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LAXintl
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 5:45 pm

Dual hubs can always be a tricky issue for airlines, particularly something like AF-KL with separate branding.
At some point they obviously do compete with each other.

And yes, I also can see potential and need to eliminate much of back office duplication at the companies.

In some ways AF-KL operate how US airlines do in the middle of a merger, but are stuck in limbo without the operations being properly fully combined. This obviously adds cost and inefficiency.

Regardless of what they do with branding, they should look to eliminate as much staff, equipment and facility duplication as possible.
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Pihero
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 6:05 pm

Quoting tommy1808 (Reply 91):
Air France/KLM may be a different story,

For the same period : AF-KL
2008 : 58.117 M passengers
2013 : 78.444 M,
Progression : 35 %.

The RPK went from 162;628 Bn to 228.863 in the same period, hence a progression of 40 %, reflecting the change for longer sectors for the group.

Quoting QatarA340 (Reply 95):
AF/KL already have a big codesharing agreement with Etihad

It's the only way any ME3 as you call them will grow in France.
The rights for EK and QR will be frozen for the foreseeable future, both in France and Germany.
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sunrisevalley
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 6:44 pm

Quoting Pihero (Reply 101):
The RPK went from 162;628 Bn to 228.863 in the same period, hence a progression of 40 %, reflecting the change for longer sectors for the group.

Thanks Pinhero for numbers. I wonder how the offsetting CPK tracked ?How about some CASK's for a selection of carriers? Some appropriate number based comparisons would be useful rather than sweeping rhetorical statements. Does anyone know the CASK spread between EasyJet and BA short haul as an example?
 
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 6:51 pm

Quoting QatarA340 (Reply 95):
True which exactly proves my point. It is the business models of AF/KL which is letting them loose those millions of euros

Well LHR has HUGE demand TATL. I'd say more than FRA, CDG and AMS combined. Just look at how many flights run JFK to LHR as an example versus CDG-JFK or FRA-JFK for example.

So it is not necessarily "just" the business model, but also the market demographics and demand.
 
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 6:56 pm

Quoting mercure1 (Reply 99):
And what date are they speaking about?
New pier is 2025 per earlier A.net thread, and runway is still in concept stage with decision in 2015.
Plus AMS has is noise issues and strict curfew.

The new (relatively small) A(1) pier will be ready by 2016 with A(2) and (3) in the long term pipeline. The construction of 06R/24L and closure of 04/22 have been postponed, simply because there is no need for it yet.
Curfew, what curfew?

AMS owes its very existence to transfer pax and AMS knows it. That explains the massive investments currently taking place to improve the airports' passenger flows.
 
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sunrisevalley
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 7:06 pm

For useful CASK comparisons for LCC and legacy carriers for short haul and long haul got to the link below and to the last table in the article.

http://centreforaviation.com/analysi...ut-still-has-homework-to-do-110949
 
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 7:07 pm

Quoting mercure1 (Reply 96):
Personally I see the better model to focus on bigger CDG as the global hub as it much growth opportunity (space, slots, market size) and revert AMS to operation that focus on local Dutch demand and not as much for transit any longer.

That would be the most counter productive move thinkable, to say it politely. KL's strongest point is their transfer passengers, that is how they became a large airline despite a small home market. And AMS is still one the most popular transit airports in the world. CDG isn't exactly, to put it mildly. It is like slaughtering the chicken with the golden eggs.

It would means huge loss of jobs at KL and at AMS if KL only could serve local traffic. As far as the Dutch public and politicians are concerned, every reason to file for divorce   

Quoting mercure1 (Reply 99):
New pier is 2025 per earlier A.net thread, and runway is still in concept stage with decision in 2015.
Plus AMS has is noise issues and strict curfew.

Why do all that when CDG today already has more capacity, gates, free slots, and curfew not big issue.

AMS has still more than enough room to grow, even without new pier or runway. Even if CDG may have more room to grow, it's not an issue really.
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LAXintl
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 7:09 pm

Quoting 76er (Reply 104):
Curfew, what curfew?
AIRPORT CURFEWS
RESTRICTIONS FOR CHAPTER 2 AND MARGINAL CHAPTER 3 AIRCRAFT

Take-off and landing is not allowed for aircraft which are certified in accordance with the noise standards of ICAO Annex 16 Chapter 2. Aircraft certified in accordance with the noise standards of ICAO Annex 16 Chapter 3, for which the margin of the sum of the three certification noise levels, relative to the sum of the three applicable ICAO Annex 16 Chapter 3 certification noise limits, is less than 5 EPNdB:

1. For aircraft equipped with engines with bypass ratio 3, it is not allowed to plan take-off between 2200-0500 (2100-0400).

OPERATING QUOTA
With effect In the year 2001 there was a maximum of 440,000 commercial air traffic movements and in the year 2002 a maximum of 460,000 commercial air traffic movements was allowed. In 2003 these operating quota for Amsterdam Airport Schiphol have been replaced by another system with no specific limit on the annual number of movements but a total noise volume (TVG) for Lden and Lnight, and maximum noise levels in 35 enforcement points Lden and 25 points Lnight. Actual maximum (night) capacity is dependent of actual scenario. Contact the airport for details.

Due to environmental constraints Amsterdam Airport Schiphol has a limited number of slots during the night period.
Airlines are not allowed to operate between 2200-0600 (2100-0500) without a slot applicable to this period.

NOISE BUDGET RESTRICTIONS
In order to guarantee that the total annual noise load around Amsterdam Airport Schiphol will not exceed the legal limits the airport is fully coordinated. This means that in order to operate a slot is needed from the Slot coordinator. Slot coordination is meant to provide a neutral, transparent and nondiscriminatory system for allocating the available noise capacity within the legal noise limits. The initially declared capacity for Winter season is 180.000 and for the Summer season 270,000 movements. The slot coordinator should stimulate airlines to operate into Amsterdam Airport Schiphol with quieter aircraft when allocating the slots to the airlines.

NOISE SURCHARGES
Note: There are two noise charges in effect at the airport - one charged by the airport and the other by the government. Shown directly below is that airport's noise charge and listed after this is a link to the government noise charges.

Airport Charges and Conditions Effective November 1, 2011
Note: The F factor, which is part of the calculation of the noise levy calculation, is set at €75.25 as of 1 January 2011 for the Government Noise Surcharges.



I've been on aircraft (747) and did not make it in time to end of runway in time for departure and had to comeback to spend the night.
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Pihero
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 8:17 pm

Quoting sunrisevalley (Reply 102):
How about some CASK's for a selection of carriers? Some appropriate number based comparisons would be useful rather than sweeping rhetorical statements. Does anyone know the CASK spread between EasyJet and BA short haul as an example?

I certainly agree with you on the importance of facts vs pure ignorant *rhetorical statements*, as you rightly say.
This is a year-old study :
Airline Costs Comparison
in which one sees the importance of costs, but also the unit revenues per ASK.

As in the study, the author(s) haven't managed to separate the cargo business for AF-KLM, the latest numbers are as follows :
- AF- KL CASK = 6.65 € cents ; RASK = 7.01
- Transavia CASK = 4.80 € cents

On these graphs, one can easily see that the AF-KL demise is, to say the least, quite premature and progress is being made : AF-KL have now achieved lower costs than LH, but still not as good yields, but they are coming closer.
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 8:57 pm

Quoting anstar (Reply 103):
Well LHR has HUGE demand TATL. I'd say more than FRA, CDG and AMS combined. Just look at how many flights run JFK to LHR as an example versus CDG-JFK or FRA-JFK for example.

LHR (+LGW) is big, but not quite that big at least to the U.S. See Table 7.


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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 10:20 pm

Wut ... 7,500 job cuts ... that a LOT if true  Wow!
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 10:55 pm

Quoting frigatebird (Reply 106):

Quoting mercure1 (Reply 96):
Personally I see the better model to focus on bigger CDG as the global hub as it much growth opportunity (space, slots, market size) and revert AMS to operation that focus on local Dutch demand and not as much for transit any longer.

That would mean destroying KLM.
AF is nothing anymore without a strong KLM and AMS.
Those times are long gone, without KLM as it is now, AF and only CDG as a global hub wont be competing with LH and BA anymore. Its the most stupid thing you could do. No sane person would do that.
But of course no sane people would let AF slide down so far either, so I guess it is possible in Paris to come up with a disastrous plan like that.
Making KLM a P2P carrier, then it might as well be separated from AF, no need to be together at all then.

A dutch article in the magazine of the academic publishing company Elsevier, states that KLM is still a separate "N.V." within the holding company.
A N.V. is a joint-stock company, a separate business unit which indeed can be separate from the holding.
It will cost a big investment because of all the joint departments within the holding company now, but the article also states
that both Delta and Ethiad have stated interest in KLM. Its certainly not impossible.
KLM is still a "separate company" because it has to have its own dutch aviation bilateral agreements.
It further states that within this N.V. the majority of sales is still in dutch hands via foundations and goverment shares.

[Edited 2014-10-28 16:08:02]
 
hooverman
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 11:06 pm

Quoting Amsterdam (Reply 111):
both Delta and Ethiad have stated interest in KLM.

Source?
 
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 11:08 pm

Quoting Amsterdam (Reply 111):
A dutch article in the magazine of the academic publishing company Elsevier, states that KLM is still a separate "N.V." within the holding company.
A N.V. is a joint-stock company, a separate business unit which indeed can be separate from the holding.
It will cost a big investment because of all the joint departments within the holding company now, but the article also states
that both Delta and Ethiad have stated interest in KLM. Its certainly not impossible.
KLM is still a "separate company" because it has to have its own dutch aviation bilateral agreements.
It further states that within this N.V. the majority of sales is still in dutch hands via foundations and goverment shares.

That's interesting to know. So everything is not lost for KL. If KL was to leave the holding, could it become competitive enough ?
 
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 11:23 pm

Quoting hooverman (Reply 112):

Its in the Elsevier article. It doesnt give its source. It might not even be true, we cant know.
But I cant find a reason why Delta would stand by and let KLM be taken down, when AMS and KLM are important for Delta and Delta is making huge profits for years now and has a very bright outlook, so it has the money.
But still the best option is to stay together with AF and be strong together.
Changes have to be even bigger at AF, but that will get the whole company to strike, and then AF will file for bankruptcy and of course they will make a restart, but the fear is that during the bankruptcy and the restart KLM will get hit hard.

The dismantling of Martinair Cargo and the presented loss figures are also not adding up.
Somethings not correct in that story. The VNV is trying to get the "real" figures.
KLM is not run like it used to be run by the people in charge now.
 
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 11:32 pm

Quoting SpaceshipDC10 (Reply 113):
That's interesting to know. So everything is not lost for KL. If KL was to leave the holding, could it become competitive enough ?

Well the thing is, that KLM needs AF too.
It needs the AF passengers.
So a KLM with lets say Delta as its main share holder, wants to have the codeshares it now has with AF.
Cutting those bonds too will of course be a big blow to the destinations and frequencies served, which means a big blow to the load factors.

So while it is possible technically to separate, doing it has deep consequences, so i wouldnt bet my money on it happening.
 
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 11:38 pm

Quoting Amsterdam (Reply 114):
But I cant find a reason why Delta would stand by and let KLM be taken down

I really don't see DL taking over or change anything that is happening with AF-KLM.
 
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LAXintl
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 11:43 pm

Personally I don't see idea of shifting primary focus for mega CDG hub and shifting KLM to focus mostly on AMS O&D as bad idea.
Its well known 6th freedom traffic tends to yields lower revenue than point to point segments. Let CDG the much larger home market, and already larger hub be the AFKL mega hub and let large airports like AMS, ORY, LYS serve as O&D centers for the group.

Yes it might kill KLM as one might remember it, but KLM is no longer a standalone enterprise and decisions must be made with a broader picture in mind.

Lastly, while nationalist feelings stand in the way, a unified single brand is needed. Today AF and KL compete with each other for average client. Average man likely does not have a clue the airlines are really one corporate enterprise, so I think its time the branding reflect a single enterprise as well.
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hooverman
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RE: AF-KL - News Reports Drastic Actions To Survive

Tue Oct 28, 2014 11:51 pm

Quoting LAXintl (Reply 117):
Yes it might kill KLM as one might remember it, but KLM is no longer a standalone enterprise and decisions must be made with a broader picture in mind.

Would you not kill the profitable part of the company.KLM is doing fine it's AF that has to be fixed. The labour costs are tremendous.
 
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LAXintl
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 12:03 am

Quoting hooverman (Reply 118):
Would you not kill the profitable part of the company.KLM is doing fine it's AF that has to be fixed. The labour costs are tremendous.

Profitable, not profitable is very much on how things like accounting are accrued for both revenue and cost.

I think one thing is clear, there is cost savings to be had on both sides. The AF-KL marriage is like the middle stage of US airline merger. There is still lots of overlap and duplication of efforts. Many synergies have not been unlocked.

I'd look at the bigger picture and forget looking at AF or KL standalone. Could be the path forward is growing AF, CDG and concentrating more activity in France while looking to reduce things in Holland.
I think US airline mergers have shown is that too many hubs, too many bases, too many buildings can be bad and great financial success can happen in consolidating them.

Outside looking in, the France market is the one that is significantly larger and the one I would fight for to protect the most. So maybe they will double down on Paris, boost the hub further, move more functions over to France and make the French staff more productive etc..

Lets see. Could be exciting times, but seems to be its time for drastic actions and maybe the BoD is now willing to use the guillotine.
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Amsterdam
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 12:21 am

Quoting LAXintl (Reply 117):
Personally I don't see idea of shifting primary focus for mega CDG hub and shifting KLM to focus mostly on AMS O&D as bad idea.
Its well known 6th freedom traffic tends to yields lower revenue than point to point segments. Let CDG the much larger home market, and already larger hub be the AFKL mega hub and let large airports like AMS, ORY, LYS serve as O&D centers for the group.

See it like this.
Without being a global network airline, KLM cannot sustain most of its routes.
70% of its passengers are transfer passengers.
Losing 70% of pax will meaning losing MORE then 70% of your destinations/frequencies.
This means that AF cannot at all give its customers a network that comes even close to that of LH and BA.
AF will lose a huge amount of passengers too.
In greater China alone AF will lose Hangzhou, Chengdu, Xiamen and Taipei and the frequencies to Beijing, Shanghai and Hong Kong. Thats only greater China.
Its wont be able to compete at all anymore with the other network carriers, if it cant deliver those flights via AFKL.

What you suggest is like LH cutting a huge part of its global network.
AF wont be able to start serving al those destinations from CDG, cause those flights need to be filled with pax from all over europe that fly with KLM.

The only option to destroy KLM, and at the same time dont lose this huge part of the available network, is if the whole KLM europe fleet could be based in CDG in a couple of days time.
So a fusion of CDG and AMS.
Your whole plan only makes sense if AFs europe network grows with exactly the size and destinations and frequencies of KLMs european network. If not, the AF website loses a huge part of its booking options and load factors will drop significantly. And no reason to be a AF frequent flyer anymore if you are not French.

I hope you see what you are saying now.
 
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 12:32 am

Also LAXintl, the US carriers have bases in one country.
The Netherlands whould give up its direct reach to the world as nation if it loses the global network at its gateway Schiphol.
Not only that, and many tens of thousends of jobs, and many jobs indrectly too, but would also be much less attractive to foreign companies, as AMSs connectability is one of the reasons many companies have european headquarters or large stations in AMS or nearby.
The International Court of Justice maybe wouldnt be based in The Hague without AMS.
Its not like a choice between Detroit and Memphis.

[Edited 2014-10-28 17:32:45]

[Edited 2014-10-28 17:35:16]

[Edited 2014-10-28 17:35:53]
 
Byrdluvs747
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 12:42 am

Quoting LAXintl (Reply 119):
Profitable, not profitable is very much on how things like accounting are accrued for both revenue and cost.

I think one thing is clear, there is cost savings to be had on both sides. The AF-KL marriage is like the middle stage of US airline merger. There is still lots of overlap and duplication of efforts. Many synergies have not been unlocked.

I'd look at the bigger picture and forget looking at AF or KL standalone. Could be the path forward is growing AF, CDG and concentrating more activity in France while looking to reduce things in Holland.
I think US airline mergers have shown is that too many hubs, too many bases, too many buildings can be bad and great financial success can happen in consolidating them.

Outside looking in, the France market is the one that is significantly larger and the one I would fight for to protect the most. So maybe they will double down on Paris, boost the hub further, move more functions over to France and make the French staff more productive etc..

Lets see. Could be exciting times, but seems to be its time for drastic actions and maybe the BoD is now willing to use the guillotine.

Im not the most knowledgable on issues of AF-KL, but your idea seems analogous to cutting off your good leg and hoping the gangrenous leg heals. AF and French work rules seem to be where cuts need to be made.
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Aesma
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 12:45 am

Quoting OO-VEG (Reply 80):
Why do HOP and Transavia simply not fly under the Air France and KLM flag, Transavia with the LCC concept could replace the Cityhopper brand, or be rebranded to KLM economy, it would give a bigger boost and with enough emphasis on a good price it could benefit the whole KLM family as a whole.

I agree that Hop! is a poor name, "Air France régional" would be much better, as for Transavia, I asked around and nobody has even heard of it, there's still time to find a better name, something simpler, neutral, like Air Europa (already taken I know), when talking Transavia people think it's Spanish.
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OO-VEG
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 7:13 am

The news reports have obviously been wrong as stated by several people here already. This mornings figures, a 25% drop in profit for KLM (265mln EUR). Air France reported a loss. The combined profit was has dropped sharply.

Measurements taken: Less investments and speeding up the planns that can lead to a cost-saving.
 
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frigatebird
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 8:20 am

Quoting Amsterdam (Reply 111):
Quoting frigatebird (Reply 106):

Quoting mercure1 (Reply 96):

Please make the effort to quote the original poster. It gives the impression I'm advocating the very things I'm arguing against. Thanks.

Quoting Byrdluvs747 (Reply 122):
Im not the most knowledgable on issues of AF-KL, but your idea seems analogous to cutting off your good leg and hoping the gangrenous leg heals. AF and French work rules seem to be where cuts need to be made.

  Very nice analogy   
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dank
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 8:38 am

I guess what I don't understand in all the discussions of the health of KL and the sickness of AF is what shifting money around for favorable taxes is going on. Given the usage of the Netherlands as a country for tax cutting and with a significantly lower tax burden than France (over 5 actual basis points), is it really clear that KL is truly much more of a money maker than AF and not simply that the company as a whole would favor making it look like KL is quite healthy and AF is not in order to push all the profits to the lower tax region?
 
76er
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 8:45 am

I agree. And for exactly those reasons I propose AFKL moves its HQ to AMS, like so many other large corporations have done.

  

In all seriousness, I do think this whole taxes shifting thing should be made much more transparent. It would remove a lot of animosity between North and South.
 
1400mph
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 9:07 am

Quoting dank (Reply 126):
Quoting 76er (Reply 127):

Does it really matter who is incurring the loss ? The loss is still being made ?
 
TYCOON
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 9:20 am

Thanks dank! Finally a voice of reason... it's the TAXES that incentivizes the Groupe AF-KL to put losses in France and profits in the Netherlands... You pay lower corporate taxes on profits in the Netherlands. It is really as simple as that!! The large (and very profitable) French oil group TOTAL shows ZERO profits in France, only losses, and guess what, it pays no corporate taxes in France due to these losses. Scandalous as it may appear, to the extent the tax laws allow this, it is just intelligent management of the bottom line (so much for those crying poor management at AFKL level.. at least from a fiscal point of view, quite astute in my view, but not original). So I call for a very reasoned and informed HALT to saying the KL is more profitable than AF - it's a load of uninformed garbage written by hysteric a.netters! It is not or at least one cannot arrive at this conclusion just by looking at the books.
US companies (not airlines) can be accused of doing the same: keeping profits off-shore in more tax friendly jurisdictions even though on a consolidated level the group is profitable. They pay next to zero taxes in the US.
An additional point about ME3 carriers, AFKL's weakness is not competing with these airlines as people willing to transfer through Dubai, Doha or Abu Dhabi to go to Asia rather than on direct flights with AFKL are not high yielding traffic. Business and First class passengers will always seek out the direct, fastest route from A to B...
AFKL's problems, as many have correctly pointed out, is how to make its intra-European network profitable. Transavia and Hop! could be a solution... we will have to see.
As an aside, it is interesting to note that Transavia is now advertising on French TV as "la compagnie aérienne low-cost FRANCAISE!"
 
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KarelXWB
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 9:24 am

What we leave behind is not as important as how we've lived.
 
OO-VEG
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 10:17 am

Transavia also reports a drop in profit, and a small drop in the yield (91%). The revenue and operated flights are increasing quite some though. Interesting to see how this will develop now.
 
Tkfan
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RE: AF-KL - News Reports Drastic Actions To Survive

Wed Oct 29, 2014 5:03 pm

Quoting tommy1808 (Reply 81):

I guess your comparisson is not very accurate as Lufthansa has aquired several airlines in that timeframe.
And AFAIK germanwing numbers where not included in the 2007 pax statistics.

Would be interesting to compare Lufthansa only numbers, its own organic growth.

Dont get me wrong I have never flown ryanair before and wont fly them if possible but LCCs in general harmed all legacies including Lufthansa.
 
dank
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RE: AF-KL - News Reports Drastic Actions To Survive

Thu Oct 30, 2014 4:23 am

Quoting 1400mph (Reply 128):
Quoting dank (Reply 126):
Quoting 76er (Reply 127):

Does it really matter who is incurring the loss ? The loss is still being made ?

With regards to the health of the airline, of course not. With regards to the bickering that KL is being hosed by AF and that they are the profitable company that is being destroyed by AF and should leave because they are the profit center... That I think it is very relevant to. The profits and losses by "company" are meaningless, as you said, all that matters is the total loss or profit because it is impossible to determine what the drain is (from us armchair CEOs; obviously the management of the airline knows much better what the true profit centers are).

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