Air France-KLM profit warning: Paris Olympics failing to lure airline passengers

Many airline passengers seem to be avoiding Paris this summer because of the Olympic Games. The Air France-KLM Group issued an evaluation of its summer bookings on Monday, which noted that air traffic to and from the French capital is clearly lagging behind. The airline group said it expects revenue will be 160 to 180 million euros below expectations during the period from June to August.

The Olympic Games begin on July 26, and the closing ceremony is set for August 11. The sporting event is still expected to draw many tourists to Paris for the competition and general atmosphere, but that influx has not led to the strength of airline ticket sales that Air France-KLM had anticipated.

The group said its booking figures for trips to Paris are also disappointing when comparing the destination against bookings for other European cities. Another factor is that Paris is likely to be "busy, expensive and full" during this period, a spokeswoman explained.

“Travel between the city and other destinations is also below the usual June-August average as French residents appear to be postponing their holidays until after the Olympics, or considering alternative travel plans.”

The disappointing figures is not a reason for the Air France-KLM Group to limit their total number of passenger flights. Their airlines, Air France, KLM and Transavia, expect that the flow of passengers to and from France will return to normal after the Olympics. According to the company, demand for the end of August and September is "encouraging."

At the end of last week, Air France-KLM suffered a sharp fall on the Euronext Amsterdam stock exchange when the airline group was removed from Barclays bank's buy list. Experts at the British bank pointed out the impending political instability in France, which could pose challenges for Air France. The political uncertainty in the Netherlands about the new downsizing plan for Schiphol is also putting pressure on KLM.

The price target for Air France-KLM was lowered from 15 euros to 9.5 euros. That sent share prices tumbling 4 percent on the day to 8.28 euros on Friday.

After the profit warning, the airline group's shares tumbled after a brief rebound on Monday morning. Shares quickly rose back up to 8.42 euros at the opening bell before sliding back down to 8.07 euros just before 11 a.m.