Air France

[Flitefone]

According to Flight Global this week, Air France losses for 2012 amount to $1.5bn...

A quick calculation shows that the airline lost almost $50 every second for the entire year! That brings a new dimension to the words heamorrhaging cash!

Competing with easyjet and Ryanair on short haul is one thing, emirates and qatar on long haul for sure, i doubt that AFR will win any of those battles, even with Hop. But is AFR even perhaps competing with itself with the etihad deal for middle and far eastern routes?

What's the future for this airline that seems to be doomed!?

[CelticRambler]

Too big to fail. := As long as every overpriced, underperforming, 110% unionised factory has to be saved "in the national interest" and at the risk of bringing crowds of tyre-burning natives onto the streets, the government will never be able consider not propping up the flag carrier. Besides, there are too many pigs with their snout in a very full trough, e.g. the infamous Comité d'entreprise.

[CelticRambler]

AF seems to be churning out the bad news at the moment. Another 2500 jobs to go, on top of the c.5000 already announced. And if their 793m € half-yearly loss wasn't enough, the government has decided to increase the "Chirac tax" which disproportionately affects AF as they lose short-haul market share to the LoCos and other European intruders.

It's been in place three years now and I still can't quite figure out why someone flying from Bordeaux to Lyon (as opposed to taking the train) should be paying for HIV tests in Africa ... but someone thought it was a good idea at the time. :hmm:

[Heathrow Harry]

AF will not be allowed to fail - the politicans will see to that

So there is less pressure than on say Iberia or BA to cut costs even further

To be fair AF are also getting hammered by the continuing spread of high speed rail services in NW Europe

[CelticRambler]

That too - which only increases their reliance on long-haul flights. I don't have stats to hand, but I get the impression that the only market where they are not (desperately) defending their share is on routes to their old stomping grounds in Africa. Something to do with the indigenous airlines having a dubious safety record ... :}

[davidjohnson6]

I hope people won't mind my asking, but why exactly does Air France lose so much cash ?

France is a large wealthy country with a high level of trade to countries around the world.
Tourists visit the country in their tens of millions every year.
AF is the European anchor for one of the big 3 global alliances.
The airline flies to major business centres all over the world.
Despite people's grumbles, CDG is more than adequate as a major world hub
The main international hub at CDG has excellent domestic TGV train service allowing passengers to travel easily from all over France without the airline having to operate the costly domestic feeder flights.
The operations of Easyjet and Ryanair are much smaller in France than the UK, Spain or Italy
AF has created Hop, similiar to Germanwings, to avoid too much carnage from the LCCs

So what precisely are causing these huge losses ?

[HOODED]

Read post 2. We are talking about France here. Very high labour costs and the unions will not allow the working practicies that the rest of the world have adopted to stay competitive. Also look at the fleet hardly streamlined is it? How many other airlines operate all 4 versions of the A320 or as many different long haul types?

[Fairdealfrank]

Quote: "That too - which only increases their reliance on long-haul flights. I don't have stats to hand, but I get the impression that the only market where they are not (desperately) defending their share is on routes to their old stomping grounds in Africa. Something to do with the indigenous airlines having a dubious safety record ..."

SN gives AF a run for its money in that market.



Quote: "Despite people's grumbles, CDG is more than adequate as a major world hub"

CDG is a s---hole!

Too harsh? OK it's barely adequate.

[Capetonian]

CDG is the worst major hub in Europe and that possibly makes it the worst in the world. It is not only antiquated and badly designed, impractical and poorly signed, but has the rudest ground staff of any European airport with the possible exceptions of Sheremetyevo and Madrid.

The others reasons AF loses so much money have been adequately explained by other posters, added to to which it's a state owned industry in a communist country, somewhat like the old Aeroflot. A pity, because their service in the air is not bad at all, it's on the ground and infrastructurally that they are so poor, mainly because like all French employees, especially of the state, they have jobs for life.

[EI-BUD]

Have to say I agree about CDG, connecting there is major headache. As explained, illogical layout. Not a pleasant experience. Compare to frankfurt , such a breeze to change.

AF have been great at buying up other French airlines and monopolising everything. Less competition than inside most other EU countries mean that they have been slow and unwilling to embrace change, stream lined and take complexity and cost out of the business. Eg diverse range of ac types. Insane pricing on one way tickets !!!

Then look to EI small market and confronted with Europes Ultra low cost airline and it evolves reforms and embraces change to the point where if makes annual profit and grows..

[OntimeexceptACARS]

Blimey Capetonian, let me help you off that fence! :}

[CelticRambler]

... like all French employees, especially of the state, they have jobs for life.

Point of order, Mr. C : information released today shows that they have jobs for only half their life, at which point they can retire and the state/miscellaneous taxpayers chip in to make up the 64% shortfall in their pension contributions. :D

Otherwise, in response to the question "why the losses?" it is as Hooded (and Capetonian) suggest: France is not a country that favours or encourages innovation. The government engages in the most bizzare contortionism to preserve "traditional manufacturing" and other such industries while suffocating creative start-ups at birth and other innovations as soon as they're spotted. A recently introduced radical idea - to pay taxes/social charges only on what you actually earn (rather than notional/forecast income) - is being hobbled because ... it's too successful (the structure of choice for 80% of newly established business in 2012, and the only class showing net job creation).

When a French-based company has to pay 230€/100€ taken-home compared with (picking an example entirely at random :p ) and Irish-based company paying 145€/100€ taken-home, and as a company of >50 employees also has numerous other "social" obligations - like throwing money into the bottomless pit that is the AF Comité d'Entreprise - it's a no-win situation for everyone ... except the non-national competition.

I can't see how combining three loss-making companies into one is going to save Hop! when the employment rules in France virtually guarantee that any "normal" merger savings will be impossible, at least not in a time frame that will allow the new company to react to competition from others with more flexibility. It's only significant PSO contributions that keep most routes alive and that bucket has a hole in it.

[Fairdealfrank]

Quote: "CDG is the worst major hub in Europe and that possibly makes it the worst in the world. It is not only antiquated and badly designed, impractical and poorly signed, but has the rudest ground staff of any European airport with the possible exceptions of Sheremetyevo and Madrid.


Quote: "Have to say I agree about CDG, connecting there is major headache. As explained, illogical layout. Not a pleasant experience. Compare to frankfurt , such a breeze to change.

Quite.


Quote: "...added to to which it's a state owned industry in a communist country..."

No, France is a NOT a communist country, it's quite different from China or Vietnam.

[Aksai Oiler]

Frank, je ne comprend pas, France is socialist bordering "communist", so I would have to agree with the communist point of view

[Capetonian]

No, France is a NOT a communist country, it's quite different from China or Vietnam.

Very true, China is highly successful and on the way up, France is on the way down. Vietnam is still poor but they make things work and enterprise and hard work are encouraged, not discouraged by the politics of envy and destruction of free enterprise.

[Winnerhofer]

Air France, ce rapport qui pense avoir la clé face à Easyjet, Ryanair, Vueling... (Hop, Transavia) (http://www.latribune.fr/entreprises-finance/services/transport-logistique/20140630trib000837617/air-france-ce-rapport-qui-pense-avoir-la-cle-face-a-easyjet-ryanair-vueling-hop-transavia.html)


Reading between the lines, AF will change all its European routes to A5, a rehashed IT.
AF will only use A330/A340/A380 for intercontinental routes and the rest will be for A5.

[Hotel Tango]

For those of you who may not be familiar with present and past IATA codes, or the concept of google:

AF - Air France (you all knew that one)
A5 - HOP! (not so obvious)
IT - (The former) Air Inter (How many remembered that one?)

;)

[Fliegenmong]

I sure do remember Air Inter, remember flying between BIQ & ORY with them.....I remember this too.....

Air Inter Flight 148 - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Air_Inter_Flight_148)

Not too long after I flew with them...

[A4]

So do HOP crew enjoy the same T&C's as AF Mainline? Can't see the AF crew being too happy to have their Terms reduced or for the existing HOP crew to flying around on inferior T&C's (if that's the case). Interesting times ahead.....

[DaveReidUK]

Reading between the lines, AF will change all its European routes to A5, a rehashed IT.It doesn't say, or even imply, that at all. The hub operation at CDG will continue to be badged as AF.

[Una Due Tfc]

Lufty have a very mixed fleet and are one of the most profitable airlines in the world, so that's no excuse.