Future of KLM and / ?? Air France!Back to Forum
Following the adagio “Never waste a good crisis” according to a major Dutch newspaper the KLM management will try to restore the old structure of Airfrance/KLM back in the days the group was created. Have a French chairman to “run” the group and have a Dutch right hand man. The coming weeks will show whether the Dutch will succeed and whether the French are willing to save the group or that Air France will drag all other components of the group with it in their demise.
Workers at Air France finally start to realize that the current situation is catastrophic. With oil prices rapidly increasing, fierce competition, diminishing customer loyalty and both the French and the Dutch governments clearly unwilling to interfere and/or finance the ensuing situation they finally woke up.11 May 2018
What was the rationale for KLM to link up with Air France? Air France have a history of strikes and tense labor relations, so why would any airline want to join forces with such a company?12 May 2018
KLM was in 2001/2002 in financial and organizational problems. As the consolidation in Eutope started and IAG and LH became the dominant players KLM was deemed to be “too small” an airline to survive. Around that time we saw the demise of Swiss and Sabena (Belgian airline) as well. KLM was looking for partners, but both BA and LH were seen as not very attractive or not interested for different reasons. Then partner Northwest was also not the healthiest of organizations and had a fairly old fleet. So they were more of a target than an investor in the industry.
Air France was the only airline more or less available.
The old structure, something KLM seems to want to revert to, was a holding with two or more brands under this Airfrance/KLM umbrella. With the French making up 2/3 and the Dutch (KLM, MartinAir and Transavia) 1/3 of the organization. In order to keep labor relations under control it was agreed that investments in the fleet would follow this line as well.
Management would be formed on the basis of a French chairman, Mr Spinetta, and a Dutch second in command, Mr van Wijk. In later years, due to the economic situation, Airfrance/KLM was forced to adapt both organizations to the new reality. KLM was very successful in reorganizing their operation by cutting staff and cost and improve on their performance, hard and soft product and subsequently on load factors, revenue and profit. Air France lagged behind, hindered by strikes, political influencing, bad management and increasingly bad relations between management and personnel, including the unions.
Where KLM kept their finances tightly under control, helped by a steady course and decent relations between management and unions, Air France didn’t meet the requirements. Air France still has a huge workforce in comparison to KLM and the amount of planes. The total cost of the organization is staggering compared to the competition. Where IAG personnel and organization reportedly takes up 23% of all costs at Airfrance/KLM it is 30% with the Air France side demanding an immediate increase of 5 to 6%.
This would make Air France even more uncompetitive. Somehow the French will have to come to their senses and start realizing that it is 2018 with global competition. Like it or not, but in the airline industry the market dictates, no longer are unions in charge and are governments able an willing to support ailing “national” carriers.
The current French president has indicated that, maybe late, France will have to become more competitive and therefor more in tune with the economic reality.
The current investment structure makes absolutely no sense anymore. Any normal commercial company would invest in the most profitable and well run side of the business, while the other part sorts out its problems. Surely KLM personnel feels like that. Frustration and animosity between the two sides of the company is increasing.It remains a question how long this situation can continue and if relations can be re-established.
Has KLM made the right decision in 2001/2002? With hindsight: maybe not. But who else was able and available at that time to support KLM?
For now the French will have to sort out their own mess, kept afloat by a moneymaker like KLM, but KLM is not generating enough profit to sustain the losses caused by the French strikes. AF is rapidly losing customer loyalty, obviously not helped by CDG as an airport. Losing 9% passengers in April compared to April 2017 is another thing that can’t be sustained. It remains a question how many of these customers will turn their back on AF forever and what AF can do to win them back.
Trying to win them back will take a lot of effort and probably money as well. Money they have lost already due to these strikes.12 May 2018
First Quarter 2018 results:
Air France lost average for “The Group” of 25 Million Euros, per day of their strikes.
211 Million Euros loss by AF. KLM Profits doubled to 60 Million Euros.
The Groups profits were up 42% for 2017, and 1.41 Billion Euros.
Share prices were around E 14.50 in January, now halved!
What a complete failure when prospects were so good.
How AF employees can self destruct their own work environment, and employment prospects, defy belief in the current Airline Industry.
I fully agree with the KLM comparison of attitude, the Hub “Feel” and impression Schiphol gives compared to CDG, and have seen the crews of Af so lazy, ambivalent. Even walking into the Lounges to take food and drink and going out with it, sitting texting in the terminals.
I would not fly AF if you gave me the ticket!
They are a disgrace, people are seeing them for who they are now, much less bookings ahead as their image severely damaged and unreliable services do not get booked ahead once you have had that experience or see the Airline is cancelling flights.
the Criminal behaviour in 2018 of them ripping the Executives shirts off, sums their attitude up. I cannot remember any Airline staff in public behaving in that way ever.
As bad as the strikes with BA many years back, and Gate Gourmet fiasco’s with no catering on flights. All the denials from BA about charges, catering turned out to be complete lies, and they operate semi-low cost now also!
it is very complicated to try to divide the two and operate as two separate Airlines again, but maybe ways must be found. The Stakeholders in Schiphol including the Dutch Government and City of Amsterdam, KLM Teams of staff, and Senior Exec’s of KLM, are looking at the scenarios and possibilities.
If you are members of Flying Blue, best spend your miles on Skyteam now, as they change on 1st june for redemptions. the changes as of 1st April, mean you will earn only 1/3rd to 1/2 of the miles as before, even travelling Business Class in Europe, or long haul Business Class on KLM flights.
Connecting Business Class Award flights (eg Europe to Asia via a hub) will be priced in miles as based on the cost of the two flights.
Currently you can fly for 125,000 miles ex Europe to Australia, on Skyteam Business Class.
These will be broken down into 3 flights and one Amsterdam to Asia sector will be 90,000 miles alone.
SPEND!14 May 2018
Temporary CEO to be named tomorrow (Tuesday).14 May 2018
I am not holding my breath that it will be anyone who can improve the situation. In fairness, I doubt if that’s possible until the unions are neutralised and someone with a spine and an international background runs both the country and the airline.
That pretty much precludes the majority of the population of the country. So it will be, as the French say : “Plus ca change.”
(I know there’s meant to be a cedilla under the ‘c’ but have no idea how to do that)14 May 2018
The temporary replacement of Mr Janaillac is apparently a 68 year old former French junior minister, Mrs XX, already a member of the AF/KLM group board. Not quite the heavyweight with a background in the airline industry you’d expect, but a politician. The French culture of muddling through in stead of fixing a major problem comes to mind again.
The desired, by anybody but the French it seems, increased influence of the Dutch arm of the group is put on hold. Strikes seem to be off the table for the moment, but now French ATC is playing this tune again.
It seems to me the French still haven’t found a way out of this swamp and continue to demolish a once promissing company.
I wish I could be more optimistic.15 May 2018
So it will be, as the French say : “Plus ca change.”
(I know there’s meant to be a cedilla under the ‘c’ but have no idea how to do that)[/quote]
Try holding Alt and typing 0231 to get ç
I think that I pressed Report instead of Quote. Sorry. Tom, please remove the report if it was me.15 May 2018
Thanks, but that doesn’t work. I need to find out how to do accents though as I sometimes write letters in Spanish and Catalan. On my old Sony laptop it was ALT plus the figures but on this brand new Lenovo it work.
More importantly, and back to topic, I can see AF lurching further down the road to oblivion. A Dutch friend of mine who used to work for KLM has just sent me an email about this which I cannot possibly reproduce here!15 May 2018
Reuters reports that a triumvirate appointed to run AF-KLM.15 May 2018
How many MarcusGB are posting on this forum ?
OP asserts that he has “flown KLM for the last 25 years” when another MarcusGB explains that he has “actually avoided KLM Long haul due to two dire return flights with the same mushy dishes, or a plate of vegetables with no flavour or protein”.
Who is right, who is wrong ???21 Jun 2018
Board of Directors appoints Benjamin Smith as Air France-KLM CEO
The Board of Directors of Air France-KLM, meeting on August 16, 2018, has decided to appoint Benjamin Smith as Air France-KLM Chief Executive Officer.
Benjamin Smith is a reputed senior airline industry executive at international level. He has played a major role at Air Canada over the past two decades, where he has been a key player in the airline’s economic and commercial development, its transformation, its value creation and the engagement of the teams. Until today, he was Air Canada’s President Airlines and Chief Operating Officer.
Benjamin Smith will take up his duties at Air France-KLM at the latest on September 30, 2018. In the meantime, the interim governance structure established on May 15, 2018 will remain in place. Anne-Marie Couderc, non-executive Chairman of the Air France-KLM and Air France Boards, and the Management Committee consisting of three members, will continue to perform their duties until then.
On his arrival, Benjamin Smith will take over executive management of the Air-France-KLM Group and will establish its organizational structure. He will be in charge as a priority to revitalize Air France, to give a new strategic impulse to the Group and to work on a new leadership approach with all Air France-KLM’s teams.
The Board has decided that Benjamin Smith will be appointed as soon as possible as director of Air France-KLM, with the full support of the French State. The Board will announce as quickly as possible an updated Group’s governance structure as regards to the roles and missions of the non-executive Chairmanship of Air France-KLM and Air France.
Benjamin Smith said: “I am very enthusiastic about this new opportunity. Air France and KLM are both airlines well known for the professionalism and commitment of their teams. I am well aware of the competitive challenges the Air France-KLM Group is currently facing and I am convinced that the airlines’ teams have all the strengths to succeed in the global airline market. I am confident in the Group’s capacity to become one of the world’s leading players. I look forward to earning the trust and respect of all teams, working together to win in this highly competitive and fast-changing customer service industry. I am approaching this new challenge with my passion for the aviation sector and with my deep willingness to listen to all stakeholders so we can work together and win. I have spent my entire career in this industry and I am convinced that the teams of the Air France-KLM Group are its strongest assets for its future success. I believe that over the past two decades I have developed very strong trust-based relations with my colleagues at Air Canada and I am looking forward to meeting the teams at Air France-KLM in September to begin working alongside them. I thank the Board of Directors of Air France-KLM to entrust me with this mandate”.
About Benjamin Smith
Benjamin Smith is a reputed senior air transport industry executive at international level. He has spent the last twenty years at Air Canada, where until today he was President Airlines and Chief Operating Officer.
He started out in 1990 at Air Ontario in parallel with his studies and in 1992 set up his own retail corporate travel agency. He successfully helmed this entrepreneurial experience for eight years. In 1999, he also simultaneously took on a consultancy role for Air Canada before finally joining the group in 2002.
Since his 2002 arrival, Benjamin Smith has filled a number of high-ranking positions at Air Canada. He was successively Chief Commercial Officer and Head of Network Planning, before joining the Air Canada executive management team in 2007.
Throughout his career, he has developed strong skills in management, strategy, labour relations management, marketing, and financial and operational management. In particular, he was the man behind Air Canada’s growth and modernization. He has defined and implemented Air Canada’s transformation strategy over the past decade, rolled out the Air Canada Group’s network expansion project worldwide, and substantially upgraded the fleet in terms of aircraft numbers and energy efficiency. As part of his responsibilities, he has also redefined Air Canada’s hub strategy, creating three major hubs to align with the airline’s key markets. Benjamin Smith was also the prime mover behind Air Canada Rouge, Air Canada’s low-cost brand, which is particularly successful at international level.
Benjamin Smith has been deeply involved in social dialogue at Air Canada. He personally oversaw, with the Human Resources Division, the collective bargaining talks with trade unions. These negotiations led to historic win-win long-term agreements for the airline, its workforce, and all other stakeholders.
In 2014, he was appointed President Airlines (Air Canada, Rouge, Express, Cargo) and Chief Operating Officer of the Air Canada Group. He took on overall responsibility for sales, operations, and customer service for the Group. He has also spearheaded Air Canada’s operational and financial performance strategy.
On 16 August 2018, Benjamin Smith was appointed Chief Executive Officer of the Air France-KLM group.17 Aug 2018
One can only hope that he is the man for the job. His biggest challenge will be the high labour costs in France and the intransigence/bloody mindedness of the French Unions, the sense of entitlement of the French employees, and the overstaffing of the AF side of the business.
AC was once a great airline. My last few flights with them (about 15 years ago when I did a couple of round trips between EU and YVR and YYZ and a couple of domestic and cross border segments) were so bad I’ve never flown with them since, so I have no first hand knowledge of what he’s achieved there in recent years.
All I can say is ‘bonne chance’ – he will need it.17 Aug 2018
Almost 230 years after the French Revolution we now have the Air France Révolution ! First CEO being neither a French National nor a former civil servant nor a former student from either ENA or Polytechnique.
A great job by KLM Delta and China Eastern.
Let’s hope Benjamin Smith will be able to clean out the AF stables. Good luck Mr Smith !17 Aug 2018