Air France-KLM Profit Plunges

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KarelXWB
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Air France-KLM Profit Plunges

Fri Jul 24, 2015 8:50 am

Air France-KLM is back in red:

Quote:
Europe’s largest airline by traffic reported on Friday a second-quarter loss of €79 million ($86.7 million), larger than the €11 million it posted last year in the same period, as revenues grew 3%, to €6.64 billion, from €6.45 billion in the second quarter of last year.

Source
http://www.wsj.com/articles/air-fran...e-growth-as-loss-widens-1437714912

Regarding route cutting plans, Air France said the following:

Quote:
De Juniac said he’ll trim available seating in the second half to meet lower demand, with capacity cuts of 14 percent to Japan, 5 percent to Brazil and 6 percent to East Africa. He also plans to reduce spending on administrative costs by another 300 million euros by 2017.

The company had already announced plans to drop four unprofitable destinations including Kuala Lumpur and Stavanger, Norway, from the Air France network, and had said the Dutch unit will pare flights to 10 European cities, as well as locations in Africa, Japan and Brazil, removing a total of 500,000 seats from the network.

Source
http://www.bloomberg.com/news/articl...-seats-routes-after-profit-plunges
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smbukas
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 9:03 am

Quoting KarelXWB (Thread starter):
Dutch unit will pare flights to 10 European cities, as well as locations in Africa, Japan and Brazil, removing a total of 500,000 seats from the network.

KLM will drop 10 European destinations? Wow, thats a lot. Any hints what destinations to be dropped by KLM?
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al2637
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 9:06 am

Doesn't say they will drop 10 cities, just cut capacity.
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factsonly
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 10:21 am

Quoting smbukas (Reply 1):
KLM will drop 10 European destinations? Wow, thats a lot. Any hints what destinations to be dropped by KLM?

It is not as drastic as that.

It has mostly to do with easyJet's new base of 5 aircraft at AMS and the new EZY routes impacting KL's yield.
So mostly winter frequency reductions in response to EZY- several are not even new, but standard Winter reductions:

examples:

- AMS-HAM from 5x/day to 4x/day - easyJet is on the route since W14
- AMS-VIE from 4x/day to 3x/day - easyJet will enter the market Dec 2015
- AMS-LYS from 4x/day to 3x/day - easyJet will enter market Dec 2015

In addition KLM will operate new winter routes as well:

- AMS-KRK
- AMS-BHD
- AMS-MPL
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bgm
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 11:27 am

Here's a novel idea, AF/KLM: how about allowing one way fares that are 50% the cost of the return fare, like most airlines do now in the 21st century...

With fuel very cheap now, and yet they are still bleeding money, I shudder to think what their results will be once oil goes back up again.  Wow!
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enilria
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 11:44 am

You can see how they are dropping capacity to India and the Middle East, so that must be where the losses are.   LOL.

I don't see too much ME3 influence in the capacity changes.
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al2637
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 12:00 pm

Quoting bgm (Reply 4):
Here's a novel idea, AF/KLM: how about allowing one way fares that are 50% the cost of the return fare

They'd lose a fortune in revenue if they did this. The reason airlines do this is to segment the market, so they can charge a higher fare for a business traveller than a leisure traveller (i.e. advance purchase, length of stay, saturday night stay etc)
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anstar
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 12:22 pm

Quoting bgm (Reply 4):
Here's a novel idea, AF/KLM: how about allowing one way fares that are 50% the cost of the return fare, like most airlines do now in the 21st century...

Agreed

Quoting al2637 (Reply 6):
They'd lose a fortune in revenue if they did this. The reason airlines do this is to segment the market, so they can charge a higher fare for a business traveller than a leisure traveller (i.e. advance purchase, length of stay, saturday night stay etc)

BA seem to be able to make it work and they are one of the more profitable european airlines.
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skipness1E
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 12:39 pm

Quoting al2637 (Reply 6):
They'd lose a fortune in revenue if they did this. The reason airlines do this is to segment the market, so they can charge a higher fare for a business traveller than a leisure traveller (i.e. advance purchase, length of stay, saturday night stay etc)

Works rather well for BA, that's why they get my business, the equivalent AF/KL is often hunderds more.
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al2637
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 1:50 pm

Since when do BA do one way pricing?

Just checked:

LHR-HKG roundtrip - 1057 per direction

LHR-HKG one-way - 1469 per direction

Anyway, that's off topic  
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bgm
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 1:54 pm

Quoting al2637 (Reply 9):
Since when do BA do one way pricing?

Apologies, I should have specified intra-Europe/shorthaul flights.  
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Revelation
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 1:54 pm

Where's all the posts saying "they just need to compete"? Seems to be what a.net fans say about the US3. Of course the US3 are all announcing huge profits. Strange thing, a link between lots of competition and big losses. Something companies should try to avoid, no?
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Hywel
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 1:55 pm

Quoting al2637 (Reply 9):
Since when do BA do one way pricing?

We're talking about short haul only.
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Polot
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 2:18 pm

Quoting Revelation (Reply 11):
Where's all the posts saying "they just need to compete"? Seems to be what a.net fans say about the US3. Of course the US3 are all announcing huge profits. Strange thing, a link between lots of competition and big losses. Something companies should try to avoid, no?

Obviously AF/KLM just need to up their service. That will solve all their problems. Disgusting how everyone in Europe is putting up with this trashy, loss making operation- that is what Americans carriers do not the Euro ones. I say let AF/KL fail.







  (Because I know there would be at least one person who thinks I'm serious)
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ytz
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 2:21 pm

Quoting enilria (Reply 5):
I don't see too much ME3 influence in the capacity changes.

Exactly.

But the problem for DL is that AF/KL doesn't have the funds to grow in India either, now that they have a fight on their home front. And now that the ME3 are flying directly to the US, that all but guarantees that the DL-AF/KL JV will be at the bottom of the list in the North America-India market. Meanwhile, thanks to BA, the AA-BA JV is quite strong. And AC and UA aren't in bad spots either, thanks to LH growing in India.

Maybe DL and AF/KL will finally find an Indian airline to partner with....
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enilria
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 4:39 pm

Quoting YTZ (Reply 14):
Quoting enilria (Reply 5):
I don't see too much ME3 influence in the capacity changes.

Exactly.

But the problem for DL is that AF/KL doesn't have the funds to grow in India either, now that they have a fight on their home front. And now that the ME3 are flying directly to the US, that all but guarantees that the DL-AF/KL JV will be at the bottom of the list in the North America-India market. Meanwhile, thanks to BA, the AA-BA JV is quite strong. And AC and UA aren't in bad spots either, thanks to LH growing in India.

Maybe DL and AF/KL will finally find an Indian airline to partner with....

To me the problem here isn't really about the service from the USA to India as much as it is about the service from DXB to India. EK has something like 17 destinations in India. That is something that has occurred as a result of the India-UAE bilateral which is beyond the purview of the USA. With that network, EK is effectively the Indian national carrier.

Much like any country many people are not really just going to JFK or BOM or PVG. Many are really going onward into the interior of the county. Even if they bought a ticket to one of those, there is a good chance they have a second ticket onward from there.

The USA carriers don't even want to fly non-stop to India from the USA. They clearly want to use the partner hubs in Europe which only really serve DEL and BOM. So from even a big market like MIA, it's MIA-LHR-BOM-Interline to the interior. That's a double connect with an interline which people avoid like the plague in major markets. From an interior point without transatlantic service it's a triple connect with an interline which is almost unsellable. EK can offer MIA-DXB-Interior India with a single online connect if they add MIA. Even if they fly FLL-(B6/EK)-BOS-DXB-Interior India all on the EK code it's still superior to the US3 who only offer an interline connect on the final leg.
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YYZAMS
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 5:35 pm

Just saw that AS made a billion this quarter and baffles me why KLM isn't making money. Maybe it is the French connection.
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MaverickM11
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 6:16 pm

Quoting enilria (Reply 5):
You can see how they are dropping capacity to India and the Middle East, so that must be where the losses are.  LOL.

The ME3 have zapped anything that doesn't have a major business component, which is why EU carriers struggle in Southeast Asia. The yields to India and the ME are comparatively sky high.

Quoting Revelation (Reply 11):
Where's all the posts saying "they just need to compete"?

I think it goes without saying that AF/KL need to focus on a MORE FABULOUS product in order to compete.

Quoting YYZAMS (Reply 16):
Just saw that AS made a billion this quarter and baffles me why KLM isn't making money.

AS' product is just that much better than AF 
I don't take responsibility at all
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TWA85
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 6:52 pm

In light of the AF/KLM struggles is there an opportunity for IAG to capitalize on them by expanding operations in Amsterdam and Paris via VY and EC?
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Planeflyer
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 7:01 pm

ME3 + terrible structural economic issues = lowering many planes
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YYZAMS
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 7:04 pm

Quoting YYZAMS (Reply 16):

Meant to write AA not AS.
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kdhurst380
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 7:25 pm

I've flown with both Air France & KLM, I wouldn't go near Air France again with a barge pole, awful crew and service. KLM I found to be good, friendly crew and decent enough, but they never seem to be particularly cheap.

I agree with other posters here regarding pricing, it's an archaic system, I often purchase one way tickets on return trips and mix airlines to get the best possible pricing in either direction.

Got to be competitive, with Ryanair setting up shop at Amsterdam, they probably want to up their game.
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zkojq
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 8:13 pm

21 replies and noone has blamed the losses on AF's A380s? What's happening to you a.net?
First to fly the 787-9
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330lover
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 8:27 pm

Quoting ZKOJQ (Reply 22):
21 replies and noone has blamed the losses on AF's A380s? What's happening to you a.net?

We finally realised that the A380 could be a good, reliable, lucrative plane in some cases  

But where are those who suggest saving money by not washing the planes?

Quoting kdhurst380 (Reply 21):
I wouldn't go near Air France again with a barge pole, awful crew and service. KLM I found to be good, friendly crew

I just have the opposite. Just a couple of (long haul) flights on AF, but they were miles ahead of KL in my opinion.
But 'les goûts et les couleurs ne se discutent pas'.
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enilria
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 8:38 pm

Quoting MaverickM11 (Reply 17):

Quoting enilria (Reply 5):
You can see how they are dropping capacity to India and the Middle East, so that must be where the losses are.  LOL.

The ME3 have zapped anything that doesn't have a major business component, which is why EU carriers struggle in Southeast Asia. The yields to India and the ME are comparatively sky high.

I was being sarcastic. Their route drops have nothing to do geographically with the ME3.
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MaverickM11
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 9:23 pm

Quoting YYZAMS (Reply 20):
Meant to write AA not AS.

Same same. AA's product is definitely better than AF 
Quoting enilria (Reply 24):
I was being sarcastic. Their route drops have nothing to do geographically with the ME3.

I think KUL absolutely had to do with the ME3
I don't take responsibility at all
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YYZAMS
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 9:41 pm

Quoting kdhurst380 (Reply 21):

Got to be competitive, with Ryanair setting up shop at Amsterdam, they probably want to up their game

Don't you mean easyJet?
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kdhurst380
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 10:28 pm

Quoting YYZAMS (Reply 26):
Don't you mean easyJet?

I do not. easyJet have been operating out of AMS for years. Ryanair have obtained slots, I believe, so we'll see what comes of that. With their new strategy of going to more centrally located airports, I think the expensive airlines should be worried.

Quoting 330lover (Reply 23):
I just have the opposite. Just a couple of (long haul) flights on AF, but they were miles ahead of KL in my opinion.
But 'les goûts et les couleurs ne se discutent pas'.

I found they were giving a superior service to those passengers who spoke French, my native language is English and I otherwise only speak patchy Spanish and a few French pleasantries, nothing conversational though. Oh well, I vote with my wallet!

[Edited 2015-07-24 15:32:38]
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TC957
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RE: Air France-KLM Profit Plunges

Fri Jul 24, 2015 10:50 pm

Here a suggestion to KL - between 15.50 and 17.35 KL has 5 flights to LHR - surely one of those can go and they can sell the precious LHR slots.
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col
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RE: Air France-KLM Profit Plunges

Sat Jul 25, 2015 3:07 am

Sad to see AF leave KUL......NOT. Terrible planes and service sucks big style.
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gkirk
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RE: Air France-KLM Profit Plunges

Sat Jul 25, 2015 6:49 am

Quoting YYZAMS (Reply 26):

Ryanair are expected to open an AMS base as well...
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anstar
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RE: Air France-KLM Profit Plunges

Sat Jul 25, 2015 7:04 am

Quoting TC957 (Reply 28):
Here a suggestion to KL - between 15.50 and 17.35 KL has 5 flights to LHR - surely one of those can go and they can sell the precious LHR slots.

For a short term gain? I can't see them getting rid of those slots. Even though they are operated by cityhopper they are usually full.

AF/KL have bigger underlying issues like poor crew utilisation. The EU rules are 900 hours and with the new EASA rules coming into effect form November they can work even more. I believe they average around 600 hours currently.
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tortugamon
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RE: Air France-KLM Profit Plunges

Sat Jul 25, 2015 7:09 pm

Quoting enilria (Reply 5):
You can see how they are dropping capacity to India and the Middle East, so that must be where the losses are.  LOL.
I don't see too much ME3 influence in the capacity changes.

EK flies LYS and VIE and those are two of the routes they are reducing. I wouldn't rule out some of ME3 involvement on these decisions.

tortugamon
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anstar
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RE: Air France-KLM Profit Plunges

Sun Jul 26, 2015 6:42 am

Looks like Lufthansa is moving to one way pricing on shorthaul from Sep/Oct this year. I presume this only puts more pressure on AF/KL to have more transparent oneway pricing on shorthaul.
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