Tag Archives: Transavia Airlines (France)

Air France’s pilots: the strike will continue, Air France: we will speed up the development of Transavia France

Air France (Paris) is still reeling from a week-long strike by its pilots. The flag carrier has only been able to fly a small portion of its flights due to the on-going strike. Today (September 22) the pilot’s union rejected the latest offer by management to end the strike.

Air France announced today it expects to operate 42 percent of its flights tomorrow (September 23) as the strike continue.

Today Air France also announced it will speed up the development of the lower-cost Transavia France (Paris) with this announcement:

The pilots’ strike has been disrupting flight operations for seven days now, with catastrophic consequences for the Company’s customers, staff and financial situation. Alexandre de Juniac and Frédéric Gagey wish once again to thank all staff who have rallied round in France and around the world to support and assist customers in this unprecedented situation. The Company wishes once again to present its sincere apologies to its customers.

This strike generates an operating loss of up to 20 million euros per day, plus customer compensations and the impact of the gradual recovery in traffic in the days following the return to normal operations. Once the dispute is over, the Group will update its EBITDA target for the 2014 financial year.

Negotiations with the pilot unions, notably the SNPL, have taken place daily. Since the beginning of the strike action, Alexandre de Juniac and Frédéric Gagey have spent over 40 hours in meetings with pilot representatives. Every day, they have been submitting new constructive proposals to resolve this conflict. On their part, the pilot unions have not put forward any proposal demonstrating their willingness to find a solution.

Management can only note that talks have reached a deadlock situation.

Management also wishes to reassert that Air France-KLM’s development on the low-cost market in Europe is both strategic and urgent for the Group’s future, given that this market is fast-expanding and our competitors have adopted particularly offensive strategies on the French market.

The ambition set out in the Perform 2020 growth and competitiveness plan remains intact. The pilot unions have stigmatized the Transavia project by fuelling unfounded fears of “delocalization” and “social dumping”, which have never been at stake. Management regrets these mistaken interpretations, but has taken note of the concerns expressed.

Alexandre de Juniac, Frédéric Gagey and the managerial teams have since taken the following measures:

Postponing the plan to create Transavia subsidiaries in Europe (outside France and the Netherlands), while entering into extended talks about the project and building together the necessary guarantees by the end of the year.

A comprehensive negotiation and explanatory process with Air France and KLM unions will be set up. As for Air France, this process will begin as soon as the next Central Works Council meeting takes place, scheduled for September 25, 2014.
FASTER IMPLEMENTATION OF THE TRANSAVIA PROJECT IN FRANCE

The expansion of Transavia in France is vital for Air France, notably in order to defend the Group’s position at Orly Airport, as highlighted by the experts’ report published in July 2014 and supported by the SNPL. It is now urgent to implement this plan.

The project was presented to the unions of each staff category over a year ago, but was not finalized within the framework of the talks underway. The pilot unions’ demand to use, on the Transavia network, Air France pilots employed under Air France conditions and to replace the existing 44 Boeing 737s by Airbus A320s, would inevitably lead Transavia France to failure. The compromise solutions proposed by management have all been rejected.

In these conditions, if the pilot organizations do not agree to the economic and social terms and conditions of the project put forward, Management will be forced to begin the formal procedure for denouncing the agreement to create Transavia France (signed in 2007). This agreement currently restricts the development of Transavia France; its withdrawal will make it possible to implement the project more quickly.

The aim is to rapidly equip Transavia in France with additional aircraft beyond the 14 currently in the fleet. It should be remembered that this project included the creation of a thousand jobs over the next 5 years, including 250 jobs for French pilots. It will now be possible to hire staff faster. The project will, as expected, be primarily open to Air France pilots on a voluntary basis.

Moreover, Management confirms that the development of Transavia in France is not intended to impact Point to Point activity on the French domestic network. Transavia will not feed the Air France hub at Paris-Charles de Gaulle.

“To remain in the race in Europe, we have no alternative than to rapidly expand Transavia. We are now taking every measure to explain and accelerate its growth out of France. The Air France-KLM Group is reaffirming its aim of reaching a fleet of more than 100 Transavia aircraft by 2017,” said Alexandre de Juniac. Frédéric Gagey continued: “These decisions must enable us to restore calm within the company and end the strike that has lasted too long for Air France, its customers and its staff.”

Top Copyright Photo: Paul Bannwarth/AirlinersGallery.com. Operations at Paris’ Charles de Gaulle Airport (CDG) will remain under the Air France brand but flights to Orly Airport will increasing be under the Transavia brand. With the expedited expansion of Transavia France the subsidiary is likely to get a new look. Airbus A319-111 F-GRHV (msn 1505) taxies at Nantes.

Air France:

Transavia France:

Current routes from Paris (Orly) by Transavia France:

Bottom Copyright Photo: Joe G. Walker/AirlinersGallery.com. Boeing 737-8K2 F-GZHC (msn 29651) wears the 2005 livery of the Dutch version of the original Transavia Airlines.

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:

KLM:

Martinair:

Transavia Airlines (Netherlands):

Transavia Airlines (France):

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 reduces its first half net loss to $824.6 million

Air France (Paris) and KLM Royal Dutch Airlines (Amsterdam) reported a net loss of €614 million ($824.6 million), an improvement of €185 million ($248.4 million).

As part of the expanding Transavia lower-fare operations the Group issued this statement:

In the Second Quarter of 2014, Transavia capacity was up 4.8%, reflecting the accelerated development of Transavia France (up 10%) and the repositioning of Transavia Netherlands (up 3% including a 6% reduction in charter capacity). Traffic rose 6.0%, leading to a record high load factor of 90.7% (up 0.9 point). Unit revenue was down 1.7%. Transavia’s total revenue stood at 296 million euros, up 5.0%. The operating result was -6 million euros, down 3 million euros year-on-year.

In the First Half of 2014, Transavia traffic increased by 6.9% for capacity up 5.8%, leading to a 0.9 point increase in load factor to 89.2%. Unit revenue was down 2.6%. Total revenue stood at 435 million euros, up 4.5%, while the unit cost per ASK decreased by 0.8%, but increased by 0.5% on a constant currency basis. The operating result decreased by 10 million euros to -64 million euros, mainly due to the ramp up of Transavia France.

Overall the Group issued this outlook:

Delivery on the Transform 2015 plan is fully on track. However, as indicated at the beginning of the month, the operating environment remains tough, with industry overcapacity on certain long-haul routes, notably North America and Asia, impacting yields. This trend comes on top of the persistently weak cargo demand and the challenging situation in Venezuela already identified in the First Quarter.

Under these conditions, as indicated at the beginning of the month, 2014 EBITDA is expected to be between 2.2 and 2.3 billion euros. Strong capital discipline will enable the group to remain on track in terms of debt reduction and achieve its objective of 4.5 billion euros in net debt in 2015.

Read the full report: CLICK HERE

Top Copyright Photo: Brian McDonough/AirlinersGallery.com. Air France’s Airbus A380-861 F-HPJE (msn 052) with the special logo to celebrate 50 years of France-China diplomatic relations.

Air France:

KLM:

Transavia (Netherlands):

Transavia (France):

Hop!:

Fleet Information:

Bottom Copyright Photo: TMK Photography/AirlinersGallery.com. Boeing 747-406 PH-BFF (msn 24202) completes its final approach to the runway at Toronto (Pearson).

Transavia France introduces seven new routes from Paris Orly as the fleet expands with Airbus A320s, introduces a new uniform

Transavia France (Transavia.com) (Paris-Orly) has introduced seven new routes per Anna Aero. Paris (Orly)-Tel Aviv was added on April 10 followed by new service to Athens, Faro, Istanbul and Malaga on April 12 along with Pisa and Prague on April 13.

The subsidiary of Air France-KLM now operates 12 Boeing 737-800s and will soon operate five Airbus A320s that are being transferred from Air France.

On April 1 Transavia unveiled its new cabin crew uniform. Previously Transavia issued this statement:

Transavia.com is in the process of creating a new uniform for its cabin crew and sales & service staff. The design process is unique because the end product will be a result of co-creation. This means that the wearers themselves will contribute ideas for the design. Bas van Wayenburg, design consultant, will translate these ideas and suggestions into wearable uniform components. Through ‘crew sourcing’, the airline’s personnel in both the Netherlands and France will take a vote on the final design. By opting for this approach, transavia.com is not only demonstrating its commitment to its employees, but is also enhancing its visual appearance to its customers. The new uniform will be put into use in the summer of 2015.

“We are proud to be working together with our around 1,500 employees, the end users, on the creation of a new uniform in such a way. Our employees reflect our brand and are the customers’ first point contact. The uniform is an important element of our visual identity and must continue to be that. Therefore, after nearly 9 years, we are giving our uniform a facelift. It needs to be in keeping with the core values of our brand, including enthusiasm, commitment and sincerity, while at the same time expressing safety and responsibility,” explains Mattijs ten Brink, General Manager of transavia.com.

Incidentally, this is not the first time that transavia.com has involved end users in the development process of a product. Crowd sourcing was also applied for the Fanflight (2013) and Slogan (2011) campaigns.

Top Copyright Photo: Ton Jochems/AirlinersGallery.com. Boeing 737-86J WL F-GZHI (msn 36120) taxies past the camera at Antalya, Turkey.

Transavia (France):