Paris: Air France-KLM Group is demanding more savings from managers this year as part of an effort to catch up with its main European rivals.
The Paris-based carrier needs to deepen cost cuts beyond the ¤500 million (Dh2.57 billion) in savings earmarked for 2011 with improved productivity and procurement, chief executive officer Pierre-Henri Gourgeon told journalists yesterday. Air France, which is targeting operating profitability in 2011, last raised its savings target from ¤470 million in July.
"Our competitiveness can be improved, and must be, compared with our biggest rivals," the CEO said at the briefing.
Air France-KLM has plunged 55 per cent in Paris this year, the worst performance on the Bloomberg EMEA Airlines Index, as the airline struggles with high fuel costs and sluggish business-class demand. Gourgeon said his company is at a disadvantage to Deutsche Lufthansa and British Airways because of currency exchange rates and higher payroll taxes. Yan Derocles, an analyst at Oddo Securities, has said investors want the airline to announce a new savings plan.
"We're still waiting to hear something further from Air France on big cost-cutting objectives," Derocles said. He has a "buy" recommendation on the stock.
Air France fell as much as 3.8 per cent to ¤ 6.05 and was 3.2 per cent in Paris yesterday.
