Air France's financial results for the third quarter of the year have shed light on the airline's strategic approach to the Paris 2024 Olympics. While the event came with a significant price tag, the French flag carrier is confident that the long-term benefits will outweigh the short-term costs, positioning the brand for sustained success.

Unlocking the Potential of the Paris 2024 Olympics

The Financial Impact: A Necessary Investment

Air France's third-quarter earnings report revealed the significant financial impact of the Paris 2024 Olympics. The event cost the airline €160 million (3 million), weighing heavily on its operating income during the crucial June-September period. Additionally, the airline allocated a bonus pot of around €50 million ( million) to reward its staff for their exceptional operational performance during the Games.Despite these substantial costs, Air France's leadership remains steadfast in its belief that the investment will pay dividends in the long run. Group CEO Ben Smith acknowledged that the event "significantly affected" the company's earnings, but he emphasized that the Olympics provided a "unique platform to demonstrate the Group's operational expertise and capabilities while offering unparalleled visibility for France as a destination."

Navigating the Challenges of Hosting the Olympics

Hosting major events like the Olympics can be a double-edged sword for airlines. While the initial surge of inbound traffic can be a boon, the subsequent sluggish demand for outbound flights often counteracts these gains. Additionally, the influx of visitors and the resulting inflated prices can deter some lucrative business travelers from visiting the host city during the event.Air France was not alone in facing these challenges. Delta Air Lines, the airline's main U.S. partner, also reported a dip in bookings to the French capital during the tournament. However, Delta's overall transatlantic revenue growth remained positive, with traffic to Paris rebounding soon after the competition ended.

Leveraging the Long-Term Benefits

Despite the short-term financial impact, Air France is confident that the long-term benefits of its involvement in the Paris 2024 Olympics will outweigh the costs. The event has brought significant infrastructure improvements to the city, including upgrades to the Orly Airport and enhancements to the airline's busy Charles de Gaulle hub.Moreover, the Olympics have provided unparalleled visibility for France as a destination, which aligns with Air France's strategic objectives. As Paris tourism chief Corinne Menegaux noted, the Games are a "strategic global tourism advertisement for the city," rather than an immediate driver of international visitors.

Building Brand Equity and Operational Expertise

Beyond the financial implications, Air France's involvement in the Paris 2024 Olympics has allowed the airline to showcase its operational expertise and capabilities. The carrier estimates that it will carry 15% of Olympic athletes, 35% of Paralympic athletes, and 13% of the broader "Olympic family," further solidifying its position as a trusted partner for major events.This exposure and the opportunity to demonstrate its operational excellence are expected to have long-term benefits for the Air France brand. As Ben Smith, the Group CEO, stated, "In the long term, this will be advantageous for the Group."

Positioning for Future Opportunities

Air France's strategic approach to the Paris 2024 Olympics is not limited to the current event. The airline's parent company, Air France-KLM, has already signed a new eight-year partnership with the United States Olympic and Paralympic Committee, covering the 2028 Games in Los Angeles.This forward-thinking strategy suggests that Air France is positioning itself as a preferred partner for major sporting events, leveraging its operational expertise and brand visibility to drive long-term growth and success.