Air France Industries KLM Engineering and Maintenance: Company Strategy & Performance Analysis
Air France-KLM primarily provides global passenger transportation services. It also has a presence in cargo transportation, aeronautics maintenance and overhauls services, and other air-transport related activities, including catering and air transport services. The company operates its business through five business segments: passenger network, cargo, maintenance, Transavia and others. Air France-KLM operates its maintenance business under Air France-KLM E&M.
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Strong order backlog to drive future growth
Air France-KLM E&M reported an order backlog of US$8.9 billion in 2016, in comparison to US$8.4 million in 2015, which includes several new A350 support contracts. The backlog increased at 6.0% over 2015-2016, despite a challenging market. For instance, in August 2017, AFI KLM E&M announced its plans to enter into an agreement with Delta Air Lines to provide component support for the US carrier's Airbus A350 fleet, as well as reciprocal components.
Air France-KLM E&M stands eighth in terms of MRO revenue
Air France-KLM E&M MRO revenue increased by 15.8%, from US$1,750.8 million in 2015 to US$2,027.6 million in 2016. This increase was primarily due to the increase in the number of contracts secured by the group in 2015. However, the company faces tough competition from MTU Aero Engines, Lufthansa Technik AG, Honeywell International Inc. and Rolls-Royce Holdings plc. GE Aviation is the market leader in terms of MRO revenue with revenues of US$11.4 billion, followed by United Technologies Corporation with revenues of US$10.0 billion.
Robust operational network provides a competitive edge
Air France-KLM E&M currently operates as the largest aircraft network between Europe and the rest of the world. The group ranks second in terms of global multi-product MRO market revenue. It has maintenance sites in Toulouse, Amsterdam, Villeneuve-Le-Roi, Roissy and Orly. AFI KLM E&M continues to market its services to customers in the line maintenance segment. It is also focusing on developing its business in its main bases and internationally. AFI KLM E&M has set up a new joint-venture with iGO Solutions in Orly, which aims to deliver high-performance support to its customers. The joint-venture’s first customers are Transavia’s B737 fleet and French Blue’s A330s.