Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Air France-KLM has warned it expects to take a financial hit because a “significant” number of would-be visitors have avoided booking trips to Paris during the Olympic Games.
The airline group said traffic to and from the French capital was “lagging behind other major European cities” ahead of the games, which will run between July 26 and August 11.
“International markets show a significant avoidance of Paris,” the company said in a statement on Monday, citing bookings patterns at both Air France and Air France-KLM’s low-cost airline Transavia.
French visitors “seem to be postponing their holidays” until after the games or making alternative plans, the company added. It also cited data from the Paris Tourist Office published last month, which forecast that hotel bookings would be down over the summer.
The company expects a negative impact of between €160mn and €180mn on revenues between June and August.
Analysts at Bernstein said this suggested an overall 13 per cent reduction in the consensus pre-tax profit forecast of €1.35bn this year.
Travel to and from France was expected to “normalise” after the Olympics, Air France-KLM said, with “encouraging demand levels” for the end of August and the month of September.
Shares were down 2.5 per cent by lunchtime trading.
The warnings come despite forecasts from tourism officials that 15mn visitors will come to Paris for the games.
Polls show that half of the city’s residents plan to leave temporarily, and one government minister has urged people to work from home or go elsewhere to avoid transport disruption.
There have also been signs of an oversupply of accommodation during the games, with a glut of listings on Airbnb pushing down prices.
Neil Glynn, analyst at research company Air Control Tower, said the lingering effects of strikes and disruption at the start of the year were likely to weigh on second-quarter results for the airline’s main European rival Lufthansa.
He added that because different factors at Air France-KLM and Lufthansa had given rise to similar expectations of disappointing revenues, this prompted questions about whether “underlying market softness is also a common factor alongside the Olympics and strike action”.
Source link
