Attacks damage French tourism

28 Jul 2016  2049 | Business & Trade Fairs

PARIS Air France-KLM said, Wednesday, it managed to cut its net loss significantly in the first half of this year, but warned terrorist attacks had reduced the attractiveness of France as a travel destination.

“The global context in 2016 remains highly uncertain regarding the geopolitical and economic environment in which we operate,” the French-Dutch airline group said in a statement, citing “a special concern about France as a destination”.

The group cut its net loss to 114 million euros in the first half of the year compared to 638 million in the same period in 2015.

inside no 9On an operating basis, it made a profit of 218 million compared to a loss of 238 million.

While the airline group even managed a net profit of 41 million euros in the second quarter, it noted a “clear deterioration during the quarter” in revenues, which dropped by 5.2%.

The company’s shares soared nearly 5% in early Paris trading. They later showed a gain of 3.4%, while the main CAC 40 index was up 1.5%.

The results were announced as Air France faced another strike by employees, which forced it to cancel 13% of flights on Wednesday during the peak summer travel season.

Chief financial officer Pierre-Francois Riolacci said unit revenue fell by 5.6% in the second quarter, which he put down to the sluggish global economic recovery and “most of all the effect of the terror attacks that have struck Europe in recent quarters and which resumed with the Brussels attacks at the end of March.”

The March 22 Brussels airport and metro attacks which killed 32 people are believed to be the work of jihadists closely linked to the cell which carried out the November Paris massacres in which 130 people died.

The July 14 attack in Nice in which 84 people were killed when a gunman drove a 19-tonne truck into a crowd of revellers following Bastille Day fireworks has renewed concerns about the impact on tourism, which accounts for 7% of France’s economy and employs two million people.

French officials said earlier this month that the number of tourists arriving on regular flights has fallen by 5.8% since January, including by 11% in Paris.

A Paris stock trader said the airline’s results were quite good, but that it faces turbulence ahead.

Air France-KLM is “buffeted by considerable headwinds: attacks, strikes, Brexit, changes to European air regulations, hikes in airport fees, competition from Gulf airlines … a change in management,” said the broker, who requested anonymity.

sourced:ttrweekly.com 

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