Martinair – the Uncertainty Continues While Air France-KLM Can’t Make up Their Minds

It had been hoped by many that Air France-KLM, in their press conference on 25. July in order to present their first half year results would also finally shed light on what their decision would be on the future of Martinair.

The fate of the cargo devision is left in his hand - AF-KL-MP helmsman Alexandre de Juniac / source: AF
The fate of the cargo devision is left in his hand - AF-KL-MP helmsman Alexandre de Juniac / source: AF

Nothing of the kind happened!
It was only mentioned by the group CEO, Alexandre de Juniac that any decision was being put back until at least September of this year. This apparently in line with their (AF/KL) still open decision as to what road the Franco-Dutch carrier will finally take with regards to its future cargo operations.
The management again stressed that it will not exit cargo operations and that it has cut down its exposure there by reducing the number of cargo aircraft in the fleet.
They (now) need until September to finalize this!

 

Martinair‘s future remains undecided, although it‘s known that KL has been holding talks with high level managers from AirBridge Cargo (ABC) during the past weeks and apparently that the presentation or offer made by ABC was “quite well received” on the AF-KL side.
Whether these discussions have been forced to slow down due to the present political pressure on the EU to sanction Russia even harder, is unknown.
Maybe unwise to jump into a Russian bed at this time.

ABC also issued figures for the first half of 2014.
However, as expected, no financial results. Just that tonnages had increased by 16% over last year and load factors increased to 72% compared to an industry average of only around 45%. That, along with new destinations, particularly to the United States should show a healthy financial return.
Whether this is the case, is unknown.
One could argue that such a high load factor compared to other carriers might be put down to cheap rates?
It is well known that ABC, now in its tenth year of operation has expanded fast, but that its mother company, Volga-Dnepr is fighting to keep results where they were aimed at.

Therefore, we come back to the old question (as previously reported in CFG) as to who can be interested.
It seems maybe that a joint venture agreement might be the most plausible as even if ABC, or even Etihad, were to be on the books, they can’t acquire more than 49%.
Who then, will take or keep the remainder?
Do AF-KL still want to stay in charge? Highly unlikely at today’s state of affairs.
Although cargo losses for the first half year were 21% lower than the same period of 2013 (€79 million versus €100 million), the managers state that not enough has been achieved and the Martinair question is whether a full scale sale, joint venture or a partnership.
The Franco-Dutch carrier would be well advised to consider their future options on how to keep their finger on the pulse of the air cargo market and not throw it all away in one go.

Light at the end of the tunnel?
AF-KL group first half year figures show an operating profit of €238 million compared to €84 million in the same period last year. This exceeds the original prognosis of €190 million.
Nothing really to “write home about” considering the size of the combined operation.
But maybe a start in the right direction.
The group also announced the introduction of a new “five year plan” aimed at pushing costs down to a minimum.
It was Lenin who originally introduced five-year-plans, which usually turned out to be counter-productive.

There seems to be a lot of jockeying in the background, but with no firm line of thought or action.
This still leaves the Martinair staff in a limbo.

Interesting to note, as reported by RTL Nieuws, a day before the first half year results presentation, is that KLM is said to be encouraging the Martinair pilots to transfer to other carriers such as Etihad or to take a package/bonus pay off and leave. This was apparently also confirmed by a spokesman of VNV, the pilots union.
Martinair still employs some 240 pilots who are not enrolled in the KLM pilot’s agreement.
The VNV spokesman went on to say that “KLM‘s encouragement of its (MP) pilots to transfer to other airlines or take early retirement may indicate they want to scale down or that they want to sell the business.” The VNV stress that it’s of utmost importance that KLM come up with an acceptable social plan in this respect.

So, things are moving - but where?

John Mc Donagh

Write a comment

Comments: 0