#AirFrance seeking to reduce controllable costs by 20%
Air France Chairman and CEO Alexandre de Juniac presented an update on the company’s business transformation plan, "Transform 2015".
The presentation reflected the work by seven project groups set up to identify critical issues, key objectives necessary for recovery and priority actions to achieve them. Over the past three months, hundreds of employees have been involved in the project groups’ work. On the basis of the groups’ recommendations, Air France’s Executive Committee has defined a series of priority actions to return the company to a path of sustainable growth:
1. Restore competitiveness
Although passenger unit revenue is better than competitors, Air France’s costs remain too high. The objective is to reduce controllable costs 20% to reach the industry level. This objective is included in the framework and methodology agreements signed with the majority of unions representing pilots, flight attendants and ground staff.
2. Win back customers
Air France’s customer focus has become insufficient. An action plan will refocus the organization and its processes on the customer as Air France’s central pre-occupation, to improve products based on clearly identified points of excellence, to develop digital and e-business communications to solidify the company’s leadership in mobility and personalization and to create new business models.
3. Simplify the organization
To make the company more responsive and agile, a new organization will be established, streamlining processes and procedures, reducing the number of hierarchical levels, improving management practices and deepening the integration with KLM.
4. Revamp and reposition long haul
Long haul, Air France’s historical growth engine, is today moving in slow motion under the combined effect of the economic crisis, higher fuel costs, increased competitive pressure and higher costs than the competition. Apart from the priority to lower production costs and return to operational excellence, including for on-time performance, Air France must find ways to better respond to growing leisure travel demand. To win back customer preference, significant investments will be made in the product, conditional on the success of the savings plan.
Click here to check Air France’s complete series of priority actions.
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