Category Archives: Air France-KLM Group

Air France-KLM’s first quarter loss widens

Air France-KLM Group (Air France, KLM Royal Dutch Airlines, Transavia Netherlands, Transavia France, Hop! and Martinair) reported a first quarter net loss of €504 million ($56.9 million), compared to a net loss of €485 million ($546 million) in the same quarter a year ago.

Read the full report: CLICK HERE

Copyright Photo: Ton Jochems/AirlinersGallery.com. The group retired three Boeing 747 freighters in the Winter 2014-15 season, while another five Martinair McDonnell Douglas MD-11s will be retired by the end of the Winter 2015-16 season. The Group plans to operate only five full-freighters by the end of 2016. McDonnell Douglas MD-11 (F) PH-MCS (msn 48618) of Martinair taxies at the Amsterdam cargo hub.

Air France aircraft slide show: AG Airline Slide Show

KLM aircraft slide show: AG Airline Slide Show

Martinair aircraft slide show: AG Airline Slide Show

Advertisements

Air France-KLM Group 2014 profit falls nearly 15% due mainly to the pilot strike

Air France-KLM Group (Air France) (KLM) (Paris and Amsterdam) reported its pre-tax 2014 earnings fell to 1.59 billion euros ($1.81 billion) from 1.86 billion euros ($2.1 billion) for the previous year. As a result, the group is delaying deliveries of aircraft for both Air France and KLM. Air France will also maintain its Airbus A380 fleet at 10 aircraft and delay taking delivery of the last two.

Read the the full report: CLICK HERE

Copyright Photo: Ton Jochems/AirlinersGallery.com. KLM is celebrating 95 years of flying and is adding special 95 Years logos on select aircraft including the pictured Boeing 777-306 ER PH-BVK (msn 42172) at the AMS hub.

Air France aircraft slide show: AG Airline Slide Show

KLM aircraft slide show: AG Airline Slide Show

AG Aviation friend

Air France and KLM announce their schedule changes for the winter season

Air France (Paris) and KLM Royal Dutch Airlines (Amsterdam) have issued details of their winter schedule from October 26 through March 28, 2015. Overall group capacity will only increase by 0.7 percent as Air France tries to recover from its devastating pilot strikes. However Transavia will see a 13.3 percent increase in capacity as the group tries to drive more operations to the lower cost divisions. Air France is cutting dome domestic AF services with the goal of breaking even by 2017. Here is the full report:

For the 2014-15 winter season (from October 26, 2014 to March 28, 2015), Air France-KLM Group capacity is scheduled to increase by 0.7%, with an increase of 0.1% for passenger operations(Air France, KLM and HOP!) and 13.3% for low-cost leisure operations (Transavia in France and the Netherlands).

Short and medium-haul capacity at the Paris-Charles de Gaulle and Amsterdam-Schiphol hubs will increase slightly (+3.1%). In the same way as last summer, point-to-point short and medium-haul capacity will continue to decrease (-11.3%). Transavia capacity will increase by +13.3%, with growth concentrated on the French market (+56%).

Air France-KLM has chosen to move upmarket with the progressive introduction of new products and services of the highest global standards.

On the long-haul network, 22 Boeing 747-400s have been equipped with KLM’s new World Business Class and 777-200s will be finished before the summer of 2015, followed by implementing the new World Business Class in the 777-300s. By the end of 2016 about 80% of the KLM fleet will be done. Air France continues to roll out its new Best cabins: five Air France Boeing 777s will be equipped by end-2014. Flights to New York, Singapore and Jakarta have already been equipped with these brand new products. Services to Tokyo-Haneda, Shanghai, Dubai, Houston, Sao Paulo, Douala and Malabo will gradually be added to this list in winter 2014.

Furthermore, this winter the Company will operate two new destinations by Airbus A380: Miami and Abidjan, in addition to Los Angeles, New York, Johannesburg, Hong Kong and Shanghai already served by the super jumbo this summer.

Long-haul: + 0.3%

On the long-haul network, Air France-KLM Group capacity is up slightly compared with winter 2013-14 at +0.3%.

On the North American network, capacity is up +2.4% compared with winter 2013-14

KLM is once again increasing capacity to Atlanta, from 7 to 12 weekly flights, in response to market demand. These new frequencies will facilitate connections with the Delta Air Lines network in Atlanta, one of the main hubs served by the Air France-KLM partner.

The Air France Airbus A380 will be flying the Miami route as from early December. Three U.S. destinations will thus be operated this winter by the A380 on departure from Paris-Charles de Gaulle – New-York-JFK, Los Angeles and Miami.

In Mexico, KLM will increase its frequencies to Mexico City, from 7 to 9 weekly flights in November and December, in line with seasonal demand. Air France capacity on a code-share basis with Aeromexico is increasing with 13 new destinations in Mexico and Central America on departure from Mexico City.

In Central and South America, Group capacity is up +1.1%.

Air France continues to serve Brasilia (Brazil) three times a week and Montevideo (Uruguay) is served daily in continuation of Buenos Aires (Argentina). The Company is increasing capacity to Panama City, increasing from three to five weekly frequencies by B777-200 and benefits from Copa’s Central American hub thanks to the commercial agreement between the two airlines.

Air France-KLM continues its close cooperation with the Brazilian airline GOL in order to take advantage of its joint network in the region and offer its customers improved connecting opportunities with the Brazilian domestic network this winter.

In the Caribbean, Air France-KLM capacity is revised downwards (-2.2%). Between mid-December and mid-January, Air France will operate 13 weekly flights (instead of 14) to Pointe-à-Pitre and 11 weekly flights (instead of 14) to Fort-de-France. KLM will increase capacity in the Caribbean in response to increasing demand for these destinations.

In Asia, Group capacity is up slightly at +0.7%.

In continuation of the summer schedule, Air France is continuing to serve Tokyo-Haneda airport up to 11 times per week in addition to the daily flight to Tokyo-Narita, providing connecting opportunities to Noumea (New Caledonia). Services to Jakarta (Indonesia) in continuation of the Singapore flight are also maintained on a daily basis.

To take advantage of the seasonal nature of certain destinations, Air France is increasing capacity during the peak winter season between mid-December and mid-March to Bangkok (Thailand) (one daily flight) and Kuala Lumpur (Malaysia) (addition of a fourth frequency).

In China, capacity to Wuhan is being increased by one weekly frequency, with three weekly flights. Guangzhou will be served by four weekly flights.

KLM continues to cooperate with its Asian partners to offer customers a wider choice of connecting flights and even more destinations in Asia.

Africa: capacity slightly down by -0.8%

In Africa, Group capacity is slightly down to -0.8%.

Air France is adjusting its flight offering and reinforcing its most buoyant routes such as Abidjan (Ivory Coast), with the entry into service of the A380, and Pointe Noire (Congo) with the introduction of a sixth weekly frequency.

In East Africa, KLM is reorganizing its network to adapt it to specific market expectations. Capacity to Dar es Salaam (Tanzania) and Entebbe (Uganda) is up. The two cities are now served directly three times a week. On the other days, they are served via Kilimanjaro (Tanzania) and Kigali (Rwanda) respectively. KLM has suspended direct service to Harare (Zimbabwe) and Lusaka (Zambia). These two destinations remain in the Group’s capacity and are currently served by Kenya Airways via Nairobi (Kenya).

In the Indian Ocean region, Air France-KLM is adjusting capacity (-2.8%). From mid-December to mid-January, Air France will offer 11 flights to Reunion island (instead of 12) and an additional flight to Mauritius.

Middle East: capacity down by -5.2%

In the Middle East, Air France-KLM capacity is down by -5.2%. KLM is again increasing capacity to Abu Dhabi (United Arab Emirates) in combination with Bahrein, as a result of its optimized cooperation with Etihad Airways, Air France-KLM’s partner. KLM will serve this destination using an Airbus 330-300, instead of an A330-200. Dubai will be served by the Air France B777-300 equipped with the new Best cabins in early 2015.

Medium-haul

On the medium-haul network, the 2014-15 winter season sees the full effect of the measures of the Transform 2015 plan.

On departure from the Paris-Charles de Gaulle and Amsterdam-Schiphol hubs: capacity increases by +3.1%
Air France and KLM continue to serve the routes launched this summer: on departure from Paris-Charles de Gaulle, Stavanger (Norway) with two daily frequencies; on departure from Amsterdam-Schiphol, two daily flights to Turin (Italy), one daily flight to Bilbao (Spain) and Zagreb (Croatia).

KLM strengthens its position in Scandinavia by increasing frequencies to Bergen (Noway) with three daily flights and five daily flights to Billund (Denmark). KLM will also increase capacity to Moscow (Russia) and Bordeaux with three daily flights.

Air France aims to better seize connecting opportunities to the rest of the world and maintain capacity adapted to variations in demand between winter and summer: for example, one daily frequency is being suspended to Munich (Germany), Bucharest (Romania), Moscow (Russia), Rome (Italy) and Bremen (Germany).

On departure from Paris-Orly and the French provinces: capacity down by -11.3%
This winter, point-to-point short and medium-haul capacity (Air France, HOP!) is down by -11.3%. Seasonal adjustments are more pronounced, with the aim to return to operational breakeven by 2017.

On departure from Paris-Orly, Air France suspends one daily flight to Bordeaux and two daily frequencies to Toulouse. From the provinces, structural adjustments continue, notably with the suspension of several destinations in Europe and North Africa on departure from Toulouse and Marseille.

HOP! capacity is slightly up in France and to major European cities on departure from the French provinces. With its 26 destinations, Lyon is the Company’s main base, giving customers from the French regions access to a vast network of connecting flights.

Low-cost leisure operations

Transavia: strong increase in capacity of +13.3%

Transavia France, a low-cost subsidiary of the Air France-KLM Group, will continue to develop as outlined in the Transform 2015 plan. During the 2014-15 winter season, Transavia France will operate nine new routes launched this year on departure from Paris-Orly – Istanbul, Tel Aviv, Budapest, Madrid, Malaga, Barcelona, Athens, Pisa and Prague. On departure from Lyon, Transavia will also inaugurate a service to Tel Aviv as from October 2014.

Copyright Photo: Christian Volpati Collection/AirlinersGallery.com. As previously reported, Air France is bringing the Airbus A380 to Miami this winter. A380-861 F-HPJI (msn 115) taxies at the Paris (CDG) hub with the special 80 And (Years) markings.

Air France: AG Slide Show

KLM: AG Slide Show

Air France Aircraft Slide Show:

Air France-KLM to retire the Martinair McDonnell Douglas MD-11 freighters in 2015 and 2016, will expand Transavia leisure flights

Air France (Paris) and KLM Royal Dutch Airlines (Amsterdam) (Air France-KLM Group) issued this statement about its shrinking and unprofitable freighter fleet including Martinair‘s (Amsterdam) McDonnell Douglas MD-11 freighter fleet:

At its meeting on September 4, 2014, the Air France-KLM Board of Directors examined the findings of the strategic review of its full-freighter operations which was launched earlier this year.

On top of the ongoing reduction of the full-freighter fleet, and facing a slower than expected recovery in demand, the Board of Directors has decided to reduce the full-freighter fleet based in Amsterdam to 3 aircraft in operation by the end of 2016. Five MD-11s will be phased out on an accelerated basis during 2015 and 2016.

By then, the Group will operate five full-freighter aircraft: 2 Boeing 777Fs in Paris and 3 Boeing 747 ERFs in Amsterdam, compared with a total of 14 in 2013.

The group intends to find alternative employment internally for all affected staff. It will engage in consultations on this matter with the Works Council and trade unions of the companies involved.

The Group will remain a major player in the cargo sector in Europe through its extensive belly network effectively supplemented by a limited number of full-freighter aircraft.

This adjustment of the full-freighter fleet is part of a broader strategic vision designed to increase cargo contribution to the group. Other measures include a strong focus on specialized products such as pharmaceuticals and express, as well as investment in state-of-the-art IT infrastructure and E-developments, further cost reduction and expansion of partnerships.

In other news, the Air France-KLM Group will expand its leisure operations under the Transavia brand with new bases outside of Paris and Amsterdam. The Group issued this statement:

At its meeting on September 4, 2014, as proposed by its Chairman and CEO Alexandre de Juniac, the Air France-KLM Board of Directors approved the group’s development project on the leisure market in Europe.

This development will take place under the Transavia brand from the two existing airlines – Transavia France and Transavia the Netherlands – and new bases will be opened in other European countries.

This project will strengthen the development of Transavia France (Paris) and Transavia Airlines (Amsterdam) in the Netherlands. The terms of these developments are the subject of consultations in both countries.

The group is positioning itself as a major player in this rapidly growing market in Europe.

This project is part of the group’s new plan for growth and competitiveness, Perform 2020, which will be presented in details to investors and to the press on September 11.

Air France-KLM have also unveiled its new “Perform 2020” program which replaces its “Transform 2015” program. Here is the formal plan:

Air France-KLM unveiled its new Perform 2020 strategic plan.

Perform 2020 is the successor to Transform 2015, which represented the first phase in the Group’s turnaround. While maintaining the imperatives of competitiveness and the ongoing strengthening of the Group’s financial position, this growth plan will focus on the following three strategic areas:

  •   Selective development to increase exposure to growth markets
  •   A product and services upgrade targeting the highest international level
  •   An ongoing improvement in competitiveness and efficiency within the framework of strictfinancial disciplineAir France-KLM’s Chairman and Chief Executive Officer, Alexandre de Juniac, made the following comments:
    “Transform 2015 will be completed by the year end having fully delivered on its objective of significantly improving the Group’s competitiveness and delivering a €1 billion-plus reduction in costs. Perform 2020, the strategic plan we are launching today, will be supported by two main levers: growth, which we are looking to capture in a number of areas, and competitiveness combined with financial discipline which should continue to ensure firm foundations for the development of Air France-KLM. This is why the ambitious initiatives we are launching today will go hand in hand with redoubled efforts to reduce costs and restructure activities which remain loss-making. By 2020, we will have built an air transport Group focused on a leading long-haul network at the heart of global alliances, with a portfolio of unique brands, restructured short and medium-haul operations with a reinforced presence in the low cost segment in Europe, leadership positions in cargo, maintenance and catering, and a significantly improved risk profile both operationally and financially.”

    1 See definition in appendix
    2 At constant currency, fuel price and pension cost

Business review

In an environment which remains challenging but with profitable growth opportunities across all the Group’s markets, Air France-KLM plans to reinforce its key strengths, namely its network, its products and services, and its brands, while adjusting its portfolio of activities.

The development of the passenger hub business based on an upgraded product offer, an increased customer focus and a stronger positioning of brands. Benefiting from the broadest long-haul network on departure from Europe, the Group will be able to continue to capture growth opportunites particularly via the reinforcement of strategic partnerships.

The Group will maintain strict capacity discipline with growth in passenger capacity expected to be around 1% to 1.5% for the 2015-2017 period.

The Group will continue to restructure its point-to-point operations, aiming at a return to operating breakeven by 2017. In addition to the full impact of the measures launched in 2013, this objective will be reached thanks to new initiatives to restructure the network and reduce costs, together with the creation of a single business unit combining HOP and the Air France point-to-point operations.

The accelerated development of Air France-KLM in the European leisure market, under the Transavia brand, based on the two existing companies – Transavia France and Transavia Netherlands – and new bases to be created in other European countries. In a growth market, the Group plans to build on the results achieved within the framework of Transform 2015 to move to a more pan-European scale. By 2017, Transavia will rank amongst the leading low cost carriers in Europe, operating a fleet of 100 aircraft and carrying more than 20 million passengers. This business should contribute an additional €100 million of EBITDAR in 2017. With profitability being impacted by ongoing ramp-up costs, the Group is targeting operating profits by 2018.

The finalization of cargo repositioning: a significant reduction in the full-freighter fleet, from 14 aircraft in operation in 2013 to 5 aircraft at the end of 2016, should enable this business to return to operating breakeven in 2017 (versus a loss of €110 million in 2013 and a €200 million loss including bellies). The group will maintain a small full-freighter fleet as an important commercial lever to support its revenue premium on bellies. The Group will remain a major player in the European cargo sector thanks to its extensive belly network, but with only very limited remaining exposure (15% of capacity) to full-freighter volatility.

The recent development of the maintenance business has proven successful, with increased profitability and rapid growth in the order book. The Group will pursue its growth in this segment, particularly in engines and components, including via targeted acquisitions. This business should generate an additional €50 million to €80 million of EBITDAR in 2017, depending on acquisitions.

From a selective capex management while adopting a disciplined approach to growth opportunities. financial perspective, Air France-KLM plans to pursue the reduction in its unit costs and The Group will leverage the structured approach implemented within the framework of Transform 2015 to maintain unit cost reduction at an annual rate of 1% to 1.5%. To achieve this target, the group will go beyond traditional efforts directed at reducing unit costs (e.g. reduction in external expenses, purchasing policy and renewal of the long-haul fleet). This will involve the ongoing restructuring of uncompetitive activities and implementing a systematic review of processes using benchmarking based on profit centers. It will also entail negotiating with staff on the achievement of productivity gains paving the way to growth.

A progressive increase in fleet capex will be undertaken within the framework of strict capex control. Investment will remain below its pre-2012 level. Dedicated sources of funding will be allocated to significant development opportunities to ensure control over credit ratios. For example, the first phase in Transavia expansion will be financed by the €339 million proceeds generated from the partial disposal of Amadeus shares on September 9.

Medium-term financial targets to 2017

As a result of all these initiatives, Air France-KLM has set itself the following Group financial targets:

  •   EBITDAR up by 8% to 10%5 per year between 2013 and 2017
  •   An adjusted net debt/EBITDAR4 ratio of below 2.5 in 2017
  •   Base businesses to consistently generate annual positive free cash flowThese targets are consistent with a ROCE of 9% to 11% in 2017.

Read the analysis by Bloomberg Businessweek: CLICK HERE

Top Copyright Photo: Keith Burton/AirlinersGallery.com. Martinair’s McDonnell Douglas MD-11 (F) PH-MCS (msn 48618) prepares to land at London’s Stansted Airport.

Air France: AG Slide Show

KLM: AG Slide Show

Martinair: AG Slide Show

Transavia Airlines (Netherlands): AG Slide Show

Transavia Airlines (France): AG Slide Show

Bottom Copyright Photo: Ton Jochems/AirlinersGallery.com. Transavia Airlines’ (Netherlands) Boeing 737-8K2 PH-HZA (msn 28373) with a Kulula underside taxies at the Amsterdam base.

 

Air France-KLM reports a net loss of $843 million in the first quarter

Air France (Paris) and KLM Royal Dutch Airlines (Air France-KLM Group) together reported a new loss of €608 million ($843 million) for the first quarter. This was narrowed from €641 million ($888 million) in the same quarter a year ago.

Read the full report (in English): CLICK HERE

Top Copyright Photo: Manuel Negrerie/AirlinersGallery.com. Airbus A320-214 F-HEPG (msn 5802) of Air France with Sharklets and the special 80 And/Years emblem arrives at the Paris (CDG) hub.

Air France Aircraft Slide Show: CLICK HERE

KLM Aircraft Slide Show: CLICK HERE

Bottom Copyright Photo: Paul Denton/AirlinersGallery.com. Boeing 737-406 PH-BDT (msn 24530) of KLM climbs away from the runway at Geneva.