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Reunion island: all indicators turn green for Air Austral

Operating income results and positive net income


On Wednesday morning, the financial results 2013/14 of Air Austral will be presented to the Supervisory Board and it promises to be a very pleasant surprise with operating income and net income both positive. And for the current economic environment, in which the company makes 80% of its sales on the Reunion/metropolis route, this performance deserves some attention...



Marie-Joseph Malé, "We are the only struggling French company that kept its promises..."
Marie-Joseph Malé, "We are the only struggling French company that kept its promises..."
It is true that Air Austral has come a long way: -87 million euros in losses in 2011/12 and - 52 million in 2012/13!

"When, in 2012, we developed the recovery plan, we anticipated a return to equilibrium in the year that just ended, but the economic situation has deteriorated significantly since then," Marie-based Joseph Malé, CEO of Air Austral.

"We are the only struggling French company having kept its promises," he says.

A blow to Corsair, still in the red, that rushed to the French and European courts to denounce the recapitalization of Air Austral...

However, Marie-Joseph Malé is not announcing a victory yet. If a lot of work has already been done (selling devices, stopping the Australia/Noumea route and flights from the province to Réunion, expense reductions, voluntary redundancy of 20% of qualified personnel on B777, achieving two thirds of the savings plan of €15 million on maintenance contracts, catering, car rental, etc.), the debt of the company still remains high: 315 million euros that needed to be restructured.

The cancellation of the order of two A 380 that the current leaders of Air Autral do not want stills needs to be found. The delivery of these aircrafts is scheduled for this year. Negotiations to resolve this problem could end in the fall.

Meanwhile, the competition took the opportunity to offer a modernized product on the metropolis/Réunion route which represents 80% of the Reunion company: a B-777 for Air France, an A 330 for Corsair.

"Air France has kept a suitable price range in relation to the proposed new product," suggesting that Corsair has shown, on the contrary, a very aggressive measure.

However, the arrival of XL Airways has had little consequence.

In fact, XL Airways and Air Austral are complementary. XL has taken flight from Marseille that we did not know how to work with our B-777 without reaping large deficits. Better if the company managed profit from this!"

An evolution of the company image presented at Top Resa

In front of the new competitor, Air Austral will provide the means to restructure its product.

Not on the seats but on the general atmosphere.

The presentation that accompanies this image change of the company will be given at Top Resa during the winter program.

Meanwhile, relations with Air France have also pacified.

As proof the pro rate agreements with baggage check-in from beginning to end applied to over 21 European destinations in the Air France network complete the offer with a pre-delivery system from Air TGV to CDG.

However, the future of Air Austral does not lie in getting closer to Air France.

"We each have 40% market share on the Reunion/metropolis line, it would not make sense to join forces," says the CEO of Air Austral.

The development will be done rather in a regional environment.

Already, code share agreements on regional flights were made with companies in the Indian Ocean such as Air Mauritius, Air Madagascar and from June 23rd with Air Seychelles.

Moreover, the establishment last November of Ewa Air Mayotte, financed by local profits but managed by Air Austral with a network of six regional routes to Mozambique, represents a growth indicator in the area.

"In fact, we have three possibilities for development. The first circle is inter-island and this is a serious topic of discussion here.

Madagascar, for example, has significant economic development opportunities. The second circle concerns East Africa.

Again, Mozambique is a rising economic power and it is essential to take position right now.

And then there is the third circle, that of very long hauls via a hub or not,"
explains Marie-Joseph Malé.

Reflection and projects in the medium/long term ask to keep in mind the importance of the immediate challenge: working on the sustainability of the company that is becoming "a modern, dynamic, and innovative SME."

To be continued...

Written by Geneviève BIEGANOWSKI translated by Joséphine Foucher the 14/06/2014
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