A fresh round of cost cuts are planned by Air France-KLM as the carrier looks to improved earnings by up to 10% by 2017.
Offshoot Transavia is to be further developed to target the European leisure sector while a single business unit will be created to optimise point-to-point operations to break-even in three years’ time.
A new strategic plan – Perform 2020 – was unveiled today following a scheme due to be completed by the end of this year which will have led to more than €1 billion in cost cuts.
Air France-KLM is looking to position Travsavia asone of the leading low-cost carriers in Europe, operating a fleet of 100 aircraft and carrying more than 20 million passengers by 2017.
The business should contribute an additional €100 million of earnings in 2017.
“With profitability being impacted by ongoing ramp-up costs, the group is targeting operating profits by 2018,” Air France-KLM said.
Chairman and chief executive Alexandre de Juniac said:
“Transform 2015 will be completed by the year end having fully delivered on its objective of significantly improving the Group’s competitiveness and delivering a €1 billion-plus reduction in costs.
“Perform 2020, the strategic plan we are launching today, will be supported by two main levers: growth, which we are looking to capture in a number of areas, and competitiveness combined with financial discipline which should continue to ensure firm foundations for the development of Air France-KLM.
“This is why the ambitious initiatives we are launching today will go hand in hand with redoubled efforts to reduce costs and restructure activities which remain loss-making.
“By 2020, we will have built an air transport group focused on a leading long-haul network at the heart of global alliances, with a portfolio of unique brands, restructured short and medium-haul operations with a reinforced presence in the low cost segment in Europe, leadership positions in cargo, maintenance and catering, and a significantly improved risk profile both operationally and financially.”