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Air France-KLM said it will accelerate capacity increases, despite an uncertain economic climate, in order to defend its share of an air-travel market that\u2019s becoming flooded with discount rivals.<\/p>\nAir France-KLM said it will accelerate capacity increases, despite an uncertain economic climate, in order to defend its share of an air-travel market that\u2019s becoming flooded with discount rivals.<\/p>\n
The Paris-based carrier will boost seating by up to 4% this year, in a bid to combat the low-cost challenge, even as fuel expenses jump by a forecasted \u20ac150m, it said.<\/p>\n
The shares dropped as much as 7.5%, to the lowest in eight months.<\/p>\n
Operating profit, last year, jumped 42%, to \u20ac1.49bn.<\/p>\n
\u201cAs we enter 2018, in a context of rising oil prices and even more intense competition, we will go on the offensive,\u201d chief executive, Jean-Marc Janaillac, said. <\/p>\n
More partnerships are planned to help defend long-haul markets, but the company played down prospects for investing in Italy\u2019s Alitalia.<\/p>\n
Air France-KLM is keeping its foot to the pedal, after breaking a cycle of losses and labour unrest, helping to propel the stock up 160% last year. <\/p>\n
The company faces a heightened challenge, as Ryanair moves to open its first French bases, while long-haul discounters, led by Norwegian, are encroaching on trans-Atlantic routes. <\/p>\n
Shares of Europe\u2019s largest airline, which cautioned that the \u201cglobal context remains uncertain,\u201d have slid 26% this year, after the mammoth 2017 advance.<\/p>\n
Mr Janaillac pledged to keep a close eye on Ryanair, which said, this week, it aims to open at least two bases in France, starting with five aircraft apiece, as a reluctant embrace of unions removes barriers to expanding in a market where companies are required to let workers join unions. <\/p>\n
\u201cWe are for competition, but fair competition,\u201d the CEO said, adding that his company will watch \u201cto see they respect the laws\u201d.<\/p>\n
Air France-KLM\u2019s planned capacity jump follows a more modest, 2.6% boost in 2017, encouraged by higher bookings and unit revenue (a measure of fares) in most arenas other than the French domestic market. <\/p>\n
Seat increases will include inter-continental services, where the IAG\u2019s British Airways discount arm, Level, aims to offer Paris-New York flights for \u20ac129.<\/p>\n
IAG also owns Aer Lingus and Iberia, as well as low-cost airline, Vueling.<\/p>\n
Chief financial officer, Frederic Gagey, said there are no plans for Air France-KLM to launch its own, low-cost, long-haul unit, and that partnerships, including the purchase of a 31% in Virgin Atlantic Airways, are \u201cweapons to answer attacks from competitors\u201d.<\/p>\n