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AIR FRANCE and KLM have decided to create a unified management body in their cargo businesses called `Cargo European House'.

In a statement, the airlines have said that this should be operational by the end of this year.

The airlines have said that this team will be in charge of network management, marketing and sales, with each airline continuing to manage its own operations.

The aim of this initiative is to create a single commercial offer for optimum customer benefits.

Besides, it looks to consolidate and develop the position of Air France Cargo and KLM Cargo based on the dual-hub strategy with Charles de Gaulle and Schiphol as the radius.

The move is also aimed at securing the ongoing performance improvement in cargo and fully realising the substantial synergy potential.

Since the Air France-KLM group was set up, the two airlines have developed a deeper and closer cooperation in their cargo businesses. They have made significant progress in achieving synergies such as network management, capacity swaps and coordinating freighter schedules. In addition, KLM has joined SkyTeam Cargo.

The SkyTeam includes nine airlines and operates 14,320 daily flights to 658 destinations in 137 countries.

Its members include Aero Mexico, Air France, KLM, Continental Airlines, Czech Airlines, Northwest Airlines, Delta Airlines and Korea Air.

The founding principle of Air France-KLM is "One group, two airlines, three core businesses". Therefore, the focus in the coming years will broadly be on realising synergies and not on organisational integration.

However, in certain specific sectors, such as cargo, joint entities will be introduced if justified by a strong business rationale, the statement adds.

(This article was published in the Business Line print edition dated January 31, 2005)
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