Category Archives: Martinair

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

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Martinair to further reduce its freighter fleet by June 2016, the MD-11Fs to be retired

Martinair Cargo (Amsterdam) will scale back its freighter fleet by June 2016 and will continue as a freighter operator for the Air France-KLM-Martinair Cargo group using three Boeing 747-400 ERFs and a Boeing 747-400 BCF. This means the remaining McDonnell Douglas MD-11F freighters will be phased out.

 

KLM has issued this statement:

The company has reached this decision after a thorough deliberation with all the parties involved.

In September 2014, Air France-KLM-Martinair Cargo announced it would be reducing the amount of freighter capacity it needs in its network. Both KLM and Martinair Cargo have discussed the consequences of this decision with the works councils. The decision to scale back the full-freighter fleet has been taken to restore the division’s financial health. The decision will affect more than 330 employees.

Air France-KLM-Martinair Cargo group has decided on a business model which requires less freighter capacity, rather than a model with no freighters at all. Consequently, as an operating carrier within the KLM Group, Martinair Cargo will scale back its fleet and use just one type of aircraft (Boeing 747). This decision affects around 170 ground staff FTEs in the Netherlands, 50 FTEs abroad and 110 cockpit FTEs.

The company will do its utmost to reassign ground staff within the KLM Group using existing instruments, the scope of which may be extended to include voluntary redundancy. This will take place in close consultation with the unions and will only apply to employees working in areas where a staff surplus arises.

A number of voluntary measures have recently been rolled out for pilots at Martinair Cargo. Reassignment options within the group have been explored over the last few months and a number of pilots have taken the step to join Transavia. Recent changes in the financial conditions mean KLM is unable to offer pilots the same salaries they were receiving at Martinair. With KLM’s help, Martinair will continue to make every effort to find solutions for the pilots outside the KLM group. Negotiations between Martinair Cargo and the unions are ongoing and are based on the existing collective labour agreement (CLA). However, the possibility of compulsory redundancies cannot be excluded. Air France-KLM-Martinair Cargo deeply regrets the social consequences of these changes, but the reduction is unavoidable if the cargo business is to be restored to good health.

From 2016, Air France-KLM-Martinair Cargo will continue to operate with a main frame fleet of six Full Freighters (two Boeing 777Fs at Paris Charles De Gaulle and four Boeing 747-400s at Amsterdam Schiphol), supplemented by 15 Boeing 747 Combi’s.

Air France-KLM-Martinair Cargo is convinced that the remaining flexible freighters will continue to provide its clients with a full range of solutions to meet their needs. The freighter network at Schiphol will concentrate on Africa and North, Central and South America and will, of course, continue to serve important markets, such as the flower sector. The company will also continue to invest in Cargo (Express, Pharma, e-commerce).

Cargo remains a core business for the Air France-KLM Group. It generates income of EUR 2.5 billion per year and contributes around EUR 1 billion a year to the passenger network. It goes without saying that pulling out of the cargo business is out of the question.

Copyright Photo: Mark Durbin/AirlinersGallery.com. McDonnell Douglas MD-11 (F) PH-MCR (msn 48617) is pictured at San Francisco International Airport (SFO).

Martinair aircraft slide show: AG Airline Slide Show

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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.

 

Are the days numbered for Martinair?

Martinair‘s (Amsterdam) days could be number. The cargo subsidiary of the Air France-KLM Group could be sold to a third party and even shut down i.e. “internal restructuring”. The cargo divisions of the Air France-KLM Group continue to bring down the group financially. As part of its first half financial report, the Group issued this statement concerning the cargo divisions, including Martinair:

Second Quarter 2014 cargo revenues amounted to 669 million euros, down 5.1% and by 1.9% on a constant currency basis. Faced with a slower than expected recovery, the group continued to reduce full-freighter capacity (down 8.6%). In consequence, total capacity decreased by 2.0%. Traffic decreased by 1.6%, leading to a 0.3 point increase in load factor to 63.2%. Unit revenue per Available Ton Kilometer (RATK) increased by 1.1% on a constant currency basis (-2.1% on a reported basis).

The operating result improved slightly to -45 million euro, up 5 million euros.

The recovery in demand being slower than expected, the group has initiated a strategic review of its full-freighter business, with different scenarios under consideration. Having already decided in October 2013 to reduce its full-freighter fleet to 2 aircraft in Paris and 8 aircraft in Amsterdam by 2015, the group is now looking to further reduce its Amsterdam-based full-freighter exposure either through a partnership with a third party or through internal restructuring. In consequence, the group has recorded an impairment of 106 million euros in its Second Quarter 2014 accounts.

First Half 2014 cargo revenues amounted to 1,344 million euros, down 4.3% and by 1.6% on a constant currency basis. Traffic was stable for a -1.5% decline in capacity, leading to a 1.0 point increase in load factor to 64.0%. Unit revenue per Available Ton Kilometer (RATK) was stable on a constant currency basis (down 2.7% on a reported basis).

On a constant currency basis, cargo unit cost was down 1.7% in the First Half (down 3.9% on a reported basis). The operating result improved by 21 million euros to -79 million euros.

Will Martinair be sold or disbanded? It is unlikely to remain as it is today.

Copyright Photo: Ton Jochems/AirlinersGallery.com. McDonnell Douglas MD-11 (F) PH-MCY (msn 48445) taxies at the Amsterdam base.

Martinair: AG Slide Show

Martinair operates its last passenger flight

Martinair (Amsterdam) with a special edition of its inflight magazine entitled “Thank you for Flying”, said farewell to its many passengers, looking back on a rich history in Dutch aviation. On the last day, October 31, 2011, a ceremonial roundtrip flight was operated above the Netherlands using this Boeing 767-300. According to the airline, “In the same way that passenger transport first began in 1958 with a round-trip flight, so too will it end. The words BEDANKT!, which mean; thank you, was printed under the aircraft”.

PH-MCL flew low over the cities of Rotterdam and Amsterdam. Martinair colleagues were out in force at Schiphol to greet the aircraft for the formal goodbye, which took place in the Martinair hangar. Martin Schröder will symbolically rename an MD-11 with his name as a gesture of goodwill for the future of “his” company as a cargo carrier.

On September 23, 2010 it was announced that Martinair would discontinue passenger operations due to insufficient economies of scale, concentrating instead on cargo transportation effective on November 1, 2011.

In the ensuing year passenger activities were scaled down and the fleet and number of destinations reduced. It was agreed with the trade unions that the pilots and cabin crew affected would be given a safe haven at KLM. A large number of ground crew have been able to do the same.

Martinair was established on May 24, 1958 by aviation pioneer Martin Schröder. At the time the airline did not carry its present name, but was called “Martin’s Air Charter” (MAC). With a fleet counting but one aircraft and a workforce of five, the fledgling airline operated roundtrip flights above Amsterdam and ad-hoc passenger and cargo flights. MAC’s first destination was Palma de Mallorca, with more than five long hours in the air, coffee from a flask and homemade sandwiches instead of a hot meal.

The airline’s operations and fleet expanded gradually in the 1960s. With the introduction of the DC-3s, a DC-4, DC-7s, Doves and a Convair 440, a start was made operating vacation flights in cooperation with tour operators. Worldwide cargo services and special missions were initiated, too, including the transport of Tibetan refugees to Switzerland for the Red Cross and, later, the flights carrying relief supplies for famine-stricken Biafra.

In 1966, the airline changed its name from MAC to “Martinair Holland”.

Martinair purchased its first DC-8 and DC-9 jet aircraft and the airline expanded once again.

In the 1970s Martinair added the DC-10 and a new Fokker F.28 (PH-PBX) government aircraft. As a result Martinair became the Netherlands’ Royal Airline.

In the 1980s first two Boeing 747s were added to the fleet. To create space for these massive aircraft, construction of Hangar 4 was initiated at Schiphol-East. Several years later, Hangar 32 followed.

The first Jumbo jet arrived at Schiphol in 1987, followed by a second a year later. Long-range passenger Boeing 767-300 ERs were purchased to serve the market in Florida and the Caribbean which began to expand towards the end of the 1980s.

In the 1990s the DC-10s were replaced with the more modern MD-11s.

Martinair President and CEO Martin Schröder withdrew from active service in 1998, 40 years after the airline’s establishment.

In 2002, CFO Arie Verberk took over from Aart van Bochove at the helm as Martinair’s President and CEO. The cargo fleet was expanded with the addition of a Boeing 747 and an MD-11. And, in the passenger fleet, a Boeing 767 and the last Boeing 757 were replaced by three new Airbus A320s, enabling Martinair to serve more markets.

Copyright Photo: Keith Burton.

Martinair Slide Show: CLICK HERE

Photo: Martinair. Martinair uniforms over the years:

Martinair to end passenger operations in November 2011

Martinair (Amsterdam) will end all passenger operations in November 2011. Parent KLM Royal Dutch Airlines will replace the passenger routes with their own service or using aircraft and crews of its partners. Martinair’s cargo operations will continue.

The company was founded on May 24, 1958 as Martin’s Air Charter (MAC) by J. Martin Schröder with a single aircraft, a de Havilland Dove and five employees.

The name was changed to Martinair Holland in 1966 (later dropped in 1991).

Copyright Photo: Bruce Drum.