http://www.bbc.com/news/business-44021431

I feel that it is impossible for certain airlines like Air France or Alitalia to go under. As we saw with the Italians there will always be some last minute rescue package that buys management more time.

Swissair ?
Sabena ?
Olympic ?
Varig ?
Mexicana ?

Of course it is. Just look at the aviation landscape 30 years ago vs now, there are so many large carriers that are missing from the skies. The 2 largest probably being the former US behemoths of Pan Am and TWA.

727LOVER wrote:

Swissair ?
Sabena ?
Olympic ?
Varig ?
Mexicana ?

Eastern?
Swissair?
PanAm?
TWA?
Malev?
AVIACSA?
Monarch?
AeroPeru?
TransBrasil?
Ansett Australia?
Braniff?

Did you ever hear the tragedy of Darth Lorenzo the arrogant?

Question is what alternatives does KLM have then ? Will they be dragged under too ?

what's happening with Alitalia??

Long before Air France leaves, Alitalia's, and Air India will be resolved. I don't have hope of SAA improving.

Lightsaber

Mortyman wrote:

Question is what alternatives does KLM have then ? Will they be dragged under too ?

Either the Air France KLM group will be dissolved before that happens if the situation gets bad enough and the Dutch get angry enough, or Air France will take KLM down with it. They exist as a single company with two brands, but the brands are two facades to the same building. So in it's current state, a failure of AF means a failure of the AFKL group, and the only way to free KLM would be before they even went under or as a part of bankruptcy proceedings in which the parts of the group that are hemorrhaging money are left to die and the profitable elements remain. If they become bankrupt it is likely that they will be able to turn themsevles around because the group does have profitable elements and a long term, progressive strategy. And I don't really think they're going to go bankrupt, I should say that im just laying out the hypothetical if they do - something will happen before then. Either way, KLM is likely to remain safe, and nobody would want to let it die along with the rest of the group unless there is some massive outstanding debt that requires it to be sold.

But whatever happens, it won't be pretty for the purists who expect to step aboard a 707 and get a kiss from a stewardess and a roast turkey while they smoke a cigar in 2018. I expect that if some major turn around happens, AF will become a low cost brand, and they will do anything to get rid of the unions if it means making everything a Joon flight. Joon, as dumb as the name is, has been working well for Air France as far as I am aware, and if it is, they need to do a detailed analysis of what mainline routes are creating so much trouble and turn them over to Joon to try to make money. I would rather have Air Joon France than no air France group at all, or Air Lufrança.

TheFlyingDisk wrote:

jubguy3 wrote:

Mortyman wrote:

Question is what alternatives does KLM have then ? Will they be dragged under too ?

Either the Air France KLM group will be dissolved before that happens if the situation gets bad enough and the Dutch get angry enough, or Air France will take KLM down with it. They exist as a single company with two brands, but the brands are two facades to the same building. So in it's current state, a failure of AF means a failure of the AFKL group, and the only way to free KLM would be before they even went under or as a part of bankruptcy proceedings in which the parts of the group that are hemorrhaging money are left to die and the profitable elements remain. If they become bankrupt it is likely that they will be able to turn themsevles around because the group does have profitable elements and a long term, progressive strategy. And I don't really think they're going to go bankrupt, I should say that im just laying out the hypothetical if they do - something will happen before then. Either way, KLM is likely to remain safe, and nobody would want to let it die along with the rest of the group unless there is some massive outstanding debt that requires it to be sold.

Kind of like how Niki Lauda bought back his airline from the bankrupt Airberlin?

That was kind of a special scenario, but yes, nobody wants to get rid of something that has potential, and KLM seems to have a lot of potential. I am sure that delta would swing their weight as much as they can despite EU regulations to ensure that their two largest, and by a large margin, European partners stay afloat. Without AFKLM, delta has nothing. Does anyone know how much they could do to prop a bankrupt AFKLM group up? How much does the regulation restrict them? Could delta become a transnational company?

jubguy3 wrote:

Mortyman wrote:

Question is what alternatives does KLM have then ? Will they be dragged under too ?

Either the Air France KLM group will be dissolved before that happens if the situation gets bad enough and the Dutch get angry enough, or Air France will take KLM down with it. They exist as a single company with two brands, but the brands are two facades to the same building. So in it's current state, a failure of AF means a failure of the AFKL group, and the only way to free KLM would be before they even went under or as a part of bankruptcy proceedings in which the parts of the group that are hemorrhaging money are left to die and the profitable elements remain. If they become bankrupt it is likely that they will be able to turn themsevles around because the group does have profitable elements and a long term, progressive strategy. And I don't really think they're going to go bankrupt, I should say that im just laying out the hypothetical if they do - something will happen before then. Either way, KLM is likely to remain safe, and nobody would want to let it die along with the rest of the group unless there is some massive outstanding debt that requires it to be sold.

Kind of like how Niki Lauda bought back his airline from the bankrupt Airberlin?

Mortyman wrote:

Question is what alternatives does KLM have then ? Will they be dragged under too ?

I doubt it. Either the Dutch government would step in or the LH group would see an opportunity.

This is the French government under Macron standing up to the unions. There is a lot to play out before the fat lady sings here!

I don’t think we will see the Air France brand dissolve, however, I see Joon expanding to all of the non-premium destinations. For example, I see the Air France brand maintain Seoul, Singapore, Los Angeles, and Tokyo while the Joon brand expands to Bangkok, Havana, and Chicago. In fact, Joon will fly to Bangkok it has been confirmed.

LAX772LR wrote:

727LOVER wrote:

Swissair ?
Sabena ?
Olympic ?
Varig ?
Mexicana ?

Eastern?
Swissair?
PanAm?
TWA?
Malev?
AVIACSA?
Monarch?
AeroPeru?
TransBrasil?
Ansett Australia?
Braniff?

May I add Air Berlin to the list?

Alitalia would have been gone long ago if it wouldn't be for the Italian government keeping it alive, but this has risen concerns in Brussels if Italy has broken European laws about illegal support to businesses. It could be that the loans that the Italian government has given to Alitalia are illegal and they're forced to get the money back. Of course Alitalia doesn't have the money anymore, so that would be the end of Alitalia.

AirAfreak wrote:

I don’t think we will see the Air France brand dissolve, however, I see Joon expanding to all of the non-premium destinations. For example, I see the Air France brand maintain Seoul, Singapore, Los Angeles, and Tokyo while the Joon brand expands to Bangkok, Havana, and Chicago. In fact, Joon will fly to Bangkok it has been confirmed.

The unions will likely choose to (do everything possible to) kill off the airline, before they let that happen.

AirAfreak wrote:

I don’t think we will see the Air France brand dissolve, however, I see Joon expanding to all of the non-premium destinations. For example, I see the Air France brand maintain Seoul, Singapore, Los Angeles, and Tokyo while the Joon brand expands to Bangkok, Havana, and Chicago. In fact, Joon will fly to Bangkok it has been confirmed.

Why this distinction between premium and non-premium destinations? Air France and Joon offer the exact same product, only the people at Air France get paid more for it than the people at Joon. The wages at Joon are more in line with other airlines, most notably KLM. The wages at Air France are considerably higher. I'd say the people working for Air France are the people they want to get rid of, but can't. They're too much of a cost to the company. The people working at Joon are the people they want to keep because they're not too much of a cost.

We can only determine if Joon and Air France offer the “exact same product” for long-haul at the launch of Bangkok services by Joon.

Currently, the product is identical at AF and Joon with the exception of a buy-on-board option with Joon for short-haul and medium-hail flying.

If wages for Joon pilots are lower than AF-marketed flying, I see the further deployment of Joon pilots to non-premium destinations to increase profitability on lower-yielding destinations first.

I would miss the AF tail. Absolutely gorgeous livery (and yes, I know the rest is eurowhite).

Otherwise, utterly terrible airline. It's like Alitalia and Air India's slightly more successful cousin. Add in CDG which was seemingly designed by a freshman in architecture school, and no, will not be missed at all.

Unfortunately you used a very special case as an example. Due to labor laws in France, and the power of its unions, AF will never go bankrupt. And if it does, it will be revived as a new airline the next day a la Swissair, with the same employees.

Hey guess what. No one (or companies) lives forever. Every songle company in this world will go “under” some time in the future. If your questions is if they will go under in the near future then no. They are profitable, growing at a healthy pace and most importantly cash generative. Some of the most profitable companies in the world become bankrupt due to lack of cash generation.

Mortyman wrote:

Question is what alternatives does KLM have then ? Will they be dragged under too ?

AFAIK, KLM and Air France (and Transavia etc) are formally independent companies owned by the TopCompany in a complicated way. One of them can go bankrupt without dragging the others, but it all depends on contractual issues, i.e. does the TopCompany guarantee the debts of the subsidiaries. To some extent they may be obliged by law, if they have taken money out of it. AF-KLM is anyway too complicated to say anything for sure. A controlled closure is always possible.

It has been "well-known" that the EU3 are too big to fail, just as the biggest banks. Many debtors indeed count on it. Unfortunately members of the EU (or whatever union) are not equal, in a sense that if there is a problem in the peripheral countries it is their fault and they have to resolve the issues as they can, obeying all the rules, but if there is a problem in centric countries, is is the fault of the system and they can reset the rules.

Nevertheless, I have got an impression from the news (forgot where, no link, sorry) that Macron wants to be tough against the unions and is prepared to let AF (and SNCF) to fall before surrendering to them.

As the French Government said, "there will be no Gov. help because it's not right that the French People pays for a Company that is not profitable anymore".
Au contraire, AZ is likely to receive some more money stolen from my pocket and stolen from public healthcare, transportation, welfare etc.
We've seen - as plane enthusiasts and, in some cases (not mine) experts, many bigger "brands" fall - TWA, Pan Am, et similia.

AF it's a commercial company, as any other commercial company should generate renvenues, incomes and sustains itself.

DarthLobster wrote:

Did you ever hear the tragedy of Darth Lorenzo the arrogant?

LMAO. Good way to describe it,I mean him.

rbavfan wrote:

DarthLobster wrote:

Did you ever hear the tragedy of Darth Lorenzo the arrogant?

LMAO. Good way to describe it,I mean him.

Revisionist history.

Overplayed his hand, and evicted from the industry for it, but Lorenzo never killed any airline, but he saved two.

what is your definition of "go under?"

Bankruptcy where shareholders get wiped out? Or The brand still flying without difference to underlying owners?

It is fairly easy to answer the bankruptcy question as financials will control that.
What no one has a clue about is whether "national" airlines aka Air France, Alitalia etc would remain around or not. The government may wipe out existing shareholders in a forced BK but they can support the company and keep the flag flying.

KLM better think about a rapid split, before their name gets dragged through the mud too. Let AF go under if that's what the staff want, and hopefully a new private company can return to France.

UTA is a good name for it. We go back a long way.

Yes, Air France could go under, thanks to the employees of the company, who hasnt learned anything...Once again you will see unions with too much power....They more or less order their members to go on strike..
But as other have said, it will probably emerge the next day or week as a new company, under and new name, but with the same employees, and the the carousell starts all over again. KLM will probably not be dragged into a bankrupt, but they will feel the consequences, not doubt...
as for Air France, the management and the french public has to put their foot down very soon before its too late..

First of all I think this is just a way of the French government and AF putting pressure on the stupid French unions...


But in a theoretical world multiple asset deals to sell off everything that is worth some money would be in order, once AF-KL-group annouces its insolvency. The major problem is that this is a huge airline, even if you look at KL and AF separately. And who is able to buy such huge airlines as AF and KL? Sure IAG and LH Group would be prime candidates, but can anyone here think of any plausible scenario where the EU and also certain countries governments would allow such takeovers? The market power of IAG and LH Group would be so massive and market-distorting. It would be horror for alle passengers within Europe.
A takeover from outside the EU is basically not realistic, too, the owner-ship rules of the EU and most member-countries don't allow non EU shareholders to take a controlling stake in a EU airline. Sure, the rules have had been bent for AZ and AB (EY controlled them for a while before they were dragged down by their stupid investments, too), but bending the rules and allowing direct ownership of two former national airlines and one of the largest airline groups in the world? That is something different and not likely IMHO.
So we would need private investors or smaller airlines investing. We might see a sell out. Perhaps the aviation landscape would change completely. Or perhaps IAG and LH Group would share AF and KL, each offering about 50% of the service at CDG and AMS?

Whatever, there are so many possible scenarios to think of, but I stand with my first sentence, this is just a tactic to break the French unions...

DarthLobster wrote:

Did you ever hear the tragedy of Darth Lorenzo the arrogant?

Ha not many people will get this one!

a major airline like AF deserves to go under

Kashmon wrote:

a major airline like AF deserves to go under

Why? I get how the seemingly endless stupidity of some of it's workers might make you think that but how many of all at AF are as unhappy (and worried) about where this could go, are not on board with the unions, are ashamed of that thuggish behavior by some in another strike a couple of years ago?.
Then there are all those in jobs which support AF.

Ironically, only 8% of French workers are in unions (lower than the UK for instance).
The sheer numbers of unions involved (I read 18) that AF has to deal with, now BA has had it's troubles in this area in the past but there the management are dealing with 3 unions.


I posted this as a new topic yesterday but it got moved to another thread;
https://www.theguardian.com/business/20 ... ike-action

Air France could be the next Alitalia and Air India.

KLM will go its separate way, LH could be interested in taking over AF.

What about EK taking over AF? A hub in Paris would be a great thing for EK.

Continental, Northwest, Pan Am, TWA, Eastern, Sabena, Olympic, several versions of Alitalia. The list goes on and on. But not AF. They're making profit as far as I know.

I just cannot see the French government letting it happen. They will always find a way, it's just too much prestige for France to let such a thing happen.
As with all politicians, what Macron says and what he is really prepared to do are very different.

I see the KLM side of things figuring out a way to cut the French side loose before that happens. The problem then becomes: who could take over Air France? The only real possibility is an LCC or its owners.

Here a link (German) https://www.aerotelegraph.com/ueberleben-von-air-france-steht-auf-dem-spiel

Was amazed to read that the strike cost AF 23 Million Euro / day!!!

LAX772LR wrote:

AirAfreak wrote:

I don’t think we will see the Air France brand dissolve, however, I see Joon expanding to all of the non-premium destinations. For example, I see the Air France brand maintain Seoul, Singapore, Los Angeles, and Tokyo while the Joon brand expands to Bangkok, Havana, and Chicago. In fact, Joon will fly to Bangkok it has been confirmed.

The unions will likely choose to (do everything possible to) kill off the airline, before they let that happen.

That's an important point. The unions (and workers) want what they want but a liquidation and no jobs would not serve their interests.

The OP has a valid question. There are lots of references to liquidated airlines but none quite of the stature of AF (in a proud and wealthy nation like France that will use all economic levers). Sabena and Swissair got reconstituted. Braniff? Ploohf. Braniff was, what, the 10th largest U.S. carrier at that point? Greece, Brazil and Mexico didn't have the money to save Olympic, Varig and Mexicana. TWA was a slow death that everyone saw coming and a smooth asset purchase by AA. No, I think AF would be unique.

My opinion? It won't happen. KLM won't be 'liberated', either - French pride won't allow it. They stepped in and declared yogurt a strategic industry to block a sale to Pepsi (that never even tendered a bid). Yogurt! (Danone, 2005)

uta999 wrote:

KLM better think about a rapid split, before their name gets dragged through the mud too.

I'm sure they've thought about different scenario's. The Dutch government already hinted on that. Wouldn't be surprised if they've made a few calls with Atlanta as well. But before you'll hear anything about that the situation needs to become more urgent.

CARST wrote:

The major problem is that this is a huge airline, even if you look at KL and AF separately. And who is able to buy such huge airlines as AF and KL? Sure IAG and LH Group would be prime candidates, but can anyone here think of any plausible scenario where the EU and also certain countries governments would allow such takeovers? The market power of IAG and LH Group would be so massive and market-distorting. It would be horror for alle passengers within Europe.
A takeover from outside the EU is basically not realistic, too, the owner-ship rules of the EU and most member-countries don't allow non EU shareholders to take a controlling stake in a EU airline. Sure, the rules have had been bent for AZ and AB (EY controlled them for a while before they were dragged down by their stupid investments, too), but bending the rules and allowing direct ownership of two former national airlines and one of the largest airline groups in the world? That is something different and not likely IMHO.

For KL a combination of an airline from outside the EU (49%) and Dutch investors (51%) seems most likely to me. If needed for the continuity of KL the Dutch government would buy and temporarily hold the 45% extra (they already have 6%). It can't be very expensive because the total value of AFKL is only 3 billion, and in a scenario where saving KL is needed that would be even less.

Jetty wrote:

uta999 wrote:

KLM better think about a rapid split, before their name gets dragged through the mud too.

I'm sure they've thought about different scenario's. The Dutch government already hinted on that. Wouldn't be surprised if they've made a few calls with Atlanta as well. But before you'll hear anything about that the situation needs to become more urgent.

CARST wrote:

The major problem is that this is a huge airline, even if you look at KL and AF separately. And who is able to buy such huge airlines as AF and KL? Sure IAG and LH Group would be prime candidates, but can anyone here think of any plausible scenario where the EU and also certain countries governments would allow such takeovers? The market power of IAG and LH Group would be so massive and market-distorting. It would be horror for alle passengers within Europe.
A takeover from outside the EU is basically not realistic, too, the owner-ship rules of the EU and most member-countries don't allow non EU shareholders to take a controlling stake in a EU airline. Sure, the rules have had been bent for AZ and AB (EY controlled them for a while before they were dragged down by their stupid investments, too), but bending the rules and allowing direct ownership of two former national airlines and one of the largest airline groups in the world? That is something different and not likely IMHO.

For KL a combination of investors from an airline from outside the EU (49%) and Dutch investors (51%) seems most likely to me. If needed for the continuity of KL the Dutch government would buy and temporarily hold the 45% extra (they already have 6%). It can't be very expensive because the total value of AFKL is only 3 billion, and in a scenario where saving KL is needed that would be even less.

KL could be worth way more. If AF is considered worth -2 billion and KL +5, you come up with a overal sum of +3.

sccutler wrote:

rbavfan wrote:

DarthLobster wrote:

Did you ever hear the tragedy of Darth Lorenzo the arrogant?

LMAO. Good way to describe it,I mean him.

Revisionist history.

Overplayed his hand, and evicted from the industry for it, but Lorenzo never killed any airline, but he saved two.

Those who worked under him at CO and EA would disagree with you.

I think AF should become a premium only carrier. Just A32x family, A321LRs with 40 business,60+ premium economy on the long haul. Will be niche premium O&D carrier out of Paris.

Joon belongs to KL/AMS. Different thread.

727LOVER wrote:

Swissair ?
Sabena ?
Olympic ?
Varig ?
Mexicana ?

Exactly.

Time to get the popcorn! Macron would love to present a picture of his government facing down the unions, even it's only by proxy, pour encourager les autres. The question to which we currently don't know the answer is will he get cold feet and push for a (another) bodged settlement behind the scenes? I'm sure that's what the various unions involved in the AF dispute believe because that's what's always happened before however tough the management and the government talked.

cv990Coronado wrote:

I just cannot see the French government letting it happen. They will always find a way, it's just too much prestige for France to let such a thing happen.
As with all politicians, what Macron says and what he is really prepared to do are very different.

Spot on. Macron does not want to be known forever as the guy who killed AF.
There is zero chance that AF goes under. Zero. And less than zero it's picked up by LH group.
Heads would explode all over the 7th arrondisement if that was ever even hinted at.

YIMBY wrote:

Mortyman wrote:

Question is what alternatives does KLM have then ? Will they be dragged under too ?

AFAIK, KLM and Air France (and Transavia etc) are formally independent companies owned by the TopCompany in a complicated way. One of them can go bankrupt without dragging the others, but it all depends on contractual issues, i.e. does the TopCompany guarantee the debts of the subsidiaries. To some extent they may be obliged by law, if they have taken money out of it. AF-KLM is anyway too complicated to say anything for sure. A controlled closure is always possible.

It has been "well-known" that the EU3 are too big to fail, just as the biggest banks. Many debtors indeed count on it. Unfortunately members of the EU (or whatever union) are not equal, in a sense that if there is a problem in the peripheral countries it is their fault and they have to resolve the issues as they can, obeying all the rules, but if there is a problem in centric countries, is is the fault of the system and they can reset the rules.

Nevertheless, I have got an impression from the news (forgot where, no link, sorry) that Macron wants to be tough against the unions and is prepared to let AF (and SNCF) to fall before surrendering to them.

Thank God someone got it. Lets see how long he's gonna try to be tought against the unions.

Bricktop wrote:

cv990Coronado wrote:

I just cannot see the French government letting it happen. They will always find a way, it's just too much prestige for France to let such a thing happen.
As with all politicians, what Macron says and what he is really prepared to do are very different.

Spot on. Macron does not want to be known forever as the guy who killed AF.
There is zero chance that AF goes under. Zero. And less than zero it's picked up by LH group.
Heads would explode all over the 7th arrondisement if that was ever even hinted at.

If I am the unions I call their bluff. They are full of crap. If they meant it they would be offloading the shares. I say it’s more likely they buy more ownwership than reduce it in next few months.

I don't get why people don't like AirFrance. I have flown them international many times, and I go out of my way to fly with them, and the A380. Last flights I had the absolute best crew service ever in all my flying. The plane was fresh, clean, new, the whole experience very professional, and fun, and the food served was quite possibly the tastiest I've ever had.
Also, arm chair CEO's love to be anti-union, but without organized labor, the race to the bottom, will become, here we are at the bottom, does anyone have a telescope, overnight.