PARIS (Reuters) - Air France (PA:AIRF) shares hit their lowest in four years on Tuesday after the airline's boss Jean-Marc Janaillac said it expected a further decline in bookings in the coming months as a result of Islamist militant attacks and a cabin crew strike.
Militant attacks in France have hit tourism in the country since last year. In July, a gunman drove a truck into crowds celebrating Bastille Day in the Riviera city of Nice, killing 86 people. Later the same month, a priest had his throat slit in a church. Both were claimed by Islamic State.
"We can see the effect on Air France already, we will feel it even more in the coming months," said Janaillac, who is head of the Franco-Dutch Air France-KLM group, of which Air France forms the major part.
Air France's bookings were down 5 percent in July and August and the drop had accelerated to between 5 and 10 percent for the remainder of the year, Janaillac said at a travel conference in Paris. He said the biggest drop in demand was coming from travellers from China, Japan and the United States.
Air France shares closed down 2.7 percent at 4.66 euros, while rivals IAG (L:ICAG), Lufthansa (DE:LHAG), Ryanair (I:RYA) and easyJet (L:EZJ) were down by between 1 and 3 percent.
Shares were also knocked after HSBC kept a "Reduce" rating across the European airline sector on Tuesday, saying the sector was facing a cyclical downturn.
The slump in ticket sales piles more pressure on Janaillac, who took over in July, to turn around the group, which has struggled to cut costs to compete more effectively with low-cost rivals on short-haul flights and Gulf carriers on long-haul.
The company also said on Tuesday it would delay taking its first Airbus (PA:AIR) A350 long-haul jet by one year, to the end of 2019. It did not give a reason for the delay.
When asked about a move into low-cost long-haul to counter new entrants to the market such as Norwegian and Lufthansa's Eurowings, Janaillac said the company was looking at its options.
"We don't have any definite plans, but we are studying all the possible ways of responding to this new trend of low-cost long-haul carriers," he said.
After plans by previous CEO Alexandre de Juniac met with fierce resistance from unions and resulted in costly strikes, Janaillac hopes to smooth relations and plans to launch a new project called "Trust Together" in early November.
"We have to restore trust within the group, that's my aim with this project for the future that we're working on," Janaillac said.
Rival Lufthansa has also faced strikes as it tries to cut costs.
