AF/KL Investor day presentation - take aways
 

Hi All,

Today was the AF/KL investor day presentation. The presentation can be found on the site.

https://www.airfranceklm.com/en/news...estor-day-2019

I created the thread so those interested can share thoughts based on information shared. I am currently traveling, so not able to go into all details at the moment, but maybe others are in the opportunity:)

Gajan

Interesting document! Didn't know they were revamping J class on Short-haul, with Sky Priority and Lounge access. Some interesting slides regarding the fleet as well, though I don't know if it was already announced on FT :)

Several interesting points:

- KLM is planning to keep only 777 and 787 in the future (they will be transferring the 330 to AF I imagine? or have them retired)
- AF has a plan to make the horrible 777 COI on other aircraft like 332 and 350...

Interesting to see that KLM is certain that the 787 and 777 have a common pilot rating, while AF calls it a potential common pilot type rating.

If you can't even make things make things like a presentation consistent...

What's 777 COI?

Overall at least this corporate direction is clear. Joon was stupid; now they can concentrate on one low cost effort that is established.

The 'business class' on short and medium haul is still the same economy seating. Yay.

Ummm, didn't J class always have these?

The "Caribbean and Indian Ocean" (COI) configuration, i.e. leisure heavy

Slide 81: Air France domestic network

Implementation of more qualitative aircraft (Embraer 170/190,A220) and Business Cabin

Slide 85
Business cabin on all routes including domestic as of 2020

Slide 86
- dedicated front cabin
- blocked middle seat
- food and beverages dedicated offer (Champagne, wine, deluxe snacks)
- targeted launch Q1 2020

Currently no J on short-haul (i.e. domestic at AF)

"Our Unique Competitive Advantages

Schiphol: Best-In-Class European Hub"

Did they forget to take their meds?

Johan

Indeed a very interesting slide deck. The main points I have noted :
- J on domestic
- very likely densification of Y long haul ;( even the 777COI (+4 seats !!)
- several domestic route cuts or frequency reduction to come

I read that there might be a new lounge coming in 2020 at LAX? If this is true, this is good - especially with the current crappy Korean Air lounge for Elite+ pax.
I wonder how they plan to upgrade the 2F lounges...seems quite limited that they can improve further....

Cheers!

I consider it might be more of a union question for Air France rather than technical question. You can have single pool between 777 and 787, many airlines already do, I think KLM among them.

Not on Domestic.

Eh.
There really isn't much competition, Schiphol sort of wins by default. LHR is not great by any means. CDG is confusing with all the different terminals and piers and somewhere you walk, somewhere there's a train and somewhere you take a bus, and somewhere you better go landside. FRA is just a mess. They can't even consistently put bus arrivals from EU into clean or unclean zone, you literally don't know which you end up with until the bus opens the door. MUC is good, but it's a secondary hub. MAD is fine within T4, but everybody sort of keeps forgetting it exists.

Interesting slide deck, thank you.

Almost nothing on the FFP however, make of that what you will

Regarding the slide with seat guru maps of A330, A350 and 777-300ER. It is just a comparison between Air France and low cost airlines on competitive routes. They don't want to implement COI cabins on the whole fleet they. They were just showing how keeping AF premium product and at the same time offering a lot of cheaper Y seats works better than having a lot of Y seat and few premium seats (far from an actual J seat). But Ben Smith did say that he would look into putting more seat in each aircraft whenever possible, while having the same number of premium seats.

You forgot to mention that there are a few other changes regarding J class:
- Pre order meals on long haul flights
- 80% highest standard J seats in 2020, 100% by 2022
- Only Michelin starred chef offered in J

They also want to implement more personal services for customers: I have no idea what it means?

The Hippocampe logo was on each and every AF slide ;) but there was also another funny Air France invention logo : Cancel the Cancellations

The only new thing in this part is GVA. The rest is old news:
- LAX : was discussed in the AF lounge thread
- CDG2F : a single new larger lounge is being build between the 2 concourses, to replace the current 2 lounges. Again, this was discussed in the AF forum and you can even find pictures of the construction that has begun some months ago.

Interesting .....perhaps also for those of us from the home of the CSeries and who knew Ben from his days at AC.

1:17 AM - 5 Nov 2019

https://cimg4.ibsrv.net/gimg/www.fly...a9f39ddcfb.png


Source tweet:

Page 24&26: they used SeatGuru's maps to highlight how they can densify the cabins...
Page 33: AF bleeding money from everywhere with Economy, except long-haul point to point as opposed to KL making money everywhere but European connections in Economy
Page 88: "Go on with partnership with Delta". Wow, impressive!

Not sure business for domestic will restore profitability.
Not a word on SkyTeam, which says a lot.

Interesting. Is the extra space on the AF B789s taken up with more lavs or closets or galley space?

UA only seats 252 in their current B789, AC has 298, clearly reflective of what the AF presentation calls "Industry Leading Configuration"


Well, there was this little mention on page 8

https://cimg9.ibsrv.net/gimg/www.fly...b11bab5fb1.png

No words on La Premiere ?

I think this plan is not that bad, and possible that if AF have a better short-haul fleet, will re-open some domestic routes.

Hope the plan of BS will boost AF in the future

Also Slide 82: very good news, move some planes from domestic "business" routes to leaisure routes from Paris Orly on holidays

Some good news and neat insight into the plans that the management has. Merci pour l'article.

But as someone who does presentations as part of my job description, let's see how the implementation actually goes. :)

Spot on!

Not a word, and more importantly, not a single picture.

Days are numbered.

Not at once the word "Skyteam" in the presentation. And the pic on page 8 definitely highlights the JV, not the alliance.

Interesting read. Before reading about it here I came across an article in the Financial Times, which also mentioned that on the news AFKL shares dropped 4.6%. Not sure how they closed though.

The undertone of "KLM is great already, let's continue that. AF still isn't where it needs to be and drags the group's performance downwards" is everywhere. At least they are open about it, where in the past they often hid the individual performances.

Some interesting things in there. One thing was a real eye-opener for me: how the agreed relative growth of AF vs. KL constrained them to put more Y seats and less premium seats on AF planes. Moving to different KPIs (and a couple of other things) now allows them to put more premium seats on AF planes. Maybe that also means more Premiere seats, which would be in line with Ben Smith's point about making the product more difficult to market when it actually offers more destinations and flights.

On page 80 it says "full flat on all flights to US and Asia". Since by 2022 they want to have 100% full flat on long haul, by when would that "100% to US and Asia" be achieved? It would also mean no more A380s to New York, Atlanta, Los Angeles, San Francisco, Shanghai.... Sure, they could put 777-300ERs te replace the A380s on those routes (some drop in capacity), but then where to put the A380s? Conakry, Ouagadougou and Quito are tricky for this type of plane.

Business class on domestic: they used to have that until about 15 years ago on domestic feeder services to CDG. Now they bring it back across the domestic network, which is good for all those that at times pay very hefty prices. But then, it'll be a bit of a farce, as all they'll do is block a NEO seat between two other NEO seats - or do they plane to upgrade the domestic cabins to the standard of the European A319/A320/A321fleet? Probably not.

And, whilst not mentioned explicitly, I do hope that they'll move to 1-1 configuration on the E90 services on European routes for Business Class. Paying J fare and then being squeezed into a 2-2 configuration on those small planes is insulting.

I like the news about the GVA lounge, it needs an refresh. Someone knows when they'll start the work?

They did mention it once:

https://cimg8.ibsrv.net/gimg/www.fly...cb308d6686.png

But I agree, that's not much.

Thanks for re-posting. That image showed up as about 300 lines of computer code ;-)

Yes, it seems that Flyertalk's editor makes you think that the copy/paste of an image works, but it does not :D

Who writes this stuff?

"Empower employees to be 'the best of themselves' " ​​​​​​
​​​​​​
Duh? What? Come again?

"Excel in customer intimacy"

Exactly what extra services will FAs be expected to provide?

Johan

Yes, that caught my eye too.
Could do although the impression I got was that it was more about the low number of C seats compared to the competition, although there is also that bit about making sure that Premiere is available consistently on routes on which it is offered.

I got the impression that the plan was to retire the A380s altogether although I have not checked the timescale for this so there may well be an interim issue.

Yes, they might need to improve their "me too" proofing. ;)

Anne Rigail hates the A380 and they will all be gone by 2022.

I get the impression if they could get A350s faster, the A380 would be dumped even earlier than that!

Correct.
FT just doesn't really have an emoji that conveys the intent of my post, which one might call mildly facetious or similar. :D

t's good to see a thruthful and detailed strategy presentation, rather than the usual half-cooked and biased traditional AF presentation.

Great idea to introduce J on domestic. I got Chinese colleagues who complain about getting into the sardine seating on a Paris-NCE flight after an excellent J longhaul flight. Having domestic J is a must for longhaul transit pax. And I am confident that some PtP pax will pay extra to get the middle seat unoccupied.

Regarding longhaul, I am not sure that AF means to increase the number of J seat per plane.but rather sub several A350s for the existing A380. Also worried about focusing on "premium" rather than J. It might suggest increasing PE rather than J.

Premium = F/J/PY. It should be listed on the slide.

Same for me. First time I was hearing about this. Interesting...

An excellent presentation. The Air France story is encouraging. Obviously some costs are beyond its control but if AF can trim down the domestic network and leverage the strength of its premium offering, profitability will increase. Crucial will be avoiding the strikes that have had such a negative impact on customers, staff and financial results.
The focus on flight completion and operational performance is a no-brainer and will surely pay dividends.
I'm intrigued by the piece on bots rebooking pax in cases of IRROPs. Is that already happening or is there still a human filter there?

On KLM, what most stood out for me was the headcount slide, it's interesting to see how old the workforce is. So many staff have 20 or even 30+ years service. Definitely KLM has an opportunity to hire more younger talent and a more diverse (less white, less European) slate of staff to further make itself relevant globally.

To me, it was more interesting to see the dip in 6-10 years category. I mean, sure, it was the crisis years, but I don't think KLM did that bad.

Anyway the ground stuff does seem to be quite diverse, especially in less senior roles.

Depending on the slide, premium can mean first, business and premium economy (e.g., slide 26), or just first and business (e.g., slide 36). Make no mistake, however. Air France has no intention whatsoever to improve its premium-economy cabin, and the recent negotiations with two of the major purser trade unions point in that direction. The airline appears to have succeeded in obtaining to have one less purser in coach class in exchange of removing the aperitif service, and, thus, one more purser in the business-class cabin. The future of the premium-economy cabin is crystal clear – PAXs will have to endure the abysmal fixed-shell seats until they are eventually deprecated and eat the economy canteen rubbish with wooden cutlery, for the same airfare as that of Delta Premium Select or Virgin Atlantic Premium Economy. At this point, I am perplexed about the attitude of the airline – are the decision-makers stupid, oblivious of the competition, or cynical and thinking they will get away with it? I am even more perplexed when looking at the premium-economy service of Ben Smith's former employer, Canadian Airlines – clearly superior to that of Air France.

I think the choices have been made, the market moved to a better product, and AF is not going to consider it necessary at this point in the lifetime of the product to overhaul it. It certainly can't be made better by throwing more staffing at it, so why bother?

Additional, dedicated staff is, indeed, one variable of the equation. A better seat is another one, and improved catering and service is a third one. It has been the choice of Air France to make its premium economy an excrescence of coach class, with common lavatory, food and pursers, when other airlines have chosen to implement a distinct class of service, neither coach, nor business. You are certainly right – for as long as chumps (like myself :p) keep filling up the cabin, why bother? Special deals throughout the year (round trips from/to ORD for about $1,000) are the reason why Air France's premium economy still exists (not clear, however, whether occasional, non-captive customers try it more than once). Flying Blue pre-April 2018 generous miles accrual scheme with this class of service was another reason. That ship has sailed...