Air France-KLM's "Transform 2015" Turnaround Program

            
 
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Case Details:

Case Code : BSTR424
Case Length : 16 Pages
Period : 2003-2012
Pub Date : 2013
Teaching Note :Not Available
Organization : Air France KLM
Industry : Aviation
Countries : Europe; Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Background Note

AIR FRANCE

Air France was founded on October 7, 1933, after the merger of five French private airlines (Air Union, Air Orient, Société Générale de Transport Aérien (SGTA), CIDNA, and Aéropostale) operating on European routes. In its early years, the airline incurred huge losses. Moreover, World War II (1939-45) had an adverse impact on the global aviation industry. After World War II, the aviation industry in France was nationalized and Air France became a state-owned entity.

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During the mid-1960s, Air France forayed into international markets. In 1959-60, it brought the first Caravelles and Boeing 707s into its service. This cut down the duration of the Paris-New York flight to eight hours. In 1972, the company established its cargo division. However, during the global oil crisis (1973-79), the company faced severe financial problems. Air France established the Paris-Charles de Gaulle (CDG) Terminal One and Terminal Two in 1974 and 1982 respectively...

KLM ROYAL DUTCH AIRLINES (KLM)

Koninklijke Luchtvaart Maatschappij NV, commonly known as KLM, was the world's oldest airline operating under its original name. It was founded on October 7, 1919, to serve the Netherlands and its colonies.

In 1934, the company started its international operations. During World War II, the company temporarily suspended its operations. After the war, it resumed operations and kept improving its services. It launched several quality programs to face the competition.

In 1959-60, KLM pressed into service its first Douglas DC-8 aircraft. In 1971, the Boeing B747 was first used on long-haul routes by KLM. In 1989, KLM entered into an important alliance with Northwest Airlines to tap the US market.

In the 1990s, KLM faced tough competition from low cost airlines and the company's margins came under pressure. In 1991, KLM founded a regional company, KLM Cityhopper, by merging NLM Cityhopper and Netherlines and increased its shareholding in Transavia Airlines from 40 percent to 80 percent. In 1992, KLM established the first European medium-haul/long-haul transfer platform at Schiphol airport. In the same year, first Open Sky agreement was signed between the Netherlands and the US...

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