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Transavia.com France (or Transavia France) is a French LCC trading as transavia.com and is an independent part of the Air France-KLM group. Its main base is at Paris-Orly Airport. Transavia.com operates scheduled and charter services mainly to leisure destinations.
Location of Transavia.com France main hub (Paris Orly Field)
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Transavia.com France fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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11 total articles
Air France-KLM reported an improved operating result for 3Q2013 and confirmed its aim to increase 2H2013 operating profit by the same year-on-year amount as in 1H2013. It has provided more details on the additional restructuring measures previously announced relating to headcount reduction and planned capacity in medium-haul and cargo.
However, while the group expects losses in medium-haul and cargo to reduce significantly in 2014, it does not expect to see the full impact of these measures until 2015.
As a result, it has pushed back its net debt reduction target by one year and focused its 2014 EBITDA target at the lower end of its previous range. Unfortunately, targets that start to slip have a habit of becoming more slippery.
Air France celebrates its 80th birthday this week, amid claims by Alexandre de Juniac, Air France-KLM Group chairman and CEO, that it risked dying or “becoming a small regional carrier” were it not for the latest cost saving plans (Les Echos, 7-Oct-2013). Now, he says, Air France “is on the way to being saved”. He is counting on new restructuring measures that were presented to Air France’s works council on 4-Oct-2013 to restore the financial health of the bigger and more troubled of the group’s two main airlines.
In 1H2013, the Transform 2015 programme achieved profit improvements of EUR100 million, but the group conceded that Air France would not achieve its breakeven target in 2013. It said that additional measures would be needed to improve results in the cargo division and in Air France’s medium-haul operations.
As expected, the measures include a new voluntary redundancy plan, a reorganisation of the French regional bases, a reduction in Air France freighter capacity, cuts to Air France’s point-to-point medium-haul network and growth for LCC subsidiary Transavia France. Are even these measures radical enough to restore Air France to a sustainable profit path?
At the time of Air France-KLM’s 2Q2013 results on 26-Jul-2013, Group chairman and CEO Alexandre de Juniac said that the turnaround of the medium-haul business was taking longer than expected. “Further measures” are to be adopted, including “industrial and commercial decisions” and more job losses.
Although he did not give details of these measures, it seems likely that they will include an acceleration of the growth of Transavia, the group’s LCC, to become its principal short/medium-haul point-to-point operator. In this report, we analyse Transavia’s network and market position and compare its unit costs both with its parent and with the other European LCCs that have been so damaging to Air France-KLM.
The Dutch arm of Transavia has been part of KLM for more than 20 years and the French operation started up in 2007, but the group has not fully exploited its potential. After a number of years of following a ‘stop-start’ approach to growth, Transavia has resumed double digit capacity growth in 2013. Is it a case of ‘too little, too late’?
Two of the European Big Three reported 1Q2013 results within two days, so we can’t resist a comparison. Air France-KLM’s quarterly operating loss of EUR530 million was EUR171 million below Lufthansa’s. Air France-KLM shaved net debt from EUR6.0 billion at the end of 2012 to EUR5.9 billion; Lufthansa’s net debt is less than one third of this. AF-KLM’s 1Q RASK grew by 1.2%; Lufthansa’s by 2.8%.
Air France-KLM makes losses in Europe, where Lufthansa now claims a profit. In an attempt to fix this, Air France-KLM has Transavia for some leisure routes, Hop for French regional point-to-point and some hub feed, Air France’s provincial bases strategy (under review) for non-hub French routes and both Air France and KLM for everything else. Lufthansa has Germanwings for non-hub routes and Lufthansa for hub feed in Germany.
For FY2013, Air France-KLM isn’t saying whether it can improve on 2012’s EUR300 million operating loss, only that it aims to cut unit costs (ex fuel and currency) and net debt, whereas Lufthansa aims to beat last year’s EUR524 million profit.
Volotea is pursuing its strategy of linking Europe's small and mid-sized cities with direct air services and plans to establish a base at Bordeaux Airport and Palermo in summer 2013. Bordeaux will be the young LCC’s second base in France after Nantes Atlantique Airport. Air France has a market leading capacity share at both Nantes and Bordeaux Airport, but Volotea does not shy away from this formidable force. The young carrier will base two 125-seat Boeing 717s at Bordeaux and will offer 13 routes from the airport. With the Bordeaux base launch, Volotea will operate 45 routes from 14 French airports.
It is unlikely that Air France will sit back and hand over key routes to a much smaller competitor. The French airline is working on a major overhaul of its domestic and European operations, which should make it more fit and dynamic to halt the expansion of low-fare rivals in its market.
Even while Air France management was announcing a new management profile for the airline to implement the company’s “Transform 2015” restructuring programme, France’s most militant union, the General Confederation of Labour (CGT) called for a strike on 26-Oct-2012 to protest the programme itself.
On 15-Oct-2012, Air France Chairman and CEO, Alexandre de Juniac, presented to company managers a new organisation based around eight business units. These include long-haul; medium-haul at Paris-CDG; Paris-Orly and the regional airports; the French Regional Hub; Transavia France; cargo; industry operations; and Servair.
Transform 2015 is designed “to restore the Company’s competitiveness and place the customer at the heart of its strategy”, but it clearly has a long way to go to win the hearts of the country’s powerful unions. The CGT described the programme as an “unprecedented attack on our jobs, our wages and our working conditions.”
Transform seeks to reduce annual costs by EUR2 billion and to improve the airline’s woeful efficiency levels.
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