What’s Air France-KLM Business Model?
Air France-KLM offers air transportation services. The Company operates airlines and offers travel booking, catering, freight transportation, aircraft maintenance, and pilot training services.
What Air France-KLM is doing in more details?
A global giant with a strong European base, the Air France-KLM Group’s main areas of business are passenger transport, cargo transport and aeronautical maintenance. Air France-KLM is the leading Group in terms of international traffic on departure from Europe. It offers its customers access to a network covering over 250 destinations thanks to Air France, KLM Royal Dutch Airlines and Transavia
With a fleet of some 555 aircraft and 104 million passengers carried in 2019, Air France-KLM operates up to 2,300 daily flights, mainly from its hubs at Paris-Charles de Gaulle and Amsterdam-Schiphol. About a third of revenue comes from France.
Where Air France-KLM is Operating?
Air France-KLM offers passenger transportation, cargo transportation, and aircraft maintenance services and transports over 100 million passengers and 1.1 million tons of cargo annually. It has a fleet of around 555 aircraft in operation.
Some 80% of its total cargo tonnage is carried in the bellies of its passenger aircraft, and around 20% in the full – freighter fleet.
The company’s single operating segment consists of four businesses. Its Network business is its primary passenger and cargo business that operates under the brands Air France and KLM and domestic operators Air France HOP and KLM Cityhopper. It generates more than 80% of sales.
Its low-cost Transavia airline accounts for more than 5% of sales and flies customers in the Netherlands and France to some 130 Middle Eastern, European and North African destinations. Transavia has a fleet of nearly 75 primarily B737-800 aircraft.
Air France-KLM’s Maintenance unit also generates over10% of total revenue and serves both Air France-KLM and third parties with maintenance, repair, and overhaul services. Its three main areas or service are airframe maintenance, engine maintenance, and component support (electronic, mechanical, pneumatic, and hydraulic).
Where is the geographical reach of Air France-KLM?
The Air France-KLM network is organized around its hubs at Paris-Charles de Gaulle and Amsterdam-Schiphol airports. With these two major hubs, the company links Europe to the rest of the world, spanning more than 250 destinations across around 115 countries.
About 30% of its revenue comes from France and the remaining 70% comes from international operations.
What is Air France-KLM Financial Performance?
Note: Growth rates may differ after conversion to US Dollars.
The company’s revenues amounted to ?11.1 billion, a decrease of 59.2% compared to last year, with Network revenues decreasing by 60.4%, Maintenance revenues down by 41.6% and Transavia down by 65.3%.
The company recorded a net loss of ?1.1 billion in 2020 compared to a net income of ?290 million from the prior year.
Cash at the end of fiscal 2020 was ?6.4 billion, an increase of ?2.7 billion from the prior year. Cash from operations used ?2.8 billion to the coffers, and investing activities used ?1.6 billion. Financing activities provided another ?7.1 billion in the fiscal year 2020.
What are Air France-KLM’s Mergers and Acquisitions?
KLM submitted its restructuring plan to the Netherlands Ministry of Finance. The presentation of this restructuring plan was a key condition in obtaining the aforementioned government loan and guarantees to the value of ?3.4 billion.
The plan outlines how KLM intends to fulfil the conditions imposed by the Netherlands government. The presentation of the plan is a very important milestone.
Substantively, the plan includes elements such as the reassessment of strategy, cost-cutting initiatives, financial considerations and how KLM staff will contribute by way of reduced employment conditions. On November 3, 2020, the ministry has approved the plan.
To face the Covid-19 crisis and forecasts expecting a return at the same level of activity of 2019 in 2024, Air France KLM must accelerate its transformation to regain its competitiveness and strengthen its leading position in terms of sustainable development. In this context, Air France Group and KLM Group announced the restructuring of the company and a reduction of staff.
Air France and HOP! announced their strategic orientations and planned to adapt their workforce in the coming months. Within the framework of these strategic orientations, the negotiations have been conducted by Air France and HOP! with their representatives of pilots, cabin crew, and ground staff.
What is Air France-KLM’s Background?
KLM was established in 1919 as Koninklijke Luchtvaartmaatschappij with service in the Netherlands and colonies. In 1920, it operated its first flight between London and Amsterdam and later introduced new regular routes serving Amsterdam, Rotterdam, Brussels, Paris, and London, then expanded to Bremen, Copenhagen, and Malmö. KLM’s fleet then consisted of the Fokker aircraft.
Air France dates back to 1933 with the merger of the five French airlines Air Union, Air Orient, Société Générale de Transport Aérien (SGTA), CIDNA, and Aéropostale.
The two companies merged in 2004 creating what is now Air France-KLM, a holding company made up of two national airlines.