Tag Archives: Transavia Airlines

Air France-KLM Group loses 1,665 million euros in the third quarter

Air France-KLM Group issued this financial report:

The continuation of the Covid-19 crisis severely impacted the Third quarter 2020 results:

  •   Revenue at 2,524 million euros, down 67% compared to last year
  •   EBITDA loss at -442 million euros, limited thanks to cost control and state aid
  •   Operating result at –1,046 million euros, down 1,955 million euros compared to last year
  •   Net income at -1,665 million euros, including restructuring provision at -565 million euros, Covid-19 related over-hedging at -39 million euros and fleet impairment at -31 million euros
  •   Net debt at 9,308 million euros, up 3,161 million compared to end of 2019
  •   At 30 September 2020, the Group has 12.4 billion euros of liquidity or credit lines at disposal

    Air France and KLM have agreed with labour representatives on substantial restructuring plans and submitted them for final validation to the French and Dutch states.

    OUTLOOK

    Air France-KLM Group continues to implement the highest safety standards for its customers and employees to counter virus transmission risks.

    After the lockdown, the Group observed a positive demand recovery trend until mid-August. Then, the negative trend reversal for the Passenger activity led the airlines of the Group to adjust downwards the capacity planned for the fall and winter period.

    There is limited visibility on the demand recovery curve as customer booking behavior is much more short-term oriented and also highly dependent on the imposed travel restrictions, especially on the Long Haul network. The period of lockdown starting today in France is a new difficulty that will weigh on the Group’s activities.

    In this context the Group expects:

  •   Capacity in Available Seat kilometers circa index 45 for KLM and inferior to index 35 for Air

    France in the Fourth quarter 2020 compared to 2019 for the Network passenger activity

  •   Negative load factor developments for the Fourth quarter 2020, particularly on the long-haul

    network, and negative yield mix effects due to a delayed recovery in business traffic

    The Group anticipates a challenging fourth quarter 2020, with a substantial lower EBITDA compared to Q3 2020.

THIRD QUARTER 2020
Increase of demand until mid-August,
then new governmental restrictions impacted the expected level of demand recovery

Air France-KLM Group

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Third quarter

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Nine months

2020 Change

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2020 Change 1

Passengers (thousands)
Passenger Unit revenue per ASK1 (€ cts) Operating result (€m)
Net income – Group part (€m)
Adj. operating free cash flow (€m)
Net debt at end of period (€m)

8,796 4.01 -1,046 -1,665 -1,220

-69.8% -42.7% -1,955 -2,026 -985

28,124 5.05 -3,414 -6,078 -3,547 9,308

-64.7% -24.5% -4,460 -6,213 -3,663 3,161

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1 Passenger unit revenue is the aggregate of Passenger network and Transavia unit revenues, change at constant currency
1

The Board of Directors of Air France-KLM, chaired by Anne-Marie Couderc, met on 29 October 2020 to approve the financial statements for the nine months 2020. Group CEO Mr. Benjamin Smith said: “After a promising recovery during the summer, the gradual closure of international borders in the second half of August and the resurgence of the pandemic strongly impacted our results in the Third Quarter, with the Group reporting an operating loss of 1.0 billion euros. We have accelerated the implementation of cost reduction and cash preservation measures. We are also working closely with our partners on various means, such as rapid detection tests, that would allow traffic within the best sanitary conditions for our customers and employees.

Beyond these immediate necessary measures, we are engaged in a more profound transformation of our Group, with the objective of exiting this crisis in a stronger position, ready to address the future challenges of our industry. Air transport will continue to connect people and cultures, but we foresee changes in customers’ expectations that we anticipate too.

We expect a challenging Fourth quarter 2020, with current forward booking sharply down compared to last year.”

Business review

Network: With active management of capacity to meet the increasing demand, the Group was able to ramp up capacity with incremental cash positive flights

Third quarter 2020 revenues decreased by 68.3% at constant currency to 2,004 million euros. The operating result amounted to -990 million euros, a -1,631 million euros decrease at constant currency compared to last year. Measures were strengthened to preserve cash, including reduction of investments, cost savings measures, deferral of supplier payments and partial activity for employees.

Passenger network: Long-haul suffering from travel restrictions, ability to capture traffic when border controls are less restrictive

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Network

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Third quarter

Nine months

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2020 Change Change constant currency

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2020 Change Change constant currency

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Total revenues (€m) Scheduled revenues (€m) Operating result (€m)

2,004 1,856 -990

-68.6% -69.8% -1,649

-68.3% -69.4% -1,631

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7,220

6,753 -2,842

-58.8% -59.7% -3,555

-58.8% -59.7% -3,564

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Passenger network

Third quarter

Nine months

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2020 Change Change constant currency

2020 Change Change constant currency

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Passengers (thousands) Capacity (ASK m) Traffic (RPK m)
Load factor

Total passenger revenues (€m) Scheduled passenger revenues (€m) Unit revenue per ASK (€ cts)

6,782 -71.3% 32,100 -59.6% 13,752 -80.7%

42.8% -46.9 pt 1,329 -77.4% 1,265 -77.9%

3.94 -45.2%

-77.1% -77.6% -44.5%

23,671 -64.3% 103,268 -54.1% 66,861 -66.3% 64.7% -23.5 pt 5,512 -65.4% 5,271 -65.7% 5.10 -25.4%

-65.4% -65.7% -25.3%

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The passenger network activity was, as anticipated strongly reduced, at around 40% of last year’s levels. The tightening of travel restrictions, border closures and absence of corporate travel delayed the expected traffic recovery. July and August were relatively strong in term of traffic compared to a disappointing September affected by restrictive travel measures.

For the third quarter, the unit revenues were down at -44.5% at constant currency compared to last year primarily due to load factors decline on Long Haul operations.

2

The Group’s strategy was to only operate incremental cash positive flight and several routes were taking advantage of the strong worldwide cargo demand while having few passenger on board.

The visiting friend and relative demand was driving the summer traffic, with the French Domestic, African & Middle East and Caribbean & Indian Ocean as the more resilient with a unit revenue performance between -22% and -27% at constant currency.

The medium-haul performance was mixed during summer, with some leisure destinations such as Italy, Spain, Portugal and Greece benefiting from easing travel restrictions and other strongly affected by quarantine and testing process like UK or Germany.

North Atlantic, South American and Asian networks continued to be strongly affected by the border restrictions in place with an important decline in capacity and passenger traffic during summer.

Cargo: Continued strong performance of cargo due to the gap between industry capacity and demand

Cargo business

Third quarter

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Nine months

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2020 Change Change constant currency

2020 Change Change constant currency

Tons (thousands) Capacity (ATK m) Traffic (RTK m) Load factor

Total Cargo revenues (€m) Scheduled cargo revenues (€m) Unit revenue per ATK (€ cts )

220 2,537 1,735 68.4% 676 592 23.35

-20.0% -33.3% -17.0%

+13.4 pt +31.7% +35.7%

+104.0%

+34.1%

+38.0% +107.6%

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611 7,309 4,747 65.0% 1,708 1,482 20.28

-25.7% -32.9% -24.2% +7.5 pt

+7.1%

+8.7% +62.0%

+6.9%

+8.4% +61.6%

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Global air cargo capacity is at the end of the Third quarter 2020 approximately 15% lower than 2019. Tightening of supply and demand levels increased yields by significant amount over the past months.

September was the fifth consecutive month of gradual air cargo market improvements and Air France- KLM’s Cargo activity continued to strongly perform with a unit revenue at constant currency up 104.0% in the Third quarter 2020. The Cargo capacity of the Group has been down 33.3%, primarily driven by the reduction in belly capacity of passenger aircraft partly offset by the increase of the full freighters’ capacity and mini cargo flights (passenger aircraft with only belly capacity commercialized). The load factors were strongly up 13.4 points for the quarter.

On the demand side, world-wide air freight volumes are down due to Covid-19 crisis but are expected to rebound to 90 to 95% of pre Covid-19 levels in 2021. The supply-demand gap of the past months is foreseen to narrow as industry capacity supply will increase and will depend on the passenger traffic recovery. Air France-KLM is in preparation to transport the future Covid-19 vaccines.

3

Transavia operating loss in the Third quarter at -13 million euros, impacted by border restrictions reinstatement

Transavia

Third quarter

Nine months

2020 Change

2020 Change

Passengers (thousands) Capacity (ASK m) Traffic (RPK m)
Load factor

Total passenger revenues (€m) Unit revenue per ASK (€ cts) Unit cost per ASK (€ cts) Operating result (€m)

2,014 -63.3% 6,009 -44.7% 3,869 -61.8%

64.4% -28.7 pt 262 -60.6% 4.38 -30.2% 4.61 -1.3% -13 -189

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4,453 11,178 8,505 76.1% 521 4.55 6.39 -206

-66.6% -57.4% -64.9% -16.4 pt -62.9% -16.3%

+32.5% -364

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The Third quarter operating result ended 189 million euros lower compared to last year at an operational loss of -13 million euros, as a result of the Covid-19 crisis.

Activity levels were close to 55% of last year’s level, with an unit revenue down -30,2% compared to the Third quarter 2019. Transavia France and Holland were able to capture traffic and fill their planes with reasonable load factors and good yields on several leisure destinations. Spain, Greece, Portugal and Italy routes were the most resilient during the quarter. However, severe travel restrictions from the Netherlands to Spain and Greece in the course of the third quarter, did put pressure on activity levels and loadfactor.

Transavia France will expend its French Domestic operation starting in November 2020 from Paris Orly and provinces airports.
However, the resurgence of Covid-19 and border restrictions have slowed down Transavia in the traffic recovery.

Strict cash preservation measures are still in place including reduction of investments, cost savings measures, deferral of supplier payments and partial activity measures.

Maintenance business operating result for Third quarter 2020 at -46 million euros, impacted by Covid-19

Maintenance

Third quarter

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Nine months

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2020 Change Change constant currency

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2020 Change Change constant currency

Total revenues (€m) Third-party revenues (€m) Operating result (€m) Operating margin (%)

616 247 -46 -7.4%

-47.1% -54.5% -117 -13.5 pt

-53.1%

-111

-13.1 pt

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2,255 963 -366 -16.2%

-34.7% -40.7% -536 -21.2 pt

-41.6%

-542

-21.3 pt

The Third quarter operating result stood at -46 million euros, a decrease of 117 million euros, highly impacted by the Covid-19 crisis. Revenues declined and were also impacted by the Air France-KLM Group airlines decrease in activity.

During the Third quarter, contracts signature have restarted and will be included in the order book before year end. The Maintenance business is carefully managing agreements with clients on payment terms.

Operating costs have been reduced in the Third quarter 2020 by a reduced maintenance activity level, partial activity pay schemes for employees and other initiated cost savings measures.

The Maintenance order book is assessed to 9.3 billion dollars at 30 September 2020 a decrease of 2.2 billion dollars compared to 31 December 2019, explained by the Covid-19 crisis effects already occurring and expected.

4

Air France-KLM Group: Decline of 5 billion euros in revenues and 2 billion euros in EBITDA during the third quarter

Third quarter

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Nine months

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2020 Change Change constant currency

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2020 Change Change constant currency

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Capacity (ASK m)

Traffic (RPK m)

Passenger unit revenue per ASK (€ cts)

Group unit revenue per ASK (€ cts)

Group unit cost per ASK (€ cts) at constant fuel

38,109 17,621

4.01 5.56 8.31

-57.8% -78.4%

-43.4% -26.5% +26.7%

-42.7% -25.6% +38.2%

114,446 75,367

5.05 6.34 9.33

-54.4% -66.2%

-24.6% -12.3% +36.7%

-24.5% -12.3% +40.4%

Revenues (€m)
EBITDA (€m)
Operating result (€m) Operating margin (%)
Net income – Group part (€m)

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2,524 -442 -1,046 -41.4% -1,665

-66.8%

-2,095

-1,955

-53.4 pt -2,027

-66.4%

-2,071

-1,931

-53.2 pt

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8,725 -1,282 -3,414 -39.1% -6,078

-57.6%

-4,545

-4,460

-44.2 pt -6,213

-57.7%

-4,554

-4,470

-44.2 pt

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2019 results restated for LLP componentization accounting change and EU passenger compensation reclassification between revenues and external expenses

In the Third quarter 2020, the Air France-KLM Group posted an operating result of -1,046 million euros, down by 1,955 million euros compared to last year.

Net income amounted to -1,665 million euros in the Third quarter 2020, a decrease of 2,027 million euros compared to last year, of which exceptional accounting items due to Covid-19:

  •   Restructuring costs provision of-565 million euros with Departure Plan of French Ground staff, contractual termination for Air France flight attendants, complement for contractual termination for Air France pilots, Departure Plan for Air France-KLM International Commercial staff and Departure Plan for HOP!
  •   Q4 2020 and Q1 2021 fuel over hedge has been recycled to “Other financial income and expenses” for -39 million euros
  •   Fleet impairment on Airbus A380 and the Canadair Jet of HOP! At -31 million euros Currencies had a negative 92 million euro impact on revenues and a positive 67 million euro effect on

    costs including currency hedging in the Third quarter of 2020.

    Since the beginning of the crisis, Air France, KLM and Transavia proceeded 1.8 billion euros of refunds including 300 million euros of voucher issued.

    The Third quarter 2020 unit cost increased by 26.7%, primarily caused by Covid-19 related capacity reductions

    Group net employee costs were down 36% in the Third quarter 2020 compared to last year, supported by partial activity implementation at Air France and KLM, release of temporary and hired staff and no profit sharing provisions to be made at both airlines. The average number of FTEs (Full Time Equivalent) in the Third quarter 2020 decreased by 5,500 compared to the Third quarter 2019, including 2,500 temporary contracts.

5

Net debt up 3.2 billion euros

In € million

Third quarter

Nine months

2020 Change

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2020 Change

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Cash flow before change in WCR and Voluntary Departure Plans, continuing operations (€m)

Cash out related to Voluntary Departure Plans (€m) Change in Working Capital Requirement (WCR) (€m) Net cash flow from operating activities (€m)
Net investments* (€m)

Operating free cash flow (€m)

Repayment of lease debt

Adjusted operating free cash flow**

-594 -2,115

-137 -115 124 +831 -609 -1,399-362 +418 -970 -981 -251 -5-1,220 -985

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-1,926 -4,950

-152 -119 666 +582 -1,412 -4,487 -1,473 +738 -2,885 -3,749 -662 +86 -3,547 -3,663

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* Sum of ‘Purchase of property, plant and equipment and intangible assets’ and ‘Proceeds on disposal of property, plant and equipment and intangible assets’ as presented in the consolidated cash flow statement.
** The “Adjusted operating free cash flow” is operating free cash flow after deducting the repayment of lease debt.

The Group generated adjusted operating free cash flow in the Third quarter 2020 of -1,220 million euros, a decrease of 985 million euros compared to last year, mainly explained by an operating cash flow decline of 1,399 million euros, partly offset by a reduction in net investments of 418 million euros.

Postponement of social charges, taxes and negotiation with suppliers compensated the refunds process and the low inflow of bookings and generated an improvement of +582 million euros in Change in Working Capital Requirement compared to last year.

In € million

Both airlines results negatively impacted in the Third quarter 2020

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30 Sep 2020

31 Dec 2019

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Net debt
EBITDA trailing 12 months

9,308 -417

6 147 4 128

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Net debt/EBITDA trailing 12 months

-22.3 x

1,5 x

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Third quarter

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Nine months

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2020 Change

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2020 Change

Air France Group Operating result (€m)

Operating margin (%)

KLM Group Operating result (€m)

Operating margin (%)

-807 -54.1% -234 -20.5%

-1,200 -62.6 pt -745 -36.8 pt

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-2,401 -47.4% -1,002 -25.2%

-2,699 -49.8 pt -1,736 -33.9 pt

6

OUTLOOK

Air France-KLM Group continues to implement highest safety standards for customers and employees to counter virus transmission risks.

After the lockdown, the Group observed a promising demand recovery trend until mid-August. Then, the negative trend reversal for the Passenger activity led the airlines of the Group to adjust downwards the capacity planned for the fall and winter period.

There is limited visibility on the demand recovery curve as customer booking behavior is much more short-term oriented than before the Covid-19 crisis and also highly dependent of the imposed travel restrictions, especially on the Long Haul network. The period of lockdown starting today in France is a new difficulty that will weigh on the Group’s activities.

In this context the Group expects:

  •   Capacity in Available Seat kilometers circa index 45 for KLM and inferior to index 35 for Air

    France in the Fourth quarter 2020 compared to 2019 for the Network passenger activity

  •   Negative load factor developments for the Fourth quarter 2020, particularly on long-haul

    network, and negative yield mix effects due to a delayed recovery in business

    The Full year 2020 Network passenger activity will be inferior to index 50 compared to 2019, due to the Covid-19 crisis.

    The Group anticipates a challenging fourth quarter 2020, with a substantial lower EBITDA compared to Q3 2020.

    At 30 September 2020, the Group has 12.4 billion euros of liquidity or credit lines at disposal.

    The Group foresees important liquidity requirements in the Fourth quarter 2020 with:

  •   Negative Fourth quarter working capital requirement influenced by deferred payments and

    substantial lower level of new bookings compared to Q4 2019.

  •   Capex spending at 0.6 billion euros, of which half is fleet Capex fully financed. The Group has

    reduced to 2.1 billion euros his 2020 capex guidance. This is a reduction of -1.5 billion euros

    compared to the initial 2020 guidance of 3.6 billion euros.

  •   The hybrid bond was repaid in October for 0.4 billion euros.

7

AIR FRANCE AND KLM HAVE AGREED ON SUSBTANTIAL RESTRUCTURING PLAN WITH LABOUR REPRESENTATIVES

The Group’s strategic orientations defined during the 2019 Investor day started to deliver results in 2019 and in early 2020. However, the Covid-19 which began in the first quarter of 2020 around the world is having an unprecedented impact on the industry and the Group has immediately reacted with safety, operational and cash protection measures.

The focus on reducing external expenses and the number of employees were one of the top priorities. Futhermore, the French and the Dutch governments have provided financial packages and the partial activity implemented in France and the “NOW” mechanism in Holland allowed the Group to further reduce labor costs.

To weather the crisis and cope with the new reality, Air France-KLM Group is accelerating its transformation plans and presented a substantial restructuring plan around the competitiveness and sustainability pillars. Negotiations with the trade unions have resulted in several agreements in Air France and KLM.

To better align the fleet with the lower passenger demand, Air France-KLM Group has accelerated the phase-out of the Airbus 380, Airbus 340, Boeing 747, Canadair Jet and Embraer 145 aircraft. These decisions will bring forward cost savings and efficiency gains due to operating fewer aircraft types. The Group does not anticipate to return to the pre-crisis levels of global demand before several years and the short-term recovery expected has been delayed with the resurgence of Covid-19 end of summer.

KLM business model is still both valid and valuable but needs to be reshaped to the new reality. KLM will be smaller, cheaper, more frugal, more agile and more sustainable.
Operating costs will structurally being reduced in 2021 and beyond, with 750 million euros benefits in 2021 coming from labour, fleet, procurements and fuel costs decrease.

KLM’s restructuring plan calls for a reduction of 5,000 FTEs end of 2020. The plan submitted to Dutch Government early October complies with state aid conditions.

Air France will enlarge and accelerate its restructuring plan to build a post-crisis successful model on several pillars to restructure the French domestic, optimize external spendings, transform support functions, adapt the opeartions to the new activity, modernize the fleet and regain commercial success.

This will bring 800 million euros structural benefits by 2021 and 1.2 billion euros in total by 2022. Air France’s restructuring plan calls for a reduction of 4,000 FTEs end of 2020 and a total of 8,500 FTEs by 2022. The plan submitted to French Government complies with state aid conditions. The long term partial activity establishement is under discussion with representative unions.

Blackshape Gabriél trainers delivered to the Transavia Pilot Program

Two new Blackshape Bk160 Gabriél trainer aircraft have been delivered from Italy to Zelf Vliegen Flight Academy in the Netherlands. The Gabriél is the first aircraft if this type to be used for the new Transavia Airlines Pilot Program, that was started by Transavia in 2019. Zelf Vliegen Flight Academy at Lelystad Airport is the launching customer of the new Italian Blackshape Bk160 Gabriél.

Blackshape Gabriél
The new high performance full carbon fiber Blackshape Bk160 Gabriél tandem seater is equipped with a glass cockpit and with dual controls, is capable of top performance flight qualities and is EASA CS-VLA certified. In 2018 the Blackshape Gabriél was chosen by Transavia for its new Airline Pilot Program.

Transavia Airline Pilot Program
In 2019 Transavia started its new Airline Pilot Program, offering young people the opportunity to obtain their Multi-crew Pilot License (MPL). Transavia Airlines is a low-cost airline that was founded in 1965, operating from the Netherlands and France with a fleet of 80 Boeing 737-700 and 737-800 aircraft to over 110 destinations in Europe and North Africa. These first two Blackshape Bk160 Gabriél basic trainer aircraft arrived in December 2019 and in February 2020 in The Netherlands. Zelf Vliegen Flight Academy has already placed an order for another two Gabriéls.

Transavia Airlines aircraft photo gallery:

 

Transavia orders 17 Boeing Next-Generation 737-800s

Boeing (Chicago, Seattle and Charleston) and Transavia Company (Transavia Airlines and Transavia France), a wholly owned subsidiary of the Air France KLM Group, today announced an order for 17 Next-Generation 737-800s, including options for three additional airplanes. The order, valued at $1.6 billion at current list prices, was previously booked and attributed to an unidentified customer on the Boeing Orders & Deliveries website.

The order will significantly support the growth of Transavia’s operations from France and the Netherlands. The airline currently has a combined all-Boeing fleet of 45 Next-Generation 737s.

Air France and KLM are now funneling more routes to its two main subsidiaries.

Transavia Company has six bases, with Amsterdam’s Schiphol Airport and Paris-Orly Airport as its main hubs, serving 110 destinations in Europe and North Africa. Passenger numbers reached 10 million in 2014.

Photo: Ton Jochems/AirlinersGallery.com. Boeing 737-8K2 PH-HSJ (msn 42150) taxies at the Amsterdam base in the now old 2005 livery.

Transavia Airlines (Netherlands) aircraft slide show: AG Airline Slide Show

AG WAN-Powered by AG

Transavia introduces a new bright and whimsical look

Transavia (2015) logo (large)

Transavia Airlines (Netherlands) (Amsterdam) and Transavia France (Paris-Orly) have introduced a new brighter shade of green and white livery, ten years after the last change. The new makeover by Studio Dumbar redesigns the “t” logo and the new style font titles also drop the .com.

Transavia New Year

 

The company is advertising the change as “the new Transavia”.

Read how the new brand was developed by Studio Dumbar: CLICK HERE

Images below: Studio Dunbar.

Transavia (Netherlands) 737-700 WL PH-XRX (15)(Tko)(Studio Dunbar)(LR)

Transavia (Netherlands) 737-800 WL PH-HZN (15)(under)(Transavia)(LR)

All images by Transavia:

Transavia (Netherlands) aircraft slide show:

Video: The unveiling of the new brand:

AG Bottom Ad Bar

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.

 

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 logo-1

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): AG Slide Show

Bottom Copyright Photo: Transavia.

Transavia FA Uniform

Routes from the Paris (Orly) base:

Transavia France ORY 4.2014 Route Map

 

Transavia Airlines to operate two Boeing 737-800s for Sunweb this summer

Transavia Airlines (Netherlands) (Amsterdam) is again planning to operate two Boeing 737-800s this summer season for Dutch tour operator Sunweb. A new color scheme has been developed on the pictured 737-8K2 PH-HZW (msn 29345).

Copyright Photo: Ton Jochems. PH-HZW is seen on the ramp at Amsterdam today after exiting the paint shop.

Sunweb logo

Hot New Photos: AG Hot New Photos

Transavia Airlines: AG Slide Show

 

Transavia Airlines leases in this Flydubai Boeing 737-800 for the summer

Transavia Airlines (Netherlands) (Transavia.com) (Amsterdam) has leased this Boeing 737-8KN formerly operated as A6-FDD (msn 40234) from Flydubai (Dubai). The aircraft is now operating as PH-FDD for the summer months in this unique hybrid livery.

Copyright Photo: Ton Jochems.

Hot New Items: 

Transavia Airlines: 

Air France to consolidate Airlinair, Brit Air and Regional, cut staff and increase the Transavia fleet

Air France (Paris), according to this report by Reuters, wants to increase productivity by 20 percent. To accomplish this mission, the airline will cut staff and consolidate its feeder airlines, namely Airlinair (Paris-Orly), Brit Air (Morlaix) and Regional (Nantes) into one carrier. Air France will also increase the fleet at lower-cost Transavia Airlines (Amsterdam).

Read the full report: CLICK HERE

Copyright Photo: Pepscl.

Air France:

Transavia Airlines to launch nonstop Amsterdam-Dubai flights on October 11

Transavia Airlines (Transavia.com) (Netherlands) (Amsterdam) is adding a new winter destination. The subsidiary of KLM will complement the parent’s service with low-fare twice-weekly flights connecting Amsterdam and Dubai starting on October 11. The airline will operate Boeing 737-800s on the route.

Copyright Photo: Terry Wade.

Transavia Slide Show: CLICK HERE

Routes from Amsterdam:

Click on the map to expand.