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Air France-KLM Group third-quarter profit slumped following a two-week pilot strike that crippled Europe’s largest carrier, which said it may need to deepen savings as bookings remain weak into the fourth quarter.
Operating profit declined to 247 million euros ($315 million) from 641 million euros a the year earlier, according to a statement today. Pressure on ticket prices will continue in the aftermath of the company’s most extensive walkout as well as broader market weakness, the company said.
“It makes sense to be very stringent how we manage things, but there have been no drastic measures,” Air France-KLM Chief Financial Officer Pierre-François Riolacci told journalists on a call. A tough trading environment and potential late booking “will hit us in the forth quarter,” he said.
Air France-KLM has reined in costs with a three-year plan called Transform 2015, and is revamping its unprofitable cargo business as it reviews the set-up of its European and domestic operations, which are losing passengers to low-cost carriers such as EasyJet Holdings Plc. Air France pilots quit flying on Sept. 15 in protest of a plan to have low-cost unit Transavia assume most short-haul flying in Europe.
The carrier said it will adapt its investment plans, accelerate the reduction of unit costs and “dynamically” manage its portfolio to mitigate the earnings impact of the pilots strike, without providing details.
Net income in the quarter declined 32 percent to 100 million euros. The company maintained a full-year earnings forecast of earnings before interest, taxes, depreciation and amortization of 2.2 billion euros to 2.3 billion euros, minus about 500 million euros from the strikes. The dispute reduced operating profit by 330 million euros in the quarter, and the company may continue to feel the fallout, Riolacci said.
The company hasn’t yet decided if it will take delivery of two additional Airbus Group NV A380 aircraft, and Riolacci said the agreement allows the carrier to transform the order into smaller A350 planes.
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