We have been asked to carry out a business analysis of Air France-KLM, the largest air service provider in Europe and one of the largest operators in the global airline industry. As the company offers its services towards the customers all over the world, different external environmental factors affect significantly on the company’s overall performances. We identified that the group face these problems with its effective plans, policies and strategies. In addition, the company has introduced effective human resource strategies, which ensure better employee satisfaction and motivation and contribute significantly to increase its overall performance. Moreover, the recent policies regarding corporate social responsibility are also deriving its overall successes around the globe.
Air France KLM is a successful company in the global airline industry. The company offers air passengers and cargo transportation services, industrial maintenance and other air transportation-related services like catering and charter services around the globe. The group has set up strong networking, effective market knowledge and capabilities, which ensure quality services. We noted that Air France and KLM Royal Dutch Airline are two successful airline companies who merged in 200 and formed Air France-KLM. Nowadays, both of the companies have separate identity, brand and trade name. There is a strategic management committee that correlates and coordinates the overall business decision of the group. Recently, the company has made an agreement with Alitalia, which will allow the company to enter the Italian market.
The airline industry is a matured industry, and it is growing rapidly with 7% in the last decade. It is responsible for better economic growth, international trade, tourism and investment all over the world. The global airline industry is dominated by a handful of companies, who have strong resource and capabilities to dominate new entrants and compete with other established companies. As Air France-KLM‘s operations cover all over the globe, external environmental factors affect significantly on its overall performance. In this research, we analysed different internal and external factors of Air France-KLM. Moreover, organisational culture, motivation and reward process has been evaluated. Followings are the Strengths, Weaknesses, Opportunities and Threats of the company that we identified:
Air France-KLM is the largest airline company in Europe, and one of the largest companies in the world. Therefore, the company has one of the largest route networks in the global airline market.
Air France-KLM serves 23.4 million air passengers to 12 destinations in 69 countries in a year.
The company operates its business in 43 destinations where its main competitor (British Air) has no operation.
The Group has set up strong fleet operations around the globe.
The company emphasises on organic growth for its expansions. xx% of Martin Air, A Dutch Cargo Company was purchased by Air France-KLM in recent years.
In recent years, the group purchased xx% of the stake of Alitalia, an Italian airline company, which allowed the company to enter into its operations in the Italian market.
Air France-KLM’s recent operating profit found downward sloping. Between 2005 to xx, the operating profit declined from $2426 million to $xx million.
According to our analysis annual report profit decreased of the company by xx% between 2009- xx.
The global airline industry is facing slow growth in recent years.
The company is emphasising on organic growth instead of actual growth.
As the group consists of two large companies, communication process and management process are difficult to manage and maintain. Moreover, there are possibilities to lose information.
Even though the total debt was increasing of the company, but in the year 2008 and xx, the total debt increased by xx.8%
The basic growth strategy of the group is strategic agreements, which will help to minimise different risks associated with the internal and external business environment.
A recent agreement with Alitalia and Martin Air will allow the company to enter and expand in Italian and Dutch markets.
Both Air France and KLM have gained experience about the industry structure, success and failure, which will help to ensure better profitability and market shares in upcoming days.
The group offers air repair and cargo service, and the demand for these services is increasing day by day. As a result, there are greater prospects to increase market shares and gain in the competition.
Airline companies are facing strong challenges regarding the recent economic recession, and it will be challenging for Air France-KLM to continue its successes as it was doing before.
Volatile oil price will affect the company’s profitability.
The competition within the industry is increasing, other existing players may merge with one another, and to face the new market situation, the company may need to formulate and implement new strategies, which may be challenging for Air France-KLM For further information, please contact us.
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