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 Posted: Wed Jan 10, 2007 8:15 pm Post subject: Air France KLM Sees Additional Savings |
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October 4, 2006
The 2004 merger of Air France and KLM could produce double the initially anticipated cost savings of EUR500 million euros (USD$635.3 million), the chief executive of KLM was quoted as saying on Wednesday.
"Savings of a billion euros in five years time is now looking like a real possibility," KLM CEO Leo van Wijk told the Dutch business travel magazine Zakenreis in an interview.
Van Wijk said the merger between the French and Dutch airlines had already saved EUR660 million and added that the top 20 managers of Air France and KLM would meet later this year to assess progress and look to the future.
"We are going to reflect on what the 'grand plan' should be for next year and how we can take the next steps," he said.
"I don't rule out further integration, but there must be good reasons for that," he said, adding that the two firms had said 75 to 80 percent of their activities were not suited to integration as the airlines wanted to keep their own identities.
Van Wijk said areas of potential cost saving include joint maintenance of both airlines' Boeing 747s at Schiphol and that of A380s in Paris. KLM will switch over to the same IT system as Air France next year, allowing sales on a common platform.
Van Wijk said the Franco-Dutch airline expected to invest much of the merger savings in new planes, noting that KLM had several Boeing 747s that were 25 years old, the company needed to replace MD-11s and Air France is buying new A380s.
Asked about further consolidation in the industry, Van Wijk said the company wanted to invest in China, which he said would be the biggest aviation market in 10 years, and also remains interested in Italy's Alitalia.
Van Wijk reiterated that Air France KLM could consider taking a stake in Alitalia if the airline was privatized.
"But the Italian government hasn't taken a decision about that yet. Moreover, Alitalia's financial performance must be improved," he said.
In August, Air France KLM dampened talk of a rapid merger with Alitalia after the Italian flag carrier said a new plan was needed to turn the company around after abandoning a promise to turn a profit in 2006.
Air France KLM announced last month it is in talks to set up a cargo venture with China Southern Airlines.
Van Wijk expects to step down as chief executive in May next year and move to a strategic role in the merged company. He said he expects to be replaced by his deputy Peter Hartman although a final decision will be taken later this year.
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