As you will have realized yourselves, we are facing very difficult times. With the worldwide
crisis in the financial markets, and the resulting global economic slowdown as major
countries move towards recession, the airline industry is suffering the worst crisis in its
history, compounded by the erratic nature of oil prices. (Although they are now falling
sharply, many carriers have hedged at higher levels). The crisis is deeper, more
protracted, more fundamental than 9/11, the Gulf War or any of the previous shocks that
have rocked our industry. All airlines are suffering – including the long established full
service airlines – and more than 30 airlines have gone bust this year.
OpenSkies and L’Avion are of course also impacted – the cities of New York, Paris and
Amsterdam that we serve are deeply affected by the financial and economic maelstrom.
Our revenues are below target through a combination of lower volumes and yields, and as
a priority we must take actions to ensure we keep within our cash reserves.
We must build on our strengths: we have people who care; we have a great product which
is exactly right for the market at this time; we have a single aircraft type which simplifies
our operation; we are small and can move quickly to respond to changing market
conditions. We must really maintain our focus.
We have decided to delay expansion: we will operate with our existing four aircraft and
defer delivery of the fifth aircraft (previously planned to enter operation in March 2009)
until the economic environment improves. We will also engage in a battle to reduce our
costs, examining each and every cost area for savings. We will look to all of you to help
us with these challenges – as well as continuing to do your job, and to make sure we
delight each and every customer.
It is imperative that OpenSkies and L’Avion act as one company so we are best placed to
get through these difficult times and achieve our shared vision of long-term success in the
point to point premium travel market. With immediate effect, we will use both company
logos and names in any external or internal communications. We will also act as one
company in commercial and financial decisions. In particular, we will have a two-way
codeshare between OpenSkies and L’Avion from 18 November, so we can sell tickets
under either the A0 or EC code from any of our distribution points on any of our four
aircraft.
Operational integration requires a decision on which Airline Operating Certificate (AOC)
we maintain as we become one single airline. We have now taken the decision to operate
under a single French AOC, after very detailed and careful organisational, commercial,
operational and cost analysis.
Paris was chosen for two major reasons:
- It is a strategic point on our network (at least half of our routes are likely to originate from
Paris)
- We can reduce cost and complexity and improve communications between managers
and operational employees by focusing our headquarters and European operations in
Paris.
The timing for full integration of our two great little airlines will be driven by a number of
factors and may proceed more rapidly in some areas than others, but will be completed
with determination as quickly and effectively as possible.
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