Oct. 31 (Bloomberg) -- Air France's 15,000 cabin crew disrupted flights for a third day in protest at cuts to staffing levels, grounding about 12 percent of services including long- haul trips to Atlanta, Los Angeles, Montreal and Washington.

Air France-KLM Group fell 6.9 percent in Paris after its French unit said 88 percent of 1,000 scheduled flights would operate today, with about 120 halted yesterday and 130 on Oct. 29. Unions put the cancellations at 171 and 209 respectively.

Cabin-crew unions have called a strike for Oct. 29 to Nov. 2, spanning the All Saints Day holiday, one of France's busiest travel periods, as they seek to halt plans to cut staff levels on Airbus SAS single-aisle jets. Air France is seeking to cut costs after an earnings slump forced the departure this month of Pierre-Henri Gourgeon, its chief executive officer.

"You don't want strikes but if it means they're confronting issues that need confronting then it could be good for the long term," said Jonathan Wober, an analyst at Societe Generale in London who cut his rating on Air France-KLM to "sell" from "hold" today because of the carrier's traffic-growth outlook.

Air France-KLM fell 41 cents to 5.51 euros in the French capital, where the company is based. Europe's No. 1 airline has lost 60 percent this year, the worst performance on the six- member Bloomberg EMEA Airlines Index, which is down 32 percent.

"Clients are being held hostage by a five-day strike for which there's no reason," Air France said yesterday. "Management negotiated day and night for 10 days and responded favorably to 90 percent of the flight attendant unions' demands."

The Paris airports of Charles de Gaulle, Europe's second busiest, and Orly, as well as the terminal in Marseille, are among those affected. The dispute is deepening as Australia's Qantas Airways Ltd. resumed flights today after a labor regulator barred stoppages that prompted the carrier to ground its fleet, stranding about 80,000 passengers over the weekend.

Air France is trying to restrict cancellations to high- frequency European routes, where it's easier to rebook seats, spokeswoman Brigitte Barrand said today by phone. U.S. services were halted because the company was able to shift people to services flown by SkyTeam alliance partner Delta Air Lines Ltd.

Read more: Air France Halts 12% of Flights as Crew Strike for Third Day

Alaska reported 6% higher mainline capacity, this quarter and expects it grow another 4% in Q4. The carrier is expanding its service between San Diego and Hawaii, with the launch of daily nonstop flight to Honolulu in November. Hawaii now accounts for about 20% of the network for Alaska.

For 2012, the carrier is guiding for a capacity growth of about 5%, primarily adding capacity into Hawaii and in regional markets such as Seattle to Spokane, Boise and Kansas City. Alaska views this growth to be in line with its profitability goals as this is driven by back filling of competitive capacity that has left the market.

Hauenstein admits that in hindsight: "There was excess capacity from the industry and from us." Part of the capacity dump could be attributed to the relatively young joint ventures created by the three large airline alliances in the Atlantic market and their acclimation to joint network planning.

Relative to the transatlantic joint venture partners in the SkyTeam tie-up - Delta, Air France and Alitalia - Hauenstin says: "I think this has been a learning process for us as we go through the first two years of our joint venture." Delta and its SkyTeam partners applied lessons learned and have moved to assure that the joint venture's collective transatlantic capacity, which entails routes between North America and Europe, is falling by 7-9%, or 15 points, during the winter season, versus previous growth projections of 7-8%.

The North American transatlantic market during the summer is also seeing a rise in average seat count, driven by Air France and Lufthansa expanding their US A380 operations, Jenks notes. Average aircraft size has risen from 252.4 seats in 2010 to 255.8, underpinned by the addition of a total of five new A380 frequencies introduced during the summer. Lufthansa has added A380 flights from Frankfurt to New York Kennedy, Miami and San Francisco while Air France expanded its Paris-Atlanta A380-operated service introduced last year with the addition of Paris-Washington DC and San Francisco.