Air France KLM Business Report

give vent France KLM Business Report way France-KLM is an international impart duct compe rattling and a member of the skyteam airline partnership. The keep comp some(prenominal) was formed on May 2004, fol confuseding the optical fusion of distribute Frances and KLM munificent Dutch painslines (KLM), thus creating the worlds largest airline concourse by earnings and second largest worldwide cargo floozie in equipment casualty of revenue-tonne kilometers. The company operates under two study net give ways hubs, Paris-CDG and cracking of The Netherlands-Schiphol. The Companys three main businesses argon rider enjoyation, cargo operations, engineering and concern. The company counts more than adept hundred thousands employees all over the world. Passenger transports existence the major business of the company with more than three hundred destinations worldwide. The majority of the employees be based in France and the Netherlands. Both commit France and KLM continue to operate flights under their distinct sucker names as subsidiaries of subscriber line France-KLM. mention of AcronymsAF standard atmosphere FranceNWA Northwest originlineCSR Corporate Social Response get up Strengths, Weaknesses, Opportunities and ThreatsMRO nutriment define and OverallCDG Charles de GaulleIT Information TechnologyE M Engineering and MaintenanceIMS Information counseling clayGDP Domestic Growth ProductTable of ContentsExecutive Summary iList of Acronyms iiCHAPTER 1 Introduction 1CHAPTER 2 Organisational structure 8CHAPTER 3 Organisational finale 10CHAPTER 4 -Leadership and focusing 12CHAPTER 5 Teamworking and Mentoring 13CHAPTER 6 Resourcing and Training 14CHAPTER 7 confabulation skills 15CHAPTER 8 Performance and Motivation 15CHAPTER 9 Management systems 17CHAPTER 10 Management of alternate 18CHAPTER 11 Future Directions 19Conclusion and Recommendations 20References 21Appendices 22CHAPTER 1 IntroductionAIR FRANCE KLMAIR FRANCE K LM is the combination of two big airlines such(prenominal) as channelize France and KLM. Since their merger in 2004, KLM works closely with behavior France deep down the AIR FRANCE KLM holding company. In terms of m adepttary turnover, AIR FRANCE KLM is the worlds largest airline partnership it also transports the close to passengers and is the worlds second-largest cargo transporter. nisus France and KLM carry more than 71 million passengers per twelvemonth. They operate more than 594 aircraft enabling them to fly to 236 destinations worldwide with 2,500 daily flights. The two airlines world networks erect be combined, forming a vast network organized ab bulge out the two major hubs of Amsterdam-Schiphol and Paris-CDG. The head offices atomic number 18 located at Amstelveen and Paris.AlitaliaAIR FRANCE KLM and Alitalia agreed to strengthen their partnership in January 2009 by AIR FRANCE KLM victorious a minority stake in Alitalia. The agreement gave AIR FRANCE KLM greate r access to the Italian market.SkyTeam concretionSkyTeam is a orbiculate airline alliance which includes AirEuropa, Air France, Alitalia, China Southern Airlines, , Delta Air Lines, Aeroflot, Kenya Air shipway, KLM, Korean Air (including Northwest Airlines), CSA Czech Airlines, Tarom and Vietnam Airlines, Aeromxico. Air France and KLM atomic number 18 members of the SkyTeam alliance.IncomeOver the fiscal stratum 2009-2010 the turnover of Air France-KLM was 20.9 zillion euros. Together, the two airlines dupe over 107.000 employees. For more information on AIRFRANCE KLM Finance, please go to www.airfranceklm-finance.com.Sh atomic number 18sThe Air France-KLM sh bes argon listed in Amsterdam, Paris and New York.AimAir France-KLM comprises a holding company which controls two airlines, Air France and KLM, each of which retains its own separate identity and brands. The group is the worlds largest air transport group in terms of revenue, second largest in terms of air profession ( in passenger-km) and cargo (ton freight-km), and third largest in terms of attention revenue. Both airlines run their own operations from their respective hubs Paris-Charles de Gaulle and Amsterdam-Schiphol.PassengersPassenger transport is the largest of the groups three core businesses, generating almost 80%of its revenues (as of 31 March 2008), with 74.8 million passengers carried.CargoCargo was the first fully-integrated commercial activity at Air France-KLM in 2005. Client companies now have a single point of entry, and a full, change offering with flights departing from both hubs and benefiting from both networks. Air France-KLM Cargo ranks first worldwide among air freight carriers (excluding integrators).MaintenanceThe combination of Air France Industries and KLM Engineering Maintenance includes the group to offer a comprehensive range of aircraft maintenance and overhaul services with attendantary areas of specialization. Maintaining the two fleets accounts for two-th irds of the groups maintenance operations, further supplemented by maintenance repair and boilers suit (MRO) operations for 150 third-party airlines.Mission and VisionThe mission of Air France KLM is to provide its customers a high quality service adaptable to their changing ask. The overall spate is to become the worlds biggest and leading airline company.Company reasonAir FranceAir France founded on 7 October 1933. The background of the company has been striking by a number of milestones, including investing the acquired capital of UTA in early January 1990 and the combination with Air Inter in 1997. Air France and Delta Air Lines joined forces with Aeromxico and Korean Air to launch the Sky Team alliance in June 2000. Air Frances main hub at Paris-Charles de Gaulle is Europes number one in terms of connecting opportunities.KLMMeanwhile KLM was first founded on 7 October 1919 being the oldest airline politic operating under its original name. The recently background has be en marked by the formation of a joint venture with Northwest Airlines (NWA) in 1989 and its achievement of the investment of Kenya Airways in 1996. KLM has Amsterdam Airport Schiphol as its home base.Air France and KLM Royal Dutch Airlines have become the largest European airline group Since May 2004 but each airline has retained its individual identity, trade name and brand which mean three businesses, two airlines, and one groupSWOT AnalysisMullins (2007) explained that, in order to prise the nature of the business environment and its strategic capability an placement may undertake a SWOT analysis focuses on Strengths, Weaknesses, Opportunities and Threats facing the ecesis.STRENGTHSStrengths are those positive aspects or distinctive attributes or competencies which provide a strong market good or upon which the institution can build. Against a backdrop of increased ease which serves to intensify competition, the profitable growth strategy plays to the groups strengths, the following are the air France KLM group strengths.A newfangled(a) fleet the groups old geezer assetGuaranteeing energy and economic efficiency and greater synthetic rubber levels, the groups aircraft fleet is its chief asset when it comes to meeting the challenges of sustainable development.The dual Roissy Schiphol hub and a balanced networkThe Air France and KLM route networks complement each other extremely well. The dual hub concept is central to group strategy and is designed to strike the most of this.The benefit of dual brand strategyAir France and KLM took an original approach to the merger, choosing to retain the two brands while develop a unified strategy. Air France and KLM each enjoy strong brand identities and are extremely complementary.Enhanced competitiveness thanks to bell controlTo maintain its competitiveness, the group launched Challenge 10,designed to rescue 1.4 billion euros by 2009-10, with a 3% cut in unit costs. The plan is four-pronged touch on opt imization and productivity gainsFleet modernization, which will generate sack and maintenance cost savingsPurchasing, and optimizing group synergiesExternal distribution costs.The development of high growth areasThe groups ambition is to seize growth opportunities in countries madcap global economic growth, mainly Brazil, Russia, India and China. In the days ahead, the Air France-KLM group plans to grow by 4.7% per year in terms of available fucking-km on its long-haul network.WEAKNESSESWeaknesses are those negative aspects or deficiencies in the present competencies or resources of the organization, or its image or reputation, which limit its goodness and needed to be corrected to minimize their effect. internationalist economic instabilityFaced with soaring oil prices, international economic instability, and signs of waning beseech, air transport has entered a period of great uncertainty. Our Group can count on its strategic assets, the quality of its fuel hedging and its re solute policy of cost control to meet this challenging period of turbulence and low visibilityOPPORTUNITIESOpportunities are favorable conditions and usually arise from the nature of changes in the away environment. The organization needs to be sensitive to the problems of business strategy and responsive to changes.Sustained engagesIn an increasingly global society, the demand for mobility is also increasing. Air transport is a key factor in a countrys economy. Over the outlast 20 years, air transport has grown twice as quickly as gross municipal product (GDP). In 2008, the rapid development of emerging countries is stimulating growth in Latin America, the pose East and Asia. This will compensate for the slowdown in the US economy. As for the succeeding(a), IATA forecasts an increase in global capacity of around 5% per year by 2011.A key contribution to the economyAir transport carries over 2 billion passengers annually. Tons of cargo shipped by air each year represent 35% of the total value of export trade in manufactured goods. By connecting community, businesses and goods around the world, air transport makes an essential contribution to global economic activity. Both directly and as a promoter of growth in other industries.THREATSThreats are the converse of opportunities and refer to unfavorable situations that arise from external developments likely to endanger the operations and effectiveness of the organization. Air France KLM like any other organizations is faced with a number of threats, these includesIncreased pressureGrowth in European low-cost carriers has been strong for some years and Middle Eastern carriers are planning considerable expansion Gulf carriers plan 20% seat growth per year for the next three years. This represents stiff competition for European airlines on traffic among Europe and Asia or Australia.Development limited by infrastructuresEurope is experiencing air traffic congestion, leading to signifi chamfer delays, increas ed costs and carbon dioxide emissions. This is partly a result of the fragmentation of airspace and of the air traffic control process. There is considerable room for improvement. For 10 million flights a year, it is estimated that the actual route flown is 5% longer than ideal. For some routes, such as Amsterdam-Zrich, it is even 20%. The annual cost of fragmented European skies is estimated at 3.4 billion euros.A sector subject to heavier taxationAir transport is subject to unbending regulation, mainly regarding security, safety and infrastructure. The sector is also subject to high charges, among them drome or navigation charges, positive(p) dedicated fees to finance security. Moreover, air transport is the only means of transport to finance soundproofing measures, as it does in numerous European countries.Climate change awarenessGeneral awareness of the reality of climate change continued to increase in 2007. This was coupled with local environmental constraints that have al ways affected air transport activities. Air transport accounts for amidst 2 and 3% of all man-made CO2 emissions. In Europe, its relative contribution will increase due to growth in traffic and the expected reducing of emissions in other industries. In the past 40 years, the sector has made considerable progress, reducing CO2 emissions per passenger by more than 70%.SummaryIn spite of its merger Air France KLM is still operating under its identity and brand name with their home bases located at Amsterdam airport Schiphol for KLM and Paris-Charles de Gaulle for Air France. The main core duties of the group are to transport passengers, cargo and engineering and maintenance. As any other organization Air France KLM has the opportunities to grow much bigger and become the first largest airline company in the world.CHAPTER 2 Organisational structureThe pattern of relationship mingled with assorted positions in the organization and among members of the organization is referred as stru cture. plaque is essentially a group of great deal with a common objective or goal to archive. The structure can all be formal i.e. documented or informal i.e. unofficial.Mullins (2007) specify, Organization Structure as the division of work among members of the organization, and the co ordination of their activities so they are directed towards the goals and objectives of the organization. It is the relationships among positions in the organization and among members of the organization. It makes possible the application of process of counseling and creates a framework of order and command through and through which the activities of the organization can be planned, organized, directed, and controlled. It defines tasks and responsibilities, work role and relationships, and channels of discourse.Essentially there are mingled types of organisational structures depending on the nature of organization, such as centralized, complex, stratified and formalized structures. An effecti ve structure is the one that coordinates various parts of the organization and disparate work areas. Meanwhile the structure of the organization can either be tall i.e. with a long hierarchical chain of command where the freedom and responsibility of the subordinates is curb or flat i.e. with a short chain of command, there is more effective between forethought and workers but employees may have more than one manager. However both of two structures above are highly affected by the number of employees who reports direct to a certain manager that is Span of Control. Hellriegel et al (1998) explained, that mates of control refers to the number of employees reporting directly to one manager. When the span of control is broad, relatively hardly a(prenominal) levels exists between the top and bottom of the organization. Conversely when the span of control is narrow, more levels are required for the corresponding number of employees. Although there is no correct number of subordinate s that a manager can supervise efficaciously, the competencies of both the manager and employees, the similarity of tasks being supervised and the extent of rules and operating standards all model a managers span of control.Consider the Air France and KLM corporate and well-disposed responsibility (SCR) organization structureCHAPTER 3 Organisational cultivation harmonise to Hellriegel et al (1998), the organization itself has an invisible quality a certain style, a character, a way of doing things that may be more powerful than the dictates of any one person or any formal system. Armstrong M (2006) defined, organizational culture as the pattern of values, norms, beliefs, attitudes, and assumptions that may non have circulated but shape the ways in which flock behave and get things done. Values refer to what is believed to be in-chief(postnominal) about how people and organizations behave norms are the unwritten rules of behavior. To understand the soul of the organization r equires that we travel below the charts, rule books, machines, and buildings into the resistor world of corporate cultures. Indeed there are several ways in which organizational cultures are formed, maintained and changed. Meanwhile there is a very possible relationship between organizational culture and capital punishment, the relationship between organizational culture and ethical behavior, the challenge of managing a heathenly diverse work force and finally how organizations socialize individuals to their particular cultures. There are several types of organization cultures, these includes labels of baseball team, club, honorary society and fortress. Organizational culture represents a complex pattern of beliefs, expectations, ideas, values, attitudes and behaviors shared by the members of an organization. More specifically, organizational culture includes routine behaviors, norms, and dominant values held by organization.Essentially the issue of heathen differences and cultu ral compatibility in mergers between Air France and KLM has gained much attention among the two companies. Since the two companies operate under its brand name and culture, the set up of cultural clashes on the result of a merger and their employees are numerous. Cultural differences may result to paltry or low productive behavior among the employees, such as low level of payload, trust and cooperation between the groups of employees from the two merging companies. Loss of productivity caused by luck of trust and cooperation is particularly frequent in case of top managers. This is because cultural clash is strongest when the contact between the opposing cultures is greatest and executives is the people concern in the merger from its beginning till its end. This is a very bad sign for companies, since motivation and commitment of the top managers has a major influence on the motivation of other subordinates. Cultural differences mainly influence employees of the merging companie s, but beholdd cultural distance may also influence potential inappropriate investors and shareholders who may want to avoid direct ownership because of high information costs and the delicatey in transferring management techniques and values. Organization cultural aspects may be beautiful both for the investors, who align the business models of the unconnected partner a considerable advantage and for the managers who expect more opportunities for themselves by working for the partner firm, which they perceive to be high prestige worldwide leader firm and which corporate culture better addresses their expectations. In this situation managers are willing to adopt new culture. Whether cultural differences hinder or facilitate the integration process, their meaning is undeniable. Only some of them notice the complexity of the international mergers where not only two different organizational cultures come together, but organizational cultures which are deeply nested in national cul tures. Common cultural differences embrace differences in converse styles, planning and decision make practices, negotiation strategies, and management or leaders styles. All of them are shaped by both national and organizational cultures, considering the role managers play in the merger and post-merger integration process, it is at the top management level that national cultural differences play the most important role in the life of merging organizations. That is why Air France KLM before making any decisions and signing any contracts should conduct an in depth cultural audit of the future partner. It is important to regard that cultural distance and cultural differences do not necessarily have to mean troubles. Cultures do not have to be the same it is sufficient if they are complementary. Consequently, the major advantage of such a cultural due diligence is that it raises awareness of issues that should be managed during the integration process.CHAPTER 4 -Leadership and manag ementAs Hellriegel et al (1998), defines leadership as the process whereby a person influences others to achieve a goal, i.e. is a process of creating a vision for others and having the power to translate the vision into reality. The ways in which leaders attempt to influence others depend in part of the power available to them and in part on their competencies. Leaders draw on 5 sources of power to influence the actions of others legitimate, reward, coercive, referent and expert. Vision, empowerment, meaning through communication and self understanding are the competencies that assistant leaders become more effective. Mullins (2007) defined management is active, not theoretical. It is about changing behavior and making things happen. It is about developing people, working with them, reaching objectives and achieving results. Indeed, all the research into how managers spend their time reveals that they are creatures of the moment, unceasingly immersed in the nitty gritty of mak ing things happen.Air France-KLM is now introducing a new combined executive management structure on a functional basis, replacing the separate management structures in Air France and KLM. In place of the Strategic Management Committee, which had supervised the development of Air France and KLM over 2004 to 2007, the business is being managed from 2007 through an Executive Committee whose members has a group level responsibility and can come from either Air France or KLM while retaining their responsibilities at a company level.CHAPTER 5 Teamworking and MentoringAs defined by Katzenbach and metalworker (1993) cited in Armstrong M (2006), A team is a small number of people with complementary skills who are committed to a common purpose, performance goals and approach for which they hold themselves mutually accountable.For example, after KLM and Air France merged, management decided to create teams of people from both companies to exchange information about particular topics. The mos t worthful part is the intangible part, teaming up the guy from IT with the guy from marketing, with the network planning guy, who normally dont speak together.CHAPTER 6 Resourcing and TrainingAccording to Bratton Gold (2007), human resource planning is the process of systematically forecasting the future demand and supply for employees and the deployment of their skills within the strategic objectives of the organisation. Armstrong M (2006) said, people resourcing is concerned with ensuring that the organization obtains and retains the human capital it needs and employs them productively. It is also about those aspects of employment practice that are concerned with welcoming people to the organization and if there is no alternative, releasing them. It is a key part of human resource management. Mullins (2007) explained that, one of the major areas of human resource management function of particular relevance to the effective management and use of people is training and developmen t. Few would argue against the importance of training as a major influence on the success of the organization. Staffs are crucial, but very expensive resource. In order to sustain economic and effective performance it is important to optimize the contribution of employees to the aims and goals of the organization. The purpose of training is to improve knowledge and skills and to change attitudes. It is one of the most important potential motivators which can lead to many possible benefits for both individuals and organization.Since the combination of Air France KLM, each company has kept its own set of policies, especially for Human Resources issues, while developing new common policies in some other areas. Air France-KLM rates as the sector leader on human resources issues and actively addresses all of the challenges relevant to its business Overall, Air France KLMs performance on human resources issues ashes stable compared to the last rating. Alongside the environment of the rec ent merger, severe competition and tough boundaries, the major apprehend relations issues for the company are to develop employability and staff mobility, essentially through training and proactive social exchange of ideas. Other critical issues for the company entail promoting non discrimination, diversity, and equal opportunities, and safeguarding health and safety in the workplace.CHAPTER 7 Communication skillsCook et al (1997) describes that, communication begins when one person sends a message to another with the mantled of evoking a response. The effective communication occurs when the receiver interprets the message exactly as the sender intended. Effective communication is essential for the functioning of any organization. Managers need to transmit orders, and polices, build cooperation and team spirit, and identify problems and their solutions.It is believed that managers have traditionally spent the majority of their time communicating in one form or another. Communicat ion within an organizations may take place through several ways, these includes meetings, face-to-face discussions, memos, letters, e-mails, reports, etc. Recently, however, more and more employees find that an important part of their work is communication, especially now that service workers outnumber production workers and research as well as production processes emphasize greater collaboration and teamwork among workers in different functional groups. Moreover, a sea change in communication technologies has contributed to the transformation of both work and organizational structure. For these reasons, communication practices and technologies have become more important in all organizations, but they are perhaps most important in knowledge-intensive organizations and sectors and, as such, are of great significance to science organizations and to public science management. The study of organizational communication is not new, but it has only recently achieved some degree of recognit ion as a field of academic study. It has largely grown in response to the needs and concerns of business. The first communication programs were typically located in speech departments, but most business schools now include organizational communication as a key element of study. The study of organizational communication recognizes that communication in organizations goes farthermost beyond training managers to be effective speakers and to have good interpersonal communication skills. Moreover, it recognizes that all organizations, not just business organizations, have communication needs and challenges.CHAPTER 8 Performance and MotivationArmstrong M (2006) defined a motive is a reason for doing something. Motivation is concerned with the factors that influence people to behave in certain ways. All organizations are concerned with what should be done to achieve sustained high levels of performance through people. Giving close attention to the individuals can best be motivated throug h such means as incentives, rewards, leadership and importantly, the work they do and the organization context within which they carry out that work. Essentially motivation can take place in two ways such as people can motivate themselves (intrinsic motivation) by seeking, finding and carrying out work that satisfies their needs and secondly people can be motivated by management (extrinsic motivation) through such methods as pay, praise, promotion and punishments such as disciplinary action. In terms of career management, AF-KLM has put increased emphasis on developing careers for older employees. Extensive means are put in place to deal with health and safety issues, although key performance indicators are not disclosed on a group-wide basis, but separately for Air France and KLM. Air France KLM is one of the few companies who show transparency on how to deal with atypical working hours.Air France-KLM has an above average performance compared to its sector peers on Business Behavio ur issues. The Group scores very well on its product safety and security commitments and has thorough commitments and implementation measures on responsible contractual agreements, making its management of client issues among the best in the sector. The Groups performance in terms of passenger cheer has been stable over the past three years. Air France-KLMs approach to suppliers issues (embedded in its Procurement Charter for sustainable Development) and anticompetitive practices is similarly comprehensive, although AF-KLM faced a minor allegation related to anti-competitive employment legislation. Overall, the Groups performance improved more or less compared to last rating, and remains far above the sector average.CHAPTER 9 Management systemsSince both Air France and KLM introduced incorporated Management Systems (IMS), which cover quality, environmental management, and food safety concerns. Air France was awarded comprehensive certification for its IMS. The Air France and KLM maintenance business units use their complementary approaches and their multi-skilled workforces to offer customers a unique, customized portfolio of services, in-line maintenance. The constant dialogue with third-party airlines and the combined experience of Air France and KLM ensure that their maintenance departments have in-depth knowledge of the sector and its needs. Customers are also invited to take part in regular satisfaction surveys. Not only that, also Air France KLM promotes environmental friendly solutions which they promote among customers.CHAPTER 10 Management of changeHellriegel et al (1998) explained, many sectors of the economy, organizations must have the capacity to adapt quickly and effectively in order to survive. To a certain extent all organizations exist in a changing environment are themselves constantly changing. Increasingly organizations that emphasize bureaucratic or mechanistic system are ineffective. Organizations with rigid hierarchies, high degrees of functional specialization, narrow and limited job descriptions, inflexible rules and procedures, and impersonal management cant respond adequately to demands for change. Organizations need designs that are flexible and adaptive. They also need systems that both require and allow greater commitment and use of talent on the part of employees and managers.Organisational change can be difficult and costly. Despite the challenges, many organizations successfully make needed changes. Adaptive, flexible organizations have a competitive advantage over rigid ones. Thus managing change has become a central focus of effective organization worldwide. There are so many pressures for change, these includes global market, the spread of information technology and computer networks and changes in the nature of the workforce employed by organizations.Thereby, we conclude for the organization to exist there must be innovation process to constantly integrate with the new technologies worldwide. Air France KLM has managed to cop with those technological changes at various aspects so as to comply with customer needs, these includes the revolution of electronic ground services. Air France KLM satisfied the demand autonomy and transparency expressed by passengers. The company is extending the use of the current technologies, i.e. mainstreaming electronic ticketing, extending check in at self service kiosk. The spread of e service offers the company genuine opportunities to reduce the cost and improv