PARIS: Air France-KLM will combine a sales drive with efficiencies including better fleet management to lift profit margins to 7-8 percent over the medium term, the airline group’s CEO Ben Smith told investors on Tuesday.
“The Air France-KLM group has all the assets to regain its leadership position,” Smith said in a company statement ahead of his first major strategy presentation since joining from Air Canada last year.
After a wave of 2018 strikes that grounded flights and cost €335 million ($373 million), the Franco-Dutch group has stabilized under Smith’s leadership thanks to union deals that have pushed up wage costs but increased operating flexibility.
Air France’s operating margin came in at 4.8 percent for the first 9 months of 2019, a 1.7 point decline from the same period a year earlier.
Under his new five-year plan, Smith vowed to lift profitability and restore dividends by “simplifying our fleet, clarifying our brand and market positioning and unlocking significant commercial and operational flexibility” thanks to labor deals. Air France-KLM has not paid a dividend since 2008.
The group also pledged to drive costs lower by speeding up the renewal of its fleet and being more flexible in managing the combined Air France-KLM fleet of more than 500 aircraft.
Air France-KLM took a €100 million charge last quarter to retire its Airbus A380 superjumbos early and replace them with more fuel-efficient planes.
Smith also overcame Dutch objections earlier this year to push through an integration plan combining management of the Air France and KLM aircraft fleets, which were still being handled separately 15 years after the airlines merged.
Air France-KLM shares were down 1.1 percent at €10.45. The stock has risen 11.5 percent so far this year, partly in anticipation of Smith’s mid-term performance plan.
To boost sales, the group said it aimed to sharpen the focus of its three main airline brands.
Air France-KLM plans sales and efficiency drive to lift profit
Air France-KLM plans sales and efficiency drive to lift profit
- The group also pledged to drive costs lower by speeding up the renewal of its fleet and being more flexible in managing the combined Air France-KLM fleet of more than 500 aircraft
‘The age of electricity’: WEF panel says geopolitics is redefining global energy security
- Surging demand, critical minerals, US-China rivalry reshaping energy security as nations compete for influence, infrastructure, control over world’s energy future
LONDON: Electricity is rapidly replacing oil as the world’s most strategic energy commodity, and nations are racing to secure reliable supply and influence in a changing energy landscape.
Global electricity demand is growing nearly three times faster than overall energy consumption, driven by artificial intelligence, electric vehicles, and rising use of air-conditioning in a warming world.
“We are entering the age of electricity,” said Fatih Birol, the executive director of the International Energy Agency, during a panel discussion titled “Who is Winning on Energy Security?” at the World Economic Forum in Davos on Tuesday.
Unlike oil, electricity cannot be stockpiled at scale, forcing governments and companies to prioritize generation, transmission, and storage, making regions with stable infrastructure increasingly important on the global stage.
US-China rivalry
Energy security is increasingly about control and influence, not just supply. The rivalry between the US and China now extends beyond oil to critical minerals, energy infrastructure, and long-term energy partnerships.
“The contrast between the US approach and China’s is stark,” said Meghan O’Sullivan, director of Harvard University’s Belfer Center. “The US, until recently, focused on access, not control. China flips that, seeking long-term influence and making producers more dependent on them.”
O’Sullivan highlighted China’s Belt and Road Initiative, which invests in energy infrastructure and critical minerals across Africa, Latin America, and Asia to secure influence over production and supply chains.
“It’s not just the desire to control oil production itself, but to control who develops resources,” she said, citing Venezuela as an example. The South American nation holds some of the world’s largest crude oil reserves, giving it outsized geopolitical importance. Recent US moves to expand influence over Venezuelan oil flows illustrate the broader trend that great powers are competing to shape who benefits from energy resources, not just the resources themselves.
“There’s no question that the intensified geopolitical competition between great powers is playing out in more competition for energy resources, particularly as the energy system becomes more complex,” O’Sullivan added.
Global drivers of the electricity era
The rise of electricity as a strategic commodity is also transforming global supply chains. Copper, lithium, and other minerals have become essential to modern energy systems.
“A new ‘energy commodity’ is copper,” said Mike Henry, CEO of BHP. “Electricity demand is growing three times faster than primary energy, and copper is essential for wires, data centers, and renewable energy. We expect a near doubling, about a 70 percent increase in copper demand over 25 years.”
Yet deposits are harder to access, refining is concentrated in a few countries, and supply chains are politically exposed.
“The world’s ability to generate electricity reliably will increasingly depend on materials and infrastructure outside traditional oil and gas markets,” Birol said.
AI and digital technologies amplify the challenge with large-scale data centers consuming enormous amounts of electricity.
The Middle East’s strategic relevance
While the global focus is on electricity demand and great-power rivalry, the Middle East illustrates how traditional energy hubs are adapting.
Majid Jafar, the CEO of Crescent Petroleum, highlighted the region’s enduring advantages: abundant reserves, low-carbon potential, and strategic geography.
“Geopolitical instability reinforces, if anything, the Middle East’s role as a supplier with scale, affordability, availability, and some of the lowest carbon reserves,” he said.
Jafar emphasized the region’s ability to navigate the growing US-China rivalry.
“Amid US-China global friction, the Middle East has managed to remain on good terms with both sides,” he said, noting that flexible policy and engagement help preserve influence while balancing competing interests.
The region is also adapting to the electricity-driven era. AI data centers and digital technologies are multiplying power needs. Jafar said: “One minute of video consumes roughly an hour’s electricity for an average Western household. Multiply that across millions of servers and billions of people and the scale is staggering.”
Infrastructure investments further strengthen the Middle East’s strategic position. In the Kurdistan Region of Iraq, the Runaki Project has expanded natural gas–fueled power plants to provide 24/7 electricity to millions of residents and businesses, reducing reliance on diesel generators and supporting economic growth.
According to Jafar, the combination of energy resources, capital, leadership, and agile policymaking gives the Middle East a competitive edge in meeting global electricity demand and navigating the complex geopolitics of energy.
While the panel highlighted the Middle East as one example, in the age of electricity, energy security is defined as much by influence and infrastructure as by barrels of oil, with the US-China rivalry determining who gains and who is left behind.
