Air France-KLM working with BCG on ‘New Horizon’ strategy

Air France KLM is on the verge of launching a new strategic transformation programme. The initiative will adjust its governance and re-align its internal organisation, while making the airline more agile and data-driven to meet changing demands.

Under the guidance of CEO Ben Smith, Air France-KLM has been working consistently to improve the airline group’s efficiency. The latest development in this is a new strategic roadmap, named ‘New Horizon’. Focusing on financial growth, and helping the carrier adjust to changed world of the passenger and cargo market, the plan aims to help the group bounce back from a rocky two years.

In its latest quarterly results, Air France KLM booked a net income of €552 million, compounding on the inevitable quarters of losses made during the Covid-19 pandemic as flying became close to impossible.

Now, though, green shoots of recovery are appearing, as passenger numbers take off, and efficiency programmes launched during Covid-19 bear fruit.

As a result, the group – which has a fleet of over 500 aircraft and flies to more than 300 global destinations – hopes to already hit operating break-even in the second or third quarter of 2022. New Horizon takes on a longer-term view on the group’s future, however.

Developed in conjunction with Boston Consulting Group (BCG), the new strategy seeks to further centralise activities with the group, downsize unnecessary management layers, and draw further synergies between the two autonomous business units of Air France and KLM. BCG is one of the company’s most used strategic advisors over the last decade.

While New Horizon’s blueprint has not yet been formally unveiled, insiders close to the matter informed French and Dutch media that the roadmap also puts forward recommendations on the way how the airline carrier conducts its aircraft maintenance. This includes the overhaul of operations across its fleet – mostly Boing, Airbus and Embrear – and at the carrier’s cargo business.

KLM and BCG

In the early days of Covid-19, KLM also engaged the consultants of Boston Consulting Group to draft a rapid recovery reorganisation plan, aimed at bringing down costs as quickly as possible to adjust to the nosedived demand. This was similar to work BCG performed for Lufthansa, TAP Air Portugal, and last year with Croatia Airlines.

BCG was already on board KLM’s operations division for years, working as an advisor on maintenance processes. In 2019, this collaboration even led to a joint venture, in which the two parties help other airlines with their operational excellence transformation.

Years before that, BCG also played a role in developing KLM's ‘High Performance Organisation’ plans.