Air France-KLM will cut its short and medium-haul fleet and freeze the pay of its French employees for the next two years as part of a three-year plan to return to profitability.
The carrier, which is the biggest in Europe based on annual revenue, has unveiled details of its plans to turn around the business by 2014. It wants to cut its net debt from the current €4.5 billion to €2.5 billion over this period.
One of its central aims is to get its short and medium-haul business back to break-even within three years – this part of the company lost €700 milion last year – through a major restructure.
Air France-KLM said it was already planning to shrink its fleet by deferring the arrival of mid-haul aircraft and also failing to take up options on aircraft orders.
Other moves include the two-year pay freeze at Air France and a policy of “wage moderation” at KLM. The freeze on hiring introduced in September 2011 will also continue.
Air France-KLM stressed its commitment to its short and medium-haul network calling “indispensable to the group’s developments” as it gave both airlines “presence throughout Europe” and also acted as a feeder for the long-haul network form Paris-Charles de Gaulle and Amsterdam.
“As the financial results of recent quarters demonstrate, the long-haul operations, also subject to increasing competition cannot alone offset these losses,” said the company in a statement.
It said that it would be looking for “better utilisation” of its aircraft as well as “improved productivity” from employees in its mid-haul business. The company may also consider more “extensive outsourcing in some areas”.
For more information visit airfrance.co.uk, klm.com.
Report by Rob Gill
