2017 was a good year for AFI KLM E&M but it wasn't a completely smooth road. The annual results for the Air France-KLM group's maintenance division, which were published on 16th February, show an erosion in financial performance. Turnover remained stable at 4.2 billion Euro, but the operating result fell by 9.66% to 215 million Euro.
Air France-KLM explains that the activity was subject to increased pressure on its operating margin (which lost 0.5 points but remained solid at 5.1%) due to two factors. The first cause is due to "logistical problems with certain suppliers which have caused problems for our teams, leading to higher logistics costs", specifies Frédéric Gagey, the group's financial director.
The second reason is more structural. "With some parts, we are affected by price indexing clauses which are the result of the huge monopoly in the OEM sector', which sometimes imposes costs on us which we can do nothing about". This relates to the engine and equipment maintenance activity in particular. On the other hand, Frédéric Gagey emphasised the improved performance in the airframe activity.
The MRO division does have a bright future, however. It has managed to achieve its order book objectives and the various contracts which were won in 2017 enabled the division to exceed these objectives, setting the order book value at 10.4 billion Euro. Whereas growth in this area was expected at around 10%, it actually reached 16.9%.