Air France-KLM Revenue Hit by France's Violent Street Protests
Air France Expansion Lags Behind KLM, Stoking Sibling Tensions
(Bloomberg) -- Air France-KLM Group said December revenue was crimped by violent French street protests, capping a turbulent year for a carrier struggling to get past a damaging labor dispute and revamp of top management.
The Yellow Vests anti-government demonstrations shaved around 15 million euros ($17 million) off monthly sales, the Paris-based company said Wednesday in a statement on traffic. The number of passengers carried by Air France and local unit Hop! fell 0.2 percent compared with December 2017, contrasting with 7.2 percent growth at Dutch arm KLM.
The figures drove Air France-KLM shares down as much as 3.8 percent and highlighted the performance gap to its biggest rivals. Group passenger traffic rose 3.5 percent in 2018, less than half the 7.1 percent advance reported by rival IAG SA, which is expanding after defeating a strike by British Airways cabin crew and cutting jobs to pare costs at Spanish unit Iberia.
The street protests added to challenges for Chief Executive Officer Ben Smith, who took charge in September and is seeking to end a pay dispute with French pilots without alienating their counterparts in the Netherlands. Crew walkouts last year led to the ouster of his predecessor and hurt earnings.
Higher profit margins at KLM have been a source of tension since Air France acquired the Dutch business in 2004. The unit boosted revenue passenger kilometers -- the number of customers times the distance flown -- by 4 percent in 2018, compared with a gain of just 1.9 percent at Air France and Hop!, according to the statement.
Smith is expected to unveil his strategy in the next few months. The Canadian struck an initial deal with labor groups in October, but talks with powerful pilot unions continue.
Air France-KLM shares fell 30 percent last year, compared with a 5 percent drop at IAG and a near 36 percent slide at Germany’s Deutsche Lufthansa AG, which reports traffic figures on Thursday.
--With assistance from Ania Nussbaum.
To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper
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