...business is one of two areas that Air France-KLM identified as "still in trouble" when third-quarter results were unveiled on 31 October. The other is cargo. But where cargo is seen as in need of group-wide attention, it is Air France, rather than the Dutch partner, that must reform medium-haul operations. Why even bother? It's a question Air France-KLM chief executive Alexandre de Juniac addressed during the results briefing. First of all, he noted, the medium-haul network is a "very important" source of revenue, generating €7.5 billion last year. Secondly, it feeds the hubs. Last year, hub feeding accounted for 59% of revenues from medium-haul, to which a total of 384 aircraft are allocated. There are two other subsectors within medium-haul, namely French point-to-point operations (30%) and the leisure business (11%), and their fortunes are sharply divergent. The airline deems domestic point-to-point services to be "essential to maintain market presence", but acknowledges them to be "most affected by the economic crisis in Europe and the market shift". Leisure, on the other hand, is "the only part of the [medium-haul] market which is growing", says de Juniac. So what is to be done? Air France has selected a specific strategy for each of the three subsectors. In the hub-feeding categories, the focus is on Paris Charles de Gaulle, where both staff and aircraft numbers are now to be cut beyond what was previously envisioned as part of the Transform 2015 restructuring...
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...companies will be closer to current risk of Air France. Beta of combined companies is 1.36 Future tax rate for both companies that are merge is 35% Market premium 5% Risk free rate 4.1% Cost of equity 10.9% Year | Expected benefit | Midpoint | Discount factor | Discount value after tax million euro | 2004/2005 | 65-75 | 70 x 0.65 | 0.90171 | 41.03 | 2005/2006 | 110-135 | 122.5 x 0.65 | 0.81309 | 64.74 | 2006/2007 | 220-260 | 249 x 0.65 | 0.73317 | 114.37 | 2007/2008 | 295-370 | 332.5 x 0.65 | 0.66111 | 142.88 | 2008/2009 | 385-495 | 440 x 0.65 | 0.59613 | 170.49 | Beyond | 600 | 600x 0.65 | 0.59613x9.17431 | 2.132.94 | | | | Total | 2.666.45 | Probably, merger will reduce airlines post merger tax rate and systematic risk rate because of KLM’s tax loss carry forwards. If we look to management expectations value of synergies is about 2.666 million euro. Should KLM shareholders be paid as a takeover premium: * Companies can be assumed to the predicted synergies in similar way (KLM -15.7%, Air France 84.3 % - market value differences taking into account) * Merger can take form of an exchange of share in this case no premium must be paid. Assume: 1. Shareholders of Air France agree on merger value to be 2.666 million euro 2. They understand that they will receive (3008.8/(559.8+3008.8)) = 84.3% , but KLM (559.8/(559.8+3008.8)) = 15.7% 3. And Air France share price will rise Air France share price increase by: 10.22 Euro - 3008...
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...Business Ethics : Air France Finance and competitiveness are today the two words at the heart of preoccupations for all Air France executives. Air France is the main French airline company. Founded in 1933, it provides transportation of passengers, cargo, maintenance, and maintains aircraft around the world. It joined with the Dutch company named KLM in 2004 and became together the fifth air carrier in the world. Air France KLM has about 77.3 million passengers each year, more than 95,000 employees and 25.5 billion turnover in 2013, so it must implement a very specific organization in order to better manage its business. With the rise of low cost airline and the economic crisis raging, Air France KLM must pay close attention to the management of his company. Many stakeholders are involved in the good functionment of Air France KLM, that’s why they have an important place in the company. In recent weeks, Air France KLM has been affected by several strikes of its employees which caused Air France to lose a lot of money (until 500 million euros) and created lowers credibility to its loyal customers. How Air France KLM has to face all these threats and what solutions could be put in place to prevent these risks ? First of all, we will see the main stakeholders present in this company and the actions to take in place to manage them. Finally, we will find different preventions to avoid any strikes and minimize risk. Company’s stake holders identification...
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...Part one Air France KLM 1.What drives this competitor? 'Making the sky the best place on earth' AIR FRANCE KLM, the result of a merger between AIR FRANCE and KLM in 2004, is one of the leading European air transport groups. 2.What is its current strategy? -Restoring competitiveness implying a reduction in costs -Restructuring the short and medium-haul operations -Rapidly reducing debt. 3.What does this competitor believe about its industry? Its main activities are the air transport of passengers and cargo as well as aircraft maintenance. In 2011, AIR FRANCE KLM carried 75.8 million passengers and 1.4 million tonnes of cargo. The group's fleet comprises more 586 aircraft, including 173 regional aircraft operated by its partners Brit Air, City Jet, Regional and KLM Cityhopper. Its network covers 230 destinations in 113 countries from its hubs at Paris-Charles de Gaulle and Amsterdam-Schiphol. 4.What are its strengths and weaknesses? S: 1) fleet - Air France-KLM offers the largest international network, built around its two coordinated hubs, Roissy-CDG and Amsterdam-Schiphol. The dual hub system is one of the cornerstones of the Group’s strategy where smaller flows of European and regional traffic connect with intercontinental flights. This enables a high frequency of flights, whilst limiting the overlap of destinations served by the two airlines: 70% of long-haul destinations and 60% of medium-haul destinations are served by just one of the two carriers. ...
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...world’s leading networks with our SkyTeam partners. II _ Air France-KLM 2010-11 Annual Report airfrance.com making the sky the best place on earth Editorial We can face the challenges with confidence Jean-Cyril Spinetta, Chairman of the Air France-KLM Board of Directors On the North Atlantic, the leading long-haul market globally, Air France-KLM has established a significant lead over the other alliances, and particularly Star Alliance, through the joint-venture that the Group has created with Delta and Alitalia. Our goal is to extend this model to all our SkyTeam partners, and particularly our Chinese partners. Furthermore, we are actively engaged in membership negotiations with other airlines in Brazil, India and elsewhere in Asia. On this basis, SkyTeam stands to benefit from global coverage. After a challenging time in 2009-10, our Group has succeeded in stemming the haemorrhage and returning to profit while also reducing debt. Our recovery has been remarkable. This success is thanks to the outstanding work of the Air France-KLM teams and the resolute commitment of all our employees within a difficult environment. I would like to thank everyone for their efforts. To confirm this recovery, the Air France-KLM group was able to implement the strategy required to win back market share lost during the crisis in both the passenger and cargo businesses. But make no mistake: we are still in an uncertain air transport environment. There remain numerous obstacles to...
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...our businesses we are pursuing a strategy of profitable growth, founded on respect for our employees, shareholders and the environment. Our position as world leader in air transport gives us responsibilities and encourages us to set ever-higher standards of customer service, financial performance and social and environmental commitment. 2006-07 Contents At a glance ••• 1 Chairman’s message ••• 2 Key figures ••• 4 A contributor to the economy ••• 8 Interview with Jean-Cyril Spinetta and Leo van Wijk ••• 10 Passenger activity ••• 14 SkyTeam ••• 26 Cargo activity ••• 28 Maintenance activity ••• 34 Corporate governance ••• 42 Being a shareholder ••• 50 Sustainable development ••• 58 Consolidated financial statements ••• 64 Glossary ••• 69 Additional information on the Air France-KLM group can be found in the 2006-07 reference document on the website, www.airfranceklm-finance.com, or on request. 2006-07 At a glance Global leader 240 105 3 73.5 1.4 900 destinations in businesses million tons of cargo transported 1 countries million passengers carried aircraft maintained Profitable growth 23.1 billion euros of revenues billion euros of operating income employees 1.2 103,000 2 Dear Shareholder, This financial year draws to a close the first phase of the merger between Air France and KLM which has resulted in significant value creation for the Group and for our shareholders. Within a context characterized by a high oil price, our profitable growth...
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...competitors. In 1934, Boeing became a large enterprise, producing aircraft engines, carrying mail, dealing with airports and ensuring many airlines. But under pressure from anti-trust law prohibiting manufacturers to operate airlines, its creators sold their holdings and "United Aircraft and Transport" got divided into three entities: * United Airlines responsible for air transport * United Aircraft responsible for manufacturing in the East * Boeing Airplane Company responsible for manufacturing in Western countries. United Aircraft and Transport Corporation is a vertically integrated group, present in all sectors of aviation. In 1934, an anti-trust law is to separate aircraft manufacturers companies carrying mail, and forces the company to split into three entities, * United Air Lines in 2011, which is the largest airline in the world * United Aircraft Manufacturing Corporation, which later became the United Technologies Corporation * Boeing Airplane Company, which became in 1941 The Boeing Company. Case example of Air France / KLM In September 2003, it was announced by Air France and KLM that they would merge their ownership and begin synchronizing operations, although they would continue to be supposedly separate carriers. This blend of two of Europe's largest four carriers created the world's largest airline, as considered by...
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...------------------------------------------------- Competing through alliances in the airline industry: The AIR FRANCE- KLM/DELTA AIR LINES JOINT VENTURE In less than twenty years, the global industry has gone through tremendous change. Several airlines had gone out of business that had been on top of the industry for years. One of the remarkable changes had been airline alliances. The case focuses on the airline industry and how airlines are forming alliances and joint ventures. It then introduces the partner firms Air France KLM , and Delta . Air France KLM had over 25 collaborative agreements with other carriers and was a founding member of Skyteam, one of the leading airline groups. Air France KLM and Delta Airlines formed revenue and cost sharing joint ventures that include all transatlantic routes of the two airlines. The alliance formed sales over 12 billion euros, and accounted for about 30% of all North Atlantic passenger business. The case also provides information on joint ventures, and how alliances are used strategically to enhance revenues and reduce cost. The case also discuss how collaboration can be structured and governed to achieve outcomes, and how strategic decisions by one alliance partner can affect the stability of the alliance. The issue of the case is if whether Air France KLM should reconsider their alliance with Delta Airlines, due to some of the independent decisions made within the alliance. Some of the external factors that affected the company...
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...logistics industry in France is ranked number 13 compared to 160 countries, measuring at 3.85. Their highest ranking indicator was that of timeliness which may be contributed to their vast transportation infrastructure. Important segments within their logistics industry is wholesale and retail trade, transportation, accommodations and food services. Within industry, the manufacturing, mining and quarrying segment represents 12.8 percent and construction accounts for 6 percent of total GDP. Agriculture contributes 2 percent to GDP. Yet, France is the second largest exporter of agricultural products in the world. France has a boasting workforce of 27051 thousand as of January 2014. Currently, France has 8 major distribution hubs and an expected increase in manufacturing will deliver another €17 million by 2020 and consumer spending up to €150 million by 2020. The workforce in France is comprised of 70% of the active population. The service industry employees almost 75% of the workforce, manufacturing captures over 20% and agriculture yields almost 3%. France is known for its great infrastructure and solid workforce which are key indicators that are attracting big business. Describe the key logistics companies in France (Name, size, locations, etc). Provide some business information about them (What logistics activities they perform?). Bolloré is a French investment and industrial holding group headquartered in Puteaux, on the western outskirts of Paris, France. The company, a...
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...the expectation of stakeholders by putting away such measures as revenues, profit and legal obligations. Community development, welfare, human rights and ethical conduct are key factors which come under the CSR umbrella’ (Laurie J. Mullins). I would like to discuss the CSR issues in Aviation Industry that’s why I have chosen Air France-KLM and Ryanair. 1.2 Air France-KLM Overview: Air France and KLM merged together in 2004 to form Air France-KLM Group while both airlines operate individually to retain their brands and identity (Air France-KLM CSR Report 2010). Air France was elected best airline of the year 2010 in Business Travel Awards (The Financial). Air France-KLM is the only airline which is selected in Dow Jones Sustainability Index in 2008.This group is the biggest in the whole world according to their profit growth which is €24.7 billion in 2008-2009 and €21.0 billion in 2009-2010.The passenger business, with €16.28 billion of revenues, makes the Group the global leader in both long and medium-haul passenger transportation and contributes some 80% of total revenues and second largest in terms of passenger carrier which is 71.4 million (Air France-KLM Financial Report 2010).Despite of its very difficult financial...
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...Associate Program Material Appendix C World War II and the Atom Bomb Complete the charts in Parts 1 and 2 by providing the requested information. An example is provided in Part 1. Answer the questions in Part 3. Part 1: Western Front | | | | | | |Campaign |Dates |Allied objective |Major turning point |Outcome | |EXAMPLE: |October 1942 to May |Attack Germans from the southern side; |Battle at El Alamein: German forces driven|The American offensive finally drove the Germans from | | |1943 |expose the vulnerability of the Nazi |out of Egypt |Africa, allowing the Allies to move toward Italy | |North Africa | |empire | | | | |1943-1944 |Allies wanted defeat the German occupancy |Battle at Monte Cassion: Allies broke |The Germans and Italians were defeated on the Italian | |Italy | |of Italy...
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...assigned parts of the Normandy coastline. The U.S. First Army was in charge of the attacks on Utah, and Omaha, while the British Second Army was responsible for the attacks on Gold, Juno, and Sword. The naval, and air forces both branches had strategic plans throughout the invasions. The naval plans consisted of transporting the Allied troops to the five beaches, and help defend the beaches, in addition to resupply the troops (Kennedy 266). While the air force plans consisted of bombing German defences, along with bombing bridges, harbours, and railroads, which would ultimately result in an immobilized German infantry (Kennedy 266). One primary factor that helped the Allied conclude with a victory after the invasions was because of deception. Deception to mislead the Germans as to the time, and location of the invasion. To accomplish this, the British already had a plan, which involved various distractions to keep German eyes focused...
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...to do or where to go. C.C. How do French women live long? Mireille Guiliano, author of French Women Don’t Get Fat, says diet is the answer and she sticks by three meals a day, one or two glasses of wine and lots of water. while French woman can expect to live to 85.1 – as against 82.4 in the rest of Europe (according to latest demographic figures from Eurostat) diet, exercise and a healthy lifestyle. Avoid driving on Saturday SATURDAY will be the busiest day of the entire year for motorway travel in France - with the annual crossover of July and August holidaymakers. meaning more than 600km of jams are forecast on roads leading out of big towns and towards the coast. Drivers are strongly advised to put off travelling until Sunday, although jams are still possible then. Air pollution hits 12 million ALMOST 12 million people are living in parts of France where the air quality does not meet European norms, official researchers have found. The ecology ministry's annual air pollution study, published today, found the number of people exposed to fine particles (called PM10) is up slightly in...
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...The women who did were wealthy and Caucasian. Coleman always dreamed of flying. She took a stand against racism, segregation, and sexism to make her dream come true. Her bravery and determination showed the world that African Americans are equal, not just in the air, but in all places. Coleman was born on January 20, 1926 in Atlanta, Texas to George and Susan Coleman. She was born into a family of thirteen children, and her father left the family when she was young. (Hart, Up in the Air, pg. 12) Coleman had to overcome both racial and sexual barriers, because she was an African American woman. (Handlemen, Philip. "Armchair Aviator". Yankee Wings, January-February 1995, pg. 20.) The community in which Coleman lived was strictly segregated. African Americans could not go to the same schools, use the same bathrooms, or entrances into buildings. (Hart, Up In The Air, pg. 12) Coleman's family never had much money. To help her family out, Coleman took on jobs such as cotton picking, laundry, and housekeeping. Coleman had dreams of breaking away from these jobs that were for "colored people" (Hart, Up In The Air, pg. 13, 18) and promised that she would "amount to something". (Rich, Doris L. "My Quest for Queen Bess". Air and Space, August-September, pg. 57) One day when Coleman was picking cotton in the fields, she saw birds flying in the sky. Coleman thought, "I wish I could fly like that." (Fisher, Brave Bessie: Flying Free, pg. 19) It was then she decided she would learn...
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...The women who did were wealthy and Caucasian. Coleman always dreamed of flying. She took a stand against racism, segregation, and sexism to make her dream come true. Her bravery and determination showed the world that African Americans are equal, not just in the air, but in all places. Coleman was born on January 20, 1926 in Atlanta, Texas to George and Susan Coleman. She was born into a family of thirteen children, and her father left the family when she was young. (Hart, Up in the Air, pg. 12) Coleman had to overcome both racial and sexual barriers, because she was an African American woman. (Handlemen, Philip. "Armchair Aviator". Yankee Wings, January-February 1995, pg. 20.) The community in which Coleman lived was strictly segregated. African Americans could not go to the same schools, use the same bathrooms, or entrances into buildings. (Hart, Up In The Air, pg. 12) Coleman's family never had much money. To help her family out, Coleman took on jobs such as cotton picking, laundry, and housekeeping. Coleman had dreams of breaking away from these jobs that were for "colored people" (Hart, Up In The Air, pg. 13, 18) and promised that she would "amount to something". (Rich, Doris L. "My Quest for Queen Bess". Air and Space, August-September, pg. 57) One day when Coleman was picking cotton in the fields, she saw birds flying in the sky. Coleman thought, "I wish I could fly like that." (Fisher, Brave Bessie: Flying Free, pg. 19) It was then she decided she would learn to...
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