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AFKL, The Future Is...  
User currently offlineOkapi From France, joined Jun 2006, 217 posts, RR: 0
Posted (6 years 6 months 3 days 11 hours ago) and read 4647 times:

After failing to buy Alitalia, AFKL is left with few options in Europe. Their network is still one of the strongest ones in the world, thanks to the Skyteam alliance and their position's not bad either with a 26% stake in KQ plus the VLM deal along with partnerships like CityJet, Régional, CCM, Transavia, etc.What do you think will be the group's next moves now that LH's started shopping around? Any hints? Any guesses? Btw, thank you Beaucaire for the french thread. IMHO, I see consolidation on long-haul TATL markets, especially out of LHR, Terminal 4 issues permitting plus a couple new destinations for Dedicate before year's end. Shall we see AF trying again to shop around in southern Europe, either IB or some other airline in Italy?

43 replies: All unread, showing first 25:
 
User currently offlineBeaucaire From Syria, joined Sep 2003, 5252 posts, RR: 25
Reply 1, posted (6 years 6 months 3 days 11 hours ago) and read 4591 times:

In my opinion AFKLM should try to purchase an airline outside of Europe.
Europe is getting very crowded and administrative and trade-union issues will increasingly handicap meaningful operations.
If AZ sinks deeper and deeper in North-Italian Mafia projects,I don't exclude the company to become available in one month -at even better conditions than before-and than AF should not miss it .
Iberia is expensive and not really for sale,BA blocking the deal to a certain extent without clear direction nevertheless
towards a full takeover .
SN is not really strategically important for AF - considering AMS operations.
TAP (one of my favoured airlines in Europe ) is solidly fixed in STAR and not really for sale.
Air Berlin would be a great move-unexpected-but would make sense.( about 420M € )
Olympic is of no real value to AF-too far off for a European hub and the local market not big enough.And see my remark about unions-Greece can be pretty tough on this side...
JAT is for sale but not really strategically interesting.
One of tha fastest growing markets in Europe remains Turkey- but TK are in STAR -remains Onur (had a bad press but the company is OK now,due to their new majority ownership through Pegasus )
AUA might be the best airline for sale that would bring real complementarity to AF in Europe other than AIr Berlin.
I'd rather see a major stake in an Asian carrier (Jet-airways,Kingfisher,Vietnam Airlines or even a deal with Ethiad ) - also a carrier in Africa would make sense,considering the growth-potential there.( SN tried something in the DRC but failed-notwithstanding it would make sens to establish a viable-safe carrier inter African )
US airline investments are difficult to manage in that the leverage of a 25% stake remains little.
South American carriers can be bought at full capital- but there is less traffic between France and South America than say from Germany to South America.



Please respect animals - don't eat them...
User currently offlineOkapi From France, joined Jun 2006, 217 posts, RR: 0
Reply 2, posted (6 years 6 months 3 days 10 hours ago) and read 4529 times:

Hello Beaucaire. I knew you'd be the first one to reply  Smile Indeed, there's not much left. I see LH very actively shopping around, but the airlines they want are all "minor" or secondary players. No real fusion à la AF-KLM. Swiss is owned through a trust investment company. Would be the same for BD and SN, should the deals be fully accepted by the EU. UK now is covered by CityJet. France's TGV trains and EasyJet make it ever harder to fill domestic flights if not for hubbing purposes in CDG. Back to Italy, for as long as AZ is kept alive and remains in Skyteam, there's no real need for another carrier although IG/EEZ could be somewhat interesting.
I like the idea of a middle-east or asian carrier. MEA is not enough a hubbing airline, especially for north American markets. I have some doubts regarding Indian carriers though. Within 5-10 years, they might well be the ones big enough to start buying bits of smaller Euro carriers. Intergration in the alliance is first necessary step here.

Quoting Beaucaire (Reply 1):
One of tha fastest growing markets in Europe remains Turkey- but TK are in STAR -remains Onur (had a bad press but the company is OK now,due to their new majority ownership through Pegasus )

Technically not in Europe...

Quoting Beaucaire (Reply 1):
a carrier in Africa would make sense,considering the growth-potential there.( SN tried something in the DRC but failed-notwithstanding it would make sens to establish a viable-safe carrier inter African )

A la Air Afrique ? Anti-colonialism is quite strong in the mouth of African presidents. Although AF has minority shareholding in VU and UY, there seems to be no move further. KQ is already very strong. Maybe the cheapest move to counter SN (LH) is to go daily on all routes.


User currently offlineKLMCedric From Belgium, joined Dec 2003, 812 posts, RR: 22
Reply 3, posted (6 years 6 months 3 days 9 hours ago) and read 4435 times:

How about SAS. They're still not doing great. Might that be an option for the AFKL group?

User currently offlineBrisseDK From Denmark, joined Nov 2007, 383 posts, RR: 0
Reply 4, posted (6 years 6 months 3 days 9 hours ago) and read 4393 times:



Quoting KLMCedric (Reply 3):
How about SAS. They're still not doing great. Might that be an option for the AFKL group?

I was thinking the same thing when I saw this topic. As I understand it, SK has a sound financial background, but is really missing a clear strategy and tactical excellence - something AF/KL (and LH) has proven they master.

SK is far from the economic/managerial nightmare that is Alitalia, and AF/KL did at least look in that direction before turning it down.

Looking at KLs historic commitment to the Nordic region, flying to more regional airports than any other non-Scandinavian carrier, it could be a nice fit.

What role would Scandinavia and the hubs in CPH, OSL and ARN play in an AF/KL/SK family?

My guess:

Regional routes would still be supported.

European flying would still be supported for the major O/D markets from all 3 hubs. Connections to secondary markets would be transferred to AMS from CPH.

Asia flying would be limited to only the heaviest routes: PEK, NRT, BKK and possibly all moved to ARN. ARN is better situated for Asia flying than CPH when focusing on Scandinavian connections. Currently CPH is better situated since the routes rely on EU connections as well, but those connections will be moved to AMS and/or CDG.

North America flying would be limited to New York (either EWR or JFK) from CPH and ARN and possibly seasonal routes to MIA, SEA, SFO. Wouldn't expect to see anything more than that.

...and I don't think an AF takeover would imply that SK should stop washing their planes Big grin

Any takers?

Regards,
BJ



Frequent flyer based in CPH - mostly heading to: OSL, HEL, KEF, FAE and EWR
User currently offlineLijnden From Philippines, joined Apr 2003, 565 posts, RR: 1
Reply 5, posted (6 years 6 months 3 days 9 hours ago) and read 4394 times:
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I think they are just on target with the DL/NW merger! The next strategic North American step would be Continental merging into Delta as well...
As for another european partner, I think Iberia would be about the only european airline that would add to the formula of AFKL. All other markets are basically covered by the alliance.



Be kind to animals!
User currently offlineBurkhard From Germany, joined Nov 2006, 4402 posts, RR: 2
Reply 6, posted (6 years 6 months 3 days 8 hours ago) and read 4305 times:

CSA would be a candidate for them. Somehow in the back of LH. Or LOT.

User currently offlineGoldorak From France, joined Sep 2006, 1853 posts, RR: 4
Reply 7, posted (6 years 6 months 3 days 7 hours ago) and read 4161 times:



Quoting Okapi (Thread starter):
After failing to buy Alitalia, AFKL is left with few options in Europe

Don't be so sure that the AZ story is finished for AK/KL. Everything is so crazy in this story that I'm sure anything can happen, including the return of AF at the negociation table !


User currently offlineOkapi From France, joined Jun 2006, 217 posts, RR: 0
Reply 8, posted (6 years 6 months 3 days 6 hours ago) and read 4085 times:



Quoting BrisseDK (Reply 4):
...and I don't think an AF takeover would imply that SK should stop washing their planes

 checkmark  You must admit it's a good way to save money, though ! I wonder why airlines don't charge for aircraft cleaning since it has an impact on environment....

More seriously, that would mean LH losing power in northern Europe markets since AY is 1W. Interesting...

Quoting Goldorak (Reply 7):
Don't be so sure that the AZ story is finished for AK/KL. Everything is so crazy in this story that I'm sure anything can happen, including the return of AF at the negociation table !

Exactly what my Italian wife keeps telling me. She's not in aviation though (although she learnt what a.net is all about). A new AZ is still possible. It's all a matter of national pride saved. The real question is can AF afford losing a 60 milion people market?


User currently offlineFlySSC From United States of America, joined Aug 2003, 7416 posts, RR: 57
Reply 9, posted (6 years 6 months 3 days 6 hours ago) and read 4057 times:



Quoting Okapi (Thread starter):
After failing to buy Alitalia, AFKL is left with few options in Europe.

The AZ "soap opera" is not finished .... Wait until the airline is declared bankrupt and stop its activities before being sold in different parts, then, if AF-KL doesn't come back on the "scene" we will see what AFKL can do.


User currently offlineFrequentflyer From United States of America, joined Jul 2005, 736 posts, RR: 3
Reply 10, posted (6 years 6 months 3 days 6 hours ago) and read 4045 times:

Call me crazy, but how about creating an Asian local thing to build on the growth explosion there? Like a mix of buying a local airline and investing in an Asian proper hub(s)? I mean, financially they seem to have strong shoulders (take it relatively), and that could take the focus beyond crowded Europe.

Would not that be bolder than taking over bankrupt AZ...?



Take off and live
User currently offlineOkapi From France, joined Jun 2006, 217 posts, RR: 0
Reply 11, posted (6 years 6 months 3 days 4 hours ago) and read 3932 times:

AF seems to be reluctant in fully integrating MH in the Skyteam alliance. Still don't understand why. They're strong in Asia and at AMS too. A good carrier indeed. Why not build upon that? Anyway, starting up a new airline is a bit risky, given the weakness of the US$ and fuel prices. Where would it be best located? India's infrastructure needs tremendous upgrade and China may not be that open to foreigners coming in. The other two places to be, namely Singapore and Hong Kong are both taken. Consolidation with KE is still possible, but to what extent?

User currently offlineBeaucaire From Syria, joined Sep 2003, 5252 posts, RR: 25
Reply 12, posted (6 years 6 months 2 days 16 hours ago) and read 3720 times:

Starting up a new airline from scratch is very,very difficult,considering the current delays in obtaining new aircraft.
Even leasing-companies don't have larger quantities of single or twin-ailse aircraft available.(and starting an airline with two or three aircraft does not make much sense in the case of a geo-strategic investment )
It's clearly better to take over en existing entity and renovate/boost it .
If it would be allowed,investing in Cuba would be a great idea,since it can be expected that the new leaders are softening gradually the constraints imposed to their population,and once US americans can travel freely into Cuba,the business will explode..
So AF could have preliminary code-share deals with Cubana and position themselves as future strategic partner.



Please respect animals - don't eat them...
User currently offlineJoost From Netherlands, joined Apr 2005, 3171 posts, RR: 4
Reply 13, posted (6 years 6 months 2 days 15 hours ago) and read 3694 times:



Quoting Burkhard (Reply 6):
CSA would be a candidate for them. Somehow in the back of LH. Or LOT.

Didn't AF have ownership in CSA before?


User currently offlineAlanUK From , joined Dec 1969, posts, RR:
Reply 14, posted (6 years 6 months 2 days 15 hours ago) and read 3678 times:



Quoting Lijnden (Reply 5):
The next strategic North American step would be Continental merging into Delta as well...

That would cause a conflict of interest since Continental is now in talks with AA and BA (OneWorld).


User currently offlineFlySSC From United States of America, joined Aug 2003, 7416 posts, RR: 57
Reply 15, posted (6 years 6 months 2 days 13 hours ago) and read 3601 times:



Quoting Joost (Reply 13):
Didn't AF have ownership in CSA before?

Correct.
And I believe CSA could be bought by AFKL and integrated to the Airline. CSA is a good airline, with the PRG hub very well located as a gateway to the growing Easter Europe ...
AFKL has a strong card to to play there ....


User currently offlineJouy31 From France, joined May 2003, 447 posts, RR: 10
Reply 16, posted (6 years 6 months 2 days 13 hours ago) and read 3590 times:



Quoting Okapi (Reply 11):
AF seems to be reluctant in fully integrating MH in the Skyteam alliance. Still don't understand why. They're strong in Asia and at AMS too. A good carrier indeed. Why not build upon that?

Strategically speaking, a mainland Chinese or/and an Indian carrier would make more sense in the long run, although the path to achieving the goal could be bumpy in each country. I may be mistaken, but a JV with one or two Chinese carriers just like the AF/DL & NW/KL one would be a more interesting move than MH.


User currently offlineDellatorre From Brazil, joined May 2000, 1088 posts, RR: 2
Reply 17, posted (6 years 6 months 2 days 13 hours ago) and read 3551 times:



Quoting Beaucaire (Reply 1):
South American carriers can be bought at full capital- but there is less traffic between France and South America than say from Germany to South America.

Just a correction: France is a way bigger maket from South American than Germany. Just check how many dedicated flights do AF & LH have.

Honestly I think the Europe-Noth American market is close to saturation. There is just too many flights and the new ones to smaller makets like AGP, LYS, PSA, VCE, LIS, OSL, BUD, PRG, KBP are somewhat affecting the overall results in the reknown routes.


User currently offlineBestWestern From Hong Kong, joined Sep 2000, 7221 posts, RR: 57
Reply 18, posted (6 years 6 months 2 days 12 hours ago) and read 3490 times:

Air France could buy Olympic or Agean - Greece is very underrepresented interms of flights, and service levels. ATH is a modern airport, with good facilities, and a growing economy (Greek GDP will exceed Italy in 2008).

Onur air is crap, and Turkish is a strong credible, high quality operation. AF have a very poor network in Turkey, with only services to Istanbul - cant believe that there are no CDG ESB flights - a perfect daily operation.



The world is really getting smaller these days
User currently offlineJoFMO From Germany, joined Jul 2004, 2211 posts, RR: 0
Reply 19, posted (6 years 6 months 2 days 10 hours ago) and read 3413 times:



Quoting BestWestern (Reply 18):
(Greek GDP will exceed Italy in 2008)

GDP per capita I reckon?


User currently offlineOkapi From France, joined Jun 2006, 217 posts, RR: 0
Reply 20, posted (6 years 6 months 2 days 1 hour ago) and read 3249 times:



Quoting BestWestern (Reply 18):
Air France could buy Olympic or Agean - Greece is very underrepresented interms of flights, and service levels. ATH is a modern airport, with good facilities, and a growing economy (Greek GDP will exceed Italy in 2008).

Or OA could simply merge with AZ and then join the AFKL group.... Just kidding. Athens is a bit too far off northern Europe and does not offer much in terms of hubbing. How about unions and local govt possible impact on the deal?

Quoting Jouy31 (Reply 16):
Strategically speaking, a mainland Chinese or/and an Indian carrier would make more sense in the long run, although the path to achieving the goal could be bumpy in each country. I may be mistaken, but a JV with one or two Chinese carriers just like the AF/DL & NW/KL one would be a more interesting move than MH.

What about chinese laws on foreign investments? It seems that airlines are indeed seen in every country as a very strategic business. Maybe KE and MH should join forces. Then Skyteam could become something more than an alliance. A true airline investment fund, someting like a trust company. Anyone thinking it could be possible? One FFP, a 10% cross-shareholding in every major airline provided by the alliance's major airlines themselves.

Quoting FlySSC (Reply 15):
And I believe CSA could be bought by AFKL and integrated to the Airline.

Certainly an easy move to complete. Moreover, it would strenghten PRG as THE east/central european hub.

Quoting Beaucaire (Reply 12):
So AF could have preliminary code-share deals with Cubana and position themselves as future strategic partner.

They already have some sort of caribbean ops with an A320 based in the French west-Indies. Add KLM placing a couple of 738 in SXM plus DL from the US and AM from Mexico, you could get a quick coverage of the Cuban market.


User currently offlineBestWestern From Hong Kong, joined Sep 2000, 7221 posts, RR: 57
Reply 21, posted (6 years 6 months 1 day 14 hours ago) and read 3110 times:



Quoting JoFMO (Reply 19):

GDP per capita I reckon?

Correct - an amazing turnaround for what was a doldrum economy for years. Greece deserves a quality airline.

Quoting Okapi (Reply 20):
Athens is a bit too far off northern Europe and does not offer much in terms of hubbing

The potential there for P2P traffic is large, whilst using CDG and AMS as east bound hubs. A loss making large carrier in a market means that the market isnt competitive, as their competitor isnt trying to compete commercially.

Athens is one of the largest european cities, with an excellent airport - but very low traffic for its size and importance. On top of this, Greece is a major tourist destination, again being let down by a badly run uncommercial flag carrier that drags the amrket down.



The world is really getting smaller these days
User currently offlineLH4116 From Sweden, joined Aug 2007, 1714 posts, RR: 18
Reply 22, posted (6 years 6 months 1 day 13 hours ago) and read 3035 times:

AF-KLM owns a 3% stake in Royal Air Maroc (AT). What interests do AF-KLM have to purchase the company? The only problem is that the Moroccan government owns 95% of the company, so privatising AT could be difficult.

[Edited 2008-05-04 03:34:37]


SAS Plus is Business Class made faux!
User currently offlineJoFMO From Germany, joined Jul 2004, 2211 posts, RR: 0
Reply 23, posted (6 years 6 months 1 day 13 hours ago) and read 3007 times:



Quoting BestWestern (Reply 21):
Correct - an amazing turnaround for what was a doldrum economy for years. Greece deserves a quality airline.

They have Aegan...!

What has happened to the Greek economy? I have completely missed their big turn-around and I would say I am quite familiar with how each EU country is going. I mean, Italy is at the bottom for the last decade with the lowest growth in the Euro zone, so no wonder that other countries have catched up with them.
What sector is the Greek success based on?


User currently offlineJanmnastami From Italy, joined Apr 2008, 828 posts, RR: 0
Reply 24, posted (6 years 6 months 1 day 10 hours ago) and read 2880 times:



Quoting BestWestern (Reply 18):
Greek GDP will exceed Italy in 2008

Sorry, this isn't true.

The Italian GDP, in 2006, was about 1.809.486 millions of dollars and the Spanish GDP was 1.232.236 millions of dollars (compared at purchasing power parity).

The GDP per-head was: Italy 30.732$, Spain 27.522$ (at p.p.p.).

According to the International Monetary Fund, the difference between Italy and Spain was about 3.000$ (comparing the GDP per-head at p.p.p.).

You are right if you say that Greece and Spain have a bigger growth than Italy: yes, this is true. But if you compare the Spanish and Greek GDP per head, you aren't right.

(Sorry for my English  Wink )


25 Post contains links BestWestern : To quote the economist - a far better source than you or I ...Italy has unquestionably become the sick man of Europe. The IMF forecasts that, both th
26 Post contains links Janmnastami : " target=_blank>http://www.economist.com/opinion/dis...50099 You haven't read my post. Comparing at purchasing power parity is a little uncertain. You
27 BestWestern : The Economist also states that next year it will overtake Italy - not last year. I never mentioned PPP, nor did the economist. Only those desperate t
28 Janmnastami : The IMF and the World Bank write that Italian GDP per head is bigger thant Spanish and Greek ones, and I've linked the sources. The Economists and yo
29 BestWestern : UNTRUE - the world bank state that GDP per capita at Purchasing Power Parity not GDP per Capita. Very different. GDP per capita is what matters to ec
30 Post contains links Janmnastami : You're right, but... Look here: http://en.wikipedia.org/wiki/List_of...ntries_by_GDP_(nominal)_per_capita I'm right: Italian GDP per head is bigger t
31 BestWestern : It is - AF is looking elsewhere as the Italian Government continue to play games with Alitalia. Thats right - Wikipedia is a better source the the wo
32 MH017 : AF and MH had some big 'sales problems' in France, and it still 'bites'... Why not invest in VN and/or make them Skyteam member ? They're pretty well
33 Janmnastami : I don't know what is the future of AZ. I think that AZ should appeal to the Marzano law and, after a strong cure and reorganization, it should find a
34 Goldorak : That would be great. AF and VN did some (limited) code-sharing a few years ago but it didn't last long. It seems that VN is closer now to OW as they
35 Glacote : Source both of you quote are correct - and you even pointed out the difference: gdp in USD or at purchasing-power-parity. The problem with ppp is tha
36 Goldorak : Can we please stop to talk about GDP of Greece, Italy, etc in this thread ? thank you very much
37 DeltaL1011man : You do know that AF/KL isn't putting any money into DL now right? Talks went south so the AF/KL getting 25% of the "new" Delta isn't going to happen.
38 Okapi : There's a problem with investing in former French colonies for Air France. The topic is often delicate as it may sound like re-colonisation. Hence LH
39 PavlovsDog : When Olympic goes bankrupt I agree that Athens would be a great hub for AF/KL. Best airport in the region, decent O/D market and well situated between
40 BestWestern : Good summary.
41 MH017 : Read somewhere quite recently, AH would become Skyteam-Associate member soon...
42 Okapi : AH would certainly add something positive to Skyteam. The ALG hub has recently been upgraded and AF is desperate about getting hands on a market actua
43 BestWestern : Welcome aboard Yes - their medium haul services with A320's arent competitive against the flag carriers to Damascus, Amman and Tel Aviv.
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