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| Air France/KLM |
| Annual revenues: | $33,487m | | Annual operating profit: | $2,073m | | Annual net profit: | $1,427m | | Operating profit margin: | 6% |
(Figures are from the period of JAN07-DEC07 in U.S. dollars.)
Strengths and opportunities:
- Operates what's arguably the world's strongest global network
- Two strong hubs in Paris and Amsterdam
- KLM merger producing both revenue and cost synergies without job cuts
- Paris, unlike London LHR and Frankfurt, has room to expand
- Key member of SkyTeam; now has transatlantic joint venture with Delta and soon four-way AF/DL/KL/NW venture
- Lucrative transatlantic KLM and Northwest joint venture the first and arguably still best bilateral global alliance
- Managing to keep tough labor unions happy through growth, profits and conciliatory management
- Highly experienced and respected management team
- Often receives political support from its government
- France less penetrated by LCCs than other major European markets
- Operates low-fare unit Transavia from both Amsterdam and Paris
- France the largest tourist destination in the world measured by revenue
- Best African network of any European carrier
- Many ex French colonies around the world retain tight economic and other links to France
- Network well balanced gepgraphically; not so dependent on the U.S. like British Airways, for example
- Has big cargo, maintenance and catering units to offset any weakness in passenger business (though this can sometimes drag down earnings as well)
Weaknesses and threats:
- Emirates and others taking some longhaul connecting traffic from regions like Africa
- Dependent on connecting traffic; could enable others to bypass Paris and Amsterdam hubs (i.e., Delta going direct from the U.S. to Africa); B787s will continue this trend
- Tough French labor laws create a difficult business environment and inflate costs
- High labor costs relative to many rivals
- French economy not growing fast; burdened with legacy obligations
- Lots of subsidized train competition; easyJet targeting France for expansion
Financial data is sourced from company reports. The strengths and weaknesses are based on an analysis by Airline Weekly's editors. Information provided on airlineweekly.com is for general informational purposes only and should not be construed as investment advice.
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