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swot of air france klm Free essay! Download now

Home > A Level > Business studies > swot of air france klm

swot of air france klm

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Downloads to date: N/A | Words: 2190 | Submitted: 20-Dec-2011
Spelling accuracy: 98.5% | Number of pages: 8 | Filetype: Word .doc


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swot of air france klm

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FRANCE AIR
SWOT ANALYSIS
Air France-KLM is an airline company. The company’s main business activity is
passenger transportation. The company is also involved into other business activities
such as cargo, industrial maintenance and other air-transport related activities,
including catering and air transport services. During the financial year ended March
31, 2007, the company operated flights to 240 destination cities and carried 73.5
million passengers. Further, through its membership in SkyTeam and its partnerships
with approximately 30 airlines, the company operated a global network of 728
destinations in 149 countries, linked by 16,615 daily flights. Such a wide network
increases the company’s reach and ability to generate revenues from both
international and domestic markets. However, the rising fuel prices are likely to have a
direct impact on the company’s margins.

Strengths :
Large scale operations
Strong returns and margins
Diversified geographic spread
Merger synergies

Weaknesses :
Low load factor in medium haul flights
Weak turnover ratios

Opportunities :
Growing Asia Pacific market
Increase in trans-pacific cargo
Global airline market

Threats :
Rising aviation fuel prices
Foreign currency fluctuation
Increasing competition from low cost airlines

Strengths:
Large scale operations-
The Air France-KLM has strong network which connects various destinations across
the world. During the financial year ended March 31, 2007, the company operated
flights to 240 destination cities and carried 73.5 million passengers. Further, through
its membership in SkyTeam and its partnerships with approximately 30 airlines, the
company operated a global network of 728 destinations in 149 countries, linked by
16,615 daily flights. Further, the long-haul network of the company consists of 118
destinations in 69 countries, including 35 destinations operated by KLM alone and 47
operated by Air France alone.
As of March 31, 2007, the company fleet consisted of 592 aircraft with 569 planes
were in operation. At the same date, the company had firm orders for 47 planes and
options on 34 aircraft. Out of the total fleet, the company owned 275 planes (46% of
the fleet) and another 133 aircraft (22% of the fleet) were under financial leases and 184 planes (31% of the fleet) were under operating leases. Such a wide network with
a large fleet size increases the company’s reach and ability to generate revenues from
both international and domestic markets.

Strong returns and margins-
The company recorded strong returns in the last five year period. Its average return on
assets, return on investment and return on equity during the period, 2003-2007, were
3.7%, 5.3% and 13.2% respectively, significantly higher than its competitors. For
instance, Lufthansa, a German based airline company recorded respective returns of
1.7%, 3.3%, and 6.7%, significantly lower than the returns of Air France. And also, the
returns of AMR, the parent group of Continental Airlines were -0.9%, -1.3%, and -
20.6% respectively.
The margins of Air France were also higher than that of its competitors. During the
period, 2003-2007, the average operating profit margin, net profit margin of the
company at 5.5%, 4.0% are higher than the margins of its competitors such as
Lufthansa, and Continental Airlines whose ...

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