Friday, September 20, 2013

Freight Operations Will Be Hit Hardest as Air France Lays Off Thousands More

Company Misses Financial Targets Once Again
Shipping News Feature

FRANCE – Air France, which merged with KLM in 2004 in an attempt to streamline operations, has announced further job cuts after admitting it has, yet again, missed its financial targets for the year. The group is looking to lay off 2,800 staff through voluntary redundancies and union CFDT tells us that plans, due to be launched officially on the 4th October, will indicate this includes 1800 ground staff and between 300 to 700 pilots, with the freight sector the worst affected.

The advent of low cost carriers has had a deleterious effect on the overall operation which meant an initial plan ‘Transform 2015’ called for a reduction of staff by 5,100 from a near 70,000 total workforce. Now the union tells us that ‘Transform 2’ is to make the additional cuts whilst they have been assured by new CEO Frédéric Gagey that ‘there will be no Transform 3’. The low cost operation Transavia will be given more prominent status however, operating an extra five aircraft from summer 2014 from Orly, and will add further European service destinations. This will result in a sharp decrease in Air France’s own point to point operations.

We understand that cuts to air cargo services will mean the closure of facilities at Orly and sites throughout the provinces (except the major regional hub at Lyon Saint-Exupéry) and continued overcapacity sees the cessation of the Boeing 747 freighter service by 2015 with the two Boeing 777F aircraft taking up the slack. Freight management tasks will be transferred to outside ground handling companies but priority will be with passenger craft and there is confusion as what will happen regarding subsidiary Martinair Cargo and calls at Charles de Gaulle airport. Basically it seems as if the entire freight operation is to be restructured whilst provincial bases, particularly Marseille, will be downgraded.

The management at the airline said that its policy of wage moderation will continue in the light of the sixth consecutive annual loss, despite increasing overall operating income by €100 million the company still saw net losses extend by €300 million to €1.19 billion in 2012. The management and union are to hold full and frank discussions at the meeting in October and one of the points under discussion will doubtless be staff flexibility in the light of a management statement that it intends to adjust schedules better to tune in to accommodate the seasonal variations and increased long haul services.

On these the company says phasing out of the 747 long haul aircraft will be matched by the early delivery of the better suited Boeing 787 in 2017 and Airbus 350 the following year and an expansion of the routes catered for. Frédéric Gagey, Chairman and Chief Executive Officer, Air France, said in a statement:

“Transform 2015 is taking effect and has had positive results in 2012. Air France is continuing its thorough transformation based on the commercial development of its markets with high growth potential, the move upmarket of its products and services and the reduction of its costs. I intend, together with all Air France staff, to concentrate on customer service and the successful recovery of our Company."

Photo: Working through the night at Lyon Saint-Exupéry.