Air France-KLM: 'on the way to being saved' or are new measures not radical enough?

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?