Airline faces 500m euros strike costs

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Air France-KLM has put the total cost of last month’s two-week pilots’ strike at 500m euros, sending its shares to a 13-month low.

Europe’s second-biggest network carrier by revenue had already revised down its target for 2014 earnings before interest, tax, depreciation and amortisation (EBITDA) from 2.5bn euros to between 2.2bn and 2.3bn in July. At the time, it mainly cited overcapacity on long-haul routes and weak cargo demand. The strike, combined with a warning note on forward demand, have added to its woes. The Franco-Dutch group said total passenger traffic fell 15.9 per cent in September compared with the year before, adding that bookings for the fourth quarter were down by between one and two percentage points. The 500m euro strike cost estimate included a direct impact of between 320m and 350m euros, reflecting lower receipts and the purchase of tickets for customers on rival airlines, with costs partly offset by savings on fuel and other costs. The remainder was down to the delay in bookings.

Chief financial officer Pierre-Francois Riolacci said the airline had sold some 28 per cent of capacity for the fourth quarter, compared with 30 per cent normally at this stage of the year.

“The group estimates that part of this delay could be progressively reduced over the coming weeks,” the carrier said in a statement, adding it was difficult to exactly quantify the adjustment given the exceptional nature of the event.

Shares in the Franco-Dutch airline group, which had lost 22 per cent since the strike began in mid-September, fell more than five per cent to touch a low of 6.26 euros, their lowest since September last year.

US securities firm Jefferies said the 500m euros hit to 2014 gross earnings was worse than expected.