|Air France after 11 September: Assessment and prospects
|The terrorist attacks of 11 September caused a major upheaval in international air transport. Like its competitors, Air France reeled under the full force of the shock.
Nonetheless, under the leadership of Chairman Spinetta, the Air France Executive Committee did its best to be proactive and quick to react, insofar as was possible, and yet to remain cautious, precipitating no decision which could be put off.
These basic principles of crisis management enabled Air France to elude the eye of the storm.
In the aftermath of the 11 September attacks, Air France immediately took steps to reinforce security on its flights. The measures adopted satisfy and even exceed the new standards called for by domestic and international aviation authorities.
Passengers flying to the US and Tel Aviv are subjected to in-depth questioning prior to check-in. The questions were established by the authorities and the screening procedure is carried out by a specialized firm.
As concerns management of scheduling and the fleet, the use of leading-edge systems has made it possible to adapt capacity in almost-real time. Passenger traffic and load factors are known every morning for the preceding day, and company revenues only three days later, network by network and route by route. The data is generated in the form of graphs which give a day-by-day picture of capacity, traffic and revenues curves. Thanks to this procedure, management of our operations was optimized during the crisis period.
On 18 September 2001, Air France cut back on capacity and decided to speed up its retirement of a certain number of aircraft, enabling it to accelerate its policy of fleet rationalization and streamlining. Even before the events of 11 September, Air France had tailored its services to a changed economic environment, trimming capacity where demand was flagging in order to bolster it in buoyant zones.
The schedule was significantly modified to adapt to the crisis into which the entire sector had been plunged.
Total Air France capacity for the winter 2001-2002 season following 11 September remained stable in relation to the previous year, whereas growth had been forecast at 7 percent. In the Middle East and North America markets, those hardest hit by the crisis, Air France cut back capacity drastically by 27 percent and 25 percent respectively from the pre-11 September schedule.
By winter, the reduced capacity had resulted in a decrease in the number of flights or the use of smaller aircraft. This choice reflected a desire to make the most of the highly efficient Roissy-CDG hub, while preserving a presence in all markets including those from which competitors had withdrawn.
The Air France winter schedule for 2002-2003 projects a pick-up in growth on North America routes. Capacity will be adjusted on Africa routes to allow for return of competitor airlines which had disappeared in the wake of 11 September, though most direct flights introduced will be maintained. Air France chose not to resort to short-time working but did take the precautionary step, on 18 September, of freezing all projected hiring, not renewing fixed contracts, and allocating manpower to the key company priorities. In view of the improved situation in March 2002, Air France will gradually resume hiring.
The geographical distribution of the Air France network played a major role in helping it to withstand the crisis. Its balanced structure, compounded by the flexible fleet, made it possible to redeploy capacity to routes less hard hit by the tragic events.
Air France's measures were put in place to save 122 million euros in current expenditure. Around 170 million euros were expected to be saved in non-fleet-related investments. Group investments were reduced from 1.9 million to 1.4 million euros, a gain of more than 500 million euros in relation to the budget. Additional expenditure for security purposes represents some 50 to 60 million euros per year.
Air France was able to post positive results for the 2001-2002 financial year, including an operating profit of 235 million euros a group net profit of 153 million euros. The profit recorded by Air France at a time when most airline majors were announcing heavy losses, proved beyond a doubt the strategies described above were the practical choice.
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