Air France will accelerate implementing its Perform 2020 strategic plan, following increased pressure on unit revenue since April.
“We have to speed up the Perform 2020 plan. There is too much capacity in the marketplace and we face uncertainty in various places of the world,” Air France chairman and CEO Alexandre de Juniac told ATW last week on the sidelines of the IATA AGM in Miami.
Part of the measures includes scheduling negotiation meetings with unions under a tight schedule to finalize agreements by the end of September, Air France said in a statement. Immediate measures include the closing of several loss-making routes—including services to Stavanger, Verona, Vigo, and Kuala Lumpur—in winter 2015. It will reduce frequency and aircraft size on routes including Japan, Brazil and Russia. “We invested a lot in the South American market, but we feel the weak economic situation there,” de Juniac said.
New initiatives targeting external expenses and general purchasing will have an estimated full-year impact of €80 million, the carrier said.
Air France is also launching a detailed review of its investment plan, which will notably include the earlier-than-planned grounding of a third Airbus A340-300 and negotiations to postpone the delivery of long-haul aircraft Airbus A350-900 and Boeing 787-9. The first aircraft of a 25 Boeing 787-9 order is expected due to arrive in November 2016; the first of a 25-strong A350-900 order is scheduled to arrive in 2018. “But at this moment, Air France does not know how long any delay in delivery might be,” a spokesperson told ATW.
Finally, management has been negotiating for the past seven months with SNPL pilot union, on implementing the remaining measures planned in the Transform 2015 agreement signed by the union. Considering the lack of progress, management has decided to engage judiciary proceedings against SNPL. “All other unions have done this, but SNPL has only implemented 65%,” the spokesperson said.
“At the end of September 2015, we will review the financial situation of Air France, the progress achieved in the negotiations with unions, and the subscriptions to the two ongoing Voluntary Departure Plans [affecting cabin crew and ground staff]. We will then be in a situation to decide the necessary actions to safeguard the future of Air France. On the eve of the summer peak period, essential to the 2015 financial results, we are fully mobilized to the service of our customers,” Air France chairman and CEO Frédéric Gagey said in a statement.
Asked by ATW if there would be further redundancies, de Juniac said, “This is not easy to say. We have cut several thousands of jobs in Air France within three years. We have done a good job [in restructuring Air France], but this will be not enough,” de Juniac said.