AIR FRANCE,
A GLOBAL LEADER IN AIR TRANSPORT
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
1/32
AIR FRANCE KLM: The Birth of an Airline Group
Key Dates in the AIR FRANCE KLM Merger
•
30 September 2003: Air France and KLM officially announce their merger through Air
France’s friendly public exchange offer for KLM.
•
11 February 2004: approval received from the European and US anti-trust authorities.
•
29 March 2004: go-ahead received from the Commission des Participations et des
Transferts for equity interests and transfers.
•
5 April 2004: Exchange offering launched on KLM securities.
•
5 May 2004: launch of the new company on the Paris, Amsterdam and New York
stock exchanges.
•
15 September 2004: holding company set up.
•
22 February 2005: AIR FRANCE KLM named Airline of the Year by Air Transport
World Magazine
•
23 March 2005: AIR FRANCE KLM launches its joint frequent flyer program, Flying
Blue, replacing Air France’s Fréquence Plus and KLM’s Flying Dutchman programs.
Some Key Figures (2005-06)
•
World’s leading airline group in terms of turnover
•
Europe’s leading airline group in terms of market share
•
World’s leading airline group for freight transported (revenue tonne-kilometres)
•
21.04 bn€ in revenues (+10%)
•
102,000 employees
•
70 million passengers
•
565 aircraft in operation
•
225 destinations including 110 long-haul and 125 medium-haul
Breakdown by sector of activity:
•
Passengers 79%,
•
Cargo 14%,
•
Maintenance 4%
•
Other activities: 3%
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
2/32
Air France and KLM, two complementary airlines
Both of the companies have three core businesses:
•
passenger,
•
cargo
•
maintenance.
In each business, their strengths dovetail effectively.
With regard to passenger transport, the two companies have developed a common strategy
based on efficient hubs in Paris and Amsterdam, which have enabled them to build up major
market shares in Northern Europe for KLM and in Southern Europe for Air France. On the
European markets, the two companies are able to combine their commercial positions and
become even more competitive. The two airlines also offer complementary long-haul
services. Only a third are common destinations with high volumes of traffic, justifying the
presence of both carriers. The new group covers a total of 225 destinations around the world,
operating out of two of the most efficient hubs in Europe, Paris-Charles-de-Gaulle and
Amsterdam-Schiphol.
Implementing Significant Synergies
The synergies already identified are scheduled to gain momentum and have a positive
impact on the Group’s consolidated operating profit of 670 million euros in 2008-09. The
synergies are to be achieved through optimized networks, improved deployment of
passenger and cargo activity, and an expanded maintenance offering together with cost
savings in supplies, sales distribution and Information Technology.
Air France and KLM passengers are already able to benefit from coordinated schedules
and services throughout their entire short-, medium- and long-haul networks. Flights
between Paris and Amsterdam will be regular and frequent to increase the possibilities of
connecting flights to the entire world via the hubs at Paris-Charles de Gaulle 2 or Schiphol.
KLM flights are, along with Air France flights, handled at Terminal 2F at Paris -Charles de
Gaulle. In Amsterdam, both airlines’ flights also leave from the same boarding area.
Air France and KLM have stepped up services between Amsterdam and French regional
airports.
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
3/32
For the first time, two national airlines’ world networks can be combined, forming a
vast network organized around the two major hubs of Amsterdam-Schiphol and ParisCDG. This initiative will be very attractive for passengers who need to travel via a hub
to reach their final destination. When they organize their trip to a distant destination
served by Air France and KLM, they can benefit from two different schedules on the
same day, on both the outgoing and return legs, and will be able to combine a trip via
Amsterdam with one via Paris.
The AIR FRANCE KLM group is therefore bringing to bear the tremendous power of its
enhanced combined offering for the benefit of its most demanding passengers. These
customers will be able to organize their trips to suit their schedules, at the most attractive
available fares, based on the addition of two half round-trip tickets. Members of the Flying
Blue frequent flyer programmes are able to earn Miles and claim awards on all the two
airlines’ routes.
By pooling their strengths in the cargo sector, Air France and KLM have become the biggest
nonintegrator operator, with a combined turnover of 2.9 billion euros. In the field of aircraft
maintenance, the merger has given rise to one of the world’s leading suppliers of
maintenance services, with a turnover of 896 million euros generated by third-party
customers.
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
4/32
Air France Today
The Air France Group’s staff count is 71,600 (AIR FRANCE KLM Group’s total workforce:
102,000).
Air transport (passengers and freight) is organized around three hubs:
•
The Paris-CDG hub provides the link between the medium-haul network and the
long-haul network;
•
Paris-Orly, the second hub in the Paris region services the domestic market,
•
Lyon Saint-Exupéry provides European trans-regional links.
Maintenance revolves around the following industrial bases:
•
Paris-Charles-de-Gaulle: on-line maintenance
•
Orly: major overhauls of wide-bodied aircraft, on-line maintenance
•
Toulouse Blagnac: large-scale maintenance of small-range aircraft
•
Le Bourget
•
Villeneuve-le-Roi
In June 2000, Air France and Delta, with Aeromexico and Korean Air, launched the
SkyTeam alliance. These founder members were joined by CSA Czech Airlines and Alitalia
in 2001 followed by KLM, Northwest and Continental in September 2004 and by Aeroflot in
April 2006.
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
5/32
Air France’s Strong Points
The Air France Group’s profitable growth strategy, underway for several years now, is based
on the airline’s fundamental assets, namely:
•
The Paris-CDG hub, providing the link between the medium-haul and long-haul
networks of Air France and its partners;
•
A balanced network, offering a natural cover in the event of crisis;
•
A worldwide alliance, well integrated and growing;
•
A product offer, with the customers in mind;
•
A strict cost control strategy.
The fleet’s rationalization and flexibility have a primordial role to play in the profitable growth
of the Group.
Thanks to this strategy, Air France has registered positive results for the last seven years
despite years of crisis in the airline industry. Furthermore, today this strategy has enabled Air
France to take a leading role in the sector’s consolidation through its merger with KLM.
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
6/32
Paris-CDG2: Europe’s Most Efficient Hub
A hub, literally the point where a wheel’s spokes converge, is an organizational model
for air transport enabling passengers from all over the world to travel from one point
to another via a single transit airport.
Air France’s main hub is located at Paris-Charles de Gaulle.
Key figures:
•
830 daily flights: over a nine-year period (1995-2004), the number of daily flights has
increased twofold
•
Over 21,000 weekly connecting opportunities (arrivals and departures): since its
creation in 1996, the hub’s constantly increasing capacity has enabled Air France to
triple its number of connecting opportunities
•
76,300 passengers per day (arrivals and departures)
•
23,900 daily connecting passengers, representing more than 53% of arrivals:
today, over 52% of passengers arriving at Paris-CDG2 on board an Air France flight
have a connecting flight on the airline’s network.
•
28,000 daily connecting baggage
•
More than 8,000 staff with complimentary responsibilities
Air France also benefits from air/rail connecting traffic thanks to the location of the TGV
station - "Aéroport Roissy/Charles-de-Gaulle TGV" - at the heart of its Paris-Charles de
Gaulle hub. Paris-CDG is also connected to the interurban express train service (RER),
which serves the Paris region and the TGV high-speed rail/air network with notably the
Thalys rail service to Brussels.
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
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The multi-hub strategy optimizes destinations
where we are in competition…
Number of long-haul/medium-haul connecting
opportunities of less than 2 hours
É
A wider offer in terms
of schedules …
6,813
AMS
20,961
2,847
ZRH
3,334
MUC
CDG
12,956
FRA
7,173
LHR
Air France-KLM
É
New York: 11 daily flights
Washington: 4 daily flights
Montreal: 4 daily flights
San Paolo: 2 daily flights
Tokyo: 4 daily flights
Beijng: up to 4 daily flights
Dubai: up to 4 daily flights
Johannesburg: 2 daily flights
…and fares, thanks to fare
combination
Lufthansa + Swiss British Airways
Source: OAG data as at 9 May 2006 (week 36)
35
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
8/32
Air France 2006 Summer Schedule:
Targeting Fast-Growing Markets
On the strength of the combined networks of Air France and KLM, Air France is
pursuing its summer 2006 (April to September) development policy on the fastgrowing markets of Latin America and Asia, as well as to oil and gas destinations.
The Group has launched a new twice weekly service to Chengdu, via Amsterdam with KLM.
This summer, Air France and KLM are operating a total of 53 weekly flights between Europe
and China.
The Group serves five destinations in India, namely Bangalore, Hyderabad, Bombay, Delhi
and Madras. Air France and KLM now offer 36 weekly flights to India.
We are increasing capacity to our oil and gas destinations. Air France will fly twice daily to
Houston and there will be daily flights to Teheran.
In Europe, Air France will be extending its medium-haul network with three new destinations
this summer: Erevan (Armenia), Leipzig (Germany) and Katowice (Poland).
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
9/32
SkyTeam, a Global Alliance
Faced with an increasing global market, airlines must have a strong, global presence.
Only an alliance of European, American and Asian partners is capable of responding
to the needs of the market for passenger and freight traffic.
Set up in 2000, SkyTeam today includes Aeroflot, Aeromexico, Air France, Alitalia,
Continental, CSA Czech Airlines, Delta, KLM, Korean Air and Northwest. Revolving around
the most efficient hubs, namely Paris, Amsterdam, Atlanta, Seoul, Detroit and Houston,
SkyTeam is present throughout the planet with 729 destinations in 149 countries and 14,600
daily flights. SkyTeam member airlines belong to the only alliance with North Atlantic and
Pacific anti-trust immunity, enabling them to draw up a joint sales strategy.
Amongst the three global alliances, SkyTeam, oneworld and Star Alliance, SkyTeam now
has a 19% market share of traffic, just behind Star Alliance (24%) and ahead of oneworld
(18%) :
Network expansion:
In June 2004, China Southern (China) announced that it intended to join SkyTeam and is
making significant progress in its preparation to join the alliance.
In June 2005, SkyTeam announced plans to associate SkyTeam membership to smaller
carriers, strengthening its cooperation opportunites. These associate airlines will be
sponsored by one of the sponsor members, contribute to the budget but will have no direct
implication in the governing structure: Air Europe ( Spain, sponsored by Air France), Copa
Airlines (Panama, sponsored by Continental), Kenya Airways (sponsored by KLM), Middle
East Airlines (Lebanon, sponsored by Air France), Portugalia (Portugal, sponsored by Air
France) and Tarom (Roumania, sponsored by Alitalia).
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
10/32
Aeroflot became an official member of the SkyTeam Alliance in April 2006. SkyTeam is the
first global airline alliance to welcome a Russian carrier.
On 28 June 2006, SkyTeam signed an agreement with China Southern, reinforcing this
airline’s commitment to join the alliance
With SkyTeam:
Customers earn Miles and can claim award tickets with the SkyTeam member airline of their
choice. They have access to over 400 airport lounges worldwide (Première-First or AffairesBusiness class and SkyTeam Elite Plus passengers with a boarding card for an international
flight with an alliance member airline). SkyTeam Elite Plus members are guaranteed a seat if
they make a reservation at least 24 hours prior to departure. Customers can choose from
14,615 flights out of 728 destinations. They can benefit from advantageous fare promotions
on all destinations served by the alliance. In addition to the various Economy, Affaires and
Première fare offerings, SkyTeam also offers around-the-world fare options. Customers
benefit from an enlarged choice of connecting opportunities via an efficient world network.
They reach their destination more quickly thanks to the harmonized procedures in place
within the member airlines. They check in once only for connecting flights within the
SkyTeam network.
The SkyTeam Global Meetings product is a comprehensive air travel management service,
allowing international show organizers and attendees to coordinate all their travel needs.
Simple mode of operation
SkyTeam is managed by a Governing Board and a Steering Committee. Consensus ( except
in a limited number of cases) is the rule governing decision-making. Each member takes part
in the preliminary proceedings and in the final decision-making. The Governing Board is
made up of chairpersons, general directors and Alliance directors of all the member airlines.
It holds two annual meetings and defines major strategic directions. It allocates budgets and
promotes the Alliance. The Governing Board appoints the chairperson and vice-chairperson
of the Steering Committee for a two-year term of office. The Steering Committee organizes
meetings between Alliance directors of the member airlines four times a year. It implements
the strategic decisions finalized by the Governing Board and oversees that SkyTeam is
running smoothly.
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
11/32
SkyTeam Cargo:
The SkyTeam founder member airlines decided to extend their alliance to include their freight
activities by creating SkyTeam Cargo in September 2000. SkyTeam Cargo is the first global
air freight alliance; it regroups Aeromexico Cargo, AIR FRANCE Cargo, Alitalia Cargo, CSA
Czech Airlines Cargo, Delta Air Logistics and Korean Air Cargo. It serves a worldwide
network of over 500 destinations in 114 countries. The member airlines have adopted a
single product and service. SkyTeam Cargo has also set up harmonized procedures in single
sales points grouping together all or some of the members. All this contributes to ensuring
perfect coordination on a logistics level, from freight acceptance to delivery, throughout the
network. Moreover, AIR FRANCE Cargo, KLM Cargo and Korean Air Cargo have launched a
centralized booking joint venture in the United States.
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
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A range of products to build customer loyalty
One of the keys to Air France’s commercial policy is to permanently listen to
customers in order to tailor its products and services to meet their expectations. This
has led to two major changes in 2004: the New Air France Travel Concept on long-haul
and the transformation of the medium-haul product.
The New Air France Travel Concept is based on a new layout for long-haul cabins split
into two categories: twin cabin aircraft with the new Business Section and the Tempo class,
and tri-cabin aircraft made up of a new First Class Section, a new Business Section and the
Tempo class. The whole long haul fleet will be fitted out progressively. Only the Boeing 777200/300 will be equipped with tri-cabins. The other long-haul aircraft will have twin-cabins.
The new First Class Section offers eights seats with 50% more space. Each one of the seats
has among other things a PC power-supply plug and an individual telephone, and can be
transformed into a proper bed with a mattress.
The new Business Section is characterised by 27% more space guaranteed by a fixed-shell
seat that can be transformed into a fully reclinable (180°) chairbed. These new fittings, with a
total investment of 300 million euros over five years, will enable the airline to increase its
long-haul capacity by around 2% while optimising the ratio of the numbers of seats to cabin
crew.
Air France has innovated by launching Dedicate, a network designed to facilitate business
travel to construction sites, production sites and business areas in far away regions. The
Dedicate product is particularly well suited to the needs of companies to facilitate their travel
to destinations for which the volume of traffic does not make it possible to use traditional
long-haul aircraft. It enables the Group to link these new destinations anywhere in the world
thanks to direct flights via the Paris-CDG Hub. Initially, this concept will apply to oil business
traffic. Dedicate flights use the Airbus A319 with 82 seats divided into two classes, the
Business Section and Tempo. Air France has invested in a fleet of five of these aircraft,
dedicated entirely to this network. Fitted with two additional fuel tanks, these aircraft can fly
3,600 nautical miles (6,500 km).
Air France Corporate Communications June 2006
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45, rue de Paris 95747 Roissy CDG Cedex
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The emergence of the low-cost model has magnified the change in attitude among
customers travelling on medium-haul flights who want to see a more simple and accessible
product in return for a reduction in fares. Consequently, the medium-haul network has been
segmented according to the average length of the flight and the type of customers targeted.
The main measures concern moves to increase cabin density, simplify the on-board product
and deploy the self-service format.
This is based on an electronic ticketing system, Internet sales and self-service terminals that
enable rapid check-in without having to go to the actual check-in desks. Air France provides
customers with the latest technological developments, while constantly increasing resources
to enable passengers to save time and benefit from optimal travel conditions. The most
advantageous rates, e-ticketing, the option of managing one’s Flying Blue account online, as
well as checking in and printing out one’s boarding card at home are a few of the services
available to facilitate customers’ travel arrangements.
Service Certification
The excellence of Air France services is achieved by attaining the highest quality in all the
airline's internal processes. To reach this target, Air France has adopted a procedure based
on the 2000 Version of ISO 9001 certification and on the certification of its service
commitments.
Service certification is a step taken voluntarily by a company to have its service commitments
to customers recognised and certified by an independent body as being in conformity with
pre-defined benchmarks. In 2001 Air France was the first airline in the world to do this.
Air France was primarily concerned with taking customers expectations into account and
having them benefit from a regular, continuous quality of service.To achieve this, Air France
has worked closely with consumer groups to set out 38 service commitments that were then
checked by a certification body, SGS ICS Qualicert.
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
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A Rationalized Fleet
As of 31 March 2006, 383 aircraft were in operation in the Air France fleet including 128
belonging to regional subsidiaries. The average lifespan of aircraft was 8.5 years.
The growth of the Air France fleet has been built within a strategy combining flexibility and
rationalization:
•
Flexibility, through clauses that enable delivery dates for an aircraft to be staggered
or to change aircraft type within the same family of aircraft.
•
Rationalization, by equipping the fleet with modern, technically similar aircraft, from
the same family of aircraft so that the maximum benefit from technical commonality
can be achieved. With these new aircraft not only the cost of crew training but also
the management of maintenance costs and fuel expenses can be improved. Lastly
the introduction of latest generation aircraft allows optimization of global
environmental efficiency.
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
15/32
FLEET AS OF 31 MARCH 2006
AIR FRANCE FLEET
Owned
Aircraft
B747-400
B747-300/200
B777-200/300
A340-300
A330-200
B767-300
Long-haul fleet
B747-400
B747-200
Cargo
A321
A320
A319
A318
B737-500
Medium-haul fleet
Total Air France
fleet
Finance lease
Operating lease
3/31/05
8
7
16
8
4
1
44
1
5
6
11
49
18
9
4
91
3/31/06
8
6
19
10
6
3/31/05
1
3/31/06
1
3/31/05
7
3/31/06
7
4
6
1
4
3
1
14
8
9
15
7
9
49
2
5
7
11
49
20
12
3
95
12
9
1
1
1
1
3
4
3
4
38
3
2
5
2
15
21
38
3
1
4
2
16
21
3
10
7
9
47
141
151
23
17
90
TOTAL
In operation
3/31/06
16
6
38
20
16
31/3/05
16
5
34
22
13
3/31/06
16
4
37
20
16
9
48
3/31/05
16
7
34
22
14
1
94
4
8
12
13
67
43
9
16
148
96
5
7
12
13
68
45
12
12
150
90
4
8
12
13
67
43
9
15
147
93
5
7
12
13
66
44
12
11
146
90
254
258
249
251
REGIONAL FLEET
BRIT AIR
Owned
Aircraft
Canadair Jet 100
Canadair Jet 700
F100-100
Total
3/31/05
2
2
1
5
Finance lease
3/31/06
2
2
5
9
3/31/05
11
9
3/31/06
11
10
20
21
Operating lease
3/31/05
6
3/31/06
6
9
15
8
14
TOTAL
3/31/05
19
11
10
40
3/31/06
19
12
13
44
In operation
31/3/05
19
11
10
40
3/31/06
19
12
13
44
CITY JET
Owned
Aircraft
BAE146-200/300*
Total
3/31/05
5
5
Finance lease
3/31/06
5
5
3/31/05
1
1
3/31/06
1
1
Operating lease
3/31/05
11
11
3/31/06
13
13
TOTAL
3/31/05
17
17
3/31/06
19
19
In operation
31/3/05
17
17
3/31/06
19
19
sub-leased by KLM
REGIONAL
Owned
Aircraft
BEECH 1900
EMB145-EP/MP
EMB135-ER
EMB120-ER
F100-100
F70-70
SAAB 2000
Total
Total Regional fleet
Finance lease
3/31/05
6
2
2
7
1
3/31/06
3
2
2
8
1
3/31/05
1
17
3
3
1
5
3/31/06
1
17
3
1
1
5
18
16
30
28
30
51
3/31/05
1
9
4
3
5
3/31/06
1
9
4
2
7
28
6
28
50
54
Air Ivoire
Owned
lease
Aircraft Air France Corporate Communications
JuneFinance
2006
3/31/05
3/31/05
3/31/06
“Air France, a global
leader in3/31/06
air transport”
45, rue de Paris 95747 Roissy CDG
F28
3 Cedex 3
Corporate web site: http ://www.airfrance.com/corporate
A321
Total
3
3
TOTAL
Air France Group
169
184
77
Operating lease
67
TOTAL
In operation
3/31/06
5
28
9
11
9
5
5
72
31/3/05
3/31/06
5
28
3/31/05
8
28
9
13
7
5
6
76
28
9
10
6
5
6
64
28
9
9
9
5
5
65
55
133
135
121
128
Operating lease
3/31/05
3/31/06
1
1
1
1
145
146
TOTAL
3/31/05
3/31/06
3
3
1
1
4
4
391
397
In 16/32
operation
31/3/05
3/31/06
3
3
1
3
4
373
383
FLEET AS OF 31 MARCH 2006
KLM AND TRANSAVIA FLEET
Owned
Aircraft
B747-400
B777-200
MD11
A330-200
B767-300
Long-haul fleet
B747-400
Cargo
B737-900
B737-800
B737-700
B737-400
B737-300
Medium-haul fleet
Total KLM fleet
3/31/05
6
Finance lease
3/31/06
6
6
6
6
3
6
6
18
24
6
6
15
21
3/31/05
16
4
8
3/31/06
16
5
8
3
28
3
3
2
20
4
32
3
3
2
23
5
1
27
58
1
31
66
3/31/05
3/31/06
6
2
6
2
12
20
8
16
3
4
5
7
7
26
46
3
4
5
7
7
26
42
In operation
TOTAL
Operating lease
3/31/05
22
10
10
12
54
3
3
5
30
9
13
14
71
128
3/31/06
22
11
10
3
8
54
3
3
5
30
10
13
14
72
129
31/3/05
22
10
10
12
54
3
3
5
30
9
13
14
71
128
3/31/06
22
11
10
3
8
54
3
3
5
30
10
13
14
72
129
REGIONAL FLEET
KLM Cityhopper
Owned
Aircraft
F70
F50
Total KLM Cityhoppe
3/31/05
18
18
Finance lease
3/31/06
18
2
20
3/31/05
6
6
3/31/06
3
4
7
TOTAL
Operating lease
3/31/05
3
4
7
3/31/06
2
2
3/31/05
21
10
31
In operation
3/31/06
21
8
29
31/3/05
20
10
30
3/31/06
21
8
29
KLM Cityhopper UK
Owned
Aircraft
F100
F50
Total KLM Cityhoppe
Total Regional fleet
TOTAL KLM Group
Finance lease
3/31/05
1
3/31/06
7
3/31/05
14
3/31/06
11
1
7
14
19
27
43
48
3/31/06
11
3/31/05
1
6
7
20
18
78
84
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
TOTAL
Operating lease
In operation
6
6
3/31/05
16
6
22
3/31/06
18
6
24
31/3/05
16
6
22
3/31/06
18
6
24
14
8
53
53
52
53
60
50
181
182
180
182
17/32
Air France Cost Reduction Strategy
Air France’s profitable growth strategy in place for the last few years has been
coupled with a cost control strategy. Since 1998, Air France has been rolling out threeyear savings plans:
•
1 April 1998 – 31 March 2001: “3 Billion* Plan”
•
1 April 2001- 31 March 2004: “2003 Performance”
•
1 April 2004 – 31 March 2007: “Major Competivity 2007”
* francs
1) On 31 March 2004 the ‘ 2003 Performance’ plan reached its close with target savings of
280 million euros. The target was surpassed with structural savings of 300 million
2) To follow on from the ‘’2003 Performance’’ plan, a new three-year savings plan was drawn
up and launched on 1 April 2004. This plan, ‘Compétitivité Major 2007’, should enable the
airline to achieve cost savings of up to 900 million in 2006-07.
Three areas are particularly affected:
•
Distribution costs: in April 2005 a new method of remuneration for travel agents will
be implemented. In the place of commission paid by Air France, travel agents will
charge customers fees for the various services provided.
•
Medium-haul product will evolve, involving an increase in the cabin density and a
simplification of the on-board product offer that in itself will lead to a new cabin crew
structure.
•
Measures taken to increase productivity with for instance the growth of automatic
airport check-in.
The plan also includes numerous actions designed to optimise external resources and the
efficiency of processes, and incorporates a percentage of the synergies that the business
combination with KLM will make possible.
Air France Corporate Communications June 2006
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45, rue de Paris 95747 Roissy CDG Cedex
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3) In 2005-06, the “2006 Competitivity Plan” enabled the airline to achieve additional cost
savings of close to 440 million euros, thanks to the savings plans rolled out at Air France and
KLM along with synergies. The unit cost of available seat kilometres has dropped by 2.7%
during the first half year of fiscal 2005-06 at constant currency and fuel rates.
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
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Air France Cargo
AIR FRANCE Cargo-KLM Cargo in figures (FY 2005-06):
•
2.9 billion euros in turnover (14% of the Group’s turnover)
•
166 million euros in operating income
•
1.33 million tons of freight transported (10 billion in tonne-km)
•
Leading carrier worldwide in terms of freight tonne-km (nonintegrator operators)
A four-tier product offer
In 2000, Air France Cargo launched a new product offer that was adopted by the other
member airlines in the SkyTeam Cargo alliance. This range contains four product offers:
•
-
Equation
-
Cohésion
-
Variation
-
Dimension
Dimension is Air France’s generic product. Specifically designed for cargo agents
who need reliable airport-to-airport delivery for their consolidated shipments (58% of
turnover in 2005-06).
•
Cohésion is a strategic “trilateral” product for companies organized for just-in-time
shipments and their cargo agents (10% of turnover for 2005-06).
•
Variation provides specialized services for the carriage of goods such as live
animals, outsized shipments or regulated products (19% of turnover for fiscal 200506).
•
Equation synonymous with speed, it is used for express freight with reduced lead
times. Loading is guaranteed on the first flight out (13% of turnover for fiscal 200506).
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
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Revamping the Fleet
Over half of the freight transported by Air France Cargo is carried in the holds of passenger
aircraft and the remaining is carried in its fleet of full freighters comprising 12 B747F aircraft.
To reach its objectives in terms of quality of service and adaptation to the market, Air France
Cargo is focusing on revamping its fleet. On 18 October 2002, the first Boeing 747-400 ERF
landed at Paris- Charles-de-Gaulle, followed by two others delivered in the fall. The fourth
entered into service in April 2004, and the fifth in 2005. This latest generation highperformance aircraft gives Air France Cargo a strong competitive edge.
The Boeing 747-400 ERF capacity is 15% higher than its predecessor the Boeing 747-200F,
and at full load, its range is 40% more. Thanks to this aircraft’s performance, significant gains
in productivity can be made since the major destinations in the Asian network can be
reached by non-stop flights from Paris with full load whereas previously an intermediate
stopover was necessary.
Reorganization of the G1XL Cargo Hub
In the G1XL hub, Air France Cargo’s hub located at Paris – CDG airport, Air France Cargo
has one of the largest freight centers in Europe. With a total available area of 111,900 sq.m,
including of 52,000 sq.m of warehouse space, this freight hub can handle 1.4 (08) million
tons annually. It is equipped with the latest technology such as electronic pallet labelling
(CAP) and automated guided vehicles to move pallets. In January 2004, the G1XL2004
Project was launched, aimed at providing the best capacity for a growing business using
technological innovations as well as an in-depth review of procedures according to three key
goals:
• Adopt a customer focus, replacing the partitioned production approach, with an overhaul of
the logistics chain within the terminal and the implementation of an arrival process and a
departure process to facilitate the fluidity of operations.
• Improve the responsiveness and efficiency of the terminal, changing the way it works by
progressively enhancing the flexibility of agents; this approach involves a major training
programme;
• Integrate the operating and commercial processes in order to facilitate synergies.
The main objectives of the restructuring programme are to improve the quality of services
and achieve 1 to 2% improvements in productivity every year.
Air France Corporate Communications June 2006
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Creation of the JCT (Joint Cargo Team)
Since October 2005, AIR FRANCE CARGO and KLM Cargo have been offering their
customers a single commercial offer in their cargo businesses. The Joint Cargo Team is in
charge of both airlines’ network management, marketing and sales operations on behalf of
AIR FRANCE Cargo and KLM Cargo. Each airline continues to manage its own operations.
Air France Corporate Communications June 2006
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Air France Industries: Leading-edge expertise
AIR FRANCE INDUSTRIES-KLM figures:
•
2.7 billion euros in turnover, including 896 million euros in turnover for external
customers)
•
54 million euros in operating income
•
15,000 employees
•
maintenance of over 900 aircraft on behalf of 150 customers
•
AIR FRANCE Industries is:
Market leader for new-generation A320, A330, A340 or Boeing 777 equipment
maintenance
Market leader for major overhauls for the Airbus and Boeing 777 families of
aircraft
A leader in the maintenance of CFM56-5, GE90 or CF6-80C2 engines
An integrated offer, serving Air France and its partners
Air France has chosen to handle its own aircraft maintenance and has developed this
expertise under the Air France Industries brand. Structured around customer needs, Air
France Industries offers a wide range of services, from comprehensive support to one-off
operations, with an option for customized fleet service. Its services include:
• large-scale maintenance visits, for a complete overhaul of aircraft or modifications to
systems and cabins;
• daily support for fleets around the world (small-scale maintenance);
• servicing of engines;
• servicing and logistics of equipment, essential in order to optimise the profitability and
efficiency of operations for a fleet of aircraft;
• servicing of thrust reversers.
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AIR FRANCE Industries operations are spread over a number of sites: Toulouse-Blagnac for
large-scale maintenance on small-range aircraft, Orly for large-scale maintenance on longhaul craft, engines and equipment, Roissy for small-scale maintenance and Le Bourget for
the maintenance of special fleets; Villeneuve-le-Roi for the servicing of equipment. In
addition to leading-edge industrial resources, the activity of Air France Industries requires a
very high level of expertise and qualifications for the entire workforce. In light of this, AIR
FRANCE Industries aims to offer its employees every opportunity to develop their skills.
« La Croix du Sud » (at Toulouse airport) and « EOLE » (near Orly airport) : two new
generation sites
Air France Industries aims to improve its working conditions and its performance by
strengthening compliance with environmental constraints. The 2003-04 financial year marked
a decisive phase in this programme, with the opening of two centres incorporating these
requirements: La Croix du Sud in Blagnac and EOLE in Villeneuve-le-Roi, near Orly airport.
Delivered in December 2003 and officially inaugurated on 2 April 2004, the Blagnac industrial
centre – La Croix du Sud – carries out the following activities: large-scale maintenance for
small and medium-sized aircraft (Boeing 737 and Airbus A320 family). This vast hangar, with
a surface area of 35,700 square metres, is located in the ZAC Aéroconstellation in ToulouseBlagnac. Reflecting Air France’s commitment to improving working conditions, it has
progressively incorporated staff and equipment from the Montaudran factory, which closed its
doors at the end of 2003. With an innovative approach in terms of both maintenance
processes and respect for the environment, it is designed to rationalise operating principles
and meet market and customer expectations more effectively.
At E.O.L.E. (Entretiens et Opérations Logistiques Équipement –equipment maintenance
and logistics operations), there are two watchwords: modernity and growth. This new 41,000
square-metre factory has been fully operational since November 2004. The two key factors
driving its performance are, on the one hand, a major technological investment programme
(the site includes avionic, surface processing, hydraulic, pneumatic, and cabin technologies
and all the product service entities), and, on the other hand, an internal organisation and
approach focused on process performance. Working conditions have been optimised in
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terms of luminosity, phonic isolation and safety. Lastly, this site has been designed in line
with a QSE approach (Quality – Security – Environment).
Air France Corporate Communications June 2006
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45, rue de Paris 95747 Roissy CDG Cedex
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Air France Subsidiaries
Based in Nantes, western France, Régional joined the Air France Group in 2001 following
the merger between Regional Airlines, Proteus Airlines and Flandre Air. Régional provides
services linking main cities in France and Europe, its network is organized around four
regional hubs, namely Paris-CDG, Bordeaux, Lyon and Clermont-Ferrand. The airline
operates around 400 flights a day to 21 destinations in France and 28 in Europe, with a fleet
of 65 aircraft in operation with an average age of 7.6 years. Régional generated a turnover of
543.7 million euros with a workforce of 1,750 employees as of 31 March 2006.
Brit Air has always been a long-term partner for Air France. As early as 1983, the airline
operated under franchise for Air France before becoming a subsidiary in 2000. Based in
Morlaix, it was one of the first regional European airlines. It operates a fleet of 44 regional
aircraft with an average lifespan of 6.5 years, with approximately 275 daily flights to over 45
destinations in France and Europe. With 1,270 employees, Brit Air generated earnings
totalling 435.8 million euros for fiscal 2005-06, including 10.1 million euros from its subsidiary
Icare that provides regional airlines with training courses for qualifications on regional
aircraft. Brit Air is also the world’s first regional carrier to have received certification for its
service commitments on 6 September 2005.
City Jet, an Irish regional airline, was also Air France’s long-term partner before becoming a
subsidiary in 2000. Based in Dublin, City Jet has a fleet of 19 BAE aircraft which enable it to
operate between airports with short runways such as London City in London, or Florence.
Beside these two destinations, City Jet operates services between Paris - CDG and Orly to
Dublin, Edinburgh, Birmingham, Gothenburg and Zurich. City Jet also operates a leased
flight service between Dublin and London City. During fiscal 2005-06, with 575 employees,
City Jet generated a turnover of 254 million euros.
Air France Corporate Communications June 2006
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45, rue de Paris 95747 Roissy CDG Cedex
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Servair is a major global provider of inflight catering and airport assistance. The thirdranking caterer in the world, SERVAIR provides Air France and 130 other airlines a full range
of indispensable services for air transport and passenger comfort.
SERVAIR, its subsidiaries and network of partners have a total of 90 sites worldwide and
boasted turnover of 564 million euros in 2004.
SERVAIR’s experience in the airline business has led it to develop 3 major sectors of activity
which meet the demands of its customers and therefore its passengers:
• Catering: composes the meals, prepares them, makes up the trays and transports the
meals to the aircraft;
• Cleaning and general airport assistance including ramp assistance, security and press
handling;
• Servair Consulting, with a full range of the best services available, both in-flight and on the
ground.
SERVAIR and quality
Right from the start, SERVAIR’s priorities have been hygiene, quality and food safety.
It has successfully developed this strategy in an aim to guaranteeing quality of
service to its customers.
As far as food safety is concerned, all SERVAIR centres apply the HACCP analysis
method (Hazard Analysis and Critical Control Point).
At its central laboratory accredited by the COFRAC (French Accreditation Committee),
SERVAIR carries out more than 50,000 analyses every year.
As far as certification is concerned, SERVAIR today has 15 ISO 9001 V2000 certified
units, including Dakar Catering, one of the leading catering groups in Africa. All units
are being progressively certified.
Air France Corporate Communications June 2006
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SERVAIR at Paris-Charles de Gaulle
• Catering sites
As well as the traditional catering sites for long, medium and short-haul flights such
as SERVAIR 1, SERVAIR 2, Bruneau Pégorier Catering and CPA Catering, there are
also specific sites such as SMC (Special Meals Catering) for kosher meals, CAP
(Culin Air Paris), for charter flight meals and Jet Chef for business flight meals.
• Cleaning and airport assistance sites
The diversity of airport assistance has led SERVAIR to develop specialized
subsidiaries for each of its activities.
• Cabin supplies and cleaning
ACNA is one of the major aircraft cleaning companies in Europe, and is in charge of
supplies and cabin and cockpit cleaning, including other cabin stores (pillows,
blankets, travel kits for children and amenity kits).
PASSERELLE
An ACNA subsidiary, PASSERELLE is specialized in assisting reduced mobility
passengers, and works for Air France at Paris-CDG2.
P.M.AIR
P.M.AIR also assists reduced mobility passengers, at Orly airport.
SERVANTAGE
This subsidiary is in charge of press handling (newspapers and magazines) for more
than 15 airlines. SERVANTAGE is also in charge of the upkeep of the VIP lounges.
AEROSUR
A SERVAIR subsidiary, AEROSUR is involved in air security and is in charge of
securing the cabins and catering products.
LOGAIR
Logair is specialized in the management of in-flight duty free sales.
Air France Corporate Communications June 2006
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Servair key figures
Operating revenue for 2004: 564 million euros
Workforce: 8,200 employees
15 ISO 9001 V200 certified centres, including one in Dakar
COFRAC-accredited analysis laboratory
A few figures on food production
Over 100 chefs
Choice of close to 1,000 menus
Choice of 5,300 recipes
48 million meal trays prepared each year and 110,000 prepared each day on average at the
Paris site
14.500 tons of provisions delivered each year
Management of 4,000 food products and beverages and 400 suppliers
A few key figures on catering
100,000 fruit baskets
13 million bread rolls and 65 product references
500,000 Viennese pastries
Approx. 40 tons of blocks of foie gras
Approx. 120 tons of chicken
Approx. 292 tons of fresh lemons
Approx. 80 tons of grapes
2 million glasses of orange juice
10 million butter portions
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
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The History of Air France
1933: Birth of an Airline
The merger of the four largest French carriers (joined shortly afterwards by Aéropostale)
gave birth to Air France. With 259 aircraft, the airline operated a total of 38,000 km. Air
France was officially inaugurated at Le Bourget airport near Paris on 7 October 1933. Air
France took over Air Orient’s emblem, a winged seahorse:
1945-1948: Becoming a Flag-Carrier
On 26 June 1945, French civil aviation was nationalized. At the end of 1945, the entire
French air network was turned over to Air France. On 1st July 1946, the Paris - New York
was officially launched. In 1948, Max Hymans took the reins of the airline and in June of the
same year, airline’s definitive status was announced.
1953: Luxury in the Skies
Paris-Orly airport took over from Le Bourget. The fleet was updated. It was the dawn of the
Golden Age of Aviation, with the magnificent Lockheed Constellation, flying cruise liners that
criss-crossed the North Atlantic. Passengers on the “Parisian Special”, which operated a
service to New York, were given private cabins, gourmet meals served with champagne and
hot dishes.
1959: Even Faster
Just as the sixties started, jet engines were at the heart of a deep-seated transformation of
air transport. Air France brought the Caravelle and the Boeing 707 into service in 1959-1960,
reducing flight times by half. According to a slogan at the time, Air France operated “the best
jet aircraft on the world’s largest network”, which then stretched over 350,000 km.
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1974: Paris-Charles de Gaulle
Air France moved into its new airport at Paris-Charles-de-Gaulle Terminal 1, an architectural
highlight of the French Fifth Republic. Although the arrival of wide-bodied jets with seats for
300 to 500 passengers (Airbus A300, Boeing 747) heralded mass air travel, it also coincided
with a world wide economic crisis, triggered by fuel hikes in the first ‘oil crisis’ at the end of
1973, followed by a second in 1979. Air France rode out the crisis by diversifying its product
offer and developing its air freight business that began to soar.
1976: Concorde
On 21 January 1976, Air France brought Concorde, a supersonic jet into service. It was
jointly produced by French and British aerospace manufacturers and began service on the
Paris-Dakar-Rio de Janeiro route. It could reach speeds of Mach 2.02 (over 2,000 km/h).
1992: Birth of the Air France Group
In
1990, Air France bought shares in UTA, founded in 1963, and became a majority
shareholder. 1992 marks a turning point in the history of French aviation, Air France merged
with UTA becoming at the same time a majority shareholder in Air Inter with a 72% stake in
the airline through an accumulation of UTA’s shares acquired in the merger and Air France’s
own. The Air France Group became one of the largest airline groups in the world. The
merger and amalgamation between Air France and Air France Europe (formerly Air Inter)
would take place in 1997.
1996: A European Hub
The hub strategy was thought up at the beginning of the nineties. The April 1996 opening of
Air France’s own hub designed to link medium- and long-haul networks at Paris-Charles de
Gaulle was the definitive crystallization of this strategy.
1999: Air France Opens on the Paris Bourse
The flotation of Air France on the French stock exchange was an important step in the
carrier’s history. It met with a resounding success; the share offer was oversubscribed forty
times by corporate investors, with 2.4 million private shareholders investing in France. Over
72% of employees became shareholders in Air France.
22 February 1999, Air France is listed on the First Market of the Paris Bourse.
Air France Corporate Communications June 2006
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45, rue de Paris 95747 Roissy CDG Cedex
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2000: SkyTeam, the Time for Alliances
On 22 June 2000, Air France together with Delta, Aeromexico and Korean Air set up the
SkyTeam Global Alliance.
2001: Regional Hubs Set Up
Air France decided to structure its regional hub around three subsidiary airlines, Régional,
Brit Air and City Jet, in order to develop its product offer on departure from French regional
destinations, feed its hubs in Paris and the other regions, and also impose itself in the face of
stiff competition on the European market.
2003-2004: The AIR FRANCE KLM Merger
The agreement to merge signed in September 2003 between Air France and KLM gave birth
to the leading European airline group in May 2004. The Group contains a holding company
and two airlines, which have retained their corporate identity, logos and core businesses.
The new group now represents 100,000 employees, 70 million passengers, 225 destinations
and a fleet of 565 aircraft. It has been hoisted up to a position of global leader in terms of
turnover and is now the leading airline group in Europe. Equally it is the world’s leading
freight carrier (aside from consolidators) and is among the world’s leading aircraft
maintenance providers. The combination of the two airlines based at the Paris-Charles de
Gaulle and Amsterdam Schiphol hubs has formed a unique global network. And since KLM
joined SkyTeam with its North American partners: Continental and Northwest SkyTeam is the
world’s second largest global alliance.
Air France Corporate Communications June 2006
“Air France, a global leader in air transport”
45, rue de Paris 95747 Roissy CDG Cedex
Corporate web site: http ://www.airfrance.com/corporate
32/32