La Compagnie CEO on the pandemic recovery for air travel and demand for transatlantic flights

Christian Vernet, La Compagnie CEO joined Yahoo Finance Live to discuss the state of air travel.

Video Transcript

ADAM SHAPIRO: Let's turn our attention, because a lot of people want to get up and go. The new travel restrictions that kept people from traveling internationally are now much easier. Paris is open again. And what could be better than flying to Paris business class on a airline that is all business class?

We want to welcome into the stream Christian Vernet, who is the CEO of La Compagnie. And your airline, I've actually been playing with fares right now. And I got to tell you, to be able to go in a lie-flat, basically luxury experience to Paris-- I think round-trip you're looking at about 2,500 to 3,000 depending when you book the ticket-- that's pretty good. You can't do that on some of the legacy carriers in the US. How do you remain competitive with that kind of fare?

CHRISTIAN VERNET: Well, interesting question. Our cost base is designed in such a manner that we can accommodate flying at this level of rates and be profitable down the end. Well, at this time. Obviously, the COVID has impacted and is still impacting the market. So we are all recuperating from the crisis.

But we basically fly today brand new A321neo airplanes, which are narrow-bodies, which, in particular, has fuel consumption which is much less than one of the aircraft we were flying before. They were Boeing 757s, and [INAUDIBLE] is 30%. 30% of saving on a cost line, which is about 15% to 20% of the cost to operate an airplane, is significant.

Well, beside this, we are a small company. We're agile. We try to fly as much as we can on the fleet. Just give you a hint, we were flying twice a day between Paris and New York up to the end of 2019 and early 2020 before the COVID came by. So it's a combination of factors that are driving the efficiency of the airline to the highest potential level.

And you're right, with our 76 cabin fitted with-- you've got on your screens some representation of what the product is, is quite enticing, especially in a post-COVID world where, well, social distance is a major factor for passengers to feel at ease and feel safe during their travel is a significant advantage to get people to try and adopt our product yet at affordable levels of pricing. I agree.

SEANA SMITH: Well, Christian, speaking of getting more people to fly, you now have resumed flights between New York and Paris for some months now. You've resumed them in the middle of June. What has demand been like over the last couple of months?

CHRISTIAN VERNET: Well, as you may remember, the European Commission allowed the European borders to reopen to American citizens, or even more, more North American citizens, back in early June on June 9. We, as an airline, we are specialized into flying the transatlantic, Paris-New York or Nice-New York. So before that, during COVID, we were basically forced to stop this kind of flying. And this has been a major drawback for our operation.

When the borders reopen in Europe, glad enough we were to see that the American public did come back to the French destination, such as Paris and Nice. And we were able to fill our airplanes at about 60% of the overall capacity, yet the fact that the American borders were still closed at this time forced us to lower the offer in terms of number of flights per week to, let's say, a lower number to the one we expected before, such as four to five.

So the traffic came along these lines during all the summertime, but we were still expecting, at this time, a lot from the opening on the side of the Biden administration of the US borders. Gladly enough, the announcement came in late September, confirming mid-October, with the borders actually opening on the 8th of November. So from this date, 8th of November, the French European travelers have been allowed to go back to America, to New York, as far as we are concerned. And suddenly we've seen something like 250% increase of our sales on a weekly basis, monthly basis, versus the previous period while we only had ability to travel American people across the Atlantic.

So that return to I wouldn't say normal operation, because we are bound to fly at a much higher pace than what we're doing today, was very much expected and is very well welcome. The reaction from the public has been quite strong and encouraging. As far as we're at today, in November and December, we are getting close to 80% load factor, which means the demand is pretty strong and there are people actively looking forward to traveling back across the ocean--

ADAM SHAPIRO: Christian.

CHRISTIAN VERNET: --to come to--

ADAM SHAPIRO: I'm going to interrupt you. I got to interrupt you, because when you talk about the 80% load factor, I'm looking, Christmas, you could be in Paris at 1,700 bucks. It's essentially a luxury ticket to Paris. And I just saw on the website, 1,700 bucks. You can't get that on the other airlines, that class of service.

And you're going to be expanding in April to Milan. Are there projections for further expansion? I realize you have the two Airbus aircraft now. But are you going to be growing in 2022?

CHRISTIAN VERNET: Well, I don't believe 2022 is going to be a growth period for us in terms of overall size and revenues. You're right, we are going to open Milan to New York from the 15th of April, which is important change and novelty to our program, to expand the possibility for American travelers to go to Europe besides Paris and Nice. We need to wait to 2022 to see our revenues stabilize and to allow us to get back into profitability, which we have obviously not seen for the last two years, before we can come to decide on fleet expansion.

But, yes, we do have plans to expand the fleet to return to a higher pace of service to Paris, between Paris and New York. A small airline like us, we represented 23% of the market between Paris and New York in [INAUDIBLE] as far as business travelers are concerned. It was quite significant. We have more destinations that we want to look at, but we need to go through 2022 and see how it goes. Hopefully, we will be out of the crisis by this time. Likely to be quicker than the other ones, you're right, and then we shall adapt to the circumstances and get back into--

ADAM SHAPIRO: Certainly.

CHRISTIAN VERNET: --growth.

ADAM SHAPIRO: I think the expression would be "Vive la France." I mean, 1700 bucks, I can't get over, Newark to Paris. And I think there's going to be a discussion in this household tonight about that. But we have to say thank you very much.

CHRISTIAN VERNET: You're more than welcome.

ADAM SHAPIRO: Christian Vernet.

CHRISTIAN VERNET: We wait for you.

ADAM SHAPIRO: La Compagnie CEO. And all the best. Happy flying.