The Turnaround Program of French-Dutch Airline, Air France KLM

674 Words2 Pages
bulb-icon

Recommended: Airline industry oligopoly

Air France-KLM's "Transform 2015" Turnaround

Program

SUMMARY

The case is about the turnaround program of French-Dutch airline, Air France KLM. The airline was formed through a merger of French and Dutch carriers in 2004. The case describes the cross border alliance and the airline's good performance in the initial years post merger. However, from 2009, the company was struggling to remain competitive in the changing global aviation industry. According to some analysts, the differences in culture and management styles of both Air France and KLM became a hindrance to the realization of the synergies of this partnership.

The case highlights the challenges faced by the airline due to increasing fuel costs, competition from low-cost airlines, and the after-effects of the financial crisis. The case discusses "Transform 2015", the turnaround program adopted by the airline in 2012. It highlights the key measures adopted in the turnaround program. While some industry experts were convinced that the turnaround strategies would help revive the airline, others were sceptical about it. The case ends with a discussion on the challenges that lie ahead of the company.

QUESTIONS

• What, in your opinion, contributed to the problems faced by Air-France-KLM post 2009? Does it indicate the failure of a cross-border merger? Culture, chapter 5 of the book.

• Discuss the organizational structure adopted by Air-France-KLM. What are its pros and cons? Discuss the new organizational structure for Air France.

• Discuss the "Transform 2015" program announced by Air France-KLM. Do you think the measures included in the program will help revive the airline?

Hand in your answers to these questions by e-mail. (b.vanbeers@fontys.nl) before We...

... middle of paper ...

...Januray 2009: operational partnership with Alitalia. 25% stake in Alitalia. Estimated that potential synergies would be 370 million as of 2nd/3rd year.

- April 2009: strategic alliance with Delta Air Lines. Expected 150 million improvement in operating result over three years of this network.

- 2010: the Group redefined its medium haul product and restructuring of the cargo business

- 2011: AF-KLM operated more than 586 aircraft, 2500 daily flights to 230 destinations in 113 countries. 75,8 million passengers and 24,4 billion revenue ( exhibits 2a 2b and 3)

3. A successful merger?

The Air France-KLM merger was unique because it was a cross border merger with companies that have different cultures. They both kept flying under their own brands. In the first years it was a success because of the needs of consolidation in the European aviation industry.

Show More
Related

  • Spirit Airlines Value Chain

    89 Words  | 1 Pages

    The following value chain, which focuses on Spirit Airlines, is representative of most of the firms in the Ultra Low-Cost Airline industry. Spirit is the industry leader in many areas such as operational efficiencies/cost structure, aircraft fleet management, brand/network and growth. The firm, however, trails industry foes in areas such as customer service and operational reliability and recoverability. While most in this segment pursue the cost-leader competitive strategy, Spirit has demonstrated the most effective model to date – whether the model is the most sustainable remains to be seen.

    Read More

  • Operational Strategies That Management May Use to Respond to Influences on Operations

    1161 Words  | 3 Pages

    One of the many influences that affect Qantas is the presence of globalisation, which has heavily affected the airline both positively and negatively. Globalisation is a process which refers to the increased integration between different countries and economies as well as the increased impact of international influences on all aspects of life and economic activity. Globalisation is responsible for the removal of many trade barriers and the increased level of competition that Qantas has been exposed to. The increased levels of competition has increased consumer sovereignty and forced Qantas to implement strategies to gain a competitive advantage in order to redirect consumers towards their business. Qantas has implemented a cost leadership strategy as a response to globalisation and the influence of cost based competition. One way that Qantas achieved this was by using Globalisation itself to the business’ advantage. Globalisation ha...

    Read More

  • Delta Airlines Executive Summary

    587 Words  | 2 Pages

    Delta Airlines has been a vibrant company in the airline industry, with great success over the years. Delta airlines started as a crops dusting company to serving more than 572 destinations, in 65 countries on six continents (Allan, H., David. H. ,2012). Delta airline moved its headquarters from Monroe, Louisiana to the city of Atlanta, Georgia. The great management strategies have portrayed from time to time to be fruitful even in the verge of a recession. With these consistency in delivery of services, it is clear that the company is out to outdo its competitors and turn out to be the greatest airline in the world.

    Read More

  • Frontier Airlines Rebranding Campaign

    1268 Words  | 3 Pages

    As Frontier approached its 10th year of operation, Frontier officials realized an image shift was in order. The airline had established a reputation for friendly and reliable service, and reasonable airfares, mainly appealing to leisure travelers. But they reali...

    Read More

  • Southwest Airline Merger With AirTran

    1448 Words  | 3 Pages

    Since its first grand opening in 1971, Southwest Airlines has shown steady growth, and now carries more passengers than any other low-cost carrier in the world (Wharton, 2010). To expand the business operations, Southwest Airlines took over AirTran in 2010 as a strategy to gain more market share for the Southeast region and international flights. However, the acquisition of AirTran brought upcoming challenges both internally and externally for Southwest Airlines. In this case analysis, the objectives are to focus on the change process post the merger with AirTran, and to evaluate alternatives to address the impacts of the merger. II.

    Read More

  • JetBlue

    1701 Words  | 4 Pages

    The Airline Industry is a fascinating market. It has been one of the few industries to reach astounding milestones. For example, over 200 airlines have gone out of business since deregulation occurred in 1978. Currently, more than 50% of the airlines in the industry are operating under Chapter 11 regulations. Since 9/11, four of the six large carriers have filed for and are currently under bankruptcy court protection. Since 9/11 the industry has lost over $30 billion dollars, and this loss continues to increase. Despite the fact that the airline industry is in a state of despair, JetBlue has become the golden example, a glimpse of what the industry could be.

    Read More

  • Case Study: Qantas

    1629 Words  | 4 Pages

    According to the International Air Transport Association, 2001 was only the second year in the history of civil aviation in which international traffic declined. Overall, it is believed that the IATA membership of airlines collectively lost more than US$12 billion during this time (Dixon, 2002).

    Read More

  • Jetstar Case Analysis

    1885 Words  | 4 Pages

    As airline industry is a competitive marketplace, the airline companies use new technologies to improve their efficiency and decrease the overhead costs, including ‘advanced aircraft engine technology, IT solutions, and mobile technology’ (Cederholm 2014). The technology changes including technology improvement, new innovation and disruptive technology. The disruptive technology need to meet the characteristics of ‘simplicity, convenience, accessibility and affordability’ (Christensen 1995). The technology changes would bring both opportunities and threats to airline companies. Since Labour cost and fuel costs occupy 50% of most airlines operating cost (Groot 2014). Therefore, if new technologies could be disruptive in the two aspects, there will be important changes to current airline

    Read More

  • Delta Airlines

    2645 Words  | 6 Pages

    When analyzing Delta, you do not have to search very far before quite possibly one its strongest attribute rears its head. Based on calendar 2000 data, Delta is the largest U.S. airline in terms of aircraft departures and passengers enplaned, and third largest as measured by operating revenues and revenue passenger miles flown. Delta is the leading U.S. airline in the transatlantic, offering the most daily flight departures, serving the largest number of nonstop markets and carrying more passengers than any other U.S. airline. Delta Air Lines transports more passengers worldwide than any other airline. Through a vast worldwide route system Delta has flown over 117 million passengers, more than any other airline in the world. Delta mainline, domestic and international service, Delta Express, Delta Shuttle, Delta Connection®, Delta Sky Team and Worldwide Partners operate 6,400 flights each day to over 450 cities in 98 countries.

    Read More

  • Company Analysis: Northwest Airlines

    831 Words  | 2 Pages

    Northwest Airlines is one of the pioneers in the airline transportation industry and is ranked at the fourth largest air carrier in the United States today. The success of the carrier depends on the quality and reliability of the service at a reasonable price. Close competitors force Northwest to innovate their services by increasing efficiency. This essay will try to examine different perspectives in the services needed to successfully complete the company’s objectives. The analysis will explain historical and financial perspectives that may give a better understanding of the current market trend of the organization.

    Read More

  • Case Study Of Southwest Airlines

    739 Words  | 2 Pages

    The Southwest Airlines company and its culture is one that is often cited in today 's business classes. The airline is widely known to be “different” compared to many of its competitors, a result of its founding values and strong corporate culture. This culture developed early in Southwest’s history and was deeply entrenched due to the competitiveness of the airline industry, as well as due to some of the pressures experienced as a result regulatory issues and stiff competition.

    Read More

  • History of United Airlines

    610 Words  | 2 Pages

    As aviation matured, airlines, aircraft manufacturers and airport operators merged into giant corporations. When cries of "monopoly" arose, the conglomerates dismantled.

    Read More

  • Analysis of EasyJet's Business Drivers

    832 Words  | 2 Pages

    ...leader. Certainly, it has to take into account the implications of completion from both the direct and the indirect competitors. That is why EasyJet centers on the cost management strategy and the differentiation strategy (Hanlon, 2007). Through an analysis of EasyJet Airplane company strategies and performance, it is clear that they are ambitious and strive for the best. They not only survive in an industry that is intensely competitive, as shown through the analysis by Porter's Five Forces, but also succeed in terms of offering their customers the best that they have to offer in terms of value for money. The advantage this airline gains over its oligopolistic competitors stems from flexible ticketing and complete access to all primary routes. However, in keeping airline industry, there is room for improvement and growth as the analysis using Ansoff Matrix reveals.

    Read More

  • Airline Sustainable Competitive Advantage

    1432 Words  | 3 Pages

    Porter stated; “for an airline to succeed in the marketplace, it must have a sustainable competitive advantage” (Porter M. E., 2008). The airline industry is the highest competitive industry, and I believe a sustainable completive advantage is essential to succeed in the future of the aviation industry. The competitive advantages that an airline embrace, needs to be based on the airlines strategy and differentiation to competitors. Emirates displays how it has a strategy and how the airline gets ahead of its competitors through how unique it is.

    Read More

  • Risk Management in Kingfisher Airlines

    1371 Words  | 3 Pages

    KINGFISHER AIRLINES LIMITED ANNUAL REPORT 2010-2011. (2011, August 25). In ANNUAL REPORT. Retrieved March 26, 2014, from

    Read More

More about The Turnaround Program of French-Dutch Airline, Air France KLM

Open Document