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Air France loses 500m over pilot strikes

Article By: ,  Financial Analyst
October 8, 2014 11:45 AM

The recent pilot strikes have cost Air France an estimated €500 million (£393 million) in lost revenue, the airline announced.

Pilots took industrial action in September over plans to expand Air France's low cost business Transavia. Staff were unhappy at the lower rate of pay being offered by the budget subsidiary of the French flag carrier and warned that the strikes would go on indefinitely unless the plans were scrapped.

In a bid to end the walkout Air France proposed a deal which would see it pull back its Transavia expansion plans if the pilots ended the strike and returned to work immediately. It also added there would be a "renewed guarantee" against the relocation of many jobs as part of the agreement.

The strikes may have ended but Air France is now counting the cost of lost revenues. The two-week strike wiped more than a fifth off the carrier's estimated full-year core profit and resulted in shares dipping to a 13-month low. Passenger traffic also fell by 15.9 per cent over the course of September, compared to the same period 12 months earlier.

Pierre-Francois Riolacci, chief financial officer of Air France, explained to reporters that the airline had already sold 28 per cent of capacity for the fourth quarter compared to its yearly average of 30 per cent. He added that the group expects that this impact will start to reduce "over the coming weeks".  

One company that has benefited from the Air France strikes has been easyJet. The budget airline recorded a £5 million increase in revenues during the industrial action in France. It has now revised its pre-tax profit forecast from between £545 million and £570 million to around between £575 million and £580 million.

As Air France continued to cancel flights, easyJet has prospered and continues to work to "execute its strategy".

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