New Air France-KLM subsidiary to take on competition
Air France-KLM is setting up a new subsidiary to compete with companies from particularly the Gulf countries. According to the French-Dutch airline, companies such as Emirates are able to work at laower costs in markets where Air France-KLM want to grow, NU.nl reports.
The new company will work completely with Air France. A spokesperson for KLM emphasized that KLM is not involved in it. It willl have its own cabin crew and make use of Air France ground crew and pilots. By 2020 Air France KLM hopes to have the new subidiary operating 10 long-haul flights. This new subsidiary will not focus on lowest costs, but on "competitive markets".
The new subsidiary is one of several measures Air France-KLM plans to implement in order to grow the size of their fleet to 435 planes in 2020. By that time the airline group wants to accommodate 100 million passengers per year and book a turnover of 28 billion euros.
Air France-KLM dealt with persistently tough market conditions during the third quarter, including strikes by French cabin crew members and fear for terrorism, especially in Paris. This cost the operating profit around 90 million euros, the airline group announced on Thursday. Ticket prices remained under pressure due to fierce competition during the busy summer months. And despite a passenger growth of 2.5 percent, the turnover fell by 5 percent to 6.9 billion euros. Operating profet dropped by nearly a sixth to 737 million euros . But the net profit, including one time windfalls and setbacks, rose 13 percent to 544 million euros.
KLM itself faced little of its French partner's prolems and saw its results improve compared to the third quarter of last year. The gross margin increased on a comparable basis by 1.5 percent to 19.6 percent. Air France on the other hand saw its gross margin drop 1.7 percent to 14 percent. KLM contributed 422 million euros to the operating profit and Air Fance 311 million euros.
