Airline shares hurt by strike

Only about 10 percent of Air France's planes go off the ground due to a strike by air traffic controllers

PARIS, France -- Shares in most European airlines fell on Wednesday after a strike by air traffic controllers grounded flights in major centres.

The one-day strike -- called to protest plans by the European Union for a "single-sky" airspace management system -- is affecting flights at airports in France, Italy, Portugal, Greece and Hungary.

The strike was expected to be in effect between 0400 and 2100 GMT.

Air France, Europe's third largest airline, said that 90 percent of its short and medium-haul flights in Europe had been cancelled, although long-haul flights were not expected to be affected.

"People had largely been warned yesterday that their flights would be cancelled, so most haven't made pointless journeys to airports," a spokeswoman for the Paris airport operator ADP told Reuters.

Air France (PAF) lost 1.6 percent to 16.11 euros in early Paris trading.

No.1 European carrier British Airways (BAY), which cancelled most of its flights to the strike-bound airports, fell 2.2 percent to 196.75 pence. UK discount carrier easyJet (EZJ) lost 6.7 percent to 363 pence.

Germany's Lufthansa (FLHA), Europe's second biggest airline, was down 1 percent at around 14.12 euros.

The strike is likely to have a minimal financial impact on the carriers. "A single day won't alter an airline's financials," Chris Avery, an analyst at JP Morgan, told CNN.

However, job action is expected to continue in the coming months as air traffic controllers push for changes to the "single sky" plans, which they claim might lead to privatisation of the sector, job losses and reduced air safety.

"It's going to be an unsettling summer," Avery said.

The airline industry has been hurt by to the downturn in air travel following the terrorist attacks in the United States, as well as the impact of the global economic slowdown.

Air France, which was forced to ground 85 percent of its flights in December due to a 36-hour strike by air traffic controllers, posted a huge drop in profits last year.

However, it still managed to fair better than many of its rivals because it is less reliant on trans-Atlantic routes. As the market weakened, Air France cut capacity by 16 percent and moved many of its planes onto African and Indian Ocean routes, where the slump of air traffic has not been so severe.

The strategy was helped by the collapse of Belgium carrier Sabena and Swissair, which sent more passengers its way -- allowing Air France to keep its planes full enough to maintain pricing and profitability.