Air France-KLM's restructuring plan calls for expansion of air cargo business
AIR FRANCE-KLM Group has launched a five-year restructuring plan to enable the airline to regain a leadership position among European carriers
AIR FRANCE-KLM Group has launched a five-year restructuring plan to enable the airline to regain a leadership position among European carriers. The initiative seeks to maximise the role of air cargo in generating revenue, as well as regain market share.
Air France-KLM is the fifth-largest global air cargo carrier, based on freight-ton kilometres, according to the International Air Transport Association (IATA). It has a 3.8 per cent global market share and handles 1.1 million tonnes of cargo per annum, generating EUR2.3 billion (US$2.5 billion) in revenue, reported FreightWaves, New York.
CEO Benjamin Smith said executing the plan is centered around optimising operations, concentrating on the most profitable passenger segments, developing customer data initiatives, maintenance, cargo and assessing consolidation opportunities.
The plan calls for achieving an operating margin of seven to eight per cent. The 4.8 per cent margin for the first nine months of this year reflects the global economic slowdown, ongoing trade tensions and higher fuel costs. The group's margins trailed those recorded by rivals International Consolidated Airlines Group (IAG) and Lufthansa Group.
The overall plan also identifies the roles to be played by Air France, KLM and low-cost carrier Transavia. Air France is tasked with leveraging its local market and premium strength, while KLM is expected to strengthen its leadership position at Amsterdam Schiphol airport, with the aim of becoming the go-to carrier for connecting traffic to and from European destinations.
Transavia management is tasked with consolidating its position as a top low-cost operator in The Netherlands, and becoming the leading low-cost carrier in France. Making inroads in France will be a tough challenge for Transavia given that larger low-cost operators EasyJet and Ryanair also serve that market. Air France and Transavia also plan to strengthen their positions at Paris Orly airport to better leverage slot portfolios at the congested airport.
Furthermore, the overall roadmap calls for speeding up fleet renewal, implementing unspecified group synergies and lobbying the French government to create a more competitive airline business environment.