Air France KLM recently released its results for the 2015 financial year.
On the face of it, the results look good. Total revenues for the year were €26.1 billion against €24.9 billion in 2014, up 4.6%. However, on a like-for-like basis, total revenues were down 3.2% like-for-like. In part, this is because fourth quarter results were affected by the Paris terrorist attacks in November, reducing revenues by an estimated €120 million, the airline said.
The airline has, however, improved its operating profits to €816 million, up from a loss of €129 million in 2014. Its net results were, however, improved by the sale of shares in Amadeus (+€218 million) and slots at London Heathrow slots (+€230 million).
Announcing the results, Alexandre de Juniac said: "We are very pleased to post positive results and a reduced net debt for the Group in 2015, reflecting the efforts of all the staff and the loyalty of our clients. The measures deployed with Transform 2015 have paid off and we are delivering the strategy implemented in the Perform 2020 plan, with focused growth in long haul, engineering and maintenance and the European low-cost operations while restructuring loss-making businesses and reducing unit costs. In spite of the favourable environment created by lower fuel prices, we confirm our ambition to improve our competitiveness within an economic and geopolitical context that remains very uncertain."
De Juniac's mention of low-cost operations is highly relevant to its restructuring plan and this is the focus of our chart this week, which shows some interesting figures for its low-cost operation Transavia, into which it is trying to channel many of its short-haul routes, and the rest of the AF/KLM group.
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Note: Full year 2015What is immediately clear is that unit costs at Transavia are substantially lower than in the rest of the group. However, it also shows that unit revenues at Transavia are also significantly lower. In fact, unit revenues at Transavia are less than costs, the reverse of the situation in the rest of the group.
While costs are falling in both parts of the business relative to 2014, unit revenues at Transavia are actually lower in 2015 than in 2014.
More and more passengers are being carried by the Transvia part of the business — up from 9.9 million in 2014 to 10.8 million in 2015 — but in order for the group to thrive with its new structure, it will need to generate additional revenues.