Air France to Add 16 Routes at Toulouse in EasyJet Challenge
Stock Chart for Air France-KLM (AF)
Air France plans to fly to 16 new destinations from Toulouse as of April, including Berlin, Prague and Vienna, as it creates a hub in the southwestern city to fend off airlines including EasyJet Plc (EZJ) in its home market.
The new routes will more than double to 28 the number of cities served from the second French regional base that the carrier has set up this year. Air France established a hub in the Mediterranean city of Marseille in October and will add six routes in Nice in the southeast in April.
The airline, owned by Air France-KLM Group, is adding short and medium-haul routes outside its Paris Charles de Gaulle airport base to catch up with other European network carriers seeking to stem low-cost rivals’ growth. The three new hubs will contribute an estimated 950 million euros ($1.28 billion) in sales in 2012, division Chief Executive Officer Alexandre de Juniac said today.
“The idea is to add the best practices of low-cost carriers, with the full services of Air France (AF) and attractive fares,” Juniac said at a press briefing in Toulouse.
De Juniac, a former adviser to French finance ministers, was appointed head of the Air France brand in November after group chief Pierre-Henri Gourgeon left in October amid losses.
Air France-KLM rose as much as 3.5 percent to 4.44 euros at 1:10 p.m. in Paris. That pared the stock’s decline this year to 67 percent.
Air France will outline cost-cutting measures in January in advance of a larger-scale strategy announcement planned for May or June, de Juniac said at the press conference, his first public appearance as the division’s CEO.
The so-called transformation plan will include refurbishment of business-class cabins in the airline’s Boeing Co. (BA) 777-model fleet, de Juniac said. Eliminating jobs will be the “last thing” Air France will do to achieve savings, he said.
The new hubs are part of a program to restore medium-haul, point-to-point routes’ profitability by the end of 2013, he said. Those services include flights from Paris Orly as well as French airports outside the capital city.
The airline will assign 10 Airbus SAS A320-series planes to Toulouse and expects eventually to have a workforce of 350 people there, with 120 pilots and the remainder cabin attendants. The planes will be able to fly 11 hours and 30 minutes a day on average, compared with the eight hours and 15 minutes that they were used when based in Paris.
Other new European routes served from Toulouse will include Athens, Brussels, Geneva and Hamburg as well the island of Malta, the Spanish towns of Malaga and Seville, and the Italian cities of Naples and Venice. Mediterranean destinations outside Europe will include Istanbul, Tunis and Casablanca and Marrakesh, Morocco.
Low-cost carriers in France account for about 24 percent of national airline traffic, as measured in revenue passenger kilometers, about half the penetration rate of such airlines in other major European markets, according to Luton, England-based EasyJet, which opened its first base in the country in 2001.
Deutsche Lufthansa AG, Europe’s second-biggest carrier by traffic after Air France-KLM, set up Germanwings in 2002 to defend regional routes. Madrid-based Iberia, now part of International Consolidated Airlines Group SA with British Airways, combined its no-frills unit with Vueling SA in 2009.
EasyJet is already planning a counter-move against Air France’s domestic expansion, with plans unveiled in October to open bases in Toulouse and Nice. EasyJet will place two Airbus A319 narrow-body airplanes at each location for next year’s summer season, expanding its fleet in France to 24 aircraft.
To contact the reporter on this story: Andrea Rothman in Toulouse, France, at email@example.com
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