Air France-KLM shares hit by profit warning

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Shares in Air France-KLM have fallen almost 8% after the airline issued a profit warning and its chief said there was excess capacity on some routes.

The carrier said that in the past few months it had been hit by industrial action, snow and the disruption in Egypt and Tunisia.

As a result it said it would miss its full-year operating profit target of 300m euros ($408m; £255m).

The news also hit shares in other airlines across Europe.

Shares in International Consolidated Airlines Group, formed last month when British Airways merged with Spain's Iberia, closed down 3.3%, while stocks in Flybe and Easyjet were also hit.

Air France-KLM chief executive Pierre-Henri Gourgeon said that there had been an increase in capacity on routes between Europe and the US, adding that some airlines had put seats back onto the market more quickly than the economy could justify.

"The increased capacity we are seeing in this winter season is very high and much higher than it should be," Mr Gourgeon told analysts.

Earlier this week, the airline had reported a 4.8% rise in January passenger numbers - faster growth than the 3.3% rise in seats on offer.

However, Air France-KLM said it had lost 46m euros between October and December - a period when it was forced to cancel about 6,900 flights because of air traffic control strikes in France and disruption caused by heavy snowfall.

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