Cash-strapped airline Air France-KLM on Thursday
unveiled plans to slash costs by over 2 billion euros ($2.5 billion) over the coming three years, by shrinking its fleet,
suspending planned investments and freezing wages.
In a statement, Air France-KLM said its board of directors had
decided on Wednesday that, "given the uncertain economic environment
and the ongoing imbalance between transport supply and demand," the
group would increase capacity by only a little over 5 per cent
between 2012 and 2014.
This will lead to a shrinkage of the European group's fleet and a
reduction in its investment programme "from over 6 billion euros over
the period 2009-11 to below 5 billion euros for the coming three
years."
Air France would do that by deferring delivery of some aircraft
and not exercising options it had on others.
The company further aimed to reduce its net debt by 2 billion
euros to around 4.5 billion euros by the end of 2014.
One billion euros in cost cutting measures would be implemented
"immediately," including a general freeze on pay increases in 2012
and 2013 at Air France, a policy of "wage moderation" at KLM and the
continuation of a hiring freeze.
A "transformation plan, encompassing all its businesses," would
aim to generate another billion euros in "free cash flow" over three
years.
The passenger business, particularly the short- and medium-haul
business, would be the main focus of the savings, Air France said.
The short- and medium-haul business is estimated to have lost 700
million euros in 2011.
Air France said it might have to outsource more activities, among
other measures.
French trade unions said they were prepared to negotiate with the
group in order to save jobs.
