Pressure on Air France-KLM managers to save

Air France-KLM needs savings to close gap with Lufthansa and BA

Battling high fuel costs and poor business-class demand, Air France-KLM says it is demanding deeper cost cuts from its managers this year. €500 million in savings has already been earmarked for 2011, but now chief executive Pierre-Henri Gourgeon says he wants even better productivity and procurement. “Our competitiveness can be improved, and must be, compared with our biggest rivals,” he told journalists at a press briefing.
Air France-KLM’s share performance is down by 55% in Paris this year – the worst performance on Bloomberg’s EMEA Airlines Index. The disadvantage against Lufthansa and British Airways comes in currency exchange rates and higher payroll taxes. The airline has put a freeze on hiring and will trim planned capacity increases in 2012.