AIR FRANCE-KLM 25th July 2014
Financial Year 2014: First Half results
SECOND QUARTER
- Revenues of 6.45 billion euros, up 1.7% like-for-like; passenger unit revenue up 1.3% at constant currency thanks to strict capacity discipline
- Operating result of 238 million euros, improvement of 154 million euros
- EBITDA1 of 641 million euros, improvement of 131 million euros
- Ongoing cost reduction: reported unit cost[1]:
#_ftn1 down 4.0%, and 1.7% like-for-like - Further reduction of full-freighter exposure: 106 million-euro impairment charge recorded
FIRST HALF
- Revenues of 12.01 billion euros, up 1.0% like-for-like
- Net result, group share of -614 million euros, improvement of 185 million euros
- Adjusted net result, group share1 of -342 million euros, improvement of 344 million euros
- Net debt of 5.4 billion euros; net debt/EBITDA ratio of 2.6, a 0.3 point improvement compared to 31 December 2013
FULL YEAR 2014 OUTLOOK
- Tough operating environment
- EBITDA expected between 2.2 to 2.3 billion euros
- On track to reach net debt target of 4.5 billion euros next year
The Board of Directors of Air France-KLM, chaired by Alexandre de Juniac, met on 24th July 2014 to approve the accounts for the First Half of the Financial Year 2014.
Alexandre de Juniac made the following comments: "Despite a tough operating environment, the Air France-KLM Group maintained the momentum of its recovery in the first half of 2014, by halving its operating loss. Quarter after quarter, our results are consistently reflecting the benefits of the productivity measures implemented under Transform 2015.
In parallel, we have continued to adapt our offer. More than a third of KLM`s long-haul fleet is equipped with the new World Business Class. The first Air France aircraft equipped with the new cabins has started flying to New York. Transavia is ramping up in Paris.
Faced with the slower-than-expected recovery of cargo demand, we will further decrease our full-freighter exposure but will remain a key player in the cargo business.
Transform 2015 will be completed in a few months. While maintaining the imperatives of competiveness and the ongoing strengthening of the Group's financial position, the successor plan will also focus on growth. The plan will be thus be named "Perform 2020", and we will give a detailed presentation of its main components in September."
Key data
| Second quarter | First half | |||||
| 2014 | 2013* | Change | 2014 | 2013* | Change | |
| Revenues (€m) | 6,451 | 6,541 | -1.4% | 12,005 | 12,222 | -1.8% |
| Change like-for-like** | +1.7% | +1.0% | ||||
| EBITDA[2]: #_ftn2 (€m) | 641 | 510 | +131 | 591 | 394 | +197 |
| EBITDA margin (%) | 9.9 | 7.8 | +2.1pts | 4.9 | 3.2 | +1.7pts |
Operating result (€m) | 238 | 84 | +154 | -207 | -448 | +241 |
Operating margin (%) | 3.7 | 1.3 | +2.4pts | -1.7 | -3.7 | +1.9pts |
| Net result, group share (€m) | -6 | -158 | +152 | -614 | -799 | +185 |
| Adjusted net result, group share2 (€m) | 143 | -34 | +177 | -342 | -686 | +344 |
| Earnings per share (€) | (0.02) | (0.53) | +0.51 | (2.07) | (2.70) | +0.63 |
| Diluted earnings per share (€) | (0.02) | (0.53) | +0.51 | (2.07) | (2.70) | +0.63 |
| Adjusted earnings per share2 (€) | 0.48 | (0.11) | +0.59 | (1.16) | (2.32) | +1.16 |
| Diluted adjusted earnings per share2 (€) | 0.38 | (0.11) | +0.49 | (1.16) | (2.32) | +1.16 |
| Operating free cash flow2 (€m) | 181 | 528 | -347 | 95 | 566 | -471 |
| Net debt2 at end of period (€m) | - | - | - | 5,414 | 5,348[3]: #_ftn3 | +66 |
* Restated for IFRIC 21, CityJet reclassified as discontinued operation
** Like-for-like: at constant currency and scope
In the Second Quarter of 2014, total revenues amounted to 6,451 million euros versus 6,541 million euros in 2013, down 1.4%, but up +1.7% on a constant currency and scope basis (like-for-like). Currencies had a negative 168 million euro impact on revenues.
Operating costs were reduced by 3.8% and by 1.5% on a constant currency basis. Ex-fuel, they decreased by 3.4% and by 2.6% on a constant currency basis. Unit cost per EASK1 (Equivalent Available Seat Kilometer) was reduced by 4.0%, and by 1.7% on a constant currency, fuel price and pension expense basis, against capacity measured in EASK up by 0.9%. The fuel bill amounted to 1,636 million euros, down 5.6%, but stable (+0.2%) on a constant currency basis. Total employee costs including temporary staff were down 3.4% to 1,934 million euros, and by 3.2% on a constant currency basis. At constant pension expense and scope, they declined by 47 million euros.
EBITDA amounted to 641 million euros, an improvement of 131 million euros. The EBITDA margin stood at 9.9%, a 2.1 point improvement on 2013. The operating result stood at 238 million euros versus 84 million euros in 2013, an 154 million euro improvement. Currencies had a 20 million euro net negative impact on the Second Quarter operating result.
The net result, group share stood at -6 million euros against -158 million euros a year ago. It was impacted by an 106 million euro impairment charge relating to assets of the Cargo business[4]:
#_ftn4. On an adjusted basis2, the net result, group share stood at 143 million euros against -34 million euros in Second Quarter 2013, a 177 million euro improvement.
In the First Half 2014, total revenues stood at 12,005 million euros versus 12,222 million euros in 2013, down 1.8%, but up +1.0% on a like-for-like basis. Currencies had a negative 287 million euro impact on revenues.
Operating costs were reduced by 3.6% and by 1.7% on a constant currency basis. Ex-fuel, they decreased by 2.9%, and by 2.0% on a constant currency basis. The fuel bill amounted to 3,189 million euros, down 5.9%, and 1.5% on a constant currency basis. Total employee costs including temporary staff were down 3.6% to 3,780 million euros, and by 3.4% on a constant currency basis. At constant pension expense and scope, they declined by 106 million euros.
EBITDA improved by 197 million euros to 591 million euros, resulting in an EBITDA margin of 4.9%, a 1.7 point increase on 2013. The operating result stood at -207 million euros versus -448 million euros in 2013, an 241 million euro improvement. Currencies had a 45 million euro net negative impact on the operating result in the First Half.
The net result, group share stood at -614 million euros against -799 million euros a year ago. It was impacted by the adjustment in the value of the cash held by the Group in Venezuela recorded in the First Quarter and the impairment charge in the Cargo business in the Second Quarter. On an adjusted basis[5]:
#_ftn5, the net result, group share stood at -342 million euros against -686 million in the First Half 2013, a 344 million euro improvement.
Earnings and diluted earnings per share both stood at -2.07 euros (-2.70 euros in 2013), and at -1.16 euros on an adjusted basis (-2.32 euros in 2013).
Passenger business
| Passenger | Q2 2014 | Q2 2013* | Change | Change Like-for-like** |
| Capacity (ASK m) | 69,658 | 68,968 | +1.0% | - |
| Traffic (RPK m) | 59,056 | 57,454 | +2.8% | - |
| Load factor | 84.8% | 83.3% | +1.5 pts | - |
| Total passenger revenues (€m) | 5,112 | 5,120 | -0.2% | +2.4% |
| Scheduled passenger revenues (€m) | 4,884 | 4,885 | -0.1% | +2.5% |
| Unit revenue per ASK (€ cts) | 7.01 | 7.09 | -1.1% | +1.3% |
| Unit revenue per RPK (€ cts) | 8.27 | 8.51 | -2.9% | -0.4% |
| Unit cost per ASK (€ cts) | 6.65 | 6.95 | -4.4% | -2.3% |
| Operating result (€m) | 255 | 96 | +159 | +178 |
* Restated for IFRIC 21, CityJet reclassified as discontinued operation
**Like-for-like: on a constant currency basis and restated for change in revenue allocation (4 million euros transferred from "other passenger" to "scheduled passenger" revenues in Q2 2013 )
In the Second Quarter 2014, passenger revenues amounted to 5,112 million euros, down 0.2%, but up 2.4% like-for-like. The operating result of the passenger business stood at 255 million euros, versus 96 million euros in Q2 2013, an improvement of 159 million euros (178 million euros on a constant currency basis).
The Group maintained its strict capacity discipline, increasing total passenger capacity by only 1.0%. Passenger traffic rose by 2.8%, leading to a 1.5 point improvement in load factor to 84.8%. Unit revenue per Available Seat Kilometer (RASK) fell by 1.1% but increased by 1.3% on a constant currency basis. Thanks to Transform 2015, and in spite of the low capacity growth, the passenger activity delivered a strong cost performance, with Cost per Available Seat Kilometer (CASK) down by 2.3% like-for-like.
Long-haul traffic rose 3.1% for a 1.5% rise in capacity, leading to a 1.4 point increase in load factor to 86.0%. Long-haul RASK was up 1.6% like-for-like.
As planned within the framework of Transform 2015, point-to-point (not linked to the Paris and Amsterdam hubs) short and medium-haul capacity was significantly adjusted (down 7.1%), leading short and medium-haul capacity to fall by 0.7%. Traffic rose by 1.6%, resulting in a 1.8 point improvement in load factor to 80.4%. Short and medium-haul RASK improved by 1.7% like-for-like.
All regions improved their profitability with the exception of Latin America, impacted by the situation in Venezuela.
| Passenger | H1 2014 | H1 2013* | Change | Change like-for-like** |
| Capacity (ASK m) | 133,710 | 132,183 | +1.2% | - |
| Traffic (RPK m) | 112,086 | 109,394 | +2.5% | - |
| Load factor | 83.8% | 82.8% | +1.0 pts | - |
| Total passenger revenues (€m) | 9,477 | 9,570 | -1.0% | +1.4% |
| Scheduled passenger revenues (€m) | 9,053 | 9,111 | -0.6% | +1.7% |
| Unit revenue per ASK (€ cts) | 6.77 | 6.90 | -1.8% | +0.5% |
| Unit revenue per RPK (€ cts) | 8.08 | 8.34 | -3.1% | -0.8% |
| Unit cost per ASK (€ cts) | 6.86 | 7.16 | -4.2% | -2.4% |
| Operating result (€m) | -123 | -351 | +228 | +268 |
* Restated for IFRIC 21, CityJet reclassified as discontinued operation
**Like-for-like: on a constant currency basis and restated for change in revenue allocation (11 million euros transferred from "other passenger" to "scheduled passenger" revenues in Q2 2013 )
In the First Half 2014, passenger revenues amounted to 9,477 million euros, down 1.0%, but up 1.4% like-for-like. The operating result of the passenger business stood at -123 million euros, versus -351 million euros in the First Half 2013, an improvement of 228 million euros (268 million euros like-for-like).
Total passenger traffic rose by 2.5% while capacity rose by 1.2% leading to a 1.0 point improvement in load factor to 83.8%. Unit revenue per Available Seat Kilometer (RASK) fell by 1.8% but increased by 0.5% like-for-like. Unit costs (CASK) were reduced by 4.2% and by 2.4% like-for-like.
Cargo business
| Cargo | Q2 2014 | Q2 2013 | Change | Change ex currency |
| Capacity (ATK m) | 3,912 | 3,993 | -2.0% | - |
| Traffic (RTK m) | 2,472 | 2,513 | -1.6% | - |
| Load factor | 63.2% | 62.9% | +0.3 pts | - |
| Total Cargo revenues (€m) | 669 | 705 | -5.1% | -1.9% |
| Scheduled cargo revenues (€m) | 625 | 652 | -4.1% | -0.9% |
| Unit revenue per ATK (€ cts) | 15.99 | 16.34 | -2.1% | +1.1% |
| Unit revenue per RTK (€ cts) | 25.30 | 25.96 | -2.5% | +0.7% |
| Unit cost per ATK (€ cts) | 17.15 | 17.58 | -2.4% | +0.2% |
| Operating result (€m) | -45 | -50 | +5 | +8 |
Second Quarter 2014 cargo revenues amounted to 669 million euros, down 5.1% and by 1.9% on a constant currency basis. Faced with a slower than expected recovery, the group continued to reduce full-freighter capacity (down 8.6%). In consequence, total capacity decreased by 2.0%. Traffic decreased by 1.6%, leading to a 0.3 point increase in load factor to 63.2%. Unit revenue per Available Ton Kilometer (RATK) increased by 1.1% on a constant currency basis (-2.1% on a reported basis).
The operating result improved slightly to -45 million euro, up 5 million euros.
The recovery in demand being slower than expected, the group has initiated a strategic review of its full-freighter business, with different scenarios under consideration. Having already decided in October 2013 to reduce its full-freighter fleet to 2 aircraft in Paris and 8 aircraft in Amsterdam by 2015, the group is now looking to further reduce its Amsterdam-based full-freighter exposure either through a partnership with a third party or through internal restructuring. In consequence, the group has recorded an impairment of 106 million euros in its Second Quarter 2014 accounts.
| Cargo | H1 2014 | H1 2013 | Change | Change ex currency |
| Capacity (ATK m) | 7,710 | 7,827 | -1.5% | - |
| Traffic (RTK m) | 4,933 | 4,932 | +0.0% | - |
| Load factor | 64.0% | 63.0% | +1.0 pts | - |
| Total Cargo revenues (€m) | 1,344 | 1,405 | -4.3% | -1.6% |
| Scheduled cargo revenues (€m) | 1,254 | 1,309 | -4.2% | -1.5% |
| Unit revenue per ATK (€ cts) | 16.27 | 16.72 | -2.7% | 0.0% |
| Unit revenue per RTK (€ cts) | 25.43 | 26.55 | -4.2% | -1.6% |
| Unit cost per ATK (€ cts) | 17.30 | 18.00 | -3.9% | -1.7% |
| Operating result (€m) | -79 | -100 | +21 | +25 |
First Half 2014 cargo revenues amounted to 1,344 million euros, down 4.3% and by 1.6% on a constant currency basis. Traffic was stable for a -1.5% decline in capacity, leading to a 1.0 point increase in load factor to 64.0%. Unit revenue per Available Ton Kilometer (RATK) was stable on a constant currency basis (down 2.7% on a reported basis).
On a constant currency basis, cargo unit cost was down 1.7% in the First Half (down 3.9% on a reported basis). The operating result improved by 21 million euros to -79 million euros.
Maintenance
| Maintenance | Q2 2014 | Q2 2013 | Change | Change ex currency |
| Total revenues (€m) | 810 | 846 | -4.0% | - |
| Third party revenues (€m) | 286 | 320 | -10.3% | -7.2% |
| Operating result (€m) | 30 | 37 | -7 | -2 |
| Operating margin (%) | +3.7% | +4.4% | -0.7 pts | - |
Second Quarter 2014 third party maintenance revenues amounted to 286 million euros, down 10.3% and by 7.2% on a constant currency basis. Q2 2013 revenues had been boosted by high volumes from the engine contract with General Electric. The operating result stood at 30 million euros, down 7 million euros year-on-year.
| Maintenance | H1 2014 | H1 2013 | Change | Change ex currency |
| Total revenues (€m) | 1,615 | 1,634 | -1.2% | - |
| Third party revenues (€m) | 576 | 622 | -7.2% | -3.4% |
| Operating result (€m) | 52 | 57 | -5 | +4 |
| Operating margin (%) | +3.2% | +3.5% | -0.3 pts | - |
First Half 2014 third party maintenance revenues amounted to 576 million euros, down 7.2% and by 3.4% on a constant currency basis. The operating result decreased by 5 million euros to 52 million euros. At constant currency, the operating result improved by 4 million euros in the First Half. The operating margin was stable (-0.3 point) at 3.2%.
In the First Half 2014, the group recorded a 16% increase in its order book to 5.1 billion euros, including a major contract with Air China covering the maintenance of GE90 engines. In addition, the group acquired Barfield, a US component support business.
Other business: Transavia
| Transavia | Q2 2014 | Q2 2013 | Change | Change ex currency |
| Capacity (ASK m) | 6,018 | 5,741 | +4.8% | - |
| Traffic (RPK m) | 5,460 | 5,153 | +6.0% | - |
| Load factor | 90.7% | 89.8% | +0.9 pts | - |
| Total passenger revenues (€m) | 296 | 282 | +5.0% | +5.0% |
| Scheduled passenger revenues (€m) | 283 | 274 | +3.3% | +3.3% |
| Unit revenue per ASK (€ cts) | 4.70 | 4.78 | -1.7% | -1.7% |
| Unit revenue per RPK (€ cts) | 5.18 | 5.32 | -2.8% | -2.8% |
| Unit cost per ASK (€ cts) | 4.80 | 4.84 | -0.8% | +0.9% |
| Operating result (€m) | -6 | -3 | -3 |
In the Second Quarter of 2014, Transavia capacity was up 4.8%, reflecting the accelerated development of Transavia France (up 10%) and the repositioning of Transavia Netherlands (up 3% including a 6% reduction in charter capacity). Traffic rose 6.0%, leading to a record high load factor of 90.7% (up 0.9 point). Unit revenue was down 1.7%. Transavia's total revenue stood at 296 million euros, up 5.0%. The operating result was -6 million euros, down 3 million euros year-on-year.
| Transavia | H1 2014 | H1 2013 | Change | Change ex currency |
| Capacity (ASK m) | 9,283 | 8,775 | +5.8% | - |
| Traffic (RPK m) | 8,277 | 7,743 | +6.9% | - |
| Load factor | 89.2% | 88.2% | +0.9 pts | - |
| Total passenger revenues (€m) | 435 | 417 | +4.5% | +4.5% |
| Scheduled passenger revenues (€m) | 410 | 398 | +3.0% | +3.0% |
| Unit revenue per ASK (€ cts) | 4.42 | 4.54 | -2.6% | -2.6% |
| Unit revenue per RPK (€ cts) | 4.96 | 5.14 | -3.7% | -3.7% |
| Unit cost per ASK (€ cts) | 5.11 | 5.15 | -0.8% | +0.5% |
| Operating result (€m) | -64 | -54 | -10 |
In the First Half of 2014, Transavia traffic increased by 6.9% for capacity up 5.8%, leading to a 0.9 point increase in load factor to 89.2%. Unit revenue was down 2.6%. Total revenue stood at 435 million euros, up 4.5%, while the unit cost per ASK decreased by 0.8%, but increased by 0.5% on a constant currency basis. The operating result decreased by 10 million euros to -64 million euros, mainly due to the ramp up of Transavia France.
Other business: Catering
| Catering | Q2 2014 | Q2 2013 | Change | Change At constant scope* |
| Total revenues (€m) | 222 | 247 | -9.0% | +2.7% |
| Third party revenues (€m) | 77 | 103 | -25.2% | +6.9% |
| Operating result (€m) | 5 | 2 | +3 | +3 |
* At constant scope : 2013 restated for sale of Air Chef
Second Quarter 2014 third party catering revenues amounted to 77 million euros, down 25.2%. At constant scope (excluding the impact of the sale of Air Chef that occurred in Q2 2013), third party revenues increased by 6.9%, reflecting new contracts and international development, while the operating result improved by 3 million euros.
| Catering | H1 2014 | H1 2013 | Change | Change At constant scope* |
| Total revenues (€m) | 427 | 466 | -9.2% | +2.6% |
| Third party revenues (€m) | 150 | 188 | -20.2% | +8.7% |
| Operating result (€m) | 2 | -1 | +3 | +5 |
* At constant scope : 2013 restated for sale of Air Chef
First Half 2014 third party catering revenues amounted to 150 million euros, up 8.7% at constant scope. The operating result increased by 5 million euros at constant scope.
Financial situation
| In € million | H1 2014 | H1 2013* | Change |
| Cash flow before change in Working Capital Requirement (WCR) and Voluntary Departure Plans, continued operations | +364 | +132 | +232 |
| Cash out related to Voluntary Departure Plans | -144 | -56 | -88 |
| Change in WCR | +650 | +964 | -314 |
| Operating cash flow | +870 | +1,040 | -170 |
| Net investments before sale & lease-back | -808 | -585 | -223 |
| Sale & lease-back transactions | +33 | +111 | -78 |
| Net investments after sale & lease-back | -775 | -474 | -301 |
| Operating free cash flow | +95 | +566 | -471 |
* Restated for IFRIC 21, CityJet reclassified as discontinued operation
In the First Half of 2014, the further improvement in EBITDA translated into an 232 million euro increase in cash flow before change in WCR and the cash out related to Voluntary Departure Plans.
The group disbursed 144 million euros for Voluntary Departure Plans representing 90% of the cash out expected in the Financial Year. Net investments before sale & lease-back transactions stood at 808 million euros.
Operating free cash flow amounted to 95 million euros, versus 566 million euros a year earlier. In the First Half 2013, operating free cash flow had benefited from the full effects of the reduction in investments and the structural improvements in WCR within the framework of Transform 2015.
Net debt amounted to 5.41 billion euros at 30st June 2014, versus 5.35 billion euros at 31st December 2013. At 2.6x, the net debt / EBITDA ratio continued to fall.
Outlook
Delivery on the Transform 2015 plan is fully on track. However, as indicated at the beginning of the month, the operating environment remains tough, with industry overcapacity on certain long-haul routes, notably North America and Asia, impacting yields. This trend comes on top of the persistently weak cargo demand and the challenging situation in Venezuela already identified in the First Quarter.
Under these conditions, as indicated at the beginning of the month, 2014 EBITDA is expected to be between 2.2 and 2.3 billion euros. Strong capital discipline will enable the group to remain on track in terms of debt reduction and achieve its objective of 4.5 billion euros in net debt in 2015.
*****
Limited review procedures were carried out by external auditors. Their limited review report was issued following the Board meeting.
The results presentation is available at www.airfranceklm-finance.com:
http://www.airfranceklm-finance.com on 25th July 2014 from 7:15am CET.
An Analysts' Meeting will be held on 25th July 2014 at 08:30am 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 www.airfranceklm-finance.com:
http://www.airfranceklm-finance.com (password: AKHH1) and by conference call.
To access the conference call, please dial:
- France: +33 1 70 99 32 12 (code: 946330, password: AKH)
- Netherlands: +31 20 7965 012 (code: 946330, password: AKH)
- UK: +44 207 162 0125 (code: 946330, password: AKH)
- US: +1 334 323 6203 (code: 946330, password: AKH)
To listen to a recording of the conference call in English, please dial:
- France: +33 1 70 99 35 29 (code: 946330)
- UK: +44 20 7031 4064 (code: 946330)
- US: +1 954 334 0342 (code: 946330)
| Investor relations | Press |
| Bertrand Delcaire | France: +33 1 41 56 56 00 |
| Head of Investor Relations | Netherlands: +31 20 649 45 45 |
| Tel : +33 1 49 89 52 59 | |
| Email: bedelcaire@airfranceklm.com: mailto:bedelcaire@airfranceklm.com Website: www.airfranceklm-finance.com: http://www.airfranceklm-finance.com | |
| Dirk Voermans Senior manager, Investor Relations Tel : +33 1 49 89 52 60 Email: divoermans@airfranceklm.com: mailto:divoermans@airfranceklm.com | |
| www.airfranceklm-finance.com: http://www.airfranceklm-finance.com | www.airfranceklm.com: http://www.airfranceklm.com |
INCOME STATEMENTS
| Second Quarter | First Half | ||||||
| In euro millions | 2014 | 2013* | Change | 2014 | 2013* | Change | |
| Sales | 6,451 | 6,541 | -1.4% | 12,005 | 12,222 | -1.8% | |
| Other revenues | 1 | 1 | na | 9 | 1 | na | |
| External Expenses | -3,877 | -4,036 | -3.9% | -7,616 | -7,883 | -3.4% | |
| Aircraft fuel | -1,636 | -1,733 | -5.6% | -3,189 | -3,390 | -5.9% | |
| Chartering costs | -111 | -116 | -4.3% | -209 | -231 | -9.5% | |
| Aircraft operating lease costs | -213 | -234 | -9.0% | -430 | -465 | -7.5% | |
| Landing fees and en route charges | -475 | -474 | 0.2% | -891 | -894 | -0.3% | |
| Catering | -146 | -153 | -4.6% | -283 | -289 | -2.1% | |
| Handling charges and other operating costs | -351 | -354 | -0.8% | -682 | -697 | -2.2% | |
| Aircraft maintenance costs | -323 | -332 | -2.7% | -643 | -636 | 1.1% | |
| Commercial and distribution costs | -213 | -212 | 0.5% | -437 | -434 | 0.7% | |
| Other external expenses | -409 | -428 | -4.4% | -852 | -847 | 0.6% | |
| Salaries and related costs | -1,885 | -1,959 | -3.8% | -3,687 | -3,839 | -4.0% | |
| Taxes other than income taxes | -39 | -43 | -9.3% | -93 | -97 | -4.1% | |
| Amortization and depreciation | -386 | -384 | 0.5% | -764 | -768 | -0.5% | |
| Provisions | -17 | -42 | -59.5% | -34 | -74 | -54.1% | |
| Other income and expenses | -10 | 6 | -267% | -27 | -10 | 170% | |
| Income from current operations | 238 | 84 | 183.3% | -207 | -448 | -53.8% | |
| Sales of aircraft equipment | -6 | na | -5 | -4 | na | ||
| Sales of subsidiaries | -3 | 15 | -120% | -3 | 9 | -133% | |
| Other non-current income and expenses | -113 | -2 | na | -114 | -19 | na | |
| Income from operating activities | 116 | 97 | 19.6% | -329 | -462 | -28.8% | |
| Income from cash and cash equivalents | 21 | 19 | 10.5% | 39 | 39 | 0.0% | |
| Cost of financial debt | -109 | -123 | -11.4% | -223 | -240 | -7.1% | |
| Net cost of financial debt | -88 | -104 | -15.4% | -184 | -201 | -8.5% | |
| Foreign exchange gains (losses), net | 6 | 30 | na | -111 | 34 | na | |
| Change in fair value of financial assets and liabilities | 32 | -158 | na | 26 | -115 | na | |
| Other financial income and expenses | -32 | -12 | na | -35 | -8 | na | |
| Income before tax | 34 | -147 | -123.1% | -633 | -752 | -15.8% | |
| Income taxes | -35 | 44 | -179.5% | 34 | 72 | -52.8% | |
| Net income of consolidated companies | -1 | -103 | -99.0% | -599 | -680 | -11.9% | |
| Share of profits (losses) of associates | -7 | -24 | -70.8% | -11 | -78 | -85.9% | |
| Income from continuing operations | -8 | -127 | -93.7% | -610 | -758 | -19.5% | |
| Net income from discontinued operations | 2 | -29 | -106.9% | -4 | -38 | -89.5% | |
| Net income for the period | -6 | -156 | -96.2% | -614 | -796 | -22.9% | |
| Minority interest | -2 | -100.0% | -3 | -100.0% | |||
| Net income for the period - Group | -6 | -158 | -96.2% | -614 | -799 | -23.2% | |
* Restated for IFRIC 21, CityJet reclassified as discontinued
CONSOLIDATED BALANCE SHEET
AssetsIn € millions | June 30, 2014 | December 31, 2013* |
| Goodwill | 245 | 237 |
| Intangible assets | 986 | 896 |
| Flight equipment | 9,235 | 9,391 |
| Other property, plant and equipment | 1,765 | 1,819 |
| Investments in equity associates | 159 | 177 |
| Pension assets | 1,819 | 2,454 |
| Other financial assets | 1,885 | 1,963 |
| Deferred tax assets | 502 | 434 |
| Other non-current assets | 130 | 113 |
| Total non current assets | 16,726 | 17,484 |
| Assets held for sale | 26 | 91 |
| Other short term financial assets | 790 | 1,031 |
| Inventories | 563 | 511 |
| Trade receivables | 2,284 | 1,775 |
| Current income tax receivables | 49 | 23 |
| Other current assets | 948 | 822 |
| Cash and cash equivalents | 3,298 | 3,684 |
| Total current assets | 7,958 | 7,937 |
| Total assets | 24,684 | 25,421 |
* Restated for IFRIC 21, CityJet reclassified as discontinued
Liabilities and equityIn € millions | June 30, 2014 | December 31, 2013* |
| Issued capital | 300 | 300 |
| Additional paid-in capital | 2,971 | 2,971 |
| Treasury shares | (87) | (85) |
| Reserves and retained earnings | (2,160) | (941) |
| Equity attributable to equity holders of Air France-KLM | 1,024 | 2,245 |
| Non-controlling interests | 44 | 48 |
| Total Equity | 1,068 | 2,293 |
| Provisions and retirement benefits | 3,212 | 3,102 |
| Long-term debt | 8,101 | 8,596 |
| Deferred tax liabilities | 16 | 178 |
| Other non-current liabilities | 348 | 397 |
| Total non-current liabilities | 11,677 | 12,273 |
| Liabilities relating to assets held for sale | - | 58 |
| Provisions | 617 | 670 |
| Current portion of long-term debt | 2,072 | 2,137 |
| Trade payables | 2,409 | 2,369 |
| Deferred revenue on ticket sales | 3,454 | 2,371 |
| Frequent flyer programs | 753 | 755 |
| Current income tax liabilities | 2 | 2 |
| Other current liabilities | 2,555 | 2,327 |
| Bank overdrafts | 77 | 166 |
| Total current liabilities | 11,939 | 10,855 |
| Total liabilities | 23,616 | 23,128 |
| Total equity and liabilities | 24 684 | 25 421 |
* Restated for IFRIC 21, CityJet reclassified as discontinued
CONSOLIDATED STATEMENT OF CASH FLOWS
| In € millions Period from January 1 to June 30, | 2014 | 2013* |
| Net income from continuing operations | (610) | (758) |
| Net income from discontinued operations | (4) | (38) |
| Amortization, depreciation and operating provisions | 805 | 848 |
| Financial provisions | 34 | 8 |
| Results on disposals of tangible and intangible assets | (3) | 3 |
| Results on disposals of subsidiaries and associates | 3 | (9) |
| Derivatives - non monetary result | (25) | 111 |
| Unrealized foreign exchange gains and losses, net | 117 | (54) |
| Impairment | 106 | 29 |
| Share of (profits) losses of associates | 11 | 78 |
| Deferred taxes | (52) | (88) |
| Other non-monetary items | (168) | (58) |
| Subtotal | 214 | 72 |
| Of which discontinued operations | (6) | (4) |
| (Increase) / decrease in inventories | (40) | (20) |
| (Increase) / decrease in trade receivables | (473) | (551) |
| Increase / (decrease) in trade payables | 47 | 281 |
| Change in other receivables and payables | 1,116 | 1,254 |
| Change in working capital from discontinued operations | 20 | 8 |
| Net cash flow from operating activities | 884 | 1 044 |
| Acquisition of subsidiaries, of shares in non-controlled entities | (37) | (18) |
| Purchase of property plants, equipments and intangible assets | (835) | (633) |
| Loss of subsidiaries, of disposal of shares in non-controlled entities | 5 | 26 |
| Proceeds on disposal of property, plant and equipment and intangible assets | 60 | 159 |
| Dividends received | 10 | 7 |
| Decrease (increase) in net investments, more than 3 months | 218 | 54 |
| Net cash flow used in investing activities of discontinued operations | (20) | (2) |
| Net cash flow used in investing activities | (599) | (407) |
| Issuance of debt | 1,145 | 1,214 |
| Repayment on debt | (1,386) | (663) |
| Payment of debt resulting from finance lease liabilities | (299) | (311) |
| New loans | (18) | (71) |
| Repayment on loans | 47 | 66 |
| Net cash flow used in financing activities of discontinued operations | - | (2) |
| Net cash flow from financing activities | (511) | 233 |
| Effect of exchange rate on cash and cash equivalents and bank overdrafts | (77) | (18) |
| Change in cash and cash equivalents and bank overdrafts | (303) | 852 |
| Cash and cash equivalents and bank overdrafts at beginning of period | 3,518 | 3,160 |
| Cash and cash equivalents and bank overdrafts at end of period Change in cash of discontinued operations | 3,221 (6) | 4,010 2 |
* Restated for IFRIC 21, CityJet reclassified as discontinued
KEY FINANCIAL INDICATORS
EBITDA
| (In € millions) | Q2 2014 | Q2 2013* | H1 2014 | H1 2013* |
| Income/(loss) from current operations | 238 | 83 | -207 | -448 |
| Amortization | 387 | 384 | 764 | 768 |
| Depreciation and provisions | 16 | 42 | 34 | 74 |
| EBITDA | 641 | 510 | 591 | 394 |
* Restated for IFRIC 21, CityJet reclassified as discontinued operation
Adjusted operating result and adjusted operating margin
| Q2 2014 | Q2 2013* | H1 2014 | H1 2013* | |
| Income/(loss) from current operations (in €m) | 238 | 83 | -207 | -448 |
| Portion of operating leases corresponding to financial charges (34%) (in €m) | 72 | 80 | 146 | 158 |
| Adjusted income/(loss) from current operations (in €m) | 310 | 163 | (61) | (290) |
| Revenues (in €m) | 6,452 | 6,541 | 12,005 | 12,222 |
| Adjusted operating margin | 4.8% | 2.5% | (0.5)% | (2.4)% |
* Restated for IFRIC 21, CityJet reclassified as discontinued operation
Restated net income
| Q2 2014 | Q2 2013* | H1 2014 | H1 2013* | |
| Net income/(loss), Group share (in €m) | (6) | (158) | (614) | (799) |
| Net income/(loss) from discontinued operations (in €m) | (2) | 29 | 4 | 38 |
| Unrealized foreign exchange gains and losses, net (in €m) | 6 | (50) | 117 | (54) |
| Change in fair value of financial assets and liabilities (derivatives) (in €m) | (32) | 158 | (26) | 115 |
| Non current income and expenses (in €m) | 122 | (13) | 122 | 14 |
| Depreciation of shares available for sale (in €m) | 29 | - | 29 | - |
| Cargo deferred tax assets (in €m) | 26 | - | 26 | - |
| Restated net income/(loss) (in €m) | 143 | (34) | (342) | (686) |
| Restated net income/(loss) per share (in €) | 0.48 | (0.11) | (1.16) | (2.32) |
* Restated for IFRIC 21, CityJet reclassified as discontinued operation
Net debt
| Balance sheet at (In € millions) | June 30, 2014 | December 31, 2013 |
| Current and non-current financial debt | 10,173 | 10,733 |
| Deposits on aircraft under finance lease | (575) | (626) |
| Financial assets pledged (OCEANE swap) | (196) | (393) |
| Currency hedge on financial debt | 3 | 8 |
| Accrued interest | (86) | (144) |
| Gross financial debt (A) | 9,319 | 9,578 |
| Cash and cash equivalents | 3,298 | 3,684 |
| Marketable securities | 97 | 126 |
| Cash pledges | 442 | 432 |
| Deposits (bonds) | 145 | 154 |
| Bank overdrafts | (77) | (166) |
| Net cash (B) | 3,905 | 4,230 |
| Net debt (A) - (B) | 5,414 | 5,348 |
Operating free cash flow*
| (In € millions) | H1 2014 | H1 2013** |
| Net cash flow from operating activities | 870 | 1,040 |
| Investment in property, plant, equipment and intangible assets | (835) | (633) |
| Proceeds on disposal of property, plant, equipment and intangible assets | 60 | 159 |
| Operating free cash flow | 95 | 566 |
* Excluding discontinued operations
** Restated for IFRIC 21, CityJet reclassified as discontinued operation
Net cost per EASK
| Q2 2014 | Q2 2013* | H1 2014 | H1 2013* | |
| Revenues (in €m) | 6,452 | 6,541 | 12,005 | 12,222 |
| Income/(loss) from current operations (in €m) | 238 | 83 | (207) | (449) |
| Total operating expense (in €m) | (6,214) | (6,457) | (12,213) | (12,670) |
| Passenger business - other passenger revenues (in €m) | 228 | 232** | 424 | 459** |
| Cargo business - other air freight revenues (in €m) | 43 | 52 | 90 | 96 |
| Third-party revenues in the maintenance business (in €m) | 286 | 319 | 576 | 621 |
| Other businesses - revenues other than Transavia transportation (in €m) | 103 | 121 | 196 | 228 |
| Net cost (in €m) | 5,554 | 5,721 | 10,925 | 11,266 |
| Capacity produced, reported in EASK | 85,807 | 85,053 | 162,971 | 161,291 |
| Net cost per EASK (in € cents per ESKO) | 6,47 | 6,74 | 6,70 | 6,99 |
| Gross change | -4,0% | -4,1% | ||
| Currency effect on net costs (in €m) | (119) | (199) | ||
| Change at constant currency | -1.9% | -2.3% | ||
| Fuel price effect (in €m) | (2) | (64) | ||
| Change on a constant currency and fuel price basis | -1.9% | -1.8% | ||
| Defined pension benefit expense included in salaries and related costs (in €m) | 98 | 107 | 196 | 211 |
| Net cost per EASK on a constant currency, fuel price and defined benefit pension expense basis (in € cents per EASK) | 6,47 | 6,58 | 6,70 | 6,82 |
| Change on a constant currency, fuel price and defined benefit pension expense basis | -1.7% | -1.8% |
* Restated for IFRIC 21, CityJet reclassified as discontinued operation
** Restated for change in revenue allocation (4 million euros transferred from "other passenger" to "scheduled passenger" revenues in Q2 2013 and 11 million euros in H1 2013)
INDIVIDUAL AIRLINE RESULTS
Air France
| Q2 2014 | Q2 2013* | H1 2014 | H1 2013* | |
| Revenue (€ bn) | 4.04 | 4.12 | 7.60 | 7.75 |
| EBITDA (€m) | 362 | 294 | 350 | 217 |
| Operating result (€m) | 98 | -3 | -180 | -373 |
* Restated for IFRIC 21, CityJet reclassified as discontinued operation
KLM
| Q2 2014 | Q2 2013* | H1 2014 | H1 2013 | |
| Revenue (€ bn) | 2.48 | 2.50 | 4.56 | 4.61 |
| EBITDA (€m) | 280 | 217 | 236 | 178 |
| Operating result (€m) | 140 | 86 | -34 | -77 |
NB: Sum of individual airline results does not add up to Air France-KLM total due to intercompany eliminations at Group level.
GROUP FLEET AT 30 JUNE 2014
Air France fleet
| Aircraft type | AF | Hop! | Transavia | Owned | Finance lease | Operating lease | Total | In operation | Change / 31/12/13 |
| B747-400 | 7 | 3 | 1 | 3 | 7 | 7 | |||
| B777-300 | 37 | 11 | 9 | 17 | 37 | 37 | |||
| B777-200 | 25 | 14 | 3 | 8 | 25 | 25 | |||
| A380-800 | 10 | 2 | 4 | 4 | 10 | 10 | 1 | ||
| A340-300 | 13 | 4 | 6 | 3 | 13 | 13 | |||
| A330-200 | 15 | 4 | 1 | 10 | 15 | 15 | |||
| Total long-haul | 107 | 38 | 24 | 45 | 107 | 107 | 1 | ||
| B747-400ERF | 3 | 1 | 2 | 3 | 2 | ||||
| B777-F | 2 | 2 | 2 | 2 | |||||
| Total cargo | 5 | 3 | 2 | 5 | 4 | ||||
| B737-800 | 14 | 14 | 14 | 14 | 3 | ||||
| A321 | 25 | 6 | 6 | 13 | 25 | 25 | |||
| A320 | 46 | 8 | 3 | 35 | 46 | 45 | 1 | ||
| A319 | 41 | 15 | 10 | 16 | 41 | 41 | |||
| A318 | 18 | 11 | 7 | 18 | 18 | ||||
| Total short and medium-haul | 130 | 14 | 40 | 26 | 78 | 144 | 143 | 4 | |
| ATR72-500 | 11 | 1 | 3 | 7 | 11 | 11 | 3 | ||
| ATR72-200 | -1 | ||||||||
| ATR42-500 | 13 | 4 | 4 | 5 | 13 | 13 | |||
| Canadair Jet 1000 | 13 | 13 | 13 | 13 | |||||
| Canadair Jet 700 | 15 | 12 | 3 | 15 | 13 | ||||
| Canadair Jet 100 | 11 | 11 | 11 | 4 | -3 | ||||
| Embraer 190 | 10 | 4 | 6 | 10 | 10 | ||||
| Embraer 170 | 16 | 8 | 2 | 6 | 16 | 16 | |||
| Embraer 145 | 19 | 14 | 5 | 19 | 16 | -2 | |||
| Embraer 135 | 6 | 4 | 2 | 6 | 2 | ||||
| Total regional | 114 | 71 | 19 | 24 | 114 | 98 | -3 | ||
| TOTAL | 242 | 114 | 14 | 152 | 69 | 149 | 370 | 352 | 2 |
KLM fleet
| Aircraft type | KLM | KLM Cityhopper | Transavia | Martinair | Owned | Finance lease | Operating lease | Total | In operation | Change / 31/12/13 |
| B747-400 | 22 | 15 | 2 | 5 | 22 | 22 | ||||
| B777-300 | 8 | 8 | 8 | 8 | ||||||
| B777-200 | 15 | 6 | 9 | 15 | 15 | |||||
| A330-300 | 4 | 4 | 4 | 4 | ||||||
| A330-200 | 12 | 6 | 6 | 12 | 12 | |||||
| MD11 | 4 | 3 | 1 | 4 | 4 | |||||
| Total long-haul | 65 | 18 | 23 | 24 | 65 | 65 | ||||
| B747-400ERF | 4 | 3 | 1 | 4 | 3 | |||||
| B747-400BCF | 3 | 3 | 3 | 1 | ||||||
| MD-11-CF | 3 | 3 | 3 | 3 | ||||||
| MD-11-F | 3 | 2 | 1 | 3 | 3 | |||||
| Total cargo | 13 | 3 | 5 | 5 | 13 | 10 | ||||
| B737-900 | 5 | 1 | 1 | 3 | 5 | 5 | ||||
| B737-800 | 25 | 22 | 7 | 10 | 30 | 47 | 47 | 2 | ||
| B737-700 | 18 | 9 | 2 | 9 | 16 | 27 | 27 | |||
| Total short and medium-haul | 48 | 31 | 10 | 20 | 49 | 79 | 79 | 2 | ||
| Embraer 190 | 28 | 13 | 15 | 28 | 28 | 4 | ||||
| Fokker 70 | 23 | 23 | 23 | 19 | -7 | |||||
| Total Regional | 51 | 23 | 13 | 15 | 51 | 47 | -3 | |||
| KLM | 113 | 51 | 31 | 13 | 54 | 61 | 93 | 208 | 201 | -1 |
| TOTAL Air France-KLM (Constant scope) | 206 | 130 | 242 | 578 | 553 | 1 | ||||
| TOTAL Air France-KLM (Before sale of CityJet and VLM) | 206 | 130 | 242 | 578 | 553 | -30 |
[1]:
#_ftnref1 See definition in appendix
[2]:
#_ftnref2 See definition in appendix
[3]:
#_ftnref3 Net debt at 31st December 2013
[4]:
#_ftnref4 See details in "Cargo business" section below
[5]:
#_ftnref5 See definition in appendix
http://hugin.info/143398/R/1837792/638822.pdf
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: AIR FRANCE - KLM via Globenewswire
