Air France-KLM reports disappointing summer season
Air France-KLM shares dropped the most in six months after the Franco-Dutch carrier said last-minute demand in the crucial summer season has been disappointing.
“Close-in bookings in the peak travel period are weaker than foreseen in view of softening macro-economic environment,” the Paris-based airline said in a statement on its August figures Monday.
Nevertheless fleet renewal program has been approved recently
The shares fell as much as 9.6%, the steepest decline since Feb. 27, after the carrier added seats faster than demand grew, leading to a drop in occupancy levels even as passenger numbers edged higher. The stock traded 8.3% lower at 9:07 euros as of 11:01 a.m. in Paris.
The latest numbers suggest any turnaround at Air France-KLM may be fragile amid a bleaker outlook for economic growth in Europe. The carrier published improved second-quarter earnings in July after a string of labor agreements paved the way for expansion of low-cost services. Chief Executive Officer Ben Smith also gave the go-ahead on a long-awaited fleet renewal program.
EU market facing cyclical dip
Sanford C. Bernstein analyst Daniel Roeska said in a note that the figures suggest corporate bookings are weakening, since they tend to come closer to the point of travel than leisure sales, providing further evidence that the European market is headed for a cyclical dip.
Investors in airline stocks were also shaken Monday by the start of a two-day strike at the British Airways unit of IAG SA, whose shares were trading 2.1% lower in London.