Air France-KLM’s Transavia plans “took too long”

Aviation analysts CAPA: “Pace of change is glacial”

As previously reported, Air France-KLM has given details of its five-year plan Perform 2020, originally outlined in July. Essentially, it is a continuation of Transform 2015, cutting more costs while keeping capacity and capital disciplined. It also includes more aggressive expansion of the group’s low-cost carrier Transavia.

But aviation analysts CAPA say that “Perform 2020 moves Air France-KLM in the right direction, but the pace of change is glacial”. Transavia’s growth has been way behind Ryanair, easyJet and Norwegian. Profitability is poor and unions are powerful, seen in this week’s damaging strikes with the airline having to cancel 60% of its flights per day.

The plan is to finally accelerate Transavia’s role to move beyond Paris and Amsterdam to become a more pan-European carrier, with five to ten new bases of three to ten planes at each base. Transavia’s fleet will more than double by 2017 to 100 aircraft.

That would leapfrog smaller LCCs, such as Wizz Air’s 82 planes in 2017 and Turkey-based Pegasus’ 67 in 2017. But it is still smaller than Norwegian’s 129 to 141 at the end of 2017, easyJet’s 262 and Ryanair’s 388 in summer 2017.

Transavia faces further challenges – it is not an established pan-European brand and has been “massively under-exploited” until recently, CAPA says. There are hurdles to profitability and its “hockey stick” profit projection looks very optimistic. The main challenge is to establish cost-efficient operations and then revenue maturity, CAPA adds.

CAPA

[photo courtesy Transavia]

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