Air France-KLM trims capacity outlook amid Olympics impact
Air France-KLM trimmed its full-year capacity outlook amid a bigger-than-expected shortfall from tourists avoiding Paris during the Summer Olympics, with the group initiating a hiring freeze and additional cost cuts. Group capacity is now expected to rise 4% from last year’s level, compared with a previous estimate of 5%, Air France-KLM said in a statement on Thursday. It also tweaked its 2024 capital-expenditure target to below E3b from an already revised April goal of E3b. The second quarter “confirmed an increasingly challenging environment for aviation,” CEO Ben Smith said. Passengers avoiding Paris to skirt possible disruptions and high prices during the Olympic Games kicking off Friday is now expected to result in a shortfall of about E200m, the company said, more than a previous estimate of E160m to E180m. French residents have been postponing holidays until after the Olympics, while international customers are staying away, it said. Citizens also traveled slightly less in June and early July due European elections first and then snap French legislative vote, the company added. Air France-KLM’s report adds to a series of gloomy outlooks by international carriers in recent weeks, hurt by a decline in ticket prices, delays in aircraft deliveries and higher costs. Deutsche Lufthansa AG said it will struggle to break even at its namesake airline unit this year, and Ryanair Holdings Plc warned on Monday that yields will be materially lower as travelers cut back on spending during the most important months of travel. Airlines poured capacity into Paris in the run-up to the Olympic Games, with Air France and its low-budget Transavia airline, as well as Ryanair leading the charge. While it’s typical for corporate travelers to avoid a host city during the Olympics, just 24 hours before the opening ceremony the French capital’s streets and restaurants remain empty as more residents work remotely or have left teh city, while tourists have yet to show up. <br/>
https://portal.staralliance.com/cms/news/hot-topics/2024-07-26/sky/air-france-klm-trims-capacity-outlook-amid-olympics-impact
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Air France-KLM trims capacity outlook amid Olympics impact
Air France-KLM trimmed its full-year capacity outlook amid a bigger-than-expected shortfall from tourists avoiding Paris during the Summer Olympics, with the group initiating a hiring freeze and additional cost cuts. Group capacity is now expected to rise 4% from last year’s level, compared with a previous estimate of 5%, Air France-KLM said in a statement on Thursday. It also tweaked its 2024 capital-expenditure target to below E3b from an already revised April goal of E3b. The second quarter “confirmed an increasingly challenging environment for aviation,” CEO Ben Smith said. Passengers avoiding Paris to skirt possible disruptions and high prices during the Olympic Games kicking off Friday is now expected to result in a shortfall of about E200m, the company said, more than a previous estimate of E160m to E180m. French residents have been postponing holidays until after the Olympics, while international customers are staying away, it said. Citizens also traveled slightly less in June and early July due European elections first and then snap French legislative vote, the company added. Air France-KLM’s report adds to a series of gloomy outlooks by international carriers in recent weeks, hurt by a decline in ticket prices, delays in aircraft deliveries and higher costs. Deutsche Lufthansa AG said it will struggle to break even at its namesake airline unit this year, and Ryanair Holdings Plc warned on Monday that yields will be materially lower as travelers cut back on spending during the most important months of travel. Airlines poured capacity into Paris in the run-up to the Olympic Games, with Air France and its low-budget Transavia airline, as well as Ryanair leading the charge. While it’s typical for corporate travelers to avoid a host city during the Olympics, just 24 hours before the opening ceremony the French capital’s streets and restaurants remain empty as more residents work remotely or have left teh city, while tourists have yet to show up. <br/>
