Air France-KLM cuts earnings forecast

PARIS: Air France-KLM Group, Europe’s largest airline, cut its full-year earnings forecast amid overcapacity on North American and Asian routes, poor demand for freight and the fallout from a dispute with Venezuela.


Earnings before interest, tax, depreciation and amortisation (Ebitda) will be €2.2 billion to €2.3 billion (RM9.49 billion to RM9.9 billion) this year, compared with a previous target of as much as €2.5 billion, Air France said in a statement. Last year, the airline group reported Ebitda of €1.86 billion.


Air France-KLM follows Deutsche Lufthansa AG in lowering its earnings projections as excess capacity on long-range routes cuts into air-fare prices.

The Paris-based carrier said average fares for passengers and cargo dropped last month, and that forward bookings declined this month and next.


“While not representing a turning point in market trends, the June traffic figures as well as bookings for July and August nevertheless reflect the over-capacity on certain long-haul routes, notably North American and Asia, with the attendant impact on yields,” the carrier said.


Compounding the drop is a “persistently” weak cargo demand as well as the situation in Venezuela, which Air France- KLM called “challenging”. Bloomberg