Air France-KLM to cut it's aircraft fleet
January 17, 2012
Air France-KLM has announced cuts to its aircraft fleet and a pay freeze for French staff as part of a three-year plan to turn around its financial woes.
The belt-tightening at Europe’s largest airline by revenue, is the first stage of a restructuring plan to cut its debts by €2 billion (US$2.56bn) to around €4 billion by the end of 2014.
After its meeting last week, the board of directors of Air France-KLM said the plan would see implementation of three priorities set out on 9 November last year: restoring competitiveness through cost-cutting, restructuring short- and medium-haul operations and rapidly reducing debt.
“We do this to avoid getting into trouble later,” said Peter Hartman, CEO of KLM.
Unions are expected to oppose the plan, which calls for a general pay freeze at Air France during 2012 and 2013 and “wage moderation” at Dutch sister airline KLM.
The carriers will scale down plans to grow capacity over the three years from 2012 to 2014.
“Given the uncertain economic environment and the ongoing imbalance between transport supply and demand, the board deemed it necessary to opt for quasi-stable capacity for the Air France-KLM group in both passenger and cargo,” a statement said.
To shrink the fleet and keep capacity in line with this, Air France-KLM said it would defer deliveries of several Airbus and Boeing aircraft, including two A380s.
A longer-term transformation plan would generate an additional €1-billion of cash flow over three years, the airline said.
Courtesy of IFW
