AFI KLM E&M Expansion Plans

Air France-KLM plans to further expand its MRO division and is looking to make acquisitions.

Air France-KLM plans to further expand its MRO division and is looking to make acquisitions.

In its business strategy for 2020 published today (September 12), the group confirms plans to actively pursue growth in its maintenance business, particularly in the engines and components MRO market, and will be making “targeted acquisitions”.

The firm predicts that its maintenance division, which includes AFI KLM E&M, will generate an extra €50m-€80m ($64m-$103m) in earnings before tax in 2017.

At the same time Air France-KLM will continue to shrink its cargo arm. Under the plan, the group will reduce its cargo fleet to just five aircraft in 2016 (from 14 in 2013) with the business expected to breakeven in 2017. In 2013, Air France-KLM’s cargo division made a loss of €100m ($129m).

The new strategy, Perform 2020, follows on from the group’s Transform 2015 plan, which aimed to turnaround the group’s fortunes and has seen it cut costs by more than €1bn ($1.3bn). Air France-KLM CEO Alexandre de Juniac said: “Transform 2015 will be completed by the year end having fully delivered on its objective of significantly improving the group’s competitiveness.

“Perform 2020 will be supported by two main levers: growth, which we are looking to capture in a number of areas, and competitiveness combined with financial discipline.

“By 2020, we will have built an air transport group focused on a leading long-haul network at the heart of global alliances, with a portfolio of unique brands, restructured short and medium-haul operations with a reinforced presence in the low cost segment in Europe, leadership positions in cargo, maintenance and catering, and a significantly improved risk profile.”

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