Of course, the financial results of this company will have to be followed with the greatest attention with the publication of the group's quarterly and annual results, which are available on its website.
It will also be important to keep an eye on the strategic growth plans drawn up by Air France-KLM, about which the group communicates regularly. Over time, you can check that the company's results are progressing in line with the objectives set out in the plans.
It goes without saying that the group's activities are closely linked to the tourism sector, whose development will be monitored.
The creation of new long-haul lines or the provision of new travel programmes to the public are also interesting elements in this fundamental analysis.
Given the specific activities of this company, it will also be necessary to monitor political decisions and changes in France, particularly with regard to the taxation of airline tickets or social charges on air carriers in general.
Finally, before selling or buying Air France KLM shares, it is important to keep an eye on the competition facing the group, particularly the rise of low-cost airlines.
Everyone knows the Air France-KLM KLM group, which is none other than the leader of French airlines, but few people know that it is also at the top of the international airline rankings.
Its turnover is generated by various activities such as of course the air transport of passengers, but also the transport of goods for more than 85% of its turnover or even maintenance or catering services for 7.3% of the turnover, while the transport of low-cost passengers represents 6.1% through its subsidiary Transavia.
It owns the fleets of Air France-KLM, but also KLM, Régional, Brit Air, City Jet and Transavia France. Most of its turnover is generated in France and Africa.
Air France-KLM is, of course, a company of international stature, by virtue of its core business of air transport. It is therefore interesting to know the distribution of its turnover according to countries. Here is the detail of this information:
Passenger transport still accounts for 80% of Air France-KLM's turnover at present. Depending on the destination, this turnover breaks down as follows:
Photo credits: ©semmickphoto/123RF.COM
Now that you are familiar with the activities of the Air France-KLM group, we propose to learn more about its sectoral environment with a presentation of its main competitors and therefore of the most important airlines in the world in terms of turnover:
This US airline operates both domestic and international flights from numerous US-based hubs. It is currently the largest airline in the world. Together with its regional subsidiary American Eagle, the airline serves over 351 destinations in some 50 countries around the world with more than 6,700 flights daily. It is controlled by AMR Corporation and is a founding member of the OneWorld alliance. It also merged with US Airways in 2013 to create the world's largest airline.
This other US airline operates scheduled flights in the US and around the world. It is currently headquartered in Atlanta, Delaware. In 2008, it also merged with Northwest Airlines to become one of the world's largest airlines with over 75,000 employees and serving over 375 destinations in 66 countries around the world.
The German airline Deutsche Lufthansa is also the largest airline in Europe in terms of passengers carried, ahead of Ryanair and Air France KLM. The airline is also a co-founder and European pillar of the Star Alliance. It owns the subsidiary Lufthansa Cargo as well as Swiss International AirLines and its subsidiary Lufthansa Regional controls Lufthana CityLine and AirDolomiti.
This company, also known as the International Airlines Group, is a holding company resulting from the merger between British Airways and the Spanish company Iberia in 2010. The group currently has a fleet of 598 aircraft serving over 279 destinations and carrying over 100 million passengers each year. It is currently the third largest group in Europe and the sixth largest in the world in terms of revenue. It is a holding company incorporated under Spanish law, based in Madrid and listed on both the London and Madrid stock exchanges. It is the number two airline in Europe in terms of market capitalisation ahead of Air France KLM and behind Lufthansa, but ranks third after these two competitors in terms of revenue.
This airline, based in Guangzhou, China, was established in 1988 following the restructuring of the Civil Aviation Administration of China, which acquired and merged a number of Chinese airlines including Air China and China Eastern Airlines. It is the largest airline in the world in terms of passengers carried and the largest in Asia in terms of fleet size, revenue and passengers carried. Its main hubs are located at Guangzhou International Airport, Beijing Capital International Airport. The group left the Skyteam alliance in 2018 and will soon join the OneWorld alliance.
Finally, the last serious global competitor to Air France KLM is Southwest Airlines. It is a leading American low-cost airline and is listed on the NYSE. It was founded in 1971 in Dallas, Texas, by Rollin King and Herb Keller.
The Air France-KLM group has also developed certain partnerships over time with a few companies in various sectors.
This is notably the case with the American Express group, whose partnership has lasted since 1998.
Air France-KLM is also a partner of the car rental company Hertz, which offers car rental at preferential prices to Hertz passengers.
Air France-KLM is also a partner of some small companies such as Air Caraïbes or Air Seychelles which operate routes not served by the French group, allowing it to broaden its offer.
Recently, in 2019, Air France-KLM has also strengthened its partnership with the Atout France group with the aim of promoting France as a destination, in particular through joint actions to highlight the diversity of the French tourism offer and the objective of developing tourist flows to the various French destinations as much as possible, notably by acting to strengthen the services offered to the airline's customers.
Also in 2019, Air France-KLM signed another agreement with Virgin Atlantic, of which the group acquired 31% in 2017, concerning a code-sharing arrangement. As a result, the group's passengers will have access to 24 new routes between the United Kingdom and North America with stopovers in London or Manchester.
The first thing that can be stressed about the Air France-KLM group is of course its positioning in the air transport market. Indeed, the French company is one of the leaders in this sector of activity and currently has the largest air network between Europe and the rest of the world. Air France-KLM is also the leader in passenger transport in Europe, with inter-European travel accounting for more than ¾ of the carrier's business. Finally, Air France-KLM is also the international leader in freight transport and aircraft maintenance.
If Air France-KLM has been able to position itself profitably on the world market, it is notably thanks to the SkyTeam alliance that it manages and which currently represents more than 20% of the international market share. The partnership with the Indian company Jet Airways and the joint venture that the group has set up with Delta Airlines for the North Atlantic market is also to be welcomed, with a collaboration contract signed until 2019. This strong presence outside the European market alone is reassuring for investors.
The Air France-KLM group also stands out from its competitors by offering a remarkable range of connections thanks to the connecting platform known as the double intercontinental hub, which combines the hubs at Roissy-Charles-de-Gaulle and Amsterdam-Schipol airports.
Recently, it has been noted that Air France-KLM has multiplied its investments in the high-end travel sector, which represents an important challenge for this sector of activity and promises interesting results. At the same time, the group has also been able to position itself in the low-cost sector with its low-cost subsidiary Transavia created in 2007 and which has been generating profits since 2012. This has notably enabled a major restructuring of the group's point-to-point network.
Recently, Air France-KLM has also become more profitable thanks to its maintenance services. The group has become the second largest in this sector on an international scale.
Like all air transport companies, Air France-KLM has also benefited for some time from the fall in crude oil prices, which has enabled it to make significant savings on its paraffin purchases. As these expenses represent more than 35% of operating expenses, this offers good prospects.
Finally, the company's efforts to reduce its level of indebtedness can also be highlighted, with a significant drop in debt since 2015.
The first weak point of this company is of course its significant exposure to the economic health of Europe. Indeed, although Air France-KLM benefits from an increasingly important international presence, particularly in North America and Asia Pacific, 2/3 of its sales remain centred on the European geographical sector.
Air France-KLM is also relying heavily on short routes, which are increasingly being competed against by various low-cost airlines such as EasyJet or Ryanair or by top-of-the-range companies from the Gulf States and South-East Asia. TGV travel is also an important competitor on this type of journey.
Air France-KLM also suffers from a higher cost of taxes in France and stopovers compared to competing airlines, which weighs on its profitability and competitiveness.
There has also been a recent decline in the profitability of the Air France-KLM group's long-haul transport activities. As this sector is usually the most profitable of the group, we can therefore expect consequences on future results. Cargo transport activities are also suffering from a loss of speed with a load factor that has fallen below 60% for the past few years.
For many years, the group has also had major concerns with the French trade unions and the dialogue here remains complicated with numerous strike movements in particular.
Finally, Air France-KLM can also be blamed for significant operating losses that seem to persist from one year to the next despite the efforts made by the group's management.
Some important dates are to be known about the Air France-KLM KLM group. KLM was founded in 1919. Air France-KLM will be created in 1933. In 2003, KLM will become the sole shareholder of Transavia. In 2013, the Air France-KLM group created its subsidiary HOP. In 2018, Benjamin Smith takes over the management of the group. Finally, in 2019, Hop Air France-KLM becomes Air France-KLM Hop. These dates have indeed marked the history of this company and its evolution over the years.
The Air France-KLM group has many varied activities in different segments. The group's different activities are thus air transport, which is well known with passenger transport and air freight transport, aeronautical maintenance and aeronautical services. However, it is the air transport activities that generate the most profits.
The capital of the Air France-KLM KLM Group is still 14.30% owned by the French State and 14% by the Dutch State. Among the major shareholders of this company are also the Chinese group China Eastern with 8.8% of the shares, and Delta Airlines in the United States, also with 8.8%. The remaining 3.9% of the shares are held by the employees, 0.3% are held in treasury stock and 50.2% in free float.
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