Cargo business

A remarkable market recovery within a volatile environment

After the sharpest decline in demand in aviation history during 2009 (-10% in traffic measured in revenue ton kilometers in 2009 versus 2008), the pick-up in world trade during 2010 underpinned a recovery in the air freight sector and reflected a 20.6% increase in traffic (Source: IATA).

Air France-KLM Cargo: an effective restructuring

Air France-KLM Cargo confirms its leadership position

Air France-KLM Cargo confirmed its position as the European and worldwide leader, excluding integrators. Its market share (including Martinair) amounted to 31.1% in 2010 (32.7% in 2009) amongst the AEA (Association of European Airlines) and 7% at the global level (8.4% in 2009).
During the financial year, the Group transported more than 1.5 million tons of cargo, 66% of which were in the bellies of passenger aircraft and 33% in the dedicated cargo fleet, to a network of 254 destinations in 111 countries.

A new mixed, belly-dominant business model

Within a context of market improvement, the Air France-KLM Group implemented a new belly-dominant business model, supplemented by an appropriately-scaled full freighter offering. This new strategy is based on a long-haul passenger network which is exceptional by virtue of its coverage, density and connectivity. It is also supported by the increasing number of Boeing B777 next-generation passenger aircraft with increased belly capacity. The full freighter fleet has been reduced from 25 to 14 aircraft.

The Air France-KLM Group’s efforts focused on the fundamentals: optimization of the network, an increase in revenues and a reduction in costs.

• Maintaining capacity discipline and restructuring the network:
  Capacity remained virtually unchanged (-0.3%) with the priority on bellies and combis (+2.5%) and a reduction in the full freighter offer (-5.6%).
• A continued strategy of increasing revenues:
  Unit revenue exceeded its pre-crisis level, leading to a 29.5% increase in revenues.
• Tight control over costs and cash:
  The Group reduced its unit costs (on a constant currency and fuel price basis) by 1.1% relative to 2009-10 and continued to adjust headcount to the level of production notably via internal mobility and voluntary departures.

Consolidation of partnerships with Alitalia and the trans-Atlantic joint-venture

The acquisition of a 25% equity interest in Alitalia enables the Group to step up its cooperation with the Italian airline and its presence in the Italian market, the 4^th largest in Europe. The Group is now responsible for the marketing, revenue management and supervision of Alitalia’s cargo operations.

Positive results a year ahead of schedule

Supported by the dynamism of international trade and the restructuring measures in place since late 2009, Air France-KLM Cargo returned to growth and profitability 1 year ahead of schedule.