Airlines Report Revenue Decline Due to Paris Olympics
- Air France-KLM Group and Delta Air Lines reported negative unit revenues due to reduced demand for travel to Paris.
- This decline in demand coincided with the Paris Olympics, which typically would have heightened interest.
- Both airlines are feeling the financial strain during the summer months from June to August.
As the Paris Olympics approach, two major airlines, Air France-KLM Group and Delta Air Lines, are experiencing a downturn in unit revenues attributed to decreased demand for travel to the French capital. The Summer Games, set to commence with the Opening Ceremony on July 26, have led to a notable drop in traffic to and from Paris, particularly from June to August, as travelers opt for other European destinations. Air France-KLM Group disclosed on July 1 that its Air France and Transavia brands are facing significant pressure on projected unit revenues for the summer season. The airline estimates a revenue decline of approximately $174.5 million to $196.3 million (€160 million to €180 million) during this period, as both international and domestic travelers avoid Paris amid the Olympic festivities. However, the company anticipates a normalization of demand following the conclusion of the Games in late August. Delta Air Lines has also reported a similar impact, with President Glen Hauenstein indicating a projected $100 million revenue hit related to travel to Paris during the Olympics. Despite this temporary setback, Hauenstein noted that summer travel demand to Europe remains strong and aligns with the airline's expectations. Looking ahead, Delta is optimistic about robust fall demand for transatlantic travel beyond the Olympics. For the third quarter, Delta forecasts a revenue increase of 2-4%, alongside an operating margin of 11-13%. The airline's CFO, Dan Janki, expressed confidence in a full-year earnings outlook of $6 to $7 per share, with free cash flow projected between $3 billion and $4 billion.