgfd