Air France KLM shares fall as Morgan Stanley downgrades stock

PARIS (Reuters) - Air France KLM shares fell on Tuesday after Morgan Stanley cut its rating on the stock to 'underweight' from 'equal weight'.

Air France KLM shares were down around 2% in early session trading.

"The shares are not expensive relative to history – as is the case for the whole of the sector – but the stock is trading at a material premium versus flag carrier peers, while the outlook for free cash flow looks very challenging to us," it wrote in a research note on the airline.

(Reporting by Sudip Kar-Gupta; Editing by Louise Heavens)

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