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LHRFlyer
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Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 10:40 am

Air France KLM has published its financial results for 2011, reporting an operating loss of €353m and a net loss of €809m.

http://www.airfranceklm-finance.com/...6438/file/Résultats_FY2011_VA.pdf

In response the company has announced a number of measures summarised from the above results announcement:

Capacity growth has been revised and will be limited to 1-2% in the next three years.

Investments have been revised, especially investments in the fleet, which will be a maximum of 700 million euros in 2012, 600 million euros in 2013 and 300 million euros in 2014, compared with 1.2 billion euros in 2011.

Immediate cost-cutting measures have already largely been implemented, including a freeze on general salary increases at Air France in 2012 and 2013 and wage moderation at KLM.

A transformation plan has been launched. The first phase will last until the end of March with the aim of reaching an agreement on framework and methodology with the relevant union organisations at Air France and KLM. These agreements will define the working methods, objectives of improvement in productivity for each business as well as the measures to achieve these objectives. The aim by the end of June is the signing of new collective agreements aimed at generating a 20% improvement in economic efficiency in 2014 relative to 2011 at Air France and stable payroll costs at KLM.
 
MOW
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 11:24 am

What's the difference between salary increase freeze and wage moderation?
Why the approach has to be different (apparently) for the 2 being in the same deep s..t?
 
captainmeeerkat
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 12:01 pm

Quoting MOW (Reply 2):
What's the difference between salary increase freeze and wage moderation?

Perhaps an indication of where the costs are too high as per the A.netters who say AF is the Achilles heel of the group?
my luggage is better travelled than me!
 
ZKCIF
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 12:07 pm

Quoting captainmeeerkat (Reply 3):
Perhaps an indication of where the costs are too high as per the A.netters who say AF is the Achilles heel of the group?

Still, something does not add up to me
i read "increase freeze" as salary staying the same" and "moderation" as "decrease"
so maintaining the same salaries for those whose results are poorer and decreasing salaries of those whose results are better ?!
 
scouseflyer
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 1:54 pm

So no new big A380 or 777 order then  
 
Joost
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 1:57 pm

Quoting ZKCIF (Reply 4):
Still, something does not add up to me
i read "increase freeze" as salary staying the same" and "moderation" as "decrease"
so maintaining the same salaries for those whose results are poorer and decreasing salaries of those whose results are better ?!

For AF, salaries will remain the same
For KL, salaries will increase slightly, but less than usual
 
76er
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 1:59 pm

Quoting ZKCIF (Reply 4):
Still, something does not add up to me
i read "increase freeze" as salary staying the same" and "moderation" as "decrease"
so maintaining the same salaries for those whose results are poorer and decreasing salaries of those whose results are better ?!

With "moderation" (at KL) what is actually meant is "moderate increase". I believe their staff got a 1.25% raise for 2012. Well below inflation, but a raise nevertheless.

Edit: Oops! Joost beat me to it.

[Edited 2012-03-08 06:00:01]
 
mikey72
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 3:17 pm

I can't understand why eveyone is making money except AF and LH groups ?

Something has gone wrong somewhere ?
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
Amsterdam
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 3:34 pm

LH is making money, the 13 million loss, was not made by LH.
Once they get rid of BMI they will be fine. Only Austrian remains not in the best shape, but Austrian is not big enough to make the whole group make a loss.
But I must say I dont know what Austrian did in 2011, so maybe they are actually doing fine.
But I remember something about Austrian not doing well.
Anyway, LH is doing fine.
 
stlgph
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 3:40 pm

From Businessweek Blogs --

"no recovery visible"

http://www.businessweek.com/news/201...ss-on-fuel-spending-ticket-pricing



In other aviation financial news, Qatar Airways says IPO is at least 5 years away due to 'economic slump'
if assumptions could fly, airliners.net would be the world's busiest airport
 
Amsterdam
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 3:48 pm

On dutch aviation news there is an article about AF commenting on a possible alliance with Ethiad, but I cannot read the full article.
 
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Stitch
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 3:50 pm

Quoting scouseflyer (Reply 4):
So no new big A380 or 777 order then.    

Boeing has some consolation that they firmed their 787 order.
 
panamair
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 4:55 pm

Quoting mikey72 (Reply 7):
I can't understand why eveyone is making money except AF and LH groups ?

Everyone? Taking a look at most of the legacy European carriers in the past 12 months, most are actually in the red:

BA: profit
VS: profit
LH: profit
LX: profit
SU: profit

BD: loss
AFKL: loss
SN: loss
IB: loss
OS: loss
SK: loss
AY: loss
LO: loss
OK: loss
RO: loss
AB: loss
EI: loss
TK: (operational breakeven or profit; net loss)
 
mikey72
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 5:04 pm

Quoting Amsterdam (Reply 8):
LH is making money, the 13 million loss, was not made by LH.

Yes it was. Who else made it ? Phantom Airways ? They purchased BD..it shows in their books...end of.

Quoting panamair (Reply 12):
LH: profit
LH lost $17M dollars last year. Announced today ?

Quoting panamair (Reply 12):
Everyone? Taking a look at most of the legacy European carriers in the past 12 months, most are actually in the red:

I'm talking globally. The world doesn't revolve around Europe.

Quoting panamair (Reply 12):
BD: loss
AFKL: loss
SN: loss
IB: loss
OS: loss
SK: loss
AY: loss
LO: loss
OK: loss
RO: loss
AB: loss
EI: loss

Most in this list are beyond help (AF is a mystery to me) and the one's that aren't are affiliated to LH and they still lost money.

That's all.

[Edited 2012-03-08 09:06:34]
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
mikey72
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 5:27 pm

Let's not get excited here. All i'm saying is that a billion has evaporated from LH groups results and AF group has lost a billion. IAG group made a respectable profit.
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
PezySPU
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 5:58 pm

Quoting Amsterdam (Reply 8):
Only Austrian remains not in the best shape, but Austrian is not big enough to make the whole group make a loss.

You are forgetting SN. I'm under impression that they have very thin profit margins, so as soon as their environment isn't perfect, they make a loss. Just an impression...
I believe 4U isn't doing the best either, although far from alarming.
 
JRadier
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 6:38 pm

Quoting panamair (Reply 12):
Everyone? Taking a look at most of the legacy European carriers in the past 12 months, most are actually in the red:

BA: profit
VS: profit
LH: profit
LX: profit


BD: loss
AFKL: loss
SN: loss
IB: loss
OS: loss

Why are you quoting IAG and LH group as separate airlines, yet grouping AF/KL?
 
mikey72
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 7:25 pm

Quoting JRadier (Reply 16):
Why are you quoting IAG and LH group as separate airlines, yet grouping AF/KL?

That's what I thought.

KL is profitable, BA is profitable, LX is profitable.

AF and LH are the big brothers in their groupings but they are letting down (or at least their management is) KL and LX who are both profitable individually.

Something has gone wrong at a high level at LH and AF. How can LH go from +1B to -17M in one year ?

I don't even know where to start with AF.

[Edited 2012-03-08 12:00:20]
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
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SQ22
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 8:38 pm

Quoting mikey72 (Reply 14):
Let's not get excited here. All i'm saying is that a billion has evaporated from LH groups results and AF group has lost a billion. IAG group made a respectable profit.

I just want to say there is a difference between making an operational loss/profit or a net result attributable to shareholders.

Please have a look here:

http://investor-relations.lufthansa....chlaegt-dividende-von-025-eur.html

It speaks for itself I would say, so back to AF/KL.

[Edited 2012-03-08 12:40:11]
 
SuperCaravelle
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 9:01 pm

Quoting SQ22 (Reply 18):
It speaks for itself I would say, so back to AF/KL.

Exactly, the constant (forced) comparisons are beginning to be a bit annoying.

Results are not brilliant to say the least. The interesting thing is that revenues on the whole increased, whereas revenues per passenger decreased.

Revenue: 4.4% up
Traffic per flight: 6.6% up
Revenue per passenger: 1.2% down.

Is AF/KL losing premium passengers or is this simply optimizing load factors? I wouldn't be surprised at the former, remembering the reactions on the Flying blue devaluation and the outdated business class products.

It's a pity AF-KL is only talking about cutting labor cost by a bit and about not expanding. If there is an opportunity to expand somewhere, they should do so and not keep to the fixed 1-2% maximum growth in my opinion. A new business class product for KL will come in (near) future, AF didn't indicate anything like this at this point, will be interesting.

The acquisition of Alitalia is to be expected really, it's a question of when, not if. Funny thing is that Alitalia is in better shape right now.
 
panamair
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 9:04 pm

Quoting JRadier (Reply 16):
Why are you quoting IAG and LH group as separate airlines, yet grouping AF/KL?

Because AFKL does not publicly break out the AF and KL figures separately. Ifyou know what those are, I would be more than happy to post them separately. Everyone always says that KL is profitable while AF is not; while I am not disputing that KL is doing better than AF, there is no publicly-available information that I know of (in AFKL's earnings release for example) that show KL actually making a profit; for all we know, KL is also losing money, just not at the AF's magnitude.

On the other hand, LH reports the performance of each of its airline subsidiaries separately, in addition to the Group's performance. Similarly, IAG mentioned in their earnings release what BA's profits were versus IB's losses.

Quoting mikey72 (Reply 17):
AF and LH are the big brothers in their groupings but they are letting down (or at least their management is) KL and LX who are both profitable individually.

Something has gone wrong at a high level at LH and AF. How can LH go from +1B to -17M in one year ?

LH has not released their detailed financial statements yet for 2011, but I am pretty sure that the 17m loss is for the entire Group, which includes the losses at BD and OS, among others. In that case, the LH passenger airline part would actually be making money. We shall see on the 15th of March when LH releases the details.
 
panamair
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 9:34 pm

Quoting SuperCaravelle (Reply 19):
Revenue: 4.4% up
Traffic per flight: 6.6% up
Revenue per passenger: 1.2% down.

Is AF/KL losing premium passengers or is this simply optimizing load factors?

The presentation shows the following:

Q4 2011:
RASK: -2.6%
RASK (ex-currency): -2.1%
Long-haul Premium RASK: +0.7%
Long-haul Economy RASK: -2.4%


Full Year 2011:
RASK: -1.2%
RASK (ex-currency): -0.7%
Long-haul Premium RASK: +3.5%
Long-haul Economy RASK: -1.2%

So long-haul premium unit revenues are actually on the up trend, and it's the back-of-the-bus that is depressing unit revenues.
 
SuperCaravelle
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RE: Air France-KLM - 2011 Financial Results

Thu Mar 08, 2012 9:46 pm

Ah, the 10 abreast problem 

Seriously though, that might be the explanation, it wouldn't be surprising to see prices drop when the area per seat drops. It shows that the revenue side isn't the real problem for the carrier. Thanks for sharing the numbers  
 
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usdcaguy
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RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 1:14 am

Quoting SuperCaravelle (Reply 22):
It shows that the revenue side isn't the real problem for the carrier.

Correct. What is happening is the apparently on the cost side with labor costs a thorny issue. Does anyone have YOY CASM figures to share? Does anyone have any ideas as to how to make that go down?
 
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shamrock604
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RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 1:19 am

Quoting panamair (Reply 12):
BD: loss
AFKL: loss
SN: loss
IB: loss
OS: loss
SK: loss
AY: loss
LO: loss
OK: loss
RO: loss
AB: loss
EI: loss
TK: (operational breakeven or profit; net loss)

Aerlingus was significantly profitable last year.
 
mikey72
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RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 7:35 am

Quoting shamrock604 (Reply 24):
Aerlingus was significantly profitable last year.

Yes it was. I don't know where some get their info.

I don't know why some can't accept that certain airlines have been slow to react to the environment and that some have forged ahead with erroneous acquisitions due to a thirst for size.

Others airlines in Europe have made very difficult decisions over the past few years in some circumstances against a barrage of opposition to reposition themselves.

Not that I expect anyone to recognize that here.
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
Delta777Jet
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RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 11:18 am

Why you think Lufthansa separates financials of all subsidiaries and AirFrance/KLM is clubbing all together ? Just look how inefficient Paris hub is ? I don't know anyone from mainland Europe, except France who like to connect there. Then all the time the strike actions also costing a lot of money. Air France has no good accident record as KLM and the on board service on KLM at least in Economy Class is 100 times better than Air France in my opinion. I hope instead of trying to save more they invest to upgrade Air France to make it flyable.
I still miss Trans World Airlines and the L-1011
 
mozart
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RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 12:47 pm

Quoting panamair (Reply 21):
Full Year 2011:
RASK: -1.2%
RASK (ex-currency): -0.7%
Long-haul Premium RASK: +3.5%
Long-haul Economy RASK: -1.2%

So long-haul premium unit revenues are actually on the up trend, and it's the back-of-the-bus that is depressing unit revenues.

Well, unit revenue went up. But they are still losing market share because they shrink their Business and First Class cabins. So: less seats available (=Less ASK), the revenue that they make is divided among less seats, thus RASK goes up. Simple maths.
 
[email protected]
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RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 1:34 pm

Quoting shamrock604 (Reply 24):
Aerlingus was significantly profitable last year.

Specifically, it earned €71.19m in net profit in its 2011FY and had a net margin of 5.52%.
"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
 
mikey72
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RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 2:30 pm

Quoting panamair (Reply 20):
LH has not released their detailed financial statements yet for 2011, but I am pretty sure that the 17m loss is for the entire Group, which includes the losses at BD and OS, among others. In that case, the LH passenger airline part would actually be making money. We shall see on the 15th of March when LH releases the details.

That makes it alright does it ?

The 'management' of the group has 'managed' the group into a loss.
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
vv701
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RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 2:31 pm

Lufthansa Group and LH are not the same thing.

Preliminary results show Lufthansa Group loosing 13 million euros in 2011.

On the other hand according to the Blomberg link provided in Reply 9, LH had an operating profit of 820 million euros in 2011.

According to the same link a 285 million euro loss is attributable to BD operations and a down-grading of the value of BD reflecting Lufthansa Group's sale negotiations with IAG.

Lufthansa Group and Lufthansa, the airline, have muddied the waters slightly by using the same base name. It is therefore wrong to talk of "LH"- which is the airline - when referring to the Lufthansa Group, particularly when quoting financials or other numeric data like passengers carried or passenger revenue km. If one does not then it is equally correct to say LH made a loss of 13 million euros and a profit of 820 million euros in 2011 which is obviously highly confusing and potentially misleading.
 
SuperCaravelle
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RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 2:34 pm

Apparently fuel costs of AF-KL went up by €900m. I know fuel prices also went up, but this rise is a bit excessive. The company states this is the most important reason for the big loss. I would say the fuel hedging department needs a review.
 
mikey72
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RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 3:07 pm

Quoting VV701 (Reply 30):
Lufthansa Group and Lufthansa, the airline, have muddied the waters slightly by using the same base name

I understand that but to take it to the extreme if one part of the group were to incurr some sort of disasterous unrecoverable loss what would happen to the group as a whole ?

i.e - Say IB were negligent in some terrible crash and were sued into bankruptcy and beyond what would happen to IAG (and BA)?

All i'm saying is that you could argue that the same people that signed off the agreement with SIr Michael Bishop to purchase BD and incurr all thoses losses are the same people that manage LH ? Are they not ?

[Edited 2012-03-09 07:09:15]
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
vv701
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RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 3:08 pm

Quoting SuperCaravelle (Reply 31):
Apparently fuel costs of AF-KL went up by %u20AC900m. I know fuel prices also went up, but this rise is a bit excessive. The company states this is the most important reason for the big loss. I would say the fuel hedging department needs a review.

These days an airline's profitability is more likely to reflect the view it took on fuel prices and currency exchange rates than on its operational performance. For example last time the crude oil price spiked back in 2008 one of the major American airlines had hedged a significant proportion of its following year's fuel needs at the equivalent price to $132 a barrel. This was at a time when the media were talking of "$200 a barrel oil"..

What happened? Crude prices peaked at around $140 a barrel in late summer 2008. By early 2009 they had fallen to below $40 a barrel:

http://futures.tradingcharts.com/chart/CO/M

So the airline lost its shirt.

Today the treasury department of airlines may have a greater impact on profitability than its operations. That is why I believe that taking the median view is the safest route. After all if you invest in an airline you are not investing in a gamble on the commodities market.
 
panamair
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Joined: Fri Oct 12, 2001 2:24 am

RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 3:26 pm

Quoting shamrock604 (Reply 24):
Aerlingus was significantly profitable last year.

Sorry, my mistake - looked at and quoted the Q4 2011 numbers which showed an operating loss. Full year 2011 was indeed profitable.

Quoting mikey72 (Reply 29):
That makes it alright does it ?

What is with this belligerence? Where did I say it was "alright"? I merely pointed out that the 13m loss was for the Group, and that LH the airline itself made money.
 
mikey72
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RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 3:45 pm

Quoting panamair (Reply 34):
What is with this belligerence? Where did I say it was "alright"? I merely pointed out that the 13m loss was for the Group, and that LH the airline itself made money.

Belligerent ? Moi ?

Look, I don't buy into all this 'spliiting the group up' crap. The bottom line is net profit/loss for the whole.
Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
 
anstar
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RE: Air France-KLM - 2011 Financial Results

Fri Mar 09, 2012 3:53 pm

Quoting mikey72 (Reply 32):

All i'm saying is that you could argue that the same people that signed off the agreement with SIr Michael Bishop to purchase BD and incurr all thoses losses are the same people that manage LH ? Are they not ?

Actually I'd say it was a previous management that signed the deal with bishop that forced them to buy his stake in 2009. I don't think the current managemtn wanted the control and as such didnt really focus on turning BS around... and here we are today with its competitor swallowing it whole.
 
vv701
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RE: Air France-KLM - 2011 Financial Results

Sat Mar 10, 2012 1:19 pm

Quoting mikey72 (Reply 32):
I understand that but to take it to the extreme if one part of the group were to incurr some sort of disasterous unrecoverable loss what would happen to the group as a whole ?

I think, repeat, think, one of two things could happen.

The holding company might be put into receivership. The appointed administrator would then offer those assets that were viable for sale. These would include other viable airlines within the group.

Alternatively the part of the corporation making the unrecoverable loss would enter bankruptcy, an administrator appointed and any saleable assets sold to partly repay the airline's creditors. The rest of that corporation would continue to trade normally.

However the above would depend on local company law. In the USA restructuring under Chapter 11 protection would be most likely. Lufthansa Group, AF/KL and IAG would depend on German, French and Spanish company law as well as the local laws in the country or countries where their subsidiary airlines are registered. So everything would be fairly complex - good for the legal profession.
 
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shamrock604
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RE: Air France-KLM - 2011 Financial Results

Sat Mar 10, 2012 8:18 pm

Quoting panamair (Reply 34):
Sorry, my mistake - looked at and quoted the Q4 2011 numbers which showed an operating loss. Full year 2011 was indeed profitable.

If that is the case, then a number of the examples you quoted will be incorrect - Northern Hemisphere airlines dont tend to do all that well in Q4....  
Quoting mikey72 (Reply 25):
I don't know why some can't accept that certain airlines have been slow to react to the environment and that some have forged ahead with erroneous acquisitions due to a thirst for size.

I agree. Mainland European carriers need to accept that Loco carriers will continue to attack the short haul market and render the current short haul operating model as useless given time.

You can prolong the pain and apply sticking plaster by tinkering about with inflight catering, and withdrawing the "free" newspaper, or you can accept the reality that British Airways and Aer Lingus, and the US airlines, who have already been through this experience, have accepted long ago.

Utilisation has to increase, productivity has to increase, the inflight offer needs to become less fussy, the fare structure needs a massive overhaul. That is tough to balance with the needs of a hubbing / network carrier, but it is not impossible as several other carriers have proved.

I suspect that AF's regional bases project is an experiment that may well be applied network wide if it it proves to be effective.
 
PezySPU
Posts: 281
Joined: Mon Dec 12, 2011 1:27 pm

RE: Air France-KLM - 2011 Financial Results

Mon Mar 12, 2012 3:03 pm

Quoting panamair (Reply 20):
Everyone always says that KL is profitable while AF is not; while I am not disputing that KL is doing better than AF, there is no publicly-available information that I know of (in AFKL's earnings release for example) that show KL actually making a profit; for all we know, KL is also losing money, just not at the AF's magnitude.

Well, if a conference call and FlightGlobal reporter are public enough, than you're wrong. AF made €560 million operating loss. Given that the whole group's operating loss stood at €353 million, than the rest of the group (mostly KLM) achieved €207 million operating profit.

Have a look here, first paragraph:
http://www.aspireaviation.com/2012/0...rbulent-year-with-widening-losses/

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