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

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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.

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