Paris Olympics a drag on revenues for Air France, Delta; will cost millions
The Paris Olympics are causing a drag on revenues for two airlines.
Air France-KLM Group and Delta Air Lines both said their unit revenues were seeing a negative impact from lower demand for Paris from June to August thanks to the Olympics.
Their comments came as the Summer Games are rapidly approaching. Paris, the city hosting the festivities this time, will hold the Opening Ceremony on July 26.
For Air France-KLM Group, the French company said on July 1 that its Air France and Transavia brands were "currently experiencing pressure on projected unit revenues for the summer season due to the upcoming Olympic Games in Paris, with traffic to and from the French capital lagging behind other major European cities."
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The company projected the associated ding to its unit revenue from June until August would be in the roughly $174.5 million to $196.3 million (€160 million to €180 million) range.
It linked that to both international and domestic travelers trying to steer clear of Paris around the period that the city holds the Olympic Games. Once the events are over, however, demand is "expected to normalize" from late August onward, Air France-KLM Group forecasted.
More recently, Delta reported it had also observed an impact related to the Paris Olympics.
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"We are seeing about a $100 million impact on travel to Paris for the Olympics from June to August," Delta President Glen Hauenstein told analysts and investors on Thursday during the company’s second-quarter earnings call. "Outside of this temporary event, summer travel demand to Europe is strong and consistent with our expectations."
Hauenstein also said the Atlanta-based carrier "see[s] a very robust fall demand for transatlantic" beyond the Olympics.
For the third-quarter, Delta said it anticipated a 2-4% increase in revenue, as well as an operating margin of 11-13% and earnings per share of $1.70-$2.00, according to company executives.
"We remain confident in our full year outlook of earnings of $6 to $7 per share and free cash flow of $3 billion to $4 billion with full year CapEx expected to be $5 billion," CFO Dan Janki said.