Primo semestre per Air France e KLM

787-9 KLM #356-ZB234

First Half 2017 results
Result improvement driven by solid traffic and unit revenue
performance
FIRST HALF 2017
 Robust traffic resulting in an improved load factor, up 1.4 pts compared to last year
 Confirmation of the positive trend in Group (Passenger + Transavia) unit revenue per
available seat kilometer (RASK) ex-currency: +1.9% during the Second Quarter
 First Half operating result 353 million euros, up 135 million euros
TRUST TOGETHER
 Major advances in strengthening the network of alliances
 Air France Pilot agreement paving the way for the creation of Joon
 Air France Cabin crew signed 5-year labor agreement
OUTLOOK
 Long haul forward bookings for coming four months above previous year’s level
 Unit revenue variation at constant currency expected to be slightly up for the Second Half
2017
 Despite the negative effects of the increased load factor and profit sharing on the unit cost
evolution, the Group is expecting a unit cost reduction for 2017 between 1.0% and 1.5% at
constant currency, fuel price and pension related expenses.
 Expected decrease in fuel bill in Second Half 2017 to be 100 million euros
 Target of positive free cash flow before disposals reiterated with capex at the high-end of
the 1.7-2.2 billion euros range
The Board of Directors of Air France-KLM, chaired by Jean-Marc Janaillac, met on 27th July
2017 to approve the accounts for the First Half 2017.
Jean-Marc Janaillac made the following comments: “In a context of solid traffic growth and
enhanced unit revenue trend, Air France-KLM delivered improved operating income and
operating free cash flow. Over the period, the Group continued to execute on its strategic
priorities of growing revenues and improve competitiveness. The agreement reached with Air
France pilots in July allows the Group to launch the creation of Joon in line with the original
schedule. I am also very pleased with the strengthening of our network of alliances: the
combination between our North-Atlantic alliance with Delta and Delta and Virgin Atlantic jointventure,
and the reinforcement of our partnership with China Eastern position Air France-KLM
as the European pillar of the leading global airline network. These are important milestones
showing that Air France-KLM is on the right path to achieve Trust Together’s strategic
objectives.”
Air France-KLM Group Second Quarter First Half
2017 Change 2017 Change
Passengers (thousands) 26,222 +7.5% 47,145 +6.5%
Capacity (ASK m) 80,934 +5.1% 151,768 +4.2%
Traffic (RPK m) 70,411 +7.5% 130,909 +5.9%
Load factor 87.0% +2.0 pt 86.3% +1.4 pt
Operating result (€m) 496 +179 353 +135
Net result – group (€m) 367 +326 151 +265
Operating free cash flow (€m) 339 +162 668 +295
Net debt at end of period (€m) 2,956 -699
2
Business Review
Network: Main contributor to the increase in the Group’s operating result
Network
Second Quarter First Half
2017 Change Change
like-for-like
2017 Change Change
like-for-like
Capacity (EASK m) 82,076 +3.9% 156,936 +2.8%
Total revenues (€m) 5,749 +5.5% +4.7% 10,790 +3.3% +2.6%
Scheduled revenues (€m) 5,520 +6.2% +5.4% 10,334 +3.7% +3.1%
Unit revenue per EASK (€ cts) 6.72 +2.2% +1.3% 6.58 +0.9% +0.3%
Unit cost per EASK (€ cts) 6.23 -0.2% -1.6% 6.39 +0.0% -1.6%
Operating result (€m) 409 +138 +162 309 +106 +200
As announced at the Full Year 2016 results presentation, the busines segment Network consists now
of both the Passenger network and Cargo business. The combined operating result amounted to 309
million euros during the First Half 2017, an improvement of 200 million euros at constant currency, driven
by a solid traffic and unit revenue performance in the Passenger network.
Robust Second Quarter traffic numbers confirming improvement in Passenger unit
revenue trend
Second Quarter First Half
Passenger network 2017 Change Change
like-for-like
2017 Change Change
like-for-like
Passengers (thousands) 21,861 +6.0% 40,333 +4.4%
Capacity (ASK m) 72,716 +4.2% 138,802 +3.1%
Traffic (RPK m) 63,022 +6.6% 119,375 +4.8%
Load factor 86.7% +2.0 pt 86.0% +1.4 pt
Total passenger revenues (€m) 5,243 +6.1% +5.2% 9,780 +3.9% +3.3%
Scheduled passenger revenues (€m) 5,050 +6.7% +5.8% 9,399 +4.4% +3.7%
Unit revenue per ASK (€ cts) 6.94 +2.4% +1.5% 6.77 +1.2% +0.6%
Unit revenue per RPK (€ cts) 8.01 +0.0% -0.8% 7.87 -0.4% -1.1%
The Second Quarter confirms the improvement of the Passenger unit revenue performance in both Air
France and KLM, up 1.5% at constant currency. On long haul, there was strong premium class
performance with unit revenues up by 4.4% at constant currency and economy class up by 2.2%. The
improvement was driven mainly by the strong recovery in Asia, with unit revenue up 8.6% at constant
currency and Latin America, up 13.6% at constant currency.
Gradual Cargo turnaround
Second Quarter First Half
Cargo business 2017 Change Change
like-for-like
2017 Change Change
like-for-like
Tons (thousands) 286 +1.4% 558 +0.0%
Capacity (ATK m) 3,624 +1.7% 7,019 +0.3%
Traffic (RTK m) 2,144 +2.7% 4,188 +1.6%
Load factor 59.2% +0.7 pt 59.7% +0.8 pt
Total Cargo revenues (€m) 506 -0.2% -0.5% 1,010 -2.5% -3.0%
Scheduled cargo revenues (€m) 470 +1.1% +0.5% 935 -2.3% -3.0%
Unit revenue per ATK (€ cts) 12.94 -0.8% -1.3% 13.31 -2.5% -3.2%
Unit revenue per RTK (€ cts) 21.87 -1.9% -2.4% 22.31 -3.8% -4.5%
During the Second Quarter, the improvement in the Cargo performance was driven by a 2.7% increase
in traffic resulting in a 0.7pt increase in load factor. The trend in unit revenue, down 1.3% during the
Second Quarter, continued to improve compared to previous quarters, confirming the gradual
turnaround.
3
Maintenance: Record high order book
Second Quarter First Half
Maintenance 2017 Change Change
like-for-like
2017 Change Change
like-for-like
Total revenues (€m) 992 -0.8% 2,041 +1.7%
Third party revenues (€m) 440 +1.1% -0.8% 900 +3.9% +1.7%
Operating result (€m) 53 -4 -7 89 -6 -12
Operating margin (%) 5.3% -0.4 pt -0.7 pt 4.4% -0.4 pt -0.7 pt
Over the period, the Maintenance order book increased to a record high 9.7 billion dollars, reaching its
target of growing the order book by 10% in 2017. The increase was driven by both the Engine and the
Component order books.
Transavia: On track for a positive result in 2017
Second Quarter First Half
Transavia 2017 Change 2017 Change
Passengers (thousands) 4,361 +15.9% 6,812 +20.4%
Capacity (ASK m) 8,218 +13.7% 12,966 +18.5%
Traffic (RPK m) 7,389 +15.7% 11,534 +19.5%
Load factor 89.9% +1.5 pt 89.0% +0.8 pt
Total passenger revenues (€m) 408 +26.3% 605 +25.3%
Scheduled passenger revenues (€m) 408 +26.7% 596 +25.5%
Unit revenue per ASK (€ cts) 4.95 +11.0% 4.59 +5.8%
Unit revenue per RPK (€ cts) 5.49 +8.9% 5.15 +4.7%
Unit cost per ASK (€ cts) 4.54 -1.8% 4.93 -2.0%
Operating result (€m) 34 +46 -43 +32
Strong capacity growth (+13.7%) in combination with an increase in load factor (+1.5pts) and an 11.0%
rise in unit revenue led to the strong positive Second Quarter result. The result was strengthened by the
decrease in unit costs, down 4.2% at constant currency and fuel. The Group is expecting a positive
result in 2017 for Transavia.
4
Group Review
Group operating result driven by solid traffic and unit revenue performance.
Second Quarter First Half
2017 Change Change
like-for-like
2017 Change Change
like-for-like
Capacity (EASK m) 90,294 +4.7% 169,901 +3.8%
Revenues (€m) 6,605 +6.3% +5.4% 12,314 +4.2% +3.5%
EBITDAR (€m) 1,190 +199 +222 1,744 +222 +310
EBITDA (€m) 913 +185 +215 1,182 +188 +290
Operating result (€m) 496 +179 +210 353 +135 +239
Operating margin (%) 7.5% +2.4 pt +3.0pt 2.9% +1.0 pt +1.9pt
Lease adjusted operating result ((€m) 588 +184 +218 540 +146 +255
Lease adjusted operating margin (%) 8.9% +2.4 pt +3.0pt 4.4% +1.1 pt +2.0pt
Net result, group share (€m) 367 +326 151 +265
The Second Quarter operating result improved by 179 million euros of which the increase in capacity
translated into a positive 13 million euros contribution. The other items contributing are, at constant
currency, the positive trend in group unit revenues resulting in an increase of 100 million euros, whereas
the decrease in fuel price including hedge results contributed 74 million euros. Currencies had a
negative impact on the operating result of 32 million euros.
Adjusted for the interest portion of operating leases (1/3 of annual operating lease expenses), the
operating margin stood at 8.9% versus 6.5% at 30 June 2016.
Unit cost reduction impacted by increase in load factor and profit sharing
During the First Half, the unit cost was down 1.0% with capacity up by 3.8%. The Second Quarter unit
cost per EASK was down by 0.3%, on a constant currency, fuel price and pension-related expense
basis, against a capacity increase measured in EASK of 4.7%.
The results of the cost saving measures and initiatives were partly offset by higher flight variable costs
related to the increasing load factor. The higher load factor compared to last year translated into a 0.3%
increase in unit costs during the Second Quarter and 0.2% over the First Half 2017.
In addition to the increase in costs related to the higher load factor, profit-sharing increased during the
First Half 2017 due to the timing of the recording of these expenses. This resulted in an increase of
0.6% in the Second Quarter and 0.2% in the First Half 2017.
Improved employee productivity
Second Quarter productivity, measured in EASK per FTE, increased by 5.6% while capacity increased
by 4.7%. The average number of staff decreased by 700 FTEs including an increase in Cabin crews by
600 FTEs linked to the increase in capacity. Due to seasonality and timing effects, net employee costs
increased by 1.9% and the profit sharing expense increased by 36 million euros. For the Full Year 2017,
the increase in the employee costs is expected to be less than 1.0% compared to the previous year.
Stable fuel bill during First Half 2017
The Half Year fuel bill amounted to 2,280 million euros, stable compared to previous year.
5
Net debt reduction supported by an improvement in EBITDA and working capital
Second Quarter First Half
In € million 2017 Change 2017 Change
Cash flow before change in WCR and Voluntary
Departure Plans, continuing operations 795 +241 1,059 +250
Cash out related to Voluntary Departure Plans -36 +98 -73 +100
Change in Working Capital Requirement (WCR) 165 -104 826 +33
Net cash flow from operating activities 924 +235 1,812 +383
Net investments before sale & lease-back* -585 -73 -1,144 -88
Operating free cash flow 339 +162 668 +295
* Net investments before sale & lease-back is defined as the sum of ‘Purchase of property, plant and equipment and intangible
assets’ and ‘Proceeds on disposal of property, plant and equipment and intangible assets’ as presented in the consolidated
cash flow statement
The net debt at 30 June 2017 amounted to 2,956 million euros, down 699 million euros compared to 31
December 2016. The reduction in net debt was supported by the improvement in both EBITDA and
working capital. Operating free cash flow was positive at 668 million euros up by 295 million euros
compared to 30 June 2016. The adjusted net debt decreased by 454 million euros to 10,712 million
euros.
Further strengthening of liquidity and continuous decrease in the net cost of debt
The net cost of debt amounted to 113 million euros during the First Half 2017, down 21 million euros
compared to last year, a continuation of the downward trend observed in recent years. The liquidity
situation further improved by an increase in the net cash on balance sheet of 580 million euros to 4.9
billion euros.
Contribution by airline to First Half results
Second Quarter First Half
2017 Change 2017 Change
Air France 184 +83 61 +46
Operating Margin (%) 4.6% +2.0 pt 0.8% +0.6 pt
KLM 317 +103 301 +94
Operating Margin (%) 11.7% +3.0 pt 6.1% +1.6 pt
Sum of individual airline results does not add up to Air France-KLM total due to intercompany eliminations at Group level
6
Outlook
The global context remains highly uncertain regarding the geopolitical environment in which we operate
and regarding fuel prices.
Long haul forward bookings for the coming four months are currently above previous year level. Based
on the current outlook, the variation in unit revenue at constant currency is expected to be slightly up
compared to last year for the Second Half 2017 .
To regain the offensive in long-haul and to improve the performance in medium-haul, the Group is
maintaining its targeted growth for the passenger group (Air France, KLM and Transavia) of between
3.0% and 3.5% measured in ASKs for Full Year 2017.
To improve its competitiveness, the Group is pursuing and amplifying the initiatives already under way
in terms of unit cost reduction. Despite the negative effects of the increased load factor and profit sharing
on the unit cost evolution, the Group is expecting for 2017 a unit cost reduction between 1.0% and 1.5%
at constant currency, fuel price and pension related expenses.
Based on the forward curve of 14th July 2017, the second half 2017 fuel bill is expected to decrease by
100 million euros compared to 20161
.
Regarding the balance sheet, the Group is maintaining strict capex discipline, targeting positive free
cash flow before disposals. The 2017 investment plan stands at between 1.7 billion euros and 2.2 billion
euros and is expected to be at the high end of the range.
The Group is pursuing a further reduction in net debt, targeting an adjusted net debt to EBITDAR below
2.5x mid cycle by the end of 2020. The adjusted net debt to EBITDAR ratio is expected to improve at
31 December 2017 compared to the previous year
*****
Limited review procedures were carried out by the external auditors. Their limited review report was
issued following the Board Meeting.
The results presentation is available at http://www.airfranceklm.com on 28th July 2017 from 7:15 am CET.
An analysts’ meeting will be hosted by Mr Janaillac (CEO) and Mr Gagey (CFO) on 28th July 2017 at
8:00am CET at the Pullman Paris Tour Eiffel hotel, 18, avenue de Suffren, Paris (15th arrondissement).
A live broadcast of the analysts’ meeting will be available at http://www.airfranceklm.com (password: AFKL)
and by conference call.

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