Will Air France-KLM be able to face bleak future of 2017?

Published on : Friday, January 13, 2017

Air franceAmidst rising oil prices and an ongoing struggle to rein in expenses, Air France-KLM Group Chief Executive Officer Jean-Marc Janaillac said at a press reception in Paris that 2017 is going to be another difficult year. Weak margins combined with high debt remain the greatest challenges to Europe’s biggest airline, he added in his statement; although, he refused to comment about the ongoing talks with pilots which are linked with cost-cutting drive.


Increase of oil prices, of the dollar, and an increase in interest rates are the major challenges that need to be faced. And consequentially, the profit scale is seeing a lower range. In addition, the CEO said that they have high debt without the option of appealing to the stakeholders which owes to the weak stock valuation.


Janaillac took over in July after predecessor Alexandre de Juniac quit following clashes with unions over plans to pare expenses and move more flights to Air France-KLM’s Transavia discount unit, amid a squeeze from Mideast carriers on long haul and routes and discount specialists such as EasyJet Plc in Europe.


Deutsche Lufthansa AG issued guidance for yields and fuel costs, which according to the experts are definitely to witness a decline in the profit rate. The International Air Transport Association, now led by de Juniac, warned in December 2016 that European airline earnings would slump 25 percent, depressed by “intense competition” and the threat of terrorist attacks.


The plans for the new French long-haul carrier, dubbed Boost, with a lower cost base are advancing ahead of its introduction next winter, starting with medium-sector routes and extending into intercontinental services in summer 2018. Janaillac said that there would be discussions with he pilots about the airline and will be sorted before March. Janaillac concluded in his statement that 2016 was a positive year overall and Air France-KLM will report full-year earnings on Feb. 16.


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