Contributor - Europe

Cathy Buyck

Air France-KLM this year will launch a tender for the procurement of medium-haul aircraft and spend half of its 2019 capital expenditure on fleet renewal and upgrading as CEO Ben Smith now turns his energy toward returning the Franco-Dutch group to what he calls its “natural position at the top of the industry in Europe.” Executives already hinted early last year that Air France-KLM had begun preparing tender requests to all manufacturers for its short- and medium-haul fleet renewal program, but the process suffered delays due to the ongoing social unrest at Air France that led to the resignation of former CEO Jean-Marc Janaillac and deepening Franco-Dutch tensions on the integration of the group. “With labor and governance issues sorted, we now know which flexibility we have to focus on the third priority: developing a strategic commercial vision which will enable us to recapture the leading position in Europe,” Smith said during the company’s full-year results briefing on Wednesday.

 


The strategy of upgrading the product offering and optimizing the fleet to enhance the group’s competitiveness will lead to changes mostly at Air France. The French airline’s A380 fleet will shrink from ten to seven by 2021, Smith said, confirming a report first published by French daily Les Echo in November that Air France would not renew the leases on some of the four-engine widebodies when they expire in 2020 and 2021. Air France owns five of its A380s and leases the other five. The airline had originally ordered 12 A380s,&nbsp;but it swapped commitments for the last two examples to positions on A350s. Air France said it would proceed with the upgrade of the cabins of the remaining A380s&nbsp;and fit them with full-flat seats from 2020.

 


Air France will accelerate the retrofit schedule of all its long-haul aircraft “as we look to offer all business class passengers full-flat seats as quickly as possible,” Smith said. The company plans to implement redesigns of the cabins of 15 A330-200s by 2020, costing it&nbsp;a total of €140 million. It also plans to equip the 12 Boeing 777-300ERs in high-density leisure configuration with new cabins by the end of 2019.&nbsp; At KLM, all widebodies already carry full-flat seats.

 


Smith noted that the new employee agreements at Air France provide enough flexibility to address the different markets more effectively. “We can now revisit the aircraft configurations with the addition of more premium seats on routes where this is justified, to maximize yields,” he explained. &nbsp;

 


As part of its drive for network optimization and a higher degree of consistency, simplicity, and “clarity” of its long-haul offer, Air France will revise its schedule to ensure at least one frequency a day on all its routes with a first-class cabin and at least one daily frequency with a full-flat product in business class in its most important markets, like the main North American and Asian trunk routes.

 


The ongoing removal of Air France’s A340s and KLM’s 747s remains on schedule, and the last A340s and last 747s will leave the fleet in 2020 and 2021, respectively. Meanwhile, six Boeing 787s and three A350s will enter the combined fleet in 2019.

 


“At Air France there will be particular focus to increase probability in line with that of the industry,” said Smith, who further called improvement in operational efficiency and robustness “key” to reduce customer compensation costs, which amounted to some €400 million in 2018. In a first step, management decided to relax the airline’s schedule constraints on the fleet and add three long-haul and four medium-haul stand-by aircraft.&nbsp;

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