Alle KLM’ers delen mee in verbetering KLM-resultaat
Alle KLM-medewerkers profiteren dit jaar mee van de eerste resultaatverbeteringen van KLM. In de cao zijn de afgelopen jaren afspraken gemaakt om KLM’ers mee te laten delen in de winst. Op 18 februari 2016 zijn de jaarresultaten van KLM over 2015 bekend gemaakt en met een operationeel KLM-resultaat van 388 miljoen euro komt de winstdelingsregeling nu tot uitkering.

De basissalarissen voor de directie zijn ook voor 2016 niet verhoogd. Dit in het licht van de uitdagingen waar KLM als onderneming voor staat. De salarissen liggen ruim onder het marktgemiddelde. Net als voor een groot aantal KLM-medewerkers geldt ook voor de directie een systeem van een variabel inkomen. Dit variabele inkomen is door de Raad van Commissarissen vastgesteld en gebaseerd op de realisatie van de financiële en niet-financiële doelstellingen. De hoogte wordt onder meer bepaald door het behaalde operationele resultaat (EBITDA) van KLM en AIR FRANCE KLM.

(*) Het Jaarverslag 2015 is beschikbaar door op onderstaande afbeelding te klikken.

• Revenues of 6.3 billion euros, up 2.2%, down 3.4% like-for-like.
• Negative impact on revenues of the Paris terrorist attacks estimated at 120 million euros
• EBITDA of 551 million euros, up 188 million euros like-for-like
• Operating result of 150 million euros, up 284 million euros like-for-like

OUTLOOK

• High level of uncertainty regarding fuel price and unit revenue due to geopolitical context and industry capacity environment
• Impact of fuel savings on P&L expected to be significantly offset by downward pressure on unit revenue and negative currency impacts
• Continued progress in unit cost reduction targeted between 0.8% and 1.2% in 2016
• Free operating cash flow generation after disposals between 0.6 billion euros and EUR 1.0 billion euros in 2016
• Further significant net debt reduction 

The Board of Directors of Air France-KLM, chaired by Alexandre de Juniac, met on 17 February 2016 to approve the accounts for Full Year 2015.

Key data

The consolidated financial statements of the Group have been revised as of 1^st January 2015 in order to improve their clarity. The changes are:

• In view of its rapid development, Transavia is now presented as a separate business segment. The passenger business segment is thus renamed from “passenger” to “passenger network”.
• Capitalized production costs are no longer deducted from individual cost lines in the profit and loss statement, but are instead fully allocated to the “Other income and expenses” line. The impact per quarter of this restatement is provided in the appendix.
• Foreign currency effects on provisions are no longer recorded in “Amortization, depreciation and provisions” but in “Other financial income and expenses”. The closing exchange rate is used to convert provisions at the closing date. Previously, the Group used the average rate of the US dollar to convert maintenance provisions. The consolidated financial statements as of December 31, 2014 have been restated for reason of comparison. The impact of this restatement is provided in the appendix.
• The costs of temporary staff are no longer recorded in “External expenses” but in “Salaries and related costs”.

Full year 2015

Full Year 2015 total revenues stood at 26.1 billion euros versus 24.9 billion euros in 2014, up 4.6%. Corrected for the strike impact, revenues increased by 2.5% mainly as a result of a strong currency tailwind. Total revenues were down 3.2% like-for-like.

The Fourth Quarter 2015 results were affected by the Paris terrorist attacks in November. The estimated impact in the Fourth Quarter 2015 revenues was 120 million euros.

Total operating costs were up +0.8% year-on-year and 5.8% lower on a like-for-like basis. Ex-fuel, they increased by 3.5% and by 1.1% on a like-for-like basis. Unit cost per EASK was reduced by 0.6%, on a constant currency, fuel price and pension basis, against capacity measured in EASK up by +0.2%, corrected for the strike.

The 2015 fuel bill amounted to 6,183 million euros, down 6.7% and 22.3% like-for-like. Based on the forward curve at 5 February 2016, the Full Year 2016 fuel bill could amount to 4.5 billion euros[1]

Total employee costs including temporary staff were up 2.8% to 7,852 million euros. They included a non-cash increase of 139 million euros in pension related expenses at KLM due to changes in actuarial assumptions (lower discount rate). On a constant scope and pension expense basis and adjusted for the strike, they increased by 0.7%. Excluding the profIt sharing scheme, net employee costs decreased by 0.2%.

In Full Year 2015, the positive currency impact on revenues reached 1,510 million euros. In spite of the higher profits on currency hedging, the negative impact on costs reached 1,688 million euros. The net impact of currencies on the operating result thus amounted to a negative 178 million euros.

EBITDAR amounted to 3,474 million euros, a reported increase of 1,012 million euros. Like-for-like, EBITDAR increased by 585 million euros, mainly driven by good second half trading. Over the Full Year 2015, 30% of the savings achieved on the fuel bill were retained; positive 1,721 million euros excluding currency was partially offset by pressure on unit revenues (negative 1,028 million euros excluding currency) and currency impacts (negative 178 million euros).

EBITDA amounted to 2,447 million euros, an increase of 858 million euros. Like-for-like, EBITDA increased by 576 million euros, mainly as a result of the strong Passenger network performance, which improved by 625 million euros like-for-like over the full year.

Full Year 2015 EBITDA improved by 341 million euros like-for-like at Air France and 221 million euros like-for-like at KLM. EBITDA margins were up at both airlines, reaching 9.3% at Air France and 9.2% at KLM.

The Full Year 2015 operating result stood at 816 million euros versus -129 million euros in 2014, a 945 million euro increase. Like-for-like, the operating result increased by 698 million euros, corrected for the strike (impact of 425 million euros) and currency effects (negative impact of 178 million euros).

The net result, group share stood at 118 million euros against a loss of 225 million euros a year ago. It included notably the non-current result related to the capital gain on the sale of Amadeus shares (+218 million euros) and the London Heathrow slots (+230 million euros), offset by the change in value of the hedging portfolio (-225 million euros), the unrealized foreign exchange loss (-360 million euros) and restructuring costs (-159 million euros). On an adjusted basis, the net result, group share stood at 220 million euros against -540 million euros in 2014, an 760 million euro increase.

Earnings and diluted earnings per share stood at 0.34 euros (-0.75 euros in 2014), and at0.68 euros on an adjusted basis (-1.82 euros in 2014). The Board of Directors decided not to submit a proposed dividend distribution to the next Annual General Meeting.

The return on capital employed² (ROCE) increased by 3.4 points to 8.6% at year end 2015.

[1] 2016 average Brent price of USD 37, average jet fuel market price of USD 365 per ton, assuming average exchange rate of 1.10 USD per euro for January-December 2016.

Fourth Quarter 2015

In the Fourth Quarter 2015, total revenues stood at 6.3 billion euros versus 6.2 billion euros in 2014, up 2.2%, but down -3.4% on a like-for-like basis. Currencies had a positive 276 million euro impact on revenues, primarily due to the strengthening of the dollar against the euro.

EBITDAR stood at 816 million euros, up by 273 million euros versus 2014. EBITDA amounted to 551 million euros, up by 235 million euros. On a like-for-like basis, EBITDA increased by 188 million euros, primarily driven by the strong increase of the passenger network performance.

The operating result stood at 150 million euros versus -169 million euros in 2014. Currencies had a 59 million euro negative impact on the operating result in Fourth Quarter 2015.

Passenger network[1]

* FY 2014 restated for change in revenue allocation (45 million euros transferred from “other passenger” to “scheduled passenger revenues”)

Full Year 2015 total passenger revenues amounted to 20,541 million euros, up 5.0% and down 2.6% like-for-like. The operating result of the passenger business stood at 842 million euros, versus a loss of 83 million euros over the Full Year 2014, an increase of 925 million euros. Like-for-like, the operating result improved by 687 million euros.

The Group maintained its strict capacity discipline, increasing total passenger capacity by 0.7% excluding the strike impact. Unit revenue per Available Seat Kilometer (RASK) remained volatile, up 2.0% in nominal value strike corrected and down by 3.3% on a like-for-like basis.

On the long-haul network, the capacity measured in ASKs was up 3.0%, while unit revenue was down 4.4% excluding currency impact, affected by the capacity-demand imbalances observed on different parts of the network, and by the large drop in demand out of Brazil and Japan. In addition, several routes were affected by travel budget reductions implemented by oil and gas related customers, notably to Africa. Nevertheless, the estimated long-haul operating result was up 400 million euros to 1,140 million euros.

As planned, medium-haul point-to-point capacity (excluding the Paris and Amsterdam hubs) was further reduced by 11.5%, leading to a significant improvement in unit revenue of +7.0% like-for-like contributing to the improvement of the point-to-point operating result by 50 million euros. The medium-haul feeding activity (the Paris and Amsterdam hubs) unit revenues decreased by 1.6% like-for-like. The medium-haul hub feeding estimated operating result stood at a loss of 230 million euros, an improvement of 90 million euros versus Full Year 2014.

The unit cost per Available Seat Kilometer (CASK) was further reduced by 6.7% like-for-like. Excluding the positive impact of the fuel bill and the additional pension charges, the CASK decreased by 0.5% over the year.

Over the Full Year 2016, the Group will maintain its strict capacity discipline in the passenger business, with planned stable capacity.

* Q4 2014 restated for change in revenue allocation (16 million euros transferred from “other passenger” to “scheduled passenger revenues”)

In the Fourth Quarter of 2015, passenger revenues amounted to 4,983 million euros, up 2.5%, but down 2.7% like-for-like. The revenues were impacted by the terrorist attacks in Paris in November 2015, with an estimated negative impact of 120 million euros. The operating result of the passenger business stood at 156 million euros, versus -171 million euros in the same period last year, up 327 million euros on a reported basis and up 292 million euros like-for-like.

Unit revenue per Available Seat Kilometer (RASK) increased by 2.1% and decreased by 3.2% like-for-like.

Cargo business

The Group continued to restructure its Cargo activity to address weak global trade from/to Europe and structural air cargo industry overcapacity. During Full Year 2015, full-freighter capacity was reduced by more than 23%, leading to a strike-adjusted decrease in total capacity of 5.8%. Revenue per Available Ton Kilometer (ATK) was down by 12.8% like-for-like, reflecting the persistently weak demand.

Cargo unit cost was down 10.8% like-for-like, as a result of the lower fuel price and of the good cost performance. Unit cost excluding fuel price and currency was down 2.5% in spite of the capacity reduction. Headcount was reduced by 8.8% over the course of the year.

Within the framework of Perform 2020, the Group phased out 5 full-freighters during 2015 and plans to operate only 5 full-freighters by summer 2016. This reduction should enable the full-freighter business to return to operating breakeven in 2017. The loss for the full-freighter activity was reduced to 42 million euro, a significant decrease by 55 million euros during Full year 2015.

In the Fourth Quarter of 2015, cargo revenues amounted to 612 million euros, down 14.3%. On a like-for-like basis, revenue were down by 19.5% and unit revenue per Available Ton Kilometer (RATK) decreased by 14.6%.

The Group continued its efforts to reduce unit costs, down 14.9% on a like-for-like basis. The operating result improved by 9 million euros like-for-like.

Maintenance

Full Year 2015 third party maintenance revenues amounted to 1,577 million euros, up 26.1% and by 7.3% like-for-like. Revenues benefited not only from the strong dollar relative to the euro and from the contracts gained in previous years.

Over the period, the Group recorded a 12% increase in its order book to 8.4 billion dollars, including significant contract wins with contracts for GE90 engines and B787 components.

The operating result amounted to 214 million euros, up 40 million, corresponding to an operating margin of 5.3%. Like-for-like, the operating results decreased by 20 million euros.

In the Fourth Quarter of 2015, third party maintenance revenues were 429 million euros, up 20.5% and up 6.0% like-for-like. The operating result decreased by 14 million euros to 47 million euros.

Transavia

* FY 2014 restated for change in revenue allocation (45 million euros transferred from “other passenger” to “scheduled passenger revenues”)

In the Full Year 2015, as planned within the Perform 2020 framework, Transavia capacity was up by 5.3%, reflecting the accelerated development in France (capacity up by 24.6%) and the ongoing repositioning in the Netherlands (with scheduled capacity up 17% and charter capacity down 13%). Traffic rose by 5.4% and passengers approached 11 million. The load factor remained high (89.9%, up 0.1 point) despite the strong increase in capacity.

Total revenues stood at 1,099 million euros, up 4.1%. Unit revenue per ASK decreased by 1.6% while unit cost per ASK decreased by 1.8%. The operating result was -35 million euros, up 1 million euro.

The development of Transavia will further accelerate in 2016 with overall ASK + 15%, with the main contributions being the growth in capacity in Transavia France and the opening of the new Munich base in March 2016, starting with 4 B737-aircraft serving 18 destinations.

* Q4 2014 restated for change in revenue allocation (10 million euros transferred from “other passenger” to “scheduled passenger revenues”)

In the Fourth Quarter of 2015, Transavia capacity was up 6.4%. Traffic rose by 5.6% resulting in a load factor decrease of 0.7 point to 87.2%. Unit revenue per ASK was down 0.4%. Transavia’s total revenue stood at 207 million euros, up 7.2%. The operating result was -37 million euros, down 3 million euros year-on-year.

Other business: Catering

In Full Year 2015, third party catering revenues amounted to 374 million euros, up 20.3%, reflecting the signature of new contracts and the launch of new operations in Africa, Asia and Latin America. The operating result stood at 37 million euros, up 19 million euros.

Financial situation

In Full Year 2015, the operating cash flow before change in working capital requirement (WCR) and cash out related to Voluntary Departure Plans increased by 958 million euros to 1,997 million euros, .

The Group disbursed 172 million euros for Voluntary Departure Plans. The change in WCR contributed 75 million euros to operating cash flow. Net investments stood at 1,294 million euros, including the disposal of the London Heathrow slots amounting to 246 million euros. Excluding the slots, net investments stood at 1,540, an increase of 378 million euros.

As a result, operating free cash flow amounted to 606 million euros, versus a negative 164 million euros a year earlier.

Operating free cash flow does not include free cash flow from financial investments, including the cash-in of 327 million euros from the sale of Amadeus shares in January and the hybrid bond transaction in April raising 600 million euros.

Net debt amounted to 4.3 billion euros at 31 December 2015, versus 5.4 billion euros at 31 December 2014. The 12 months trailing adjusted net debt / EBITDAR ratio stood at 3.3x at 31 December 2015 compared to 4.0x at 31 December 2014 excluding strike impact.

The balance sheet pension situation moved from a net liability of 710 million euros at 31 December 2014 to a net liability of 222 million euros at 31 December 2015, an improvement of 488 million euros as a result of changes in actuarial assumptions (pension indexation) and 10 year discount rate (1.65% to 1.80%).

The Group continues to enjoy a good level of liquidity, with net cash of 3.8 billion euros at 31 December 2015, and undrawn credit lines of 1.78 billion euros that were renewed in 2015.

[1] Air France, KLM and HOP!. Transavia is reported in its own business segment.

Outlook

The Group is currently deploying all the operational initiatives planned within the framework of the strategic plan Perform 2020:

• The continuous development of the passenger network business based on an upgraded product offer, an increased customer focus, a stronger positioning of brands and the reinforcement of strategic partnerships.
• The further optimization of its Air France point-to-point operations, with the creation of a single structure, aiming at a return to operating breakeven by 2017.
• A new step in the accelerated development in the European leisure market, under the Transavia brand, growing by 20% on the French market in 2016 and the opening of the new Munich base in March 2016 with 101 weekly flights throughout the 2016 summer season
• The finalisation of the cargo repositioning with a fleet reduced to 5 full-freighter as per June 2016
• The continuous development of the maintenance business

In parallel, a structured approach to achieve unit cost reduction is being deployed across all entities of the Group, and cost reduction initiatives are being rolled out.

The global context in 2016 remains highly uncertain regarding fuel prices, the continuation of the overcapacity situation on several markets and the geopolitical and economic context in which we operate. In consequence, the Group expects the expected savings on the fuel bill to be significantly offset by unit revenue pressure and negative currency impacts.

Under these conditions, the Group is expecting for 2016:

• Free operating cash flow generation after disposals between 0.6 billion euros and 1.0 billion euros. The 2016 investment plan (between 1.6 billion euros and 2.0 billion euros) and disposals programme (between 0.2 billion euros and 0.5 billion euros) will be adjusted depending upon operating cashflow generation
• 2016 unit cost reduction target around 1%
• Further significant reduction in net debt

Based on current market conditions and without any major adverse event, the Group is retaining its unit cost reduction target being an average of 1.5% per year, amending the related period from 2015-2017 to 2016-2018.

The Group is maintaining its medium term financial targets:

• Adjusted net debt²/EBITDAR ratio of around 2.5 by end 2017
• Base businesses to consistently generate annual positive free cash flow
• ROCE of 9% to 11% in 2017

.

*****

The audit procedures for the consolidated accounts have taken place. The certification report will be published following the completion of procedures necessary for the filing of the Registration Document.

The results presentation is available at www.airfranceklm.com on 18 February 2016 from 7:15am CET.

A press conference will be held on 18 February 2016 at 10.30 CET at the Pullman Paris Tour Eiffel hotel, 18, avenue de Suffren (75015 Paris).

A live webcast of the press conference will also be available on the website (password AFKL).

INCOME STATEMENTS

* Restated, see page 17

CONSOLIDATED BALANCE SHEET

* Restated, see page 17

* Restated, see page 17

CONSOLIDATED STATEMENT OF CASH FLOWS  

* Restated, see page 17

KEY FINANCIAL INDICATORS

EBITDA and EBITDAR

* Restated, see page 17

Adjusted net income

* Restated, see page 17

Return on capital employed (ROCE)

* Restated, see page 17

** Restated for IFRIC 21, CityJet reclassified as discontinued operation

Net debt

Adjusted net debt and adjusted net debt/EBITDAR ratio

Operating free cash flow

Net cost per EASK

* Restated, see page 17

** Passenger other revenues restated for change in revenue allocation (16 million euros transferred from “other passenger” to “scheduled passenger revenues” in Q4, 45 million euros over the Full Year)

INDIVIDUAL AIRLINE RESULTS

Air France Group

* Restated, see page 17

KLM Group

* Restated, see page 17

** KLM EBITDA and operating result are affected by a non-cash increase of 139 million euros in pension-related expenses

NB: Sum of individual airline results does not add up to Air France-KLM total due to intercompany eliminations at Group level.

Restatement of income statement for capitalized costs

To improve the readability of its financial statements, the Group has decided, as from January 1, 2015, to isolate the items relating to capitalized production in a single line of the income statement (within “other income and expenses”) while they had previously been allocated by type of expenditure. The consolidated financial statements as of December 31, 2014 have been restated to facilitate comparison. The impacts of this reclassification on the 2014 income statement are the following:

Modification in the conversion method of provisions in foreign currencies

The Group records provisions for future expenses in foreign currency, primarily for the restitution of aircraft under operating leases. A significant portion of these provisions is made to cover the purchase of spare parts to be purchased in US dollars whatever the functional currency of the entity. To facilitate analysis of the impacts linked to the dollar variation, the Group has decided, with effect from January 1, 2015, to isolate the foreign currency effect on provisions in “Other financial income and expenses” while it had hitherto been recorded in “Amortization, depreciation and provisions”.

Moreover, the closing rate will be used to convert provisions at the closing date. Previously, the Group had used the average rate of the US dollar to convert maintenance provisions. The consolidated financial statements as of December 31, 2014 have been restated for reasons of comparison. The impacts of this restatement on the income statement are the following:

The impacts of this restatement on the balance sheet are the following:

Change in the income statement presentation

The presentation of the income statement has been reviewed and the Group has decided, with effect from January 1, 2015, to integrate the cost of hired staff in “Salaries and related costs”, while it had been recorded in “External expenses”.

GROUP FLEET AT 31 DECEMBER 2015

De winnaars worden een jaar lang bijgestaan door de initiatiefnemers van het fonds die hun expertise en ervaring delen. Via hun internationale netwerk worden deuren geopend die anders vaak gesloten blijven. Het is het derde jaar op rij dat de Oranje Handelsmissiepakketten worden uitgereikt. Hieronder een korte toelichting op de kersverse winnaars:

• Arte Viva (Wijk bij Duurstede)
  is gespecialiseerd in innovatieve producten op het gebied van kinderveiligheid en met name deurstrippen ter voorkoming van vingerbeknelling. Het bedrijf streeft ernaar om de leefomgeving voor kinderen veiliger te maken en wil dit in 2016 ook in Chili gaan doen;
• Anker Stuy (Terwispel)
  is vooruitstrevend in verfproducten. Enkele jaren geleden ontwikkelde het bedrijf Seramic Lightcoating, lichtgevende verf voor markeringsstrepen waarmee het een volwaardig, duurzaam alternatief biedt voor conventionele verlichting. Anker Stuy wil graag een netwerk ontwikkelen in de Verenigde Staten;
• Guide ID (Deventer)
  helpt musea wereldwijd hun bezoekers te boeien en te binden door middel van culturele informatie. Het bedrijf is gespecialiseerd in het ontwikkelen en onderhouden van het Podcatcher-platform voor audiotours en wil dit ook graag in Duitsland opzetten;
• NAÏF (Den Haag)
  is een verzorgingslijn voor baby’s met natuurlijke ingrediënten en zonder onnodige toevoegingen. De ambitie is om ook in China zaken te doen;
• NETICS (Alblasserdam)
  is een ingenieursbureau dat beschikt over technieken om baggerslib als basismateriaal te gebruiken voor bouwelementen, bijvoorbeeld voor kustveiligheid. Het bedrijf zoekt naar de ideale combinatie tussen natuur en techniek. Netics wil graag zakendoen in China;
• Octatube (Delft)
  ontwerpt, ontwikkelt en realiseert complexe architectonische constructies van glas en staal. Zo is het bedrijf de bedenker en bouwer van de twee glazengevels voor de Markthal in Rotterdam. Octatube wil graag worden geïntroduceerd bij ontwikkelaars in Groot-Brittannië;
• Oesterij (Yerseke)
  is actief in de kweek van schaal- en schelpdieren. Het bedrijf vaart iedere dag uit om Zeeuwse oesters, mosselen en kreeft te oogsten, te verplaatsen of te beschermen tegen natuurlijke vijanden. Oesterij wil Nederland hiermee graag op de kaart zetten in Azië;
• Oxipack (Houten)
  is specialist in efficiënte lekdetectie oplossingen bij het luchtdicht of vacuüm verpakken van voedings- en geneesmiddelen. Oxipack wil graag voet aan de grond krijgen in de Verenigde Staten;
• Tony’s Chocolonely (Amsterdam)
  wil de ongelijk verdeelde chocoladewereld veranderen in een 100% slaafvrije wereld. Het bedrijf wil een schaalbaar en winstgevend handelsmodel ontwikkelen in West-Afrika. Een lancering in de Verenigde Staten is een grote stap in hun missie;
• Yays (Amsterdam)
  is een ‘travel & stay’ concept dat het stedelijke toerisme een nieuwe richting geeft. Yays biedt slaapplekken op unieke locaties in een stad waar de gast het beste kan ervaren hoe het is om daar als local te leven. Yays wil dit concept in Spanje uitrollen.

Tijdens de feestelijke ceremonie onder leiding van Ronnie Overgoor reikten Ralph Hamers, CEO ING Groep, Harm Kreulen, Directeur KLM Nederland, Michaël van Straalen, voorzitter MKB-Nederland en Ed Hoeks, Ambassadeur van Nederland in Tsjechië, de prijzen uit.

De winnaars zijn door een vakjury geselecteerd uit meer dan vierhonderd inschrijvingen. Eerdere winnaars van het Oranje Handelsmissiefonds zijn onder andere Milestone Cards, Micanti en Tropicare.

(*) Voor een sfeerverslag van het finale event, volg de link

• Revenues of 19.7 billion euros, up 3.1% excluding strike impact, down 3.1% like-for-like
• EBITDAR of 2,658 million euros, an improvement of 388 million euros like-for-like
• Strong operating free cash flow (2) generation: 533 million euros
• Further net debt reduction: net debt (2) of 4.33 billion euros, down 1,077 million euros compared to 31 December 2014
• Adjusted net debt / EBITDAR ratio (3) of 3.4x, an improvement of 0.6 compared to 31 December 2014

Full year 2015 outlook

• Unit cost target: reduction in the 0.5% to 0.7% range (4) (previously: in the 1.0% to 1.3% range)
• End 2015 net debt target unchanged: around 4.4 billion euros, down 1 billion euros compared to end of 2014

The Board of Directors of Air France-KLM, chaired by Alexandre de Juniac, met on 28 October 2015 to examine the accounts for the Third Quarter of the Financial Year 2015.

1) Like-for-like: excluding currency and September 2014 pilot strike. Same definition applies in rest of press release
2) See definition in appendix
3) Trailing 12 months, EBITDAR adjusted for September 2014 pilot strike impact; see definition in appendix
4) On a constant currency, fuel price and pension-related expense basis. See computation in appendix

• 7.3 million passengers, up 1.0%
• Long-haul traffic up 2.9% resulting in high load factor (90.9%) on long-haul network
• Unit revenue per available seat kilometer (RASK) ex-currency down compared to August 2014

• .4 million passengers, up 3.6%
• Ongoing accelerated development of Transavia in France (passenger volumes up 21%) partly offset by seasonal charter capacity adjustments in the Netherlands

• 8.7 million passengers, up 1.4%

• Ongoing restructuring of cargo: full-freighter capacity down 31% compared to August 2014
• Unit revenue per available ton kilometer (RATK) ex-currency clearly down compared to August 2014 

Agenda

• 8 October 2015: September 2015 traffic
• 29 October 2015: Q3 2015 results
• 9 November 2015: October 2015 traffic

Statistics

Transavia activity

 Total group passenger activity**

Cargo activity

• Revenues of 6.64 billion euros, up 3.0%, down 4.5% like-for-like[1]
• EBITDAR[2] of 824 million euros, a decrease of 30 million euros
• Operating result of 185 million euros, a decrease of 53 million euros,stable like-for-like
• Unit cost² down 0.5% like-for-like

FIRST HALF

• Revenues of 12.30 billion euros, up 2.4%, down 3.6% like-for-like
• EBITDAR of 1,053 million euros, an improvement of 32 million euros
• Strong operating free cash flow² generation: 274 million euros
• Further net debt reduction: net debt² of 4.55 billion euros, down 857 million euros compared to 31 December 2014
• Adjusted net debt / EBITDAR ratio[3] of 3.8x, an improvement of 0.2 compared to 31 December 2014

FULL YEAR 2015 OUTLOOK: OBJECTIVES MAINTAINED

• Unit cost reduction in the 1% to 1.3% range[4]
• Significant reduction in net debt, from 5.4 billion euros at end 2014 down to around 4.4 billion euros at end 2015

ACCELERATION OF PERFORM 2020

• Launch of immediate cost-saving measures
• Acceleration of all cost reduction initiatives
• Adjustment of Winter 2015-16 capacity

[1] Like-for-like: excluding currency. Same definition applies in rest of press release

[2] See definition in appendix

[3] Trailing 12 months, EBITDAR adjusted for September 2014 pilot strike impact; see definition in appendix

[4] On a constant currency, fuel price and pension-related expense basis. See computation in appendix

----------------------------------------------------------------------------------------------------------------------------------------------------

The Board of Directors of Air France-KLM, chaired by Alexandre de Juniac, met on 23 July 2015 to approve the accounts for the First Half of the Financial Year 2015.

Key Data

The consolidated financial statements of the Group have been revised as of 1^st January 2015 in order to improve their clarity. The changes are:

• In view of its rapid development, Transavia is now presented as a separate business segment. The passenger business segment is thus renamed from “passenger” to “passenger network”.
• Capitalized production costs are no longer deducted from individual cost lines in the profit and loss statement, but are instead fully allocated to the “other income and expenses” line. The impact per quarter of this restatement is provided in the appendix.
• Foreign currency effects on provisions are no longer recorded in “amortization, depreciation and provisions” but in “other financial income and expenses”. The closing exchange rate is used to convert provisions at the closing date. Previously, the Group used the average rate of the US dollar to convert maintenance provisions. The consolidated financial statements as of December 31, 2014 have been restated for reason of comparison. The impact of this restatement is provided in the appendix.

• Watch the broadcast of the press conference at 10:30 am CET

1. Revenues of 5.7 billion euros, up 1.8%
2. EBITDAR[1] of 229 million euros, an improvement of 62 million euros
3. EBITDA1 of -21 million euros, an improvement of 29 million euros
4. Operating result of -417 million euros, an improvement of 109 million euroslike-for-like[2]
5. Net negative currency impact of 81 million euros on operating result
6. Net debt¹ of 5.28 billion euros, down 127 million euros compared to 31 December 2014, and down to 4.68 billion euros including April 2015 hybrid bond issuance
7. Adjusted net debt / EBITDAR ratio[3] of 3.7x, an improvement of 0.5 compared to 31 March 2014

FULL YEAR 2015 OUTLOOK: OBJECTIVES MAINTAINED

1. Unit cost¹ reduction target of 1 to 1.3%
2. Significant reduction of net debt, from 5.4 billion euros at end 2014 down to around 4.4 billion euros at end 2015, in part as a result of the April 2015 hybrid bond issuance

[1] See definition in appendix

[2] Like-for-like: excluding currency. Same definition applies in rest of press release

[3] Trailing 12 months, adjusted for September 2014 pilot strike impact and April 2015 hybrid bond; see definition in appendix

KEY DATA

The consolidated financial statements of the Group have been revised as of 1^st January 2015 in order to improve their legibility. The changes are:

• In view of its rapid development, Transavia is now presented as a separate business segment. The passenger business segment is thus renamed from “passenger” to “passenger network”.
• Capitalized production costs are no longer deducted from individual cost lines in the profit and loss statement, but are instead fully allocated to the “other income and expenses” line. The impact per quarter of this restatement is provided in appendix.

First Quarter 2015 total revenues stood at 5.7 billion euros versus 5.6 billion euros in First Quarter 2014, up 1.8%, but down 2.4% like-for-like.

Currencies had a positive 239 million euro impact on revenues, primarily driven by the strengthening of the US dollar against the euro. In spite of higher profits on currency hedging, the negative impact on costs reached 320 million euros. It was larger considering the bigger share of costs than revenues in US dollars, and considering the fact that a sizeable portion of First Quarter 2015 revenues were booked in 2014 at a time when the dollar was weaker. In the First Quarter 2015, the net impact of currencies thus amounted to a negative 81 million euros.

Total operating costs were 1.2% higher year-on-year and down 3.9% on a like-for-like basis. Ex-fuel, they increased by 3.3% and by 1.5% on a like-for-like basis. Unit cost per EASK was stable, on a constant currency, fuel price and pension-related expense basis, against stable capacity measured in EASK (+0.1%).

The fuel bill amounted to 1,480 million euros, down 4.7% and like-for-like down 17.6%, on the back of a 20.3% reduction in jet fuel price after hedging and of a 15.6% negative currency impact. Based on the forward curve at 17 April, the Full Year 2015 fuel bill is expected to reach 6.6 billion euros4[1]. Based on the same forward curve, the Full Year 2016 fuel bill could amount to 6.1 billion euros4.

Total employee costs including temporary staff were up 2.1% to 1,920 million euros. They included a non-cash increase of 31 million euros in pension-related expenses at KLM due to changes in actuarial assumptions (lower discount rate). On a constant scope and pension-related expense basis, they were flat (+0.3%). In addition, the Group recorded under “non-current income and expenses” a 56 million euro provision for the Voluntary Departure Plan targeting 800 positions that was announced in February.

EBITDAR amounted to 229 million euros, an improvement of 62 million.

4 2015 average Brent price of USD63, average jet fuel price of USD608 per metric ton, average exchange rate of 1.10 USD per euro. 2016 average Brent price of USD69, average jet fuel price of USD663 per metric ton, average exchange rate of 1.10 USD per euro.

EBITDA amounted to a negative 21 million euros, an increase of 29 million euros. On a like-for-like basis, EBITDA improved by 91 million euros. The Passenger network had the largest contribution to the improvement of EBITDA, up 58 million euros, whereas cargo EBITDA decreased by 30 million euros. At 85 million euros, maintenance achieved a good performance on EBITDA level, up 9 million euros.

The operating result stood at -417 million euros versus -445 million euros in 2014, a 28 million euro improvement. Like-for-like, the operating result increased by 109 million euros.

The net result, group share stood at -559 million euros against -608 million euros a year ago. It included notably the non-current result related to the capital gain on the sale of Amadeus shares (+218 million euros), partly offset by the change in value of the fuel hedging portfolio (-26 million euros) and the unrealized foreign exchange loss (-143 million euros). On an adjusted basis, the net result, group share stood at -504 million euros against -485 million euros in First Quarter 2014, a 19 million euro decrease.

At 31 March 2015, the trailing 12 months strike-adjusted return on capital employed¹ (ROCE) was 5.6%, up 1.6 point compared to 31 March 2014.

PASSENGER NETWORK BUSINESS

First Quarter 2015 total passenger network revenues amounted to 4,421 million euros, up 1.3% and down 2.0% like-for-like. The operating result of the passenger network business stood at -322 million euros, versus -378 million euros over the First Quarter 2014. Like-for-like, the operating result improved by 132 million euros.

The Group maintained its strict capacity discipline, keeping total passenger network capacity stable (+0.1%). Unit revenue per Available Seat Kilometer (RASK) remained volatile, down by 2.3% on a like-for-like basis in the First Quarter. On the long-haul network, unit revenue was affected by the expected capacity-demand balances reflected in the unit revenue performance of the different parts of the network: good performance on North America and the Caribbean & Indian Ocean, weaker performance on the Latin American network on the back of a weak economic environment in several key markets, whereas the capacity-demand balances put pressures on both Eastern-Africa and Asia networks.

As planned, short and medium-haul point-to-point capacity (excluding the Paris and Amsterdam hubs) was further reduced by 11.8%, leading to a significant improvement in unit revenue of +9.6% like-for-like, whereas for hub-related short and medium-haul traffic, unit revenues were down -1.4% like-for-like.

CARGO BUSINESS

The Group continued to restructure its cargo activity to address the weak global trade and structural air cargo industry overcapacity. During First Quarter 2015, full-freighter capacity was reduced by 9.6%, while belly capacity increased by 1.2%, leading to a decrease in total capacity of 1.9%. Revenue per Available Ton Kilometer (ATK) was nevertheless down by 11.3% like-for-like, reflecting the structural industry overcapacity, especially on flows from Asia to Europe.

The operating result stood at -63 million euros, a decrease of 15 million euros like-for-like.

Within the framework of Perform 2020, 3 Boeing 747 were retired in the Winter 2014-15 season, while another 5 MD11s will be retired by the end of the Winter 2015-16 season. The Group plans to operate only 5 full-freighters by the end of 2016. This reduction should enable the full-freighter business to return to operating breakeven in 2017 (versus a strike-adjusted loss of around 95 million euros in 2014).

MAINTENANCE BUSINESS

First Quarter 2015 third party maintenance revenues amounted to 380 million euros, up 31.0% and by 13.8% like-for-like. Revenues benefited not only from the strong dollar, but also from the contracts gained in previous years and from weak comparables in Q1 2014. In the quarter, the Group performed its first GEnx engine overhaul.

The operating result stood at 35 million euros, up 13 million euros year-on-year, and down 2 million euros like-for-like.

Over the period, the Group recorded a further 5% increase in its order book to a record high 5.9 billion euros, including several new B787 component support contracts. The Group further expanded its service portfolio with an investment in a US engine parts trading business.

TRANSAVIA

In the First Quarter 2015, Transavia capacity was up by 5.1%, reflecting the accelerated development in France (capacity up by 48%) partly offset by seasonal capacity adjustments in the Netherlands (capacity down 7.5%). Traffic rose by 7.1%. The load factor remained high (87.9%, up 1.7 point) despite the increase in capacity. Unit revenue per ASK increased by +0.7% despite the increase in capacity, resulting in total revenues of 146 million euros, up 5.0%.

Unit costs were up 4.3% on the back of the stronger US dollar, a shorter stage length, ongoing ramp-up investments in France, and the seasonal capacity adjustments performed in the Netherlands.

The operating result was thus down by 11 million euros to reach -69 million euros.

The development of Transavia will further accelerate in 2015: on top of a 30% capacity increase to serve 44 destinations from France, Transavia is launching a new brand identity, a new web site, implementing a tighter integration with Flying Blue, and has recently ordered 20 Boeing 737s.

OTHER BUSINESS: CATERING

In the First Quarter 2015, third party catering revenues amounted to 75 million euros, up 2.7%.The operating result stood at -1 million euros, up 3 million euros.

FINANCIAL SITUATION

In the First Quarter 2015, the increase of 29 million euros in EBITDA translated into a 27 million euro improvement in cash flow before change in WCR and cash out related to Voluntary Departure Plans. The Group disbursed 30 million euros for Voluntary Departure Plans. The change in Working Capital Requirement contributed 477 million euros to operating cash flow. Net investments before sale & lease-back transactions stood at 350 million euros. As a result, operating free cash flow improved by 43 million euros.

The operating free cash flow does not include free cash flow from financial investments, including the cash-in of 327 million euros from the sale of Amadeus shares in January.

Net debt amounted to 5.28 billion euros at 31 March 2015, versus 5.41 billion euros at 31 December 2014. Currencies had a significant 175 million euro negative impact on net debt. After issuance of an hybrid bond in April, net debt would stand at 4.68 billion euros at the end of First Quarter 2015.

Excluding the impact of the pilot strike on EBITDAR and including the hybrid bond issued in April, the trailing 12 months adjusted net debt / EBITDAR ratio stood at 3.7x at 31 March 2015, down 0.3 points compared to 31 December 2014, and 0.5 points compared to 31 March 2014. In parallel, a 661 million euro convertible bond was reimbursed on 1^st April, reducing the diluted share count by more than 70 million shares to 370 million shares.

Despite strong returns on pension plan assets and the positive impact of the changes in Dutch fiscal rules on pensions, the 70 basis point fall in discount rates during First Quarter 2015 led to another significant increase in the actuarial valuation of retirement obligations. The balance sheet pension situation thus moved from a net liability of 710 million euros at 31 December 2014 to a net liability of 1,051 million euros at 31 March 2015.

At 31 March 2015, equity, group share, amounted to -1,515 million euros, down 844 million euros over the quarter due to the strong seasonality of results (net result of -559 million euros) and an increase of 257 million euros in after tax net pension liability. The change in fair value of the fuel hedging portfolio had a limited impact over the quarter. At 31 March 2015, the fair value of the fuel hedging portfolio remained however strongly negative, at around -1.3 billion euros. This level of equity does not take into account the 600 million euro hybrid bond that was issued in April.

The Group continues to enjoy a good level of liquidity, with net cash² of 3.5 billion euros at 31 March 2015, and undrawn credit lines of 1.77 billion euros. At the end of April, the Group renewed some of its credit lines for an amount of 1,100 million euros with a wide pool of international banks. In addition, in January 2015, the Group received net proceeds of 327 million euros on the sale of Amadeus shares, and it issued a 600 million euros hybrid bond in April.

OUTLOOK

All the operational initiatives planned within the framework of the new strategic plan Perform 2020 are being deployed.

In parallel, negotiations with unions on labor productivity are ongoing.

As demonstrated in the First Quarter, almost all of the expected savings on the fuel bill could be offset by unit revenue pressure and negative currency impacts.

For Full Year 2015, the Group maintains its key targets:

• unit cost reduction of 1 to 1.3%
• net debt around 4.4 billion euros at the end of 2015

Network airlines activity (Air France, KLM, HOP!)

• 5.4 million passengers, +0.8%
• Unit revenue per available seat kilometer (RASK) ex-currency down compared to February 2014, reflecting the expected capacity-demand balances: good performance on North America, the Caribbean-Indian Ocean region and point-to-point, unit revenues under pressure on Asia, Africa, Middle East and Latin America

Transavia activity

• 0.5 million passengers, +14.8%
• Ongoing accelerated development of Transavia: strong traffic growth combined with increased load factor

Total group passenger activity

• 5.9 million passengers, +1.9%

Cargo activity

• Unit revenue per available ton kilometer (RATK) ex-currency down compared to February 2014, impacted notably by the change in business mix (13% reduction in full-freighter capacity)

Agenda

• 8 April 2015: March 2015 traffic
• 30 April 2015: Results of the First Quarter of 2015
• 11 May 2015: April 2015 traffic