Air France-KLM will today detail its new business plan, Perform 2020, aimed at supporting its group target of lifting EBITDAR by 8-10% annually between now and 2017.
The plan follows on from its Transform 2015 initiative, the first phase of its restructuring. "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," says Air France chief executive Alexandre de Juniac.
Air France-KLM returned to profit, recording a modest gain €130 million ($173 million), at an operating level in 2013, but heavy net losses have continued.
"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," says de Juniac. "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."
This includes continued tight discipline on capacity, which will run at around 1% to 1.5% for 2015-17.
It will restructure its point-to-point operations with further network and costs measures on top of its creation of Hop as it targets this part of the business reaching operating break even by 2017.
In the low-cost leisure sector it will aggressively develop its Transavia operations - including new bases outside of France and the Holland - to rival other low-cost units. It sees Transaiva operating 100 aircraft and carrying over 20 million passengers, though it sees associated ramp-up costs pushing operating profitability for the unit into 2018.
Air France-KLM will complete its freighter fleet downsizing - from 14 to five aircraft by 2016 - and sees this bringing the loss-making operation to breakeven by 2017.
The group will also push ahead with expanding its maintenance business, notably in the engines and components segment, including targeted acquisitions.
On the cost side, the SkyTeam carrier group says it will maintain the Transform 2015 target of annual unit cost reductions of 1% to 1.5%. "To achieve this target, the group will go beyond traditional efforts directed at reducing unit costs," it says, adding this will involve the ongoing restructuring of uncompetitive activities, benchmarking and negotiating with staff productivity gains.
Source: Cirium Dashboard