Don't miss

Replay


LATEST SHOWS

MEDIAWATCH

Cameron's EU Charm Offensive

Read more

DEBATE

David Cameron's EU Tour: British PM Mets Europe's Leaders to Plead his Cause (part 2)

Read more

DEBATE

David Cameron's EU Tour: British PM Mets Europe's Leaders to Plead his Cause (part 1)

Read more

THE INTERVIEW

Jordan 'needs more assistance' from international community for Syrian refugees

Read more

THE INTERVIEW

Paris UN climate conference 'will be a success'

Read more

ENCORE!

Rapper's delights: 'Hip-Hop, from the Bronx to the Arab Street'

Read more

FOCUS

The plight of civilians in Darfur's never-ending conflict

Read more

BUSINESS DAILY

Greece says a deal is close, Germany says no progress made

Read more

IN THE PAPERS

'FIFA Nostra'

Read more

Business

Air France plan cost cutting to slash debt

Text by News Wires

Latest update : 2012-01-12

Air France-KLM said in a statement on Thursday that it was embarking on "an ambitious three-year plan to restore profitability", including a salary freeze and a reduction in investment, in a renewed bid to tackle its debt.

AFP - Air France-KLM said Thursday it would implement a three-year cost-cutting plan, including wage freezes and investment reductions, aimed at saving at least one billion euros ($1.3 billion) and reducing its debt.

The company said in a statement that its board of directors had approved "an ambitious three-year plan to restore profitability".

"New cost-cutting measures amounting to some one billion euros will be implemented immediately," it said, including a freeze on general pay rises in 2012 and 2013 at Air France and wage moderation at KLM.

A hiring freeze introduced in September will continue, it said, and talks will begin with unions on renegotiating employment rules to bring "a significant improvement in productivity".

The company aims to reduce its net debt by two billion euros to about 4.5 billion euros by the end of December 2014, it said.

Its investment programme will also be reduced from more than six billion euros for the 2009-2011 period to less than five billion euros for the next three years.

"Given the uncertain economic environment and the ongoing imbalance between transport supply and demand, the board deemed it necessary to opt for quasi stable capacity for the Air France-KLM Group in both passenger and cargo," it said.

"Consequently, over the next three years (2012-2014), the group will only increase capacity by a little over five percent on a cumulative basis."

It said this would lead to a "shrinkage of the group's fleet with attendant reduction in the investment programme."

Air France-KLM said its short- and medium-haul network had lost about 700 million euros last year and would be restructured to better use its aircraft, improve employee productivity and redefine "certain activities", a move that could lead to more extensive outsourcing.

 

Date created : 2012-01-12

  • AVIATION

    CEO of Air France-KLM resigns in wake of financial woes

    Read more

  • AVIATION

    Air France-KLM post 736 million euro profit for first quarter

    Read more

  • AVIATION

    Air France considers new domestic low-cost carrier

    Read more

COMMENT(S)