As a result, the group stated it would cut another €300 million ($328 million) in costs. The group will continue to cut unprofitable routes.
The group announced these immediate measures:
- Launch of immediate cost-saving measures
- Acceleration of all cost reduction initiatives
- Adjustment of Winter 2015-16 capacity
The group blamed the widening loss on increased competition and exchange rate issues.
Alexandre de Juniac made the following comments:
“In the First Half 2015, Air France-KLM’s results were characterized by exceptional volatility in exchange rates and the fuel price, and by on-going pressure on unit revenues. All the Perform 2020 cost-saving initiatives were identified and quantified, and productivity agreements have already been signed at KLM. Transavia is pursuing its rapid development and will serve 47 cities on departure from Paris this summer. The maintenance business is posting strong growth.
The lack of results improvement leads us to implement immediate additional adaptation measures including, in particular, the closure of heavily loss-making routes, the downward revision in capacity for the forthcoming Winter season, together with an acceleration and an increase in the magnitude of our cost-saving initiatives. Following the agreement signed by KLM with its unions, the rapid conclusion of the negotiations with the Air France unions is key to re-launching the results turnaround. At this pivotal moment in Air France-KLM’s history, the Board and I know that we can count on the spirit of responsibility and commitment shared by all the Group’s staff to enable us to return to a growth path.”
Read the Financial Times analysis: CLICK HERE
In other news, KLM is banking on the new Boeing 787-9 (above) to give it a financial spark and lift. The airline issued this preview of the upcoming introduction of the new type:
Image Above: KLM. The new Boeing 787-9 over Amsterdam.
For KLM Royal Dutch Airlines, the introduction of the Boeing 787-9 marks the dawn of a new age for both customers and crew. With this aircraft, KLM invests more than ever in its customers and future. KLM has chosen this new aircraft type to ensure its passengers an unforgettable and comfortable journey.
“The Boeing 787-9 enables KLM to offer passengers even more comfort and privacy. KLM has chosen to add specific improvements to this special aircraft, which make it unique among other 787s. All these details add up to ensure our passengers can experience a new way to fly.”
Among the most important features of the Boeing 787-9 are the new World Business Class (WBC) seats, which recline completely flat and have direct access to the aisle; the Economy Class seats, which recline 40% further; a state-of-the-art Inflight Entertainment system; and Wi-Fi for all passengers who want to be online during their flight. Finally, the interiors in WBC, Economy Comfort and Economy Class create a highly hospitable setting onboard.
Lower fuel consumption
With the arrival of this new aircraft type in October 2015, KLM is adding a quieter and more fuel-efficient aircraft to its fleet. The Boeing 787-9 is equipped with highly fuel-efficient engines, which will reduce CO2 emissions by at least 20%.
The aircraft is part of KLM’s program of fleet investment, which began with the introduction of the new World Business Class in the Boeing 747. This was followed by entirely new World Business Class and Economy Class interiors in the Boeing 777-200 and the phased introduction of new Boeing 777-300s. From December 2015, KLM will continue its fleet renewal with the deployment of the Embraer 175 and 190.
New flight mode
The design of the interior of the aircraft creates a typically KLM mood, layout and character onboard the Boeing 787-9. The point of departure for the cabin interior was to maximise comfort and privacy for passengers, while maintaining KLM’s brand values.
Above Photo: KLM.
KLM’s Boeing 787-9 is fitted with onboard Wi-Fi. This marks the launch of KLM Wi-Fi, which was tested in earlier trials. It will now be possible to use the internet, email and other online services onboard using laptops, tablets and mobile phones.
Larger windows, a higher cabin pressure and special LED-lighting further enhance the unique flight experience. This is all aimed at ensuring passengers arrive fitter and more rested at their destinations.
Malaysia Airlines (Kuala Lumpur) today issued this statement concerning the one-year anniversary of the tragic shoot-down of flight MH 17:
July 17 marks the one year anniversary of flight MH 17.
Malaysia Airlines, together with the governments of Malaysia, Australia and the Netherlands, are honoring those lost by offering our deep condolences to families and friends affected by this tragedy.
In observance of the one year anniversary, the Government of Malaysia held a memorial event on July 11, 2015, at Kompleks Bunga Raya, KL International Airport, Sepang. The Government of Australia and the MH 17 Aviation Disaster Foundation, with support from the Government of Netherlands, will also be having a remembrance ceremony on July 17, 2015, in Canberra and Nieuwegein respectively.
Malaysia Airlines has made arrangements for family members to attend the memorial event at one of these countries by providing flight tickets, accommodation and transfers to the event venue.
The airline would like to take this opportunity to thank the Government of Malaysia, Australia and Netherlands, our many international friends, our employees, our loyal customers, and the people of Malaysia who have provided tremendous and heartfelt support to Malaysia Airlines and the families of the passengers and crew during this difficult time.
Today, we remember and honor those lost and keep their family and friends in our hearts.
WE REMEMBER. WE HONOR. ALWAYS AND FOREVER.
MH 17, July 17, 2014
Top: In support, KLM Royal Dutch Airlines issued this statement and symbol.
Note: The government of the Netherlands is preparing to issue its aircraft accident report on the intentional destruction of flight MH 17.
KLM Royal Dutch Airlines (Amsterdam) today reached a further agreement in principle with the Dutch Air Line Pilots Association (Vereniging Nederlandse Verkeersvliegers – VNV).
The agreement in principle reached with VNV will now be put before the association’s membership base for approval.
The airline provided these details:
Lengthy and intense negotiations took place with a VNV delegation in recent months. VNV consistently expressed its willingness to invest in the company. KLM and VNV have now reached an agreement for the forthcoming three-year period from January 1, 2015 up to and including December 31, 2017, in which the pilots’ contribution towards the employment conditions is proportionately balanced with the consideration required of KLM by VNV and will also contribute significantly towards achieving the Air France KLM Perform 2020 objectives.
The outcome achieved through negotiation now means that pilots will give concrete shape to the annual productivity gain of 4%. The agreement also includes a concrete increase in the retirement age. Moreover, this agreement will also generate an improvement in KLM’s cash position. In return for this investment, pilots now enjoy access to shares. This will be defined further. The agreement in principle has yet to be tested against legal, fiscal and governance aspects.
What are the results of negotiations with the Dutch Air Line Pilots Association (VNV)?
From commencement of the 2016 collective labor agreement (CLA) year, all pilots will enjoy a holiday entitlement of 35 days. Holiday entitlement was first awarded on the basis of age, and varied from 34 to 38 days.
21 days leave during summer
The number of contiguous days leave during the summer period has been reduced by 1 day to 21 calendar days starting from April 1, 2016.
Transparent holiday scheme
A properly functioning offer and exchange platform will increase the transparency and predictability of the holiday scheme for pilots.
ICA: Change to travel leave days (leave scheme)
Starting from the winter schedule, travel leave in travel cycles of more than 3 travel leave days will no longer be rounded upward. For example, if a flight generates 4.2 travel leave days, this will no longer be rounded up to 5 days.
As a result (in this example), the travel leave after a flight will thus be 4.2 days instead of 5. The 0.2 travel leave day (4.2 – 4) will not be lost, as the decimal will be counted. As soon as the decimals total 1 full travel leave day, the day will be awarded to the pilot.
The current CLA agreement and method (rounding system) will remain applicable to travel cycles of 3 or fewer travel leave days.
ICA: Reduction of 4-pilot operations
Cape Town, Seoul and Kuala Lumpur have been designated as 3-pilot instead of 4-pilot destinations. Should any of these destinations no longer apply, KLM and VNV will in consultation designate another 4-pilot destination.
Note: KLM conducts ICA flights with two, three or four pilots. The number of pilots in the cockpit depends on the applicable flight time.
Boeing 737: Assignment
A Boeing 737 pilot is assigned in cycles of 28 days (16 working days, 12 leave days). This will be adjusted by structurally raising the number of working days from 16 to 17 (with 11 leave days).
KLC: Public holidays
KLC pilots will with retroactive effect from January 1, 2015 surrender 3 of the 6 public holidays provided for by the CLA.The maximum number of flight hours per 30 days and per year as stated in the CLA will be raised in order to accommodate the productivity increase resulting from this measure.
Boeing 787 classification
Pilots can vary/ mix flights* with the Boeing 787 and Boeing 777-200/300. KLM and VNV have a shared vision of the professional and technical aspects that require attention in this respect, including a logical design and the accompanying preconditions. Consultations on this will continue also after the introduction of the Boeing 787.
This has resulted in the proposal that the Boeing 787 be classified in the same manner as the Boeing 777 in terms of payment, the rules applicable to duty and rest times (WRR) as well as the position in the pilot career scheme (RVL).
Two beds and a seat for resting purposes are available in the Overhead Flight Crew Rest (OFCR) area. If a business class seat is still available on the flight day in the case of 4-pilot destinations, this seat will be made available to the 4th pilot for resting purposes.
The Boeing 787 cockpit OFCR is certified for the entire flight operation, including taxiing, takeoff and landing.
* A pilot flies/ is certified for both the Boeing 777 200/300 and the Boeing 787.
The retirement age will be raised in 4 steps from 56 to 58. This means that starting from 2016, it will be raised by six months each year until the retirement age of 58 years is reached in 2019.
Additional agreements reached on the financing of the pension scheme have released a significant amount in pension contributions, thus improving the cash position of KLM.
Counter performance KLM
Shares in AF-KLM
KLM will provide pilots with a one-off share package as compensation for the resulting productivity gains and pension concessions.
The current profit-sharing scheme will be replaced by an improved profit-sharing scheme.
A 90% part-time variant will be added to the existing options for all WRR appendices. This offers pilots the possibility of exchanging the raised productivity for a salary reduction. The new employment percentage cannot be applied in combination with parental leave.
KLM has in this proposal committed itself to the VNV to include the same employment provision as that agreed with the ground and cabin unions. This provision states that no forced redundancies will take place on economic grounds during the CLA period as long as the existing instruments used for this purpose (including temporary increase in part-time and/or non-activity) are adequate. The parties will enter into consultations if these instruments prove to be inadequate.
The term is from January 1, 2015 up to and including December 31, 2017.
Air Malta (Luqa) and KLM Royal Dutch Airlines (Amsterdam) have signed a code-share agreement whereby KLM will place its code and flight numbers on flights operated by Air Malta between Malta and Amsterdam.
Starting with immediate effect this agreement will enable KLM to offer their customers daily services between the Dutch capital and Malta. Air Malta’s flights to/from Amsterdam’s Schiphol airport will connect with KLM’s extensive global network.
The flights will be operated by the Maltese airline with Airbus A319/A320 aircraft (above).
With this code-share agreement, the two airlines’ customers will benefit from new services, such as through check-in for passengers with connections.
Copyright Photo: SPA/AirlinersGallery.com. Airbus A320-214 9H-AEK (msn 2291) approaches the runway at London (Heathrow).
KLM Royal Dutch Airlines (Amsterdam) has announced a pull back on its planned expansion for this coming winter season. The airline issued this statement:
KLM Royal Dutch Airlines will reduce the number of flights it had planned and, in so doing, curtail the growth it had intended for the 2015/2016 winter season. The adjustments will result in a half-million fewer seats than were previously planned. The winter season will run from October 25, 2015 to March 26, 2016.
KLM will reduce flight frequencies to ten European destinations. Furthermore, frequencies to Africa, Japan, and Brazil will also be curtailed. KLM will do all it can to minimise any inconvenience to passengers.
The adjustments result from the fact that KLM’s revenues are under pressure. The pressure will force Air France-KLM to accelerate its plans to implement its Perform 2020 program. KLM has introduced a broad range of initiatives to improve its competitive position, and speed is of the essence.
KLM has already reached an accord with the cabin crew and ground crew unions concerning a collective labour agreement. Further implementation depends on an accord with the pilots’ union (VNV), which has not yet agreed to much-needed productivity increases.
Copyright Photo: SPA/AirlinersGallery.com. Boeing 737-7K2 PH-BGK (msn 38054) departs from London’s Heathrow Airport.
The CEOs of Europe’s five largest airline groups – Air France-KLM, easyJet, International Airlines Group (IAG), Lufthansa Group and Ryanair – met collectively for the first time today (June 17) and agreed to work together to lobby for the development of a new EU Aviation Strategy that will support growth and jobs across Europe, strengthen the sector and give Europe’s passengers lower fares and more choice.
The meeting took place (in Brussels) in response to the new EU Transport Commissioner Violeta Bulc’s consultation on a new EU Aviation Strategy. The five agreed a vision for this strategy that would match the revolution in aviation that the liberalization of Europe’s airline sector created a generation ago, through the creation of the internal aviation market.
The five airlines identified four measures that would support the Commission‘s objectives of enhancing the competitiveness of the European air transport industry both at European and international level, supporting growth and jobs across Europe and which would help consumers through the provision of more flights and lower fares.
These measures are:
The development of an EU Aviation strategy with a plan for a simple efficient regulatory structure, which would strengthen the competitiveness of European airlines, ensure jobs and growth through innovation (e.g. Horizon 2020), protect consumer interests and promote more efficiency to reduce costs.
Lowering the cost of the EU’s airports by ensuring that monopoly airports are effectively regulated; ensuring that passengers receive the full benefit of the commercial revenues which they create at airports; and that security charges are efficient. This could be achieved by reforming the Airport Charges Directive.
Delivering reliable and efficient airspace by reducing the cost of ATC provision; ensuring that ATC strikes do not cause disruption to passengers across Europe; resetting the Single European Sky strategy by focusing on using new technology to make efficiency savings; and using SESAR funding to drive compliance with the Single Sky framework.
Stimulating more economic activity and jobs by creating the right regulatory environment, removing passenger taxes and unreasonable environmental taxes.
The five CEOs – Alexandre de Juniac, Carolyn McCall, Willie Walsh, Carsten Spohr and Michael O’Leary – outlined their vision:
“Europe’s airlines form the most competitive sector in aviation with a diverse mix of carriers offering competition and choice to consumers.This is the first time we have set aside our competitive battles to highlight the importance of a new European Aviation Strategy.
The liberalization of aviation in Europe in the 1990’s, creating a fully liberalized single market with a comprehensive common regulatory framework 18 years ago, strongly enhanced competition across Europe.As a result, consumers have benefited with substantially lower fares and more routes across Europe and to the rest of the world. At the same time, EU airlines have maintained leading safety standards. The range and quality of services have increased and airline costs have fallen by 1 – 2% per year for the last two decades.
We believe that this decline should now be matched by a reduction in those costs which airlines do not control themselves. “As the new Transport Commissioner prepares a new Aviation Strategy for Europe she must drive more competition, encourage more efficiency and help reduce costs in other parts of our industry (such as monopoly airports and Air Traffic Control providers) and reduce the tax burden on passengers.”
Aviation is a proven driver of economic growth and jobs. The proposed measures will create many hundreds of thousands of jobs – particularly for young people, at a time of high youth unemployment in countries such as Italy or Spain – and increase Europe’s GDP. The group will write to the EU Transport Commissioner Violeta Bulc asking for these measures to be put in place.
Alongside the proposed policy positions the five CEO’s confirmed their support for several key principles and action items which should underpin EU aviation policy. The most important of these is the commitment to safety and ensuring that safety standards are developed based on a risk based scientific assessment.
The CEOs confirmed their support for the liberalization of the whole aviation value chain and for pro-competition policy and regulation within the EU. They also confirmed their opposition to the provision of State-aid, as a general principle, to airlines and airports. They agreed that EU and national regulation and policies should support the efficient delivery of services, and that this includes the need for efficient operations to minimise the environmental impact of aviation. The importance of balanced consumer rights was also underlined; EU and national policies need to ensure that consumer rights are respected.
The CEOs agreed to work together to encourage the Commission and EU member states to take up the proposed measures. The five airlines agreed that airline representation in Brussels today is not as effective as it could be – with six airline representative organisations – and agreed to explore possible forms of future representation.
The five airlines between them carried a total of 420 million passengers in 2014, accounting for half of the passenger journeys in Europe.