Air France blames attacks, strikes as fall in bookings accelerates
September 20 2016 04:32 PM
Air France
Air France

Reuters/Paris

* Bookings down by up to 10 pct in latter part of year
* Demand from China, Japan, US especially weak
* Adds to pressure on new CEO, new project due in Nov

Air France expects a further decline in bookings over the coming months as a result of Islamist militant attacks and a cabin crew strike during the summer, the airline's boss Jean-Marc Janaillac said.

Air France shares hit their lowest level in four years on Tuesday after Janaillac's comments, dropping more than 2 percent, while rivals IAG, Lufthansa, Ryanair and easyJet were down by between 0.5 and 2.2 percent.

Air France's bookings were down 5 percent in July and August and the drop had accelerated to between 5 and 10 percent for the remainder of the year, Janaillac said at a travel conference in Paris. He said the biggest drop in demand was coming from travellers from China, Japan and the United States,

Militant attacks in France have hit tourism in the country since last year. In July, a gunman drove a truck into crowds celebrating Bastille Day in the Riviera city of Nice, killing 86 people. Later the same month, a priest had his throat slit in a church. Both were claimed by Islamic State.

‘We can see the effect on Air France already, we will feel it even more in the coming months,’ said Janaillac, who is head of the Franco-Dutch Air France-KLM group, of which Air France forms the major part.

The slump in ticket sales piles more pressure on Janaillac, who took over in July, to turn around the group, which has struggled to cut costs to compete more effectively with low-cost rivals on short-haul flights and Gulf carriers on long-haul.

The company also said on Tuesday it would delay taking its first Airbus A350 long-haul jet by one year, to the end of 2019. It did not give a reason for the delay.

‘We, and indeed the airlines, do not yet have clarity on just how weak trading will be as we close out 2016,’ HSBC analysts said in a note on Tuesday in which they kept a ‘Reduce’ rating across the European airline sector.

After plans by previous CEO Alexandre de Juniac met with fierce resistance from unions and resulted in costly strikes, Janaillac hopes to smooth relations and plans to launch a new project called ‘Trust Together’ in early November.

‘We have to restore trust within the group, that's my aim with this project for the future that we're working on,’ Janaillac said.

Rival Lufthansa has also faced strikes as it tries to cut costs.



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