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Transform to Perform for Air France-KLM

PARIS/AMSTERDAM: Air France-KLM is to replace its "Transform 2015" cost-cutting program with a "Perform 2020" growth plan.

Group chairman and CEO Alexandre de Juniac said that by the end of this year costs will have fallen by over a €1 billion. As of December 2013, the airline group's net debt was €11.74 billion – including lease obligations of €6.4 billion. A year earlier the figure had been €12.6 billion including lease obligations of €6.6 billion.

transaviaLaunching this latest attempt at profitability, de Juniac declared: "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."

De Juniac said the cost reduction/growth formula of Perform 2020 includes expanding low-cost Transavia throughout Europe. By 2017 he said it will operate 100 aircraft, carry more than 20 million passengers and contribute €100 million to group earnings.

By comparison, in 2013 Ryanair operated 305 aircraft, produced revenue of €4.88 billion, and a net profit of €569 million. Transavia is not expected to make a profit until 2018.

As reported last week, costs for the group's cargo business will be shrunk due to the reduction of the freighter fleet to three KLM 747ERFs and two Air France B777Fs. All Martinair's MD-11s will be disposed of by 2016. One 747 freighter operated by Martinair will remain as a "back up" until its lease expires in 2018.

According to the new plan, cargo will return to breakeven by 2017 as the group concentrates on developing premium products across its belly capacity and the remaining B747Combi equipment.

Air France-KLM reported a 1.1 percent increase in its passenger traffic for August while Transavia traffic rose eight percent and cargo declined 1.7 percent.

Nothstanding the threat of an Air France pilot's strike, the cargo division has announced new freighter services to Entebbe, Uganda and Shanghai, China this month. Click links below for details:

Entebbe.pdf

Shanghai.pdf

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