Reuters - Video

EDITION: U.S. | U.K. | IN

Finance Videos

Overcapacity dents Air France outlook

Tuesday, July 08, 2014 - 02:15

Europe's aviation sector takes another knock as Air France warns profits this year will be much lower - following hard on the heels of a similar warning from Lufthansa. Can the industry deal with its overcapacity problem? David Pollard reports.

▲ Hide Transcript

View Transcript

The Airbus A380 super jumbo. The mighty king of the Air France fleet, it can fly at 500 miles an hour to destinations 8,000 miles away. With over 500 passengers. And that's the airline's problem. Overcapacity on long-haul routes means it's struggling to fill those seats. And there's only weak demand for its cargo services. As a result, profits will be down this year - by as much as 12 percent. Shares in Air France fell over five percent on the news. Others in the sector, like BA and Iberia parent IAG, also took a battering. Adding to a sense of unease in European markets over the recent rally in stock prices. William De Vijlder, CIO, BNP Paribas Investment Partners. SOUNDBITE (English) William De Vijlder, CIO, BNP Paribas Investment Partners, saying: ''The historical experience is that when European cyclical environment accelerates, that margins also grow. That, by the way, must make us very much attentive to the recent softness that we have seen in some data in the euro area, because if that would be confirmed in future data coming out, then of course the picture of earnings are going to power ahead and are going to push at the market, that base scenario would have to be revisited. So yeah, we're in kind of a tricky situation.'' It's the second high-profile profits warning from European aviation over recent weeks. Lufthansa saw nearly two billion dollars knocked off its market value when it, too, warned of overcapacity. That coming after a series of crippling strikes. The pressure is on new CEO Carsten Spohr to come up with new strategies when he makes a company statement this week. Including, it's expected, an 'if you can't beat them', join them' plan - for tie ups with state-owned airlines in the Gulf it's previously accused of distorting the market. For its part, Air France says it will follow on from a recent round of jobs cuts with a programme to get rid of 700 cabin crew posts. There's talk it may sell all or part of its Martinair cargo division. And despite the profit warning, it says it's on track to reduce its net debt to four and half billion euros next year.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

Overcapacity dents Air France outlook

Tuesday, July 08, 2014 - 02:15

Top News »

Most Popular »

Investing 201 »

Bond investors brace for the end of Fed stimulus Bond investors brace for the end of Fed...

Fri, Oct 10, 2014 - (4:03)

Arian Foster = BlackBerry? Arian Foster = BlackBerry?

Fri, Oct 25, 2013 - (3:16)

Don’t miss these red flags for IPOs Don’t miss these red flags for IPOs

Thu, Oct 10, 2013 - (2:34)

Copycat currency trading Copycat currency trading

Wed, Oct 02, 2013 - (2:28)

When to dump a winner When to dump a winner

Tue, Sep 24, 2013 - (1:55)

Where gold might again attract Jim Rogers Where gold might again attract Jim Rogers

Thu, Sep 19, 2013 - (2:05)

Why savings interest rates won't budge Why savings interest rates won't budge

Fri, Sep 13, 2013 - (2:09)

Buy local? ETFs try the trend Buy local? ETFs try the trend

Thu, Sep 05, 2013 - (2:42)

Money Clip »

Will Apple Pay transform mobile payments? Will Apple Pay transform mobile payments?

Thu, Oct 16, 2014 - (2:45)

3 things to do before disaster strikes 3 things to do before disaster strikes

Wed, Sep 18, 2013 - (1:39)

Your must-do money list Your must-do money list

Wed, Sep 11, 2013 - (1:24)

The worst "best" financial advice The worst "best" financial advice

Wed, Sep 04, 2013 - (1:42)

Forget gold: The case for REITs Forget gold: The case for REITs

Fri, Apr 26, 2013 - (1:19)

3 rules for buying a house now 3 rules for buying a house now

Thu, Apr 18, 2013 - (1:39)

Reuters Investigates »

Re-homing victim: "I could have been dead" Re-homing victim: "I could have been dead"

Wed, Feb 19, 2014 - (8:24)

Cops and loggers in the Amazon rainforest Cops and loggers in the Amazon rainforest

Fri, Jan 10, 2014 - (4:01)

"Passed around like a dog" "Passed around like a dog"

Thu, Aug 29, 2013 - (6:32)

Adopted, then abandoned online Adopted, then abandoned online

Thu, Aug 29, 2013 - (13:21)

How the DEA keeps its secrets secret How the DEA keeps its secrets secret

Mon, Aug 05, 2013 - (1:36)

How education lost its role as the great equalizer - Reuters Investigates How education lost its role as the great...

Mon, Dec 17, 2012 - (7:52)

Jihad Jane: From abused child to American jihadist - Reuters Investigates Jihad Jane: From abused child to American...

Sat, Dec 08, 2012 - (10:01)

Jihad Jane: The order to kill - Reuters Investigates Jihad Jane: The order to kill - Reuters...

Sun, Dec 09, 2012 - (10:39)

Moving Pictures »

Dance of the northern lights Dance of the northern lights

Mon, Oct 20, 2014 - (1:08)

Images of September Images of September

Wed, Oct 01, 2014 - (1:00)

Still missing – MH370 Still missing – MH370

Fri, Sep 05, 2014 - (2:05)

Burning Together Burning Together

Mon, Sep 01, 2014 - (2:23)

Mending dolls, teddies and hearts Mending dolls, teddies and hearts

Fri, Aug 22, 2014 - (3:12)

Images of August Images of August

Fri, Aug 29, 2014 - (1:00)

"Old timers" sail the Chesapeake Bay "Old timers" sail the Chesapeake Bay

Mon, Aug 11, 2014 - (2:27)

Burned memories Burned memories

Fri, Aug 08, 2014 - (3:02)

Images of July Images of July

Thu, Jul 31, 2014 - (1:20)

World Cup: passion on the pitch World Cup: passion on the pitch

Fri, Jul 11, 2014 - (1:00)