Air France-KLM is an international airline company and a member of the Skyteam airline partnership. The Group was created on May 5, 2004, following Air France's combination with KLM Royal Dutch Airlines (KLM), thereby forming the world's largest airline group by turnover and second largest worldwide cargo operator in terms of revenue-tonne kilometers. The Group organizes its networks around two major hubs: Paris-CDG and Amsterdam-Schiphol. The Company's three main businesses are passenger transportation, cargo operations and industrial maintenance. The Group counts more than 100,000 employees throughout the world. Passenger transport is the Group's main business, with 74.8 million passengers carried (2007-08 financial year), a fleet in operation of 607 aircraft on 31 March 2008 and 258 destinations worldwide. The majority of the employees are based in France and the Netherlands. Both Air France and KLM continue to operate flights under their distinct brand names as subsidiaries of Air France-KLM.
CHAPTER 1 - Introduction
AIR FRANCE KLM
AIR FRANCE KLM is the combination of two big airlines such as Air France and KLM. Since their merger in 2004, KLM works closely with Air France within the AIR FRANCE KLM holding company. In terms of financial turnover, AIR FRANCE KLM is the world's largest airline partnership; it also transports the most passengers and is the world's second-largest cargo transporter. Air France and KLM carryÂ more than 71 million passengers per year. They operate more thanÂ 594 aircraft enabling them to fly toÂ 236 destinations worldwide with 2,500 daily flights. The two airlines' world networks can be combined, forming a vast network organized around the two major hubs of Amsterdam-Schiphol and Paris-CDG. The head offices are located at Amstelveen and Paris.
In January 2009 AIR FRANCE KLM and Alitalia reached an agreement to strengthen their partnership cemented by AIR FRANCE KLM taking a minority stake in Alitalia. This agreement will give AIR FRANCE KLM greater access to the Italian market.
Air France and KLM are members of the SkyTeam alliance. SkyTeam is a global airline alliance which includes Aeroflot, Aeroméxico, AirEuropa, Air France, Alitalia, China Southern Airlines,Â CSA Czech Airlines, Delta Air Lines, Kenya Airways, KLM, Korean Air (including Northwest Airlines), Tarom and Vietnam Airlines. Through one of the world's most extensive hub networks, SkyTeam offers itsÂ 384 million annual passengers a worldwide system of more than 13,000 daily flights to all major destinations.
Over the fiscal year 2009-2010 the turnover of Air France-KLM was 20.9 billion euros. Together, the two airlines have over 107.000 employees. For more information on AIRFRANCE - KLM Finance, pleaseÂ go to www.airfranceklm-finance.com.
The Air France-KLM shares are listed in Amsterdam, Paris and New York.
Air France-KLM comprises a holding company which controls two airlines, Air France and KLM, each of which retains its own separate identity and brands. The group is the world's largest air transport group in terms of revenue, second largest in terms of air traffic (in passenger-km) and cargo (ton freight-km), and third largest in terms of maintenance revenue. Both airlines run their own operations from their respective hubs Paris-Charles de Gaulle and Amsterdam-Schiphol.
Passenger transport is the largest of the group's three core businesses, generating around 80%
of its revenues (as of 31 March 2008), with 74.8 million passengers carried.
Cargo was the first fully-integrated commercial activity at Air France-KLM in 2005. Client companies now have a single point of entry, and a full, simplified offering with flights departing from both hubs and benefiting from both networks. Air France-KLM Cargo ranks first worldwide among air freight carriers (excluding integrators).
The combination of Air France Industries and KLM Engineering & Maintenance allows the group to offer a comprehensive range of aircraft maintenance and overhaul services with complementary areas of specialization. Maintaining the two fleets accounts for two-thirds of the group's maintenance operations, further supplemented by maintenance repair and overall (MRO) operations for 150 third-party airlines.
According to (KLM, 2010), 'the company was set up on 7 October 1933. Its history has been marked by several major milestones, including the holding acquired in the capital of UTA in January 1990 and the merger with Air Inter in 1997. In June 2000, Air France and Delta Air Lines joined forces with Aeroméxico and Korean Air to launch the Sky Team alliance. Air France's main hub at Paris-Charles de Gaulle is Europe's number one in terms of connecting opportunities'.
As cited in (KLM, 2010), 'KLM was set up on 7 October 1919 and is the oldest airline still operating under its original name. Its recent history has been characterized by the creation of a joint venture with Northwest Airlines (NWA) in 1989 and its acquisition of the holding of Kenya Airways in 1996. KLM has Amsterdam Airport Schiphol as its home base.
Since May 2004, Air France and KLM Royal Dutch Airlines have become the largest European airline group: one group, two airlines, and three businesses. Each airline has retained its individual identity, trade name and brand
Mullins (2007) explained that, in order to evaluate the nature of the business environment and its strategic capability an organization may undertake a SWOT analysis focuses on Strengths, Weaknesses, Opportunities and Threats facing the organization.
Strengths are those positive aspects or distinctive attributes or competencies which provide a significant market advantage or upon which the organization can build. Against a backdrop of increased
Liberalization which serves to intensify competition, the profitable growth strategy plays to the group's strengths, the following are the air France KLM group strengths.
A modern fleet the groups chief asset
Guaranteeing energy and economic efficiency and greater safety levels, the group's aircraft fleet is its chief asset when it comes to meeting the challenges of sustainable development.
The dual Roissy - Schiphol hub and a balanced network
The Air France and KLM route networks complement each other extremely well. The dual hub concept is central to group strategy and is designed to make the most of this.
The benefit of dual brand strategy
Air France and KLM took an original approach to the merger, choosing to retain the two brands while developing a unified strategy. Air France and KLM each enjoy strong brand identities and are extremely complementary.
Enhanced competitiveness thanks to cost control
To maintain its competitiveness, the group launched "Challenge 10",designed to save 1.4 billion euros by 2009-10, through a 3% cut in unit costs. The plan is four-pronged:
Process optimization and productivity gains;
Fleet modernization, which will generate fuel and maintenance cost savings;
Purchasing, and optimizing group synergies;
External distribution costs.
The development of high growth areas
The group's ambition is to seize growth opportunities in countries driving global economic growth, mainly Brazil, Russia, India and China. In the years ahead, the Air France-KLM group plans to grow by 4.7% per year in terms of available seat-km on its long-haul network.
Weaknesses are those negative aspects or deficiencies in the present competencies or resources of the organization, or its image or reputation, which limit its effectiveness and needed to be corrected to minimize their effect.