AF To Cut Jobs, Long-haul Fleet And Orders

PanHAM · Tue Oct 06, 2015 1:51 pm

Quoting Amsterdam (Reply 88):
No
The first thing BA would do is kill KLMs presence in the UK.

BA would have their code on each and every KL flight from the British provinces to AMS and onwards. Never understood that the BA(KL alliance or Merger or whatever it would be called did not happen. I think that the Brits were afraid of the KL Managers (duck)

Quoting EC99 (Reply 99):
In my opinion, Air France doesn’t need a state subsidy, they need a American style bankruptcy. The problem appears

France does not have a true chapter 11 and the US does not have the Ecole Nationale

TYCOON · Tue Oct 06, 2015 2:10 pm

Quoting EC99 (Reply 99):
Does any Frenchman know what happens to pension and other obligations AF made to its employees in the event it folds? Does the government pick those up? In the States, when a company is in dire straits (usually bankruptcy) Unions have to balance getting as much as they can without putting the company out of business. If the company folds, the government Pension Benefit Guarantee Corporation (PBGC) insures that all employees get a portion of the promised pension but it is usually only a limited amount and the PBGC does not guarantee the retiree healthcare benefit or other plan benefits

I am not a Frenchman, but pensions are state funded in France, so not a liability of the company. Workers' pensions are safe from any corporate bankruptcy.
In general, a French company must indemnify a worker who is laid-off a sum that is determined by the number of years s/he has been working with the company. This severance payment is usually spelled out in the collective bargaining agreement each economic sector has. It varies between segments.
Despite what one poster said on this thread or the other AF thread, unemployment insurance is very generous in France compared to other countries, namely the US and the UK.
Unemployment benefits last for 23 months and are near to the average monthly salary that person had been earning. That sum is capped however, but the cap is quite high - a little under 6000 euros per month I believe.

PanHAM · Tue Oct 06, 2015 2:43 pm

Quoting TYCOON (Reply 101):
I am not a Frenchman, but pensions are state funded in France, so not a liability of the company. Workers' pensions are safe

The state funded pensions are safe in France, in Germany as well. Large companies like AF and LH offer additional pensions which are secured by a Special funds as well. If, in case of bankcruptcy that insurance would pay the full amounts is doubtful.

Still, workers are generally better secured in Europe than in the US.

aryonoco · Tue Oct 06, 2015 3:07 pm

Quoting EC99 (Reply 99):

In my opinion, Air France doesn’t need a state subsidy, they need a American style bankruptcy.

Well thankfully, the rest of the world still thinks contracts should be honoured at all times, not only when the sun is shining. You shouldn't shout yellow and ask for cuddles and hugs the moment the going gets tough!

KarelXWB · Tue Oct 06, 2015 3:12 pm

Quoting Stitch (Reply 34):
Perhaps KLM will end up taking the 787s AF cancels/defers in place of whatever A350s they were tasked to get?

Air France can use the A350s for 77E replacement during the next decade.

ec99 · Tue Oct 06, 2015 3:48 pm

Quoting aryonoco (Reply 103):
Well thankfully, the rest of the world still thinks contracts should be honoured at all times, not only when the sun is shining. You shouldn't shout yellow and ask for cuddles and hugs the moment the going gets tough!

Much of the continent does lacks a bankruptcy mechanism and many believe it puts a real drag on entrepreneurship and is one of the reason France/Germany have not been the birthplace of any of the giant tech companies like Amazon, Google, Yahoo, Facebook etc… Moreover, you comment seems ignorantly anti-American as the idea of bankruptcy is actually a pre-revolution English concept and most of the English speaking world has a similar legal framework calling going into administration. For more info based on your flag - https://en.wikipedia.org/wiki/Australian_insolvency_law#Voluntary_administration
https://en.wikipedia.org/wiki/Administration_(law)

Also, as much as it would be nice if everyone honored the term of a contract, there is the old legal saying you can’t extract blood from a stone. If AF can’t operate profitably with its current cost structure, the options are shutting down or bankruptcy restructuring. Either way, they won’t be honoring the contracts they made with their employees.

ec99 · Tue Oct 06, 2015 3:51 pm

Quoting TYCOON (Reply 101):
I am not a Frenchman, but pensions are state funded in France, so not a liability of the company. Workers' pensions are safe from any corporate bankruptcy.
In general, a French company must indemnify a worker who is laid-off a sum that is determined by the number of years s/he has been working with the company. This severance payment is usually spelled out in the collective bargaining agreement each economic sector has. It varies between segments.
Despite what one poster said on this thread or the other AF thread, unemployment insurance is very generous in France compared to other countries, namely the US and the UK.
Unemployment benefits last for 23 months and are near to the average monthly salary that person had been earning. That sum is capped however, but the cap is quite high - a little under 6000 euros per month I believe.

Quoting PanHAM (Reply 102):
The state funded pensions are safe in France, in Germany as well. Large companies like AF and LH offer additional pensions which are secured by a Special funds as well. If, in case of bankcruptcy that insurance would pay the full amounts is doubtful.

Thanks Tycoon and PanHam, you both answered my question. That explanation really cleared up my misunderstandings about the protections afforded the AF employees.

B777LRF · Tue Oct 06, 2015 4:31 pm

Quoting TYCOON (Reply 11):
I'm wondering what would prevent KL to start offering international flights out of Paris, other than to AMS...

Legally, nothing. Politically, it's a nightmare.

aryonoco · Tue Oct 06, 2015 4:34 pm

Quoting EC99 (Reply 105):
Moreover, you comment seems ignorantly anti-American as the idea of bankruptcy is actually a pre-revolution English concept

Well, I didn't mean to sound anti-American, and my apologies if I did. It was meant as a tongue-in-cheek comment to point out the uniqueness of the US Chapter 11 restructuring process.

And of course the concept of bankruptcy is well established in common law countries, it's just that in most places, bankruptcy means liquidation, whereas in the US, Chapter 11 gives it a completely different meaning.

Now as to the merits of having a Chapter 11 style administrative system, a lot has been written on the subject by those far more knowledgeable than me, and as it's off topic, I shall refrain from delving further into the matter.

wingman · Tue Oct 06, 2015 6:15 pm

Those guys are in pretty good shape for fat cats. I don't think many US CEOs could climb a fence like that but I'd pay to watch Trump make an attempt, climbing over a wall being chased by Mexican and Canadian man rapists.

lightsaber · Tue Oct 06, 2015 6:15 pm

Quoting EC99 (Reply 99):

Sadly, AF needs CH11. Or EY. With 300.2 million share at 6.16 euro, that is only a 1.85 billion euro concern.

Which is 5% of the corporate value of DL!

Note, that is AF/KLM combined!

Is there an estimate on the value of AF?

Lightsaber

Quoting aryonoco (Reply 108):

Please understand the owners of a CH11 lose everything. It is the recognition that a going concern is worth more than a pure liquidation.

Best for the employees if it remains a going concern.

Lightsaber

slcdeltarumd11 · Tue Oct 06, 2015 6:24 pm

Seems like they can use skyteam partners and still keep a pretty good network for their flyers. Only fly the profitable and network important routes. For example Delta can provide service to the US so maybe they dont need such a large order. Just because Delta can make money on a route doesnt mean AF is etc. I think slimming down is smart and necessary for AF

delimit · Tue Oct 06, 2015 6:46 pm

Quoting factsonly (Reply 16):
We need to get the facts straight here, there are two companies:

- AF company based in Paris
- KL company based in Amsterdam

= under one umbrella organisation - AF/KL Mother Company.

The current labour issues relate to the AF company only.

The KL company has all its labour agreements in place and would only be impacted if AF flights were to stop.

This is apart from KL staff expressing dismay at what they see happening in the AF company.

AF company restructuring is reaching the pinnacle of its labour negotiations, with AF management calling the unions bluff and the unions responding. It is going to be make or brake for both sides and it seems the unions made a political booboo today, which may cost them dearly in public/political support.

What a great post. The signal to noise ratio in this thread is terrible.

Quoting lightsaber (Reply 110):
Sadly, AF needs CH11.

AF needs concessions from labor. Chapter 11 would be one avenue for that, but it should be noted that Delta, one of the great turnaround stories in aviation, received its labor concessions outside of chapter 11.

SCQ83 · Tue Oct 06, 2015 7:36 pm

Quoting factsonly (Reply 97):
Be interested to know the logic behind this statement, as AMS already serves as a 3rd runway for not just LHR, but all of BRITAIN to

I don't see it that way. KLM offers many routes that are also flown by Iberia and BA. For instance, Chengdu is flown by both KL and BA. Would it make any sense to keep both if merged? Cali, Colombia is also flown by KLM and IB.

Then KLM is way bigger than EI.

So if KLM becomes part of IAG there would be some major route restructuring for KLM. What would they become specialised at? Asia? LHR will still get the "prime" London routes to Asia. UK-AMS-Asia has to compete with the ME3 1-stop... ups. Major issue.

EI fits perfectly in its aim to add more flights to the US, the strength of BA, and particularly in the US-UK non London routes. Also EI is not about moving away routes from LHR, it is just a way to add more frequencies to places like BOS or JFK with IAG.

AirGAbon · Tue Oct 06, 2015 9:37 pm

I read that despite all this situation, AF is planning to be profitable in 2015 (150M €)!

lightsaber · Wed Oct 07, 2015 12:08 am

Quoting AirGabon (Reply 114):

Link please. They list over 600 million euro in the first half and now have labor strife.

Lightsaber

factsonly · Wed Oct 07, 2015 6:10 am

Quoting SCQ83 (Reply 113):
I don't see it that way. KLM offers many routes that are also flown by Iberia and BA. For instance, Chengdu is flown by both KL and BA. Would it make any sense to keep both if merged? Cali, Colombia is also flown by KLM and IB.

Then KLM is way bigger than EI.

So if KLM becomes part of IAG there would be some major route restructuring for KLM. What would they become specialised at? Asia? LHR will still get the "prime" London routes to Asia. UK-AMS-Asia has to compete with the ME3 1-stop... ups. Major issue.

EI fits perfectly in its aim to add more flights to the US, the strength of BA, and particularly in the US-UK non London routes. Also EI is not about moving away routes from LHR, it is just a way to add more frequencies to places like BOS or JFK with IAG.

Your explanation gives the impression that you are measuring with two standards.

For, as you say, EI (via DUB) only adds frequencies to existing LHR destinations in North America, so EI adds nothing new.

While contrary to what you state, KLM actually adds a lot of unique destinations not served by LHR, such as XMN, HGH, TPE, MNL, CGK, FUK (until 1/16), EBB, DAR, KGL, JRO, PBM, CUR, AUA, BON, LIM (BA in 2016), PDX, and in Europe loads of smaller stations such as AES, TRD, LPI, KRS, etc....

SCQ83 · Wed Oct 07, 2015 6:22 am

Quoting factsonly (Reply 116):
While contrary to what you state, KLM actually adds a lot of unique destinations not served by LHR, such as XMN, HGH, TPE, MNL, CGK, FUK (until 1/16), EBB, DAR, KGL, JRO, PBM, CUR, AUA, BON, LIM (BA in 2016), PDX, and in Europe loads of smaller stations such as AES, TRD, LPI, KRS, etc....

Most of those routes are thin routes with likely trash yields (MNL, XMN, etc; KLM is cancelling FUK soon) and heavily threatened by the ME3. What would you do with the "trunk" routes that are duplicated or even triplicated? BA for instance has cancelled EBB not long ago. It is funny you mention LIM and "forget" about IB. A route like PDX could be served by BA soon, so in that case BA would not route prime passengers LHR-AMS-PDX, so no need for KLM flying PDX.

Also another issue with AMS is that it is too close to LHR for Asia. So if IAG wants to serve Germany-Asia (for instance), AMS is still a backtrack.

If IAG needs to add another gateway to Asia, Finnair would be much more interesting. It is a smaller airline with much less duplication of routes with BA and IB, geographically it is perfect (no backtrack to Asia from anywhere in Europe) and it could help IAG to grow in Eastern and Northern Europe.

factsonly · Wed Oct 07, 2015 7:00 am

Quoting SCQ83 (Reply 117):
Most of those routes are thin routes with likely trash yields (MNL, XMN, etc; KLM is cancelling FUK soon) and heavily threatened by the ME3. What would you do with the "trunk" routes that are duplicated or even triplicated?

Quoting SCQ83 (Reply 117):
Also another issue with AMS is that it is too close to LHR for Asia. So if IAG wants to serve Germany-Asia (for instance), AMS is still a backtrack.

1. You conveniently disregard the benefit of unique destinations, as these do not support your argument.
2. KLM has a higher overall load factor than BA, so these unique destinations are adding passengers, though you believe this to be at a lower yield (unsupported argument).
3. KLM has its own volume of pax at present, so a cooperation with IAG (possibly more demand) would result in higher yields across its network.
4. KLM selects unique destinations to stay out of ME3 competition. Regretfully the current softness of the YEN, means FUK failed. The overall strategy is working.
5. Duplication of trunk routes is a non-issue as KLM serves a large European market and has its own traffic to fill these routes.
6. The geographic position of AMS versus DUB in relation to UK - Asia and UK-North America is pretty well identical, so another non-issue.
7. KLM serves a lot of Germany-Asia traffic and does so better than either BA or IB.

Finally, I am convinced that IAG will be looking for a match that serves all of the UK and Spanish markets and not just LHR.

I still do not accept your view that EI / DUB is a bigger benefit to IAG in the overall network sense, than KLM could be.

AirGAbon · Wed Oct 07, 2015 7:12 am

There are many articles (mostly in French, in business magazines and newspapers). This one is dated 24th September, in French, "La Tribune" a very serious economic journal.

This objective has been again confirmed yesterday by AF management, despite the pathetic events last Monday. For the moment the airline operations continue "as normal" and no strike is in the air... (for the moment!)

Yesterday there was a debate on French TV with a captain of the pilots union (the infamous SNPL), surprisingly they seem to start to understand how the situation is serious and to recognize that there is always room for discussion to fly more hours (AF management still push for the objective of +100 hours per year).

Article of La Tribune (24th September 2015), in French:
http://www.latribune.fr/entreprises-...ts-qui-posent-probleme-508114.html

To summarize:

"Air France will generate a positive operating profit in 2015 after six years of consecutive losses (a record in Europe) which resulted in cumulative losses exceeding 2.5 billion euros. Not surprising , the company would have been profitable last year without 15 days of pilot strike in September 2014 .
Nevertheless . This recovery , which remains fragile regarding the level of debt and equity, compared to competitors ."

"The improvement in Air France's accounts is expected to continue next year. With the current oil price, which are expected to be maintained, Air France-KLM in 2016 could benefit from a reduction in its fuel bill by about € 500 million says Yan Derocles , analyst at Oddo Securities."

"Especially he said, it is unlikely that this decrease is offset by a decline in unit revenues as strong as 2015 if market conditions do not deteriorate."

AirGAbon · Wed Oct 07, 2015 7:14 am

Quoting lightsaber (Reply 115):
Link please. They list over 600 million euro in the first half and now have labor strife.

Lightsaber

There are many articles (mostly in French, in business magazines and newspapers). This one is dated 24th September, in French, "La Tribune" a very serious economic journal.

This objective has been again confirmed yesterday by AF management, despite the pathetic events last Monday. For the moment the airline operations continue "as normal" and no strike is in the air... (for the moment!)

Yesterday there was a debate on French TV with a captain of the pilots union (the infamous SNPL), surprisingly they seem to start to understand how the situation is serious and to recognize that there is always room for discussion to fly more hours (AF management still push for the objective of +100 hours per year).

Article of La Tribune (24th September 2015), in French:
http://www.latribune.fr/entreprises-...ts-qui-posent-probleme-508114.html

To summarize:

"Air France will generate a positive operating profit in 2015 after six years of consecutive losses (a record in Europe) which resulted in cumulative losses exceeding 2.5 billion euros. Not surprising , the company would have been profitable last year without 15 days of pilot strike in September 2014 .
Nevertheless, this recovery, remains fragile regarding the level of debt and equity, compared to competitors ."

"The improvement in Air France's accounts is expected to continue next year. With the current oil price, which are expected to be maintained, Air France-KLM in 2016 could benefit from a reduction in its fuel bill by about € 500 million says Yan Derocles , analyst at Oddo Securities."

"Especially he said, it is unlikely that this decrease is offset by a decline in unit revenues as strong as 2015 if market conditions do not deteriorate."

[Edited 2015-10-07 00:22:57]

lightsaber · Wed Oct 07, 2015 11:32 am

Quoting AirGabon (Reply 119):
"Air France will generate a positive operating profit in 2015 after six years of consecutive losses (a record in Europe) which resulted in cumulative losses exceeding 2.5 billion euros.

Let's be clear, that is an operating profit which is not the same as a profit. I'd love to operate a company without certain expenses, but those expenses are there... I thought we were talking a profit (not operating profit).

When does AF plan to make a profit (including all expenses)? For example, AI considers an operating profit before interest expense on their debt... but since airlines are capital intensive industries, they will always have a tremendous amount of debt, so that shouldn't be excluded. What does AF exclude in their operating profit estimate? Sometimes it is surprising what isn't included as part of operating expenses.

I'm happy their financial situation is improving, but it isn't that rosy. While I expect oil to be low for a few year, I also expect the competition to get more brutal and thus AF must lower their costs.

For a company only worth 1.8 billion Euros (combined AF/KLM), I wonder what the value of AF alone is...

Lightsaber

ThReaTeN · Wed Oct 07, 2015 12:51 pm

Am I correct in interpreting these plans as affecting only AF's fleet and not KLM's in any way? If so, all I can say is "good riddance". They should dismantle the entire company while they're at it and restore KLM as an independent entity.

Stitch · Wed Oct 07, 2015 1:39 pm

Quoting ThReaTeN (Reply 122):
Am I correct in interpreting these plans as affecting only AF's fleet and not KLM's in any way?

Yes. KL is taking delivery of their current 787s (which are leased from AerCap) and have not indicated they intend to cancel or defer any future deliveries.

It's possible we could see KL take the 787s planned for AF - with the equal possibility AF would then take A350s planned for KL - so KL would operate a 777/787 future widebody fleet and AF would operate a 777/A350 future widebody fleet.

r2rho · Wed Oct 07, 2015 2:21 pm

Quoting AirGabon (Reply 119):
"Air France will generate a positive operating profit in 2015 after six years of consecutive losses (a record in Europe) which resulted in cumulative losses exceeding 2.5 billion euros. Not surprising , the company would have been profitable last year without 15 days of pilot strike in September 2014 .

Well, that is one good news at least. It means the actual flying business makes money. It is thus debt which is making the company post losses in the end.

ec99 · Wed Oct 07, 2015 2:28 pm

Quoting ThReaTeN (Reply 122):
They should dismantle the entire company while they're at it and restore KLM as an independent entity.

Quoting lightsaber (Reply 121):
For a company only worth 1.8 billion Euros (combined AF/KLM), I wonder what the value of AF alone is...

As has been discussed above, this is one company that ownership doesn’t plan to split up. But, as Lightsaber asks, what is the value of AF alone?

With the small market cap of 1.85 billion (small relative to the size of operation), it does make me wonder if there is a chance another company would be willing to come in and buy the whole operation. The main impediment to this outcome is that the French government likely has enough shares to veto any sale. http://www.wsj.com/articles/french-g...power-at-air-france-klm-1431097199

For the French government to approve a sale, I envision someone coming in, buying up the operation, spinning off KLM, hopefully for more than 1.85 billion dollars, and then selling Air France back to a French company if possible. However, if it remains unprofitable perhaps it would basically be given back to a French company with significant government ownership/involvement.

I am the first to admit, the idea of a sale and breakup seems farfetched now. However, at a time when most airlines are making record profits, AF is limping along with only an operating profit. At some point, the good times are going to end (either fuel goes up or global economy slows) and when that happens the French government is going to have to pour money into AF to keep it flying.

breiz · Wed Oct 07, 2015 2:32 pm

Many posts here have been about management versus unions. Bad, old style management against crazy unflexible unions.
The truth, as always, is somewhat in-between.
The management tried to cap loses and align to the cost levels of competition by asking the various parts of the airline to accept 20% increase efficiency (meaning less money, longer working time).
Air France costs are 25% higher than Lufthansa or BA for example.
The achieved results before the last clashes were 22% for ground crew, 20% for cabin crew and 14% for pilots.
So, when some pilots unions refused further improvement and the management went for plan B (as discussed here), the ground and cabin crews felt betrayed.
This plan B caters for many ground and cabin crews to be laid-off, but few pilots.
Prior to the plan B, 4193 ground personnel, 750 PN and 236 pilots have been laid-off. The unbalance is obvious.
That can explain, but not justify in any way, the regretable incidents.

lightsaber · Wed Oct 07, 2015 2:45 pm

Quoting EC99 (Reply 125):

That is worth repeating. This is the good times for airlines. As you noted, it wouldn't take much to undermine that.

Lightsaber

delimit · Wed Oct 07, 2015 2:49 pm

Quoting lightsaber (Reply 127):
hat is worth repeating. This is the good times for airlines. As you noted, it wouldn't take much to undermine that.

LH is not doing all that well either. They are also having labor issues. BA went through similar problems.

This is what market consolidation looks like in Europe. The legacy carriers are dealing with the results of low fare carriers entering their home markets and maturing.

We went through the same process in the US. Chapter 11 facilitated our transition out of it.

ordbosewr · Wed Oct 07, 2015 3:57 pm

Quoting delimit (Reply 128):
We went through the same process in the US. Chapter 11 facilitated our transition out of it.

Don't say this, to many on a.net the US CH 11 process is the worst thing ever.
If I recall it has been compared to many things that are just false and misleading but people use it to distort the facts.

eta unknown · Thu Oct 08, 2015 12:42 am

Surprised to hear about CDG-KIX- being cut. KIX (along with CDG-NRT) is used for NOU connection pax with Aircalin.

Re KLM & AMS-MNL... I thought that route does OK with lots of seaman pax.

ro1960 · Thu Oct 08, 2015 6:19 pm

I don't know if anyone's seen this. A video of de Juniac (AF's CEO) is circulating showing him giving a speech at the "rencontres patronales de Royaumont" in December 2014. De Juniac questions the 35-hour work week, retirement age and child labor! He also quotes QR's CEO on strikes saying it wouldn't be possible in Qatar as they (staff on strike) would have been thrown in jail.

Seems like he had a little too much to drink (speech was after lunch) but it certainly won't revive AF's management's image.

http://www.legrandsoir.info/quand-al...iction-du-travail-des-enfants.html

bennett123 · Thu Oct 08, 2015 6:27 pm

A 35 hour week presumably means lower wages or a higher hourly rate.

The latter would then mean higher prices or a lower ROI or both.

seabosdca · Thu Oct 08, 2015 6:34 pm

Quoting delimit (Reply 128):
This is what market consolidation looks like in Europe. The legacy carriers are dealing with the results of low fare carriers entering their home markets and maturing.

The European legacies don't have a competitive cost base at this point. It took years and a lot of pain (not to mention Chapter 11) for the US carriers to get there.

Quoting bennett123 (Reply 132):
A 35 hour week presumably means lower wages or a higher hourly rate.

35 hours is the current norm in France.

Quoting ro1960 (Reply 131):
He also quotes QR's CEO on strikes saying it wouldn't be possible in Qatar as they (staff on strike) would have been thrown in jail.

Unfortunately this is the place where a whole lot of Western executives would like to end up. Work for lousy wages and under atrocious conditions or get locked up.

Polot · Thu Oct 08, 2015 6:56 pm

Quoting delimit (Reply 128):
This is what market consolidation looks like in Europe. The legacy carriers are dealing with the results of low fare carriers entering their home markets and maturing.

Its not just the low fare carriers (I suspect most of the legacies have been losing money on their European network for probably over 10 years now), but the Euro legacies are seeing what happens when you have cost efficient competition (e.g. ME3, US3) attacking your intercontinental long hauls that you were using to subsidize your European loses.

The US3 were lucky in the sense that it was mostly their domestic operations dragging the company down, so they could refocus on their profitable intercontinental network (i.e. CO converting all 752s for European flights, DL converting 764s from domestic to international) and make the necessary painful cuts to be profitable in the domestic market (one primary lesson they seemed to learn is you don't have to be everything to everyone in the domestic market, and it is ok if you are not the market share leader in a particular market pair).

delimit · Thu Oct 08, 2015 10:51 pm

Quoting Polot (Reply 134):
Its not just the low fare carriers (I suspect most of the legacies have been losing money on their European network for probably over 10 years now), but the Euro legacies are seeing what happens when you have cost efficient competition (e.g. ME3, US3) attacking your intercontinental long hauls that you were using to subsidize your European loses.

I wouldn't really include the US3 in this. All three EU legacies are in JV with their US counterparts. Their cost base is still a drag, but the JVs buffer them from taking a huge hit. The ME3 are definitely a factor though.

Polot · Thu Oct 08, 2015 10:55 pm

Quoting delimit (Reply 135):
I wouldn't really include the US3 in this. All three EU legacies are in JV with their US counterparts. Their cost base is still a drag, but the JVs buffer them from taking a huge hit. The ME3 are definitely a factor though.

They still compete.

UA's SFO-CDG flight, for example, is not operated in partnership with AF and their SFO flight. I said US3 because I was collectively referring to all the Euro legacies and didn't want any confusion. Probably should have said US3 minus JV partner.

delimit · Thu Oct 08, 2015 11:03 pm

Ya sure, but they also benefit in their US counterpart's cost base because of the JV math. Transatlantic isn't nearly as brutal for them as Europe - Asia/Africa

Polot · Thu Oct 08, 2015 11:18 pm

Quoting delimit (Reply 137):
Ya sure, but they also benefit in their US counterpart's cost base because of the JV math. Transatlantic isn't nearly as brutal for them as Europe - Asia/Africa

Yes, it isn't as nearly as brutal as the ME3, but I never claimed they were. Any form of yield depression hurts them hard right now, however, because making sure their international network is profitable is not good enough. Their international network has to be profitable enough to also cover the losses from the European short haul operation. Hence they are now finally starting to seriously address their Euro networks by shifting a lot of flying to low cost subsidiaries etc versus just continuing to make basic cuts such as the quality/quantity of the inflight meal.

The EU3 are doing the same thing as the US3 did, just in a different way. Because they don't have Chap 11 to slash costs, they are just forming new companies/subsidiaries with lower costs and shifting more flying to them at the expense of the legacy company.

[Edited 2015-10-08 16:24:15]

Pihero · Thu Oct 08, 2015 11:36 pm

Quoting ro1960 (Reply 131):
I don't know if anyone's seen this.

A stinkier piece of garbage for an article is very difficult to find.
As for the poster, he either doesn't understand French or the usual anti-management agenda is well on course.

Quoting ro1960 (Reply 131):
De Juniac questions the 35-hour work week, retirement age and child labor! He also quotes QR's CEO on strikes saying it wouldn't be possible in Qatar as they (staff on strike) would have been thrown in jail.

He defends none of those
- the child labor - definition of a child ? - illustrates the changes in regulations
- The 35 hour week doesn't mean a thing any more in our connected world people can work at home with their electronic devices.
- Why the unchanged retirement age when life expectation has increased by some 20 years since ther end of the second WW ?
- The Qatar Awys ceo comment on how strikers would be treated illustrates how the playing ( competitive ) field is unbalanced between the ME3 and the EU airlines.

That's the level of your comment : low.
As to your assessment of Mr J's inebriation, that's even lower. Just reached the gutter.

ro1960 · Fri Oct 09, 2015 7:40 am

Quoting Pihero (Reply 139):

Cher ami, je comprends très bien le français. I was just reporting what the article says. That doesn't mean I agree with it.

At the time I wasn't able to view the video due to limited bandwidth on my smartphone. He does have a few good points, though, about the reality of the market. Yet, people are shocked by this video hence my final comment. I know this from several persons at AF. And this is just a fact not a judgment.

You read "to defend" where I wrote "to question" in my post amongst other misinterpretations and quick judgmental comments.
So please do not draw conclusions from what you're reading between the lines where nothing is written.

ro1960 · Fri Oct 09, 2015 7:42 am

Quoting Pihero (Reply 139):

Cher ami, je comprends très bien le français. I was just reporting what the article says. That doesn't mean I agree with it.

At the time I wasn't able to view the video due to limited bandwidth on my smartphone. He does have a few good points, though, about the reality of the market. Yet, people are shocked by this video hence my final comment. I know this from several persons at AF. And this is just a fact not a judgment.

You read "to defend" where I wrote "to question" in my post amongst other misinterpretations and quick judgmental comments.
So please do not draw conclusions from what you're reading between the lines where nothing is written.

Pihero · Fri Oct 09, 2015 10:37 am

Quoting ro1960 (Reply 140):
At the time I wasn't able to view the video due to limited bandwidth on my smartphone.

People have this idiotic behaviour of reacting before knowing the facts.

Quoting ro1960 (Reply 140):
Yet, people are shocked by this video hence my final commen

You know who these people who publish *the grand soir* are, don't you ?

I have to admit that A.net was the last place I'd have expected to read, find links to revolutionary proletariat cum anarchist /proto marxist litterature :
Click on *Liens* ( links ) on this page :http://www.legrandsoir.info/les-tribunaux-diront-bientot-aux-prolos-d-air-france-le-prix-faramineux-d-une-chemise-de-drh.htmlµ.

So, mon cher ami, if that is your reference, it's no use trying to change what you wrote. It's your right.
An honest attitude would have been to own what you read and commented.

ro1960 · Fri Oct 09, 2015 5:01 pm

Quoting Pihero (Reply 142):

I just found it interesting that this video came out now. It doesn't make me a supporter of this site, of the AF unions or an anti-management person. You're free to think that I am but in no way the rudeness of your post is called for.

What is important is that parties are back at the table of negotiations and let's hope the best compromise will come out of it.

Aesma · Sun Oct 11, 2015 2:45 am

Quoting EC99 (Reply 28):
Perhaps a European labor expert can correct me but I don’t believe these layoffs going to save any money in the short run? How long must AF continue to pay these employees under French labor law? I know the multinational company I worked for in Europe ended up moving operations from a few bases in the continent to Dublin largely based on the ease of adding and reducing employees as needed.

Unemployment protection is an insurance in France. 2,4% is taken on every paycheck and provides money when you find yourself unemployed, for whatever reason. That money doesn't stay in the company so a bankruptcy/liquidation doesn't impact it. The employer pays 4,3% on top.

Quoting PanHAM (Reply 102):
The state funded pensions are safe in France, in Germany as well. Large companies like AF and LH offer additional pensions which are secured by a Special funds as well. If, in case of bankcruptcy that insurance would pay the full amounts is doubtful.

In France pensions and "additional pensions" ("complémentaires" ) are both nationalized systems. Some companies (but probably not AF) have another, private pension on top for top managers (CEOs), to go along with golden parachutes, golden hellos etc., and those would fall under your description. BTW those things rile up a lot of French people every time we learn a CEO is getting them, especially ones that have run the company they managed into the ground, so it would certainly not be smart for AF to have those at the moment.

Quoting seabosdca (Reply 133):
35 hours is the current norm in France.

If by norm you mean the default work week if nothing different is agreed in the company or trade, then yes, if you mean what people actually work, then the average full time employee in France is closer to 39 hours (and I think in Germany it's the opposite).

In my company the work week is 37 hours. However to not have to pay overtime, we get 11 days of "free time" we can use whenever we want. And there is another subtlety (that has screwed me over many times) in that overtime isn't taken into account before 42 hours, instead a counter is incremented, and I have to work less at some point to go back to 0 before the end of the year, to the point I can get mandatory vacation. So only my hours over 42 a week are actually paid, and paid more than regular hours.

bleudefrance · Tue Oct 13, 2015 7:00 pm

What really damaged the AFKL performance in recent years was the AF447 accident.

Before that tragic day occurred, the group had had healthy results, even during the 08 financial crisis, when all the world economy almost collapsed.

The group is still suffering through that terrible accident. They have done a great effort of financial consolidation in recent years but unfortunately the good results have not been achieved yet.

[Edited 2015-10-13 12:03:47]

Polot · Tue Oct 13, 2015 7:23 pm

Quoting bleudefrance (Reply 145):
Before that tragic day occurred, the group had had healthy results, even during the 08 financial crisis, when all the world economy almost collapsed.

The financial crisis didn't really start until September 2008, and they lost money in that quarter and ended up losing money that entire fiscal year (at the time AF/KLM's fiscal year was I believe April-March, not Jan-Dec). The first 9 months of the fiscal year they had a profit. Their financial decline predates AF447 and starts right when you expect it to: the financial crisis.

bleudefrance · Tue Oct 13, 2015 7:52 pm

Quoting Polot (Reply 146):

I may have exaggerated the word "healthy", but the financial results of AFKL in 08 were in line with the airline industry average.

The blue lines are the average profit margins:

In 2009, the financial results of the group sank as the industry was recovering from the financial crisis.

http://centreforaviation.com/analysi...ner-optiions-beyond-skyteam-153960

[Edited 2015-10-13 13:07:00]

Polot · Tue Oct 13, 2015 8:04 pm

Quoting bleudefrance (Reply 147):
In 2009, the financial results of the group sank as the industry was recovering from the financial crisis.

Your chart is only showing full year results at fiscal year end. The fiscal year ending March 2008, which was pre-crisis (again, it was August/September 2008 when the crisis started), AF was profitable. The fiscal year ending March 2009 (which was April 2008-March 2009), which includes the financial collapse/crisis and is before AF447, shows the group in the red.

bleudefrance · Tue Oct 13, 2015 8:09 pm

Quoting Polot (Reply 148):

You're right, I may have exaggerated the word "healthy", but the financial results of AFKL were in line with the airline industry average in 2008.

My point is, before the accident, the group had been in good shape, with almost 1.5 billion in operating profit in 2007.

[Edited 2015-10-13 13:15:32]

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