The numbers are looking mighty fine for Air France-KLM. The carrier just reported a healthy second quarter profit. But dig deeper and you’ll find a disparity…and a ticking time bomb.
With a net profit of 345MN Euros (405MN USD), Air France-KLM have something to be proud of. Well, at least KLM does. Dig deeper into the numbers and you’ll see that the smaller KLM division contributed 90% of the profits over this period. That’s staggering considering KLM is only 2/3 the size of Air France in terms of passenger traffic. KLM carried 41.6 million passengers last year while Air France carried 57.1 million.
The strong results were attributed to overall growth in premium and North Atlantic pricing. All this despite a string of strikes by Air France workers which cost the company 335MN Euros during the last two quarters. French workers have agreed not to strike during the busy summer months, but have already warned of a new round of strikes in September. Rising fuel costs also remain a concern, with total fuel expenditure expected to rise 450MN Euros over last year.
The carrier is still without a CEO and the latest results again make the case for a Dutch CEO. KLM CEO Pieter Elbers is still considered a top contender for the position, though he continues to deny interest in it.
The way I see it, KLM will not continue to prop up Air France and its perpetual labor woes quarter after quarter, year after year. This is a ticking time bomb that can only be diffused by a long-term labor concession from Air France workers. But that’s like asking a cat not to eat the mouse in front of her. That’s why I still predict an eventual Air France-KLM divorce. On amicable terms of course…
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