Air France-KLM plans a business Boost
AMSTELVEEN/PARIS: November 03, 2016. The Air France-KLM Group has reported a third quarter net profit of EUR544 million on a 5.1 percent drop in revenue to EUR6.9 billion. For the first nine months of 2016, net income was EUR433 million on a 3.5 percent fall in revenue to EUR18.7 billion.
Cargo revenue continued to decline during Q3 – falling 16.6 percent compared to the same period last year to reach EUR487 million. Another operating loss added EUR100 million to the group’s Q3 2015 cargo loss of EUR81 million. Revenue from cargo for the first nine months was EUR1.5 billion, down 16 percent from EUR1.8 billion in 2015.
Air France-KLM-Martinair losses for the two consecutive nine-month periods now exceed EUR438 million. One MD11 freighter was retired during Q1 2016 and two more left last July – reducing the group’s all-cargo fleet to six. Coincident with the publication of its latest results, Air France-KLM has announced a new nine-point strategy to “return to a leadership position in our markets,” according to chairman and CEO Jean-Marc Janaillac.
Called ‘Trust Together’, the plan includes the launch of a new Air France airline called ‘Boost’. Based at Paris CDG, it will have a fleet of 10 long-haul aircraft by 2020 and compete with “Gulf State” airlines that are expanding into “key markets where Air France-KLM is pursuing its growth ambition”. Apparently, to be flown by Air France pilots on a volunteer basis, Boost will focus on new routes, the re-opening of old routes and maintaining current routes under threat.
Air France said the new airline will not be positioned as low-cost and “serve as a laboratory in terms of products, digital and technology, catering, cabin design, services and the customer experience, as well as for working methods”.
Acknowledging the future strategy for cargo will be “to seize opportunities in the airfreight market,” Air France-KLM described it as “support of the passenger activities” with a focus on the “utilization of long and medium-haul aircraft bellies”.
While ‘Trust Together’ is expected to realize annual revenue of EUR28 billion by 2020, Air France-KLM said it would continue to lobby the European Commission for “equitable competition” with the Gulf State and low-cost carriers.