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62 _ AIR FRANCE-KLM 2010-11 Annual Report
AMONGST THE FIVE GOALS OF THE EMBARK
CORPORATE PROJECT ONE RELATES TO FINANCE.
WHAT ARE YOUR OBJECTIVES?
PC: Our ambition is to remain a major Group within our
industry and to generate the financial resources required
to actively participate in the growth of air transportation over
the next few years. For this, we need to continue our efforts
to regain our level of pre-crisis financial performance, which
is to say a return on capital employed of 8%. To achieve
this objective, we must focus our efforts on three main areas.
Firstly, the Group must pursue its efforts to reduce unit
costs to remain competitive within a tougher competitive
environment. Air France-KLM’s objective is to reduce unit
costs by around 1% annually over the next three years.
The Group must also continue to curtail investment,
particularly in terms of the fleet plan and reduce debt
so that it remains below the level of stockholders’ equity.
FG: Note that this ambition applies to all the businesses:
supporting profitable growth in the maintenance business
but also developing a cargo business that is profitable
over the long term and makes an increased contribution
to long-haul profitability. The trends already in place during
the 2010-11 financial year, notably the recovery in the cargo
business, show that we are on the right track. This remains
to be consolidated!
In terms of unit costs, efforts to reduce external expenses by
a more effective procurement strategy should be maintained.
We also need to continue to improve productivity by using
new technologies more effectively and making our processes
more efficient. For example, this is the aim of the project to
simplify and align the financial processes, launched in 2010
(Finance Function Transformation project).
PC: Lastly, I would add that 2011 will be one of change
since the Group has decided to come into line with most air
transport players and change its accounting year to the
calender year. This means that the financial year beginning
April 1, 2011 will close on December 31, 2011 and last for
a period of only nine months.
DEBT
NET DEBT
(in E billion)
2009-10 6.2
2010-11 5.9
GEARING RATIO
2009-10 115%
2010-11 85%
CHALLENGE 2012 COST-SAVINGS PLAN:
approaching E600 million of savings in the 2010-11
financial year
• Procurement
• Process and productivity
• Fleet
• Distribution costs
44%
42%
11% 3%
€595 m
“We need
to pursue our
cost-cutting
efforts.”