AirFrance-KLM ( AFLYY ) shares led markets lower?in Paris Tuesday after Barclays downgraded the airline amid concern over restructuring efforts and rising fuel costs.Shares in the carrier fell ?3.2% by 10:00 GMT on the Euronext exchange to change hands at ?5.02 each, extending its 52-week loss to 34.33%.
AirFrance is in the midst of a restructuring aimed at streamlining its business and recapturing market share from its rivals. IAG ( IAG ) , British Airways' parent company, said it carried 100.7 million passengers last year, a 14% increase that allowed it to surpass Air France-KLM - which notched a rise of just 4% - for the first time.
Restructuring efforts, meanwhile, have been hampered by fierce resistance from staff, including a cabin crew strike that the airline said in November would hit operating results by ?90 million ($95.4 million). This remains a source of concern for Barclays.
"We fear profits may materially decline amidst challenging restructuring," Barclays said in a note to investors in which it cut its rating to 'underweight' from 'equal weight' and set a price target of??4.5 each.
Air France-KLM posted earnings before interest, tax, depreciation and amortization of ?2.1 billion for the first nine months of 2016, on sales of?18.6 billion. The carrier booked EBITDA of ?2.4 billion in 2015, on sales of ?26.1 billion.
Margins are also likely to be squeezed in this year as Air France-KLM contend with rising fuel costs after oil cartel OPEC made a pact with non-member nations-notably Russia-to curb production.
Air France shares surged to a seven-month high after it posted better-than-expected full year profits and pledged further cost reductions to boost capacity and offset rising fuel costs
European stocks drifted lower Thursday despite a strong session in Asia as a U.S. dollar retreat affiliate marketing ce este and mixed corporate earnings allowed benchmarks to pull back from recent multi-month highs
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