Air France KLM Looks at a Plan to Save Through 2012

On Thursday, Air France KLM said they are working on a plan for cost-saving from now until 2012 in order to protect the profitability of the company during the surging price of fuel. Jean-Cyril Spinetta, the chairman and chef executive of Air France KLM, said in a meeting with shareholders that their target is to make sure that the airline maintains profits during any kind of change in jet fuel prices. In 2007, the airline initiated a plan for saving on costs, which was called Challenge 10, aiming to achieve a 1.4 billion euro cost-savings until 2010 or reduce unit costs by 3%, without including fuel. Now with the huge increase in the cost of fuel, the airline is aiming to save another 150 million euros during this financial year until March 31^st. The next plan will be called Challenge 12, and Spinetta didn’t give any details or figures as to how much the airline will be aiming to save through that plan.

The airline has made the estimate that their fuel bill will rise by more than 1 billion euros for this financial year in comparison to the last 12 months. Spinetta says that he is confident that the Northwest Airlines Corp., Delta Air Lines Inc., KLM, and Air France joint venture will be completed by the beginning of April next year. All four of the airlines have obtained the approval of the United States to collaborate their operations in the North Atlantic in the sharing of revenue and cost, which is estimated to have a 7.5 billion euro total revenue. Many airlines have disappeared already in recent months, Spinetta said, and this is very likely to increase.

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