The Air France-KLM Group are joining forces with a major French container transportation and shipping company to combine their complementary cargo networks, including aircraft fleets. The ten-year deal will see the French company CMA CGM take up to 9% of Air France-KLM's share capital and appoint a CMA CGM representative to the Air France-KLM Group board.
New freight synergies for Air France-KLM as their freighter fleet gets a boost
Announced on Wednesday, the partnership will result in the four full-freighter aircraft CMA CGM Air Cargo operates teaming up with the six full-freighter aircraft the Air France-KLM Group flies. Also in the mix is cargo capacity in the 160 plus long-haul passenger aircraft the Air France-KLM Group operates. Both parties say the deal will generate significant revenue synergies, including the joint design of the full freighter networks and enhanced products and services mix opportunities.
"This strategic partnership leverages the complementary skills, expertise, and activities of Air France-KLM and CMA CGM. It is a landmark step which will significantly strengthen and expand the Group's position in the air cargo industry," says Air France-KLM Group CEO Benjamin Smith.
Alongside subsidiary CEVA Logistics, CMA CGM carries 400,000 tons of air freight annually and has a presence in 160 countries. The Air France-KLM Group will be familiar to Simple Flying readers. The European powerhouse airline group has an extensive full freighter and widebody belly aircraft network built around two global hubs at Paris-Charles de Gaulle (CDG) airport and Amsterdam Airport Schiphol (AMS) - both fitted with state-of-the-art cargo facilities and serving 295 destinations across 110 countries.
More freighters on the way for both parties
CMA CGM's current freighters are converted Airbus A330-200 planes operated by Air Belgium. But the Marseille-headquartered company also has four Airbus A350 freighters and two Boeing 777 freighters on order. The Air France-KLM Group is also expecting four A350 freighters from Airbus.
"I am very pleased with this strategic partnership with Air France-KLM," says Chairman and CEO of the CMA CGM Group Rodolphe Saadé. It allows us to significantly accelerate the development of our air division, CMA CGM Air Cargo, which was created just over a year ago, and to position our two companies among the world's leading players in air freight."
Underscoring the depth of the new partnership, CMA CGM will dig deep to take a stake in the Air France-KLM Group. The logistics business has the "firm intention" to take up 9% of the ex-post share capital in the airline group. Ex-post refers to the way the value of that share capital is assessed.
"I am also extremely pleased that this commercial partnership with CMA CGM has resulted in their decision to invest directly in the Air France-KLM Group, demonstrating a strong testimony of their belief in the future success of our Group," said Mr Smith.
Money to burn and opportunity beckoning for CMA CGM
After a big jump in revenues recently (the pandemic has been a profitable although difficult period for most freight and logistics companies), a cashed-up CMA CGM is looking for investment opportunities. So far, CMA CGM's presence in air freight isn't that significant - they've only been flying their own planes for a year. However, this deal will significantly expand CMA CGM's air freight capacities (CMA CGM and the Air France-KLM Group will jointly sell their air freight capacities) and allow the company to tap into the significant air freight and airport infrastructure the Air France-KLM Group has.
For the Air France-KLM Group, the deal brings a welcome flush of capital into the airline group and allows it to expand its air freight capacity. Business is booming in the air freight market and traditional passenger airlines are keen to build up their presence in this lucrative corner of the aviation industry. In the meantime, the deal remains subject to approval by the relevant regulators and consultation of employee representatives.