Air France-KLM to Restructure

Air France-KLM, Europe's biggest airline, reportedly plans to transfer its freighter operations to Martinair, its low cost Dutch subsidiary, in the next two years as part of a radical restructuring of its unprofitable cargo business.

The Franco-Dutch carrier will also further cut its freighter fleet before the transfer to Martinair, union officials at Air France said, confirming a report by Les Echos, the French business daily.

At the same time, Air France-KLM will hike its freight rates by between 20 percent and 30 percent in October as it shrinks its capacity for the winter season, Les Echos said. Major shippers have already been informed of the planned increases, it reported.

Les Echos said Air France-KLM intends eventually to reduce its freighter fleet, the largest in Europe, by half.

"We have no comment to make. We neither confirm nor deny the report," an Air France spokesman said.

KLM played down the reports. "We can't recognize anything in the story," a spokeswoman said. "We're always looking for synergies, … [but] we're not going as far as [transferring cargo operations to Martinair]," she said.

Air France-KLM, including Martinair, operated 29 freighters at the end of June – 18 747-400s, two 747-200s, two 777s and seven MD-11s.

Air France-KLM reportedly plans to refocus its cargo activities on selling pallet space in the bellies of its passenger aircraft.

KLM operates 16 747 "combis" with two thirds of capacity for passengers and a third for cargo depending on market demand.

Air France-KLM airline announced Sept. 4 that it would cut freight capacity by 15 percent in October as part of restructuring of its cargo business aimed at boosting the load factor, or capacity utilization, of its freighters and passenger aircraft. The carrier also said it will eliminate 1,500 jobs but did not provide a breakdown between the passenger and cargo divisions.

The CGT union claims 10 percent of the carrier's 2,000 cargo workers will be laid off in January, but the CFDT union said no decisions have been made.

Air France-KLM said its cargo traffic stabilized in August for the fourth month running, with volume down 16.1 percent from a year ago and the load factor 0.6 percentage points higher at 63.5 percent.

By contrast, passenger figures declined only 2.9 percent and the load factor improved by 1.1 percentage points to 84.8 percent.