Air France-KLM is planning a drastic cull of its freighter fleet, one of Europe’s largest, as part of a new cost-cutting program.
The airline is expected to announce plans today to phase out its fleet of Boeing 747 aircraft by 2016, starting with the cargo unit’s 10 747-400 freighters.
The restructuring, which includes 2,600-3,000 voluntary layoffs at the French division, has been prompted by lower than expected revenues this year which has left the carrier €400 million ($528 million) short of its target of €1.5 billion ($2 billion) cost savings by the end of 2014.
The phase-out of 747 freighters will leave Air France’s cargo unit with two 777 freighters in 2016. The carrier also is expected to eliminate unprofitable routes and shut its cargo operation at Paris Orly airport to focus on its larger Roissy Charles de Gaulle hub.
Frederic Gagey, CEO of the French unit, is expected to detail the cuts, including a review of short and medium haul passenger operations and provincial airports in France, at a meeting today with labor unions.
Air France unveiled a major cost-cutting plan, involving 5,100 layoffs by the end of the current year, in 2011 but it says the turnaround in its medium haul and cargo operations is slower than expected.
The cargo unit trimmed second quarter operating losses to €50 million from €64 million a year earlier as traffic declined 5.8 percent and revenues shrank 7.7 percent to €705 million.
The first half loss also narrowed, to €100 million from €134 million in the same period in 2012.
But the airline, which lost €222 million on freight in 2012, says it will be a “major challenge” to meet its target of break even in 2014.
Air France-KLM will fine tune its plans over the next two weeks and make an official announcement on October 4.