Profits at Air France-KLM are set to dive by as much as 12% in the face of increasing competition in the long-haul airline sector.
The Franco-Dutch carrier’s profit warning sent its shares tumbling by 5% and followed a similar alert from Lufthansa less than a month ago.
Yesterday’s unexpected profit warning sent shares at British Airways and Iberia parent International Airlines Group down almost 7% to 336¼p.
IAG shares were changing hands at 420p prior to Lufthansa’s warning, the Times reported.
EasyJet’s shares were also hit even though its longest flights are from Europe to the Middle East and North Africa.
The shares fell 77p to £12.48 and have now come off 30% in the past three months, wiping more than £2 billion off the value of the airline.
Air France-KLM said: “Bookings for July and August reflect the over–capacity on certain long-haul routes, notably North America and Asia, with the attendant impact on yields.”
The impact on the long-haul market of expansion by the three state-backed carriers of the Middle East – Emirates of Dubai, Qatar Airways, and Etihad of Abu Dhabi – is seen to be a key issue, although Air France-KLM declined to specify it.
Etihad yesterday announced strong first-half figures with revenues rising by 28% to $3.2 billion.
Noting weak cargo demand and a fall-off in traffic to Venezuela amid the political uncertainty there, Air France KLM said: “These factors lead us to revise our EBITDA for 2014 from around €2.5 billion to between €2.2 billion and €2.3 billion.”
The warning from Air France-KLM came despite carrying 3.9% more passengers at 7.2 million in June and its aircraft flew 0.9% fuller at 86.2%.