Air France-KLM profits hit by pilots' strike

The pilots' strike brought disruption to France's airports, with many flights cancelled

Air France-KLM is planning to speed up cost cuts and reduce investment after it reported a drop in full-year profits following last year's pilots' strike.

The strike followed a dispute with pilots over plans to expand the group's budget subsidiary Transavia.

The airline's pilot strike, which was the longest in 20 years, offset the benefits of lower fuel prices.

Earnings fell €266m (£172m) to €1.598bn, with the September's strike costing it €495m in lost revenue.

Air France-KLM also said it had been hit by the weaker euro, while overcapacity on routes to Asia, Latin America and Africa had weighed on ticket prices.

Revenues fell 2.4% to €24.91bn, despite a 1.3% increase in passenger numbers.

The airline group said it planned to cut investment by €300m euros a year in 2015 and 2016.

"With the way we see the market developing, except for the North Atlantic, we are being very, very cautious," said chief executive Alexandre de Juniac.

'Struggling'

Shares in Air France-KLM fell almost 6% in early morning trading.

Aviation analyst Norman Gage, from New Generation Technology, told the BBC that there were "differences of opinion toward the top levels" between the Air France and KLM sides of the business over how to progress with a low-cost service.

Mr Gage said that in comparison to existing low-cost carriers such as Easyjet, Air France-KLM was "struggling".

He added: "The low cost carriers who have started up more recently are much quicker on their feet and have a much better basic structure to work from."