Mixed results for AF KLM Cargo

The Air France-KLM airline group has reported its 2018 full-year results, which paint a mixed picture with cargo volumes down but revenues up.

In terms of its freight-related operations, over the course of the year cargo volumes fell by 0.1% compared to 2017 to 1.14m tonnes, while revenues rose by 4.1% (by 6.4% at constant currency rates) to reach 2,288m euros.

With regard to the latter, AF-KLM said that it had achieved “strong unit revenue performance” in the context of stable cargo network capacity.

The combined carrier group said that the trading environment had proved better than expected, particularly over the summer period, and that its Asian and American freight networks had made a strong contribution to the results.

Higher yields in both full freighters and bellies resulted in an overall unit revenue increase of 5.2% at constant currency rates for the 12-month period.

Cargo capacity as measured in available tonne-km rose by 0.1% to 14,365m, while traffic as measured in revenue tonne-km rose by 0.7% to reach 8,657m. As a result, the cargo load factor rose by 0.4% to reach 60.3%.

Combined passenger and cargo revenues across the group increased by 4.1% at constant currency rates to reach €22.9bn.

The group operating result totalled €994m, a €382m decrease at constant currency rates compared to 2017, mostly due to strikes in the first half of 2018 and to fuel price increases.

Looking ahead, AF-KLM predicted: “The global context remains uncertain given the current geopolitical environment and fuel price trends.”

As well as access to the bellyhold capacity of AF-KLM’s large passenger fleet, as of the end of the year the group’s all-cargo fleet consisted of two Air France B777Fs, three KLM B747-400ERFs and one KLM B747-400BCF.

Air France reaches agreement with pilots

In other news, Air France has confirmed that it has reached an agreement with pilot union Syndicat National des Pilotes de Ligne (SNPL) following an extended period of negotiations.

The new agreement was welcomed by both the airline and by the union.

Air France-KLM’s CEO, Benjamin Smith, commented: “This agreement forms the basis of a strong culture that acknowledges their leadership.

“After the Mandatory Annual Negotiation (NAO) agreements already signed with all our stakeholders, Air France-KLM is now in a position to begin implementing more ambitious plans and winning back its European leadership position.”

Smith observed: “These agreements provides the flexibility required to support Air France’s new ambition while setting out measures to improve flight safety, the commercial strategy, operational performance, and pilots’ daily lives and pay.”

SNPL observed in a statement: “A consultation was launched by SNPL Air France with all Air France pilots on February 1 concerning the draft agreement on pilot categorical measures. The vote was concluded today, 19 February.

“Air France pilots approved the agreement with 85.42% of positive votes. The participation rate reached 70.51%.

“This participation rate illustrates, without ambiguity, the willingness of Air France pilots to become involved in the future of the airline. By this vote, the pilots support the strategic project of upscaling initiated by Benjamin Smith and accept the salary increases, thus putting an end to nearly 12 months of conflict.”

Guillaume Gestas, president of SNPL Air France, declared: “This major agreement has been the subject of intense negotiations since December.

“After months of conflict, it was time to enter a new era of social dialogue. The approval of the text by our colleagues reinforces us in this idea and confirms the desire of each to go forward to offer new perspectives to the company and the group.”

AF-KLM board approves long-term strategy

Also yesterday (February 19), the board of directors of Air France-KLM unanimously approved the plans put forward by Smith for the group.

With a goal of simplifying and improving governance of the group in order to reach a leadership position among European airlines, some of his strategies include:

  • Creating a new Group CEO Committee to determine the strategic direction of all the group’s airlines and business units. This committee will be chaired by Smith, with other members of the committee to include Pieter Elbers (chief executive of KLM), Anne Rigail (chief executive of Air France) and Frédéric Gagey (chief financial officer of Air France-KLM)
  • Improving collaboration across the group to better capture synergies, efficiencies and economies of scale, with the aim of improving overall group profitability
  • Building on the longstanding heritage, reputation and brand recognition of Air France, KLM and KLM budget airline subsidiary Transavia within their respective markets and reinforcing the group’s position at its two hubs, Amsterdam Schiphol and Paris Charles de Gaulle
  • Simplifying key group operational processes in the following areas: fleet and network strategy, commercial and alliances strategy, human resources, purchasing, digital and data management

“We are convinced that Benjamin Smith and his team… will drive further growth at Air France-KLM, leveraging the combined strength and experience provided by the group and its airlines,” insisted Anne-Marie Couderc, chair of the Air France-KLM board.

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