Air France-KLM Group said its markets are deteriorating as fares fall and France’s standing as a tourist hotspot is undermined by a succession of terrorist attacks that have spanned Paris to the Riviera. Europe’s largest airline said Wednesday there is “special concern about France as a destination” amid the Islamic State-inspired killings. Fuel savings that lifted second-quarter operating profit 77 percent will also be “more than offset” over the year as a fare drop prompted by overcapacity clips revenue. Demand for travel from countries including Japan and China is ebbing away as attacks including those that claimed 130 lives in the French capital in November and 84 in Nice this month make global headlines, the company said. In the latest outrage Tuesday a priest was murdered in a village church. Sluggish growth in markets such as Brazil is also hurting passenger numbers, while Britain’s vote to quit the European Union may prove a further drag. Excess Capacity “If the question is do we see a deteriorating environment, the answer is yes,” Chief Financial Officer Pierre-Francois Riolacci said in a phone briefing. “As the months have gone by we’ve seen a significant drop in demand for inbound travel to Europe, especially France. This pressure is happening in the context of capacity growth that is very high for the summer season.” Air France-KLM had previously suggested the benefits of cheaper fuel would only be “significantly offset” by the decline in unit revenues, which reflect fares, and Riolacci said that while the Paris-based company wasn’t providing any earnings guidance for 2016, the revision reflects a shift in its outlook. Second-quarter operating income increased to 317 million euros ($348 million) from 179 million euros a year earlier as the Franco-Dutch group’s fuel bill shrank by 30 percent. At the same time, the fare slide led sales to slip 5.2 percent to 6.22 billion euros and a four-day pilot strike timed to disrupt the Euro 2016 soccer championships wiped 40 million euros from earnings. Flight attendants have also begun a four-day strike as unions opposed to a wholesale restructuring of the airline and its cost-base send an early message to Chief Executive Officer Jean-Marc Janaillac, a former bus company head who took over this month pledging “openness and dialog” and doesn’t intend to make any strategic announcements until November. Riolacci, who plans to leave the company later this year following the exit of his former CEO Alexandre de Juniac, said the walkouts are themselves also probably contributing to a passenger “wariness” about traveling with the Air France unit, though the effect is impossible to quantify. Air France-KLM, which achieved its first annual profit for four years in 2015, aided by the fuel-savings bonanza, is maintaining its 2016 goals of a free operating cash flow between 600 million euros and 1 billion euros, a unit-cost reduction of about 1 percent, and a “significant” reduction in net debt.