NickB

But that is an argument about the European airline industry as a whole rather than one directed at France and AF specifically. Under that logic, LH and BA would be much better off branching out of air transport altogether and switch to a more lucrative activity. Besides, this is hardly new. The old quip that "if you want to earn a million in the airline industry, start with two and know when to stop" is as old as the hills.

If we assume, and I think that it is a reasonable assumption, that companies like BA and LH intend to remain major players in the European airline industry, becoming the major player in another of the largest European markets would be very attractive to them, LCCs and HSTs nowithstanding. The question is whether it can be done at an acceptable cost and without dragging the airline in a quagmire.

respectable_man

The correct quote I believe (but cannot verify) is
"Corporate America loves a subsidy only if the subsidy loves corporate America."

But seriously: the corporate culture at DL is basically orthogonal to that at AF, and likewise when it comes to the culture of employee groups (DL FAs are not union and DL pilots just rejected a contract for higher base salary but less profit sharing).

The long term problems at AF are many, and will be solved in part by improving the passenger experience (instant coffee in Y on TATL anyone?)

af fp

AF has already improved and streamlined quite a bit. A space where they are still lacking, and many airlines are, is pricing. When AF will offer more competitive and reliable prices, instead of selling one-ways for more than returns and last minute fares at irrealistic levels, it will build trust and make revenues more predictable.
The employees need to let go of some benefits but the management must set the example for reasonableness in other areas too. More transparency, fair sharing will work better long term than smokescreens in the shape of irrealistic long term growth plans or hazardous takeover and or recapitalization schemes.

brunos

I read this article:
http://www.lemonde.fr/entreprises/ar...6_1656994.html

Apparently AF has set a deadline of Wednesday 30 September to accet the "New Deal" (a version of Perform 2020?). This appears like a soft deadline, but do we know where we stand today?
Apparently, plan B by AF is direct layoff of 3,000 including some 300 pilots. I think that this is a first for AF. But there is no doubt that AF cannot engage in competitive pricing as long as employee costs are cut drastically; what is often stated as "productivity gains".
The future looks quite stormy for everyone.

Mokshu

Negociations did not succeed (http://www.lefigaro.fr/societes/2015...air-france.php).

So Plan B it is !

San Gottardo

Thanks for the info Mokshu ^

I suppose most of us expect Plan B to happen only after some more screaming and shouting from crews, i.e. strikes

brunos

Thanks Mokshu.
Either AF draws a line in the (moving sands) and an independent AF has a chance to survive or it keeps yielding to pilots and by 2020 there will be little hope left.
In both cases, strikes are likely by 2016 or sooner.

San Gottardo

I am afraid that strikes are likely already in the next two weeks.

brunos

AF pilots determination is based on their belief that their jobs are 100% secure. Hence, they resist any action by AF that would reduce any of their current benefit. That is a natural behavior.
If the threat to fire 350 pilots becomes credible then that behavior could change towards a more reasonable attitude. A tradeoff between job security and productivity. An AF longhaul pilot friend indicated that the proposed plan who translate into an additional 5 flights per year (roughly one more every two months). That is not a huge increase. But why concede anything without some offsetting benefit, unless you that your job is at stake. There is a strong demand for pilots in some regions of the world, but jumping ship is easier said than done.

That being said, I also find AF management arguments hard to buy. Increased productivity will mean more supply of pilot time. That can only be absorbed by growing. But AF does need to eliminate some unprofitable routes, routes that are getting increasingly unprofitable. Hard to see how that can be achieved without reducing the number of more productive pilots.

GenevaFlyer

But there is growth potential on selected routes. Yes, let's start forgetting the need to fly the French flag all over the world and concentrate on specifics.

If we take aside the cost structure of the ME3, let's look at the moves that Emirates is making on some markets:
- All London flights will soon be operated by A380s instead of B777.
- The DXB-BRU flight has been upgaded from B777 to A380.

This is not just because they are getting more A380s, it is also because they can fill the seats. (Yes, they are getting more B777 as well as more A380s, so no obligation from a fleet perspective)

The noises of some of the growth being shifted to KLM is the reality. While not everything the company wants, they have reached agreements with the KLM unions, opening room for progress, whereas the AF pilots have tried to play hardball, and they may now be getting the stick as a result.

Just some random thoughts,

GenevaFlyer

Zembla

True, interesting perspective you give here. That may be the poker game AF management are playing. From my understanding it's very difficult to sack people in France, but it could well be they are after sacking people in the first place. They may have played their cards this way to get more arguments to justify it.

Mokshu

I think it's time for major actions now :
- improve the growth of KLM and Transavia Holland, for which VNV and cabin unions have accepted new conditions ;
- decrease AF capacity (10-12%) and lay-off people (3500? Meh! 12000!) ;
- create a new subsidiary at AF/KL group level (so that SNPL has no word to say) and delegate part of the fleet to it (340/330 for example) with strict FTL rules in application.

San Gottardo

The pilots have their own ideas on how to improve Air France. Unfortunately that communiqué on the website of SNPL is accessible to members only... (which is silly, isn't it? Wouldn't you like the world to know your position and get public opinion to back you up? How do they want opinion on their side if they refuse to express it? Instead AFKL has publicly accessible information on their website and all in all is much better in public communications, bringing public opinion behind its position.

brunos

With all due respect, AF pilots do not care much about public support. They might care a bit about what their friends think, but they know that they can paralyze the company at a whim without significant financial personal penalty. Sure French politicians will not be their Facebook likes, but pilots know that these same politicians will yield when it's time for their family to fly for holidays.

orbitmic

Hilariously, according to some unions and regional papers, AF plans to apply its "plan B" in outstations rather than CDG, while of course, it is the CDG staff refusing the change. In that sense, they indeed have zero incentive to change their minds if it is others paying the price anyway.

What I heard (but could not verify) is that AF would have mentioned to its staff that only 50% of long haul routes are profitable while they are aiming for 80%. That would put an end to oft held belief that the problem only lies with short/medium haul and that long haul is doing fine and gives an entirely new aspect to the current crisis.