Air France will push back aircraft deliveries to contain costs after announcing a third profit revision this year that sent its stock tumbling 8.3 per cent.
Europe’s biggest airline will not take some Boeing 777 wide-body jets due in the next two years after saying 2014's earnings before interest, tax, depreciation, and amortization will be €200 million ($246 million) lower than expected. Poor sales on long-haul routes and a two-week pilot walkout in September are largely to blame for the shortfall, it said.
The revision in the final days of 2014 caps a tough 12 months for Air France-KLM, which had set out to reap the rewards of a five-year recovery plan. Instead, the longest strike in the Paris-based company’s history crippled traffic for weeks and leaves it on the defensive as the wider industry reaps the benefits of the oil-price drop’s impact on fuel bills.
"We’ll have to look again at cutting our investments, and clearly that may involve our fleet," CEO Pierre-Francois Riolacci said on a conference call late yesterday after announcing the earnings revision, with this year’s Ebitda now seen at €1.6 billion at best.
Air France shares fell as much as 68 cents and were trading down 55 cents or 6.7 per cent at €7.75 as of 9:33 a.m. in Paris. The stock has gained 2.4 per cent this year, valuing the company at €2.33 billion.
Bloomberg News, edited by ESM
