< Back to News

Air France-KLM Sees $632 Million Earnings Hit From Strike

Airfrance

Air France-KLM Group (AF) said the worst strike in the airline’s history, which crippled flights for two full weeks last month, may cut profit this year by 500 million euros ($632 million) amid lost revenues from canceled flights.

The fallout from the actual strike stands at 320 million euros to 350 million euros, a combination of lost revenue and additional costs minus expenses such as a fuel, the carrier said as it released its September traffic figures, which plunged 15.9 percent from a year earlier.

The figure for the potential 2014 hit is higher because the strike led some passengers to delay bookings, Chief Financial Officer Pierre Francois Riolacci said in a briefing. Fourth-quarter bookings at this point show seat occupancy rates at one to two percentage points lower that what the airline would normally have expected for the period, he said.

“It’s hard to know exactly what portion of that is linked to the strike, and what is linked to a lower market trend,” Riolacci said.

Air France’s biggest pilot units initiated a strike after Chief Executive Officer Alexandre de Juniac announced plans to lower expenses and compete more effectively with EasyJet Plc (EZJ) and other lower-cost airlines by creating a new, pan-European discount unit based outside France. Pilots only ended their walkout when the company dropped the plans.

Management was set to meet with various 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 to the discussions showed up and refused to leave. Negotiations will instead proceed with smaller groups starting again today, the airline said.

(Source: Bloomberg)