Air France-KLM: over half way through 'Transform 2015' plan, "additional measures" are still needed

Air France-KLM reported its first positive second quarter operating result for five years as its Passenger segment enjoyed a return to the black, although medium-haul is still loss-making. Low-cost subsidiary Transavia, which now accounts for one fifth of the group's narrow-body fleet, cannot seem to break into profit despite impressive load factors and growth in capacity and revenues.

In spite of the growing use of Transavia, the creation of French regional airline subsidiary Hop and the provincial bases project in France, the group's medium-haul business will struggle to meet its 2014 breakeven target. The Cargo division also remains loss-making in spite of capacity cuts.

Although previously announced initiatives of the group's Transform 2015 restructuring plan are on schedule, Chairman and CEO Alexandre de Juniac is considering additional measures to improve results in medium-haul and Cargo. These will be outlined at the end of Jul-2013 and announced in detail by Oct-2013. More than half-way through the restructuring programme, the more radical steps may still lie ahead.