The CEO of Air France-KLM, Alexandre Juniac, announced a reduction of 300 million euros overheads of the Franco-Dutch group, which released Friday a net loss increased by 3% in first half to € 638 million, despite an increase in its turnover. Air France-KLM launched “a great program to reduce its general and administrative expenses” in the amount of 300 million euros out of a total of about 1.5 billion, said Alexandre de Juniac in a presentation of interim results of his group.
The turnover close to € 12.3 billion, was helped by currency effects, in particular the appreciation of the dollar against the euro, which has had the opposite effect on profitability, according to data released by the group in a statement. Thus, the gross operating profit (EBITDA) decreased by 7.2% to 548 million euros, whereas it would have increased by 15.5% at constant currency. Similarly, the operating loss has widened from 12.1% to 232 million euros, while it would have been halved at constant currency.
Reduced capacity and closing lines
In detail, the poor performance of the cargo activity has erased gains in passenger transport and maintenance, both in terms of EBITDA as operating income. Ultimately, the net loss group share reached 638 million euros, against 619 million in the first half of 2014. “The lack of improvement in our results lead us to take additional measures for immediate implementation” by more than 1.8 billion euros in savings targeted by 2017 through the plan “Perform,” said Alexandre de Juniac.
In addition to the € 300 million of overhead, the flights of the winter season program (October to March) has been revised downwards, with a total capacity that will be increased by only 0.3% instead of 2.3% originally planned and even reduced the Japan (- 14%), East Africa (- 6%) and Brazil (- 5%). On the side of Air France, four closures unprofitable lines (Kuala Lumpur, Stavanger, Verona, Vigo) had already been announced in June and more than 1000 job cuts have been initiated since the beginning of the year, through a voluntary separation plan and the merger of three regional subsidiary companies composing the Hop!.
The threatened long-haul network
Several aircraft will also leave the fleet by end of 2016, including an Airbus A340, five regional aircraft and nine freighters. In addition, the first deliveries of the new A350 jumbo “were postponed early 2019 ‘instead of 2018, said Alexandre de Juniac.
As negotiations on the plan” Perform “led to the signing of agreements categorical KLM, discussions are continuing French side with a deadline of the end of September. “We do everything to make these negotiations succeed and be successful,” said Alexandre de Juniac, adding that in the opposite case “we would have to take drastic measures to reduce our long-haul network.”
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