Air France 2008 Annual Report Download - page 19

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19
A global alliance to extend the network
Air France and KLM play a lead role in the SkyTeam
alliance, the number two alliance world-wide in terms of
market share. Bringing together eleven European, American
and Asian airlines (Aeroflot, Aeromexico, Air France,
Alitalia, Continental, CZA, Delta Air Lines, KLM, Korean
Airways, Northwest Airlines and, as of 2007, China
Southern), SkyTeam gives the Group the means to fully
satisfy the expectations of its customers and to extend its
offer under competitive conditions in both passenger and
cargo transportation.
A modern fleet
The Group makes an ongoing investment in the
acquisition of new aircraft and currently operates one of
the most rationalized and modern fleets in the sector. This
means it can provide an enhanced level of passenger
comfort and achieve substantial fuel savings while
respecting its sustainable development commitments in
reducing noise disturbance for local residents and
greenhouse gas emissions.
An innovative product offer
Air France-KLM’s customer-focused strategy aims to offer
passengers a wide range of destinations and innovative
products including, for example, fare combinability, which
increases the routing possibilities at attractive fares.
The joint Flying Blue frequent flyer program, e-services
and improved cabin services are further examples of this
innovation at work. These new products and services are
developed while respecting the Group’s environmental policy.
Synergies and cost saving plans
Given the complementarity between their three main
businesses, the companies are generating significant
synergies. Originally estimated at 495 million over five
years, this figure has been regularly increased with the
most recent revision standing at 750 million (+51.5%)
over the same period (through to 2008-09). In addition,
there will be new synergies to come from, notably, the
integration of operational IT in 2010-11 by which time
total synergies should have reached 1 billion.
The two companies have also launched a joint three-
year cost saving plan which will include the 212 million
of synergies still to come. Challenge 10, effective as of
April 1, 2007, is targeting total savings of 1.4 billion, or
a 3% reduction in unit costs excluding fuel by the end of
the 2009-10 financial year. In response to the current
environment, the Group has launched an additional plan
seeking a further 150 million of cost savings in the
2008-09 financial year.
685
million euros
of synergies since
the merger of the two
companies in 2004