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Air France-KLM plan to fight competitors

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Group aims at both short-haul and long-haul markets

Air France-KLM says it will raise core earnings by up to 10% a year until 2017 as a new strategic plan is launched aimed at Europe’s leisure market as well as at long-haul passengers.

As it and other legacy airlines fight a double threat from low-cost rivals and long-haul carriers in the Gulf, Air France-KLM’s new PERFORM 2020 package includes both restructuring and investment. This comes on top of the group’s Transform 2015 turnaround plan, which is said to be on course to deliver more than €1 billion in savings.

In the new plan, unit costs will be cut by a further 1% to 1.5% a year, keeping to the pace of cuts in 2012 to 2014. At the same time, Air France-KLM would invest in better products and services for long-haul networks

Crucially, the importance of Air France-KLM low-cost unit Transavia will increase. By 2017, Transavia will have 100 aircraft, up from the current total of just over 40, and will launch bases abroad, possibly in Germany and Portugal.

Reuters

[photo courtesy Transavia]

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