Air France CEO Frederic Gagey stated (18-Sep-2013) the carrier discussed a new voluntary departure plan with staff on 18-Sep-2013 as it seeks to reduce costs as it forecast it would miss its break-even target in 2013 to post a sixth consecutive annual operating loss. "We're in a period of weak demand and things are going poorly, particularly in the countries where we're focused... We must improve our performance," Mr Gagey said, adding that the carrier sees it as "imperative" to break even in 2014. The carrier plans to introduce a new job cut plan, involving the elimination of 2800 additional positions, with the carrier to offer a buyout plan in order to reduce around 5% of its workforce. Mr Gagey however noted that the new measures are the "last" under the Transform 2015 plan. The carrier last year announced that it was reducing its workforce by 5100 positions and originally said it would stem losses by the end of 2013. The carrier said it hopes the additional cuts will help it save EUR450 million p/a as it seeks to cut around EUR2 billion in annual costs by 2015. [more - original PR]
Air France plans 2800 job cuts, won't break even in 2013
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Air France-KLM: long haul low cost airline could be part of new CEO's vision as French Blue enters
Air France-KLM chairman and CEO, Jean-Marc Janaillac, who took charge in Jul-2016, has talked about the possibility of launching long haul low cost operations (Bloomberg/luchtvaartnieuws.nl, 20-Sep-2016).
If Air France-KLM were to enter this segment it would be the second of Europe's big three legacy airline groups to do so, after the Lufthansa Group. Ironically, there is no long haul low cost competition to Lufthansa in Germany. By contrast, IAG faces more such competitors in the UK than either of its two major rival groups in their largest home market, but currently has no plan for such an operator.
Air France-KLM management told analysts on a conference call in May-2016 that it was sceptical about the sustainability of year-round profits for long haul low cost. However, new competition has prompted Mr Janaillac to look more closely at this market segment. Since Jul-2016 Norwegian has commenced trans-Atlantic long haul operations from Paris CDG. In addition, since Sep-2016, the new-start long haul LCC French Blue now flies on routes to the Caribbean. Mr Janaillac is expected to report on his strategic vision for Air France-KLM in early Nov-2016. Labour relations will be crucial to the group's development – not least in the area of long haul low cost.
Brexit follow-up Part 3: Gulf airlines, Turkish lose UK ally in M/E talks as protectionism spreads
The Brexit referendum produced a vote for the United Kingdom to leave the EU, although this process has not yet been formally invoked. In the scope of aviation, one outcome is the potential loss of the UK in shaping air service agreement negotiations. The UK has been a liberalising voice, one that often counterbalanced more protectionist views from France and Germany. The UK is often able to galvanise the smaller EU states too.
The EU now has mandates to negotiate open skies with states, including the UAE, Qatar, Turkey and the ASEAN bloc. The UAE and Qatar, home to the three Gulf network airlines, are expected to produce the most contentious negotiations. France and Germany will surely takes cues from Air France and Lufthansa to impede Gulf growth. In this light there are questions about whether the talks are genuinely motivated, or merely designed to draw out the discussion and thereby not produce any additional traffic rights while under negotiation.
What Air France and Lufthansa need is a real, lasting solution, rather than persevering Canute-like with stonewalling. Although a partnership seems logical, they may have waited too long. The Gulf airlines have found that they can succeed on their own.