27th July 2016
 
Financial Year 2016: First Half results

 

 

SECOND QUARTER

  • Revenues of 6.22 billion euros, down 5.2% and down 3.7% like-for-like[1], with clear deterioration during the quarter
  • Non fuel unit costs down 1.5% at constant currency
  • EBITDA[2] of 728 million euros, a reported increase of 171 million euros and up 211 million euros like-for-like
  • Operating result of 317 million euros, an improvement of 138 million euros and up 183 million euros like-for-like

       

 

FIRST HALF

  • Revenues of 11.82 billion euros, down 2.6% both reported and like-for-like
  • EBITDAR of 1,522 million euros, an improvement of 486 million euros, up 597 million euros like-for-like
  • Strong operating free cash flow2 generation: 373 million euros
  • Further net debt reduction: net debt2 of 4.04 billion euros, down 265 million euros compared to 31 December 2015
  • Adjusted net debt / EBITDAR2 ratio of 2.9x, an improvement of 0.5 points compared to 31 December 2015

       

 

FULL YEAR 2016 OUTLOOK

  • High level of geopolitical and economic uncertainties, increasing pressure on unit revenues and special concern about France as a destination
  • Impact of fuel savings on P&L expected to be more than offset in the coming quarters by downward pressure on unit revenue and negative currency impacts
  • Continued progress in unit cost reduction, targeted at around 1% ex fuel in 2016
  • Free operating cash flow generation after disposals maintained between 0.6 billion euros and 1.0 billion euros in 2016
  • Further significant net debt reduction

 

 

 

The Board of Directors of Air France-KLM, chaired by Jean-Marc Janaillac, met on 26th July 2016 to approve the accounts for the First Half of the Financial Year 2016.

 


 

Key data

 

  Second Quarter First Half
  2016 2015* Change 2016 2015* Change
Passengers (thousands) 24,385 23,579 +3.4% 44,281 42,601 +3.9%
Capacity (EASK m) 85,948 85,807 +0.2% 163,392 163,039 +0.2%
Revenues (€m) 6,215 6,558 -5.2% 11,820 12,140 -2.6%
Change like-for-like (%)     -3.7%     -2.6%
EBITDAR (€m) 991 812 +179 1,522 1,036 +486
EBITDA (€m) 728 557 +171 994 531 +463
EBITDA margin (%) 11.7% 8.5% +3.2 pt 8.4% 4.4% +4.0 pt
EBITDA change like-for-like (€m)     +211     +582

Operating result (€m)

 317 179 +138 218 -238 +456
Operating margin (%) 5.1% 2.7% +2.4 pt 1.8% -2.0% +3.8 pt
Operating result change
like-for-like (€m)		     +183     +580
Net result, group share (€m) 41 -79 +120 -114 -638 +524
Restated net result, group share2 (€m) 78 75 +3 -24 -431 +407
Earnings per share (€) 0.14 (0.27) +0.41 (0.43) (2.16) +1.73
Diluted earnings per share (€) 0.13 (0.27) +0.40 (0.43) (2.16) +1.73
Adjusted earnings per share (€) 0.24 0.24 +0 (0.12) (1.46) +1.34
Diluted adjusted earnings per share (€) 0.22 0.21 +0.01 (0.12) (1.46) +1.34
Operating free cash flow (€m) 177 311 -134 373 265 +108
Net debt at end of period (€m)       4,042 4,307 -265

*  Servair reclassified as discontinued operation.

 

The consolidated financial statements of the Group were revised as of 1st January 2016 in order to reflect Servair as a discontinued operation. The 2015 financial statements have been restated accordingly. Details of this restatement can be found in the appendix of this press release.

 

Second Quarter 2016 total revenues stood at 6.22 billion euros versus 6.56 billion euros in Second Quarter 2015, down 5.2% as a result of increasing pressure on unit revenue and down 3.7% like-for-like.

 

Currencies had a negative 104 million euro impact on revenues, primarily driven by the weakening of currencies other than the US dollar against the euro, notably the BRL, GBP, CNY, CAD and ZAR. The negative effect on revenues was partly offset by the positive effect of currencies on costs, which amounted to 58 million euros. The net impact of currencies on the operating result thus amounted to a negative 46 million euros.

 

Total operating costs were 7.5% lower year-on-year and down 6.7% on a like-for-like basis. Ex-fuel, they increased by 0.3% and by 0.5% on a like-for-like basis. Unit cost per EASK was down 1.5%, on a constant currency, fuel price and pension-related expense basis, against stable capacity measured in EASK (+0.3%).

 

The fuel bill amounted to 1,167 million euros, down 29.7% and down 27.6% like-for-like. Based on the forward curve at 15 July 2016, the Full Year 2016 fuel bill is expected to reach 4.6 billion euros[3] and  the Full Year 2017 fuel bill could amount to 4.4 billion euros.

 

Total employee costs including temporary staff were down 2.7% to 1,862 million euros. On a constant scope and pension-related expense basis, employee costs decreased by 2.9% and by 3.6% excluding the increase in the profit sharing scheme.

 

Over the Second Quarter 2016, 15% of the savings achieved on the fuel bill were retained, down significantly from the 55% retained during First Quarter 2016. During the Second Quarter, the positive fuel price effect of 408 million euros was largely offset by pressure on unit revenues (negative 300 million euros) and currency impacts (negative 46 million euros).

 

EBITDAR amounted to 991 million euros, a reported increase of 179 million euros and up 226 million euros like-for-like.

 

EBITDA amounted to 728 million euros, an increase of 171 million euros. Like-for-like, EBITDA increased by 211 million euros, mainly as a result of the strong Passenger network performance, which improved by 186 million euros like-for-like.

 

  Second Quarter First Half
EBITDA per business (€m) 2016 2015* Changelike-for-like 2016 2015* Changelike-for-like
Passenger network 675 518 +157 +186 952 510 +442 +541
Cargo -61 -80 +19 +24 -103 -128 +25 +37
Maintenance 108 112 -4 -1 193 197 -4 -4
Transavia 2 -1 +3 +9 -50 -59 +9 +20
Other 4 9 -5 -7 2 11 -9 -12
Total 728 557 +171 +211 994 531 +463 +582

*  Servair reclassified as discontinued operation.

 

Second Quarter 2016 EBITDA improved by 60 million euros like-for-like at Air France and 151 million euros like-for-like at KLM. EBITDA margins were up at both airlines, reaching 10.0% at Air France and 13.8% at KLM.

 

  Second Quarter First Half
EBITDA per airline (€m) 2016 2015* Changelike-for-like 2016 2015* Changelike-for-like
Air France 382 333 +49 +60 532 347 +185 +240
EBITDA margin 10.0% 8.2% +1.8 pt +2.1 pt 7.2% 4.5% +2.7 pt +3.4 pt
KLM 341 220 +121 +151 459 178 +281 +346
EBITDA margin 13.8% 8.6% +5.2 pt +6.4 pt 10.0% 3.8% +6.1 pt +7.6 pt
Other/ eliminations 5 4 +1 +0 3 7 -4 +4
Total 728 557 +171 +211 994 531 +463 +582

*  Servair reclassified as discontinued operation.

 

In the First Half 2016, total revenues stood at 11.8 billion euros versus 12.1 billion euros in the first half 2015, down 2.6% reported and on a like-for-like basis. The fuel bill amounted to 2,263 million euros, a reported decrease of 28.0% and down 29.1% on a like-for-like basis.

 

Over the first six months, savings achieved on the fuel bill (positive 858 million euros excluding currency) were partly offset by pressure on unit revenues (negative 419 million euros excluding currency) and negative currency impacts (negative 125 million euros) resulting in 37% of the fuel savings being retained.

 

In the First Half 2016, EBITDA amounted to a positive 994 million euros, an increase of 463 million euros. On a like-for-like basis, EBITDA increased by 582 million euros.

 

At 952 million euros, the Passenger Network was the main contributor to the EBITDA, up 541 million euros like-for-like. Despite the challenging Cargo operating context, marked by structural industry overcapacity, Cargo EBITDA improved by 37 million euros like-for-like mainly as a result of restructuring efforts.

 

The operating result stood at 218 million euros versus negative 238 million euros in 2015, an improvement of 456 million euros. Like-for-like, the operating result increased by 580 million euros.

 

The net result, group share stood at negative a 114 million euros against a negative 638 million euros a year ago.

 

At 30 June 2016, the trailing 12 months return on capital employed (ROCE) was 11.7%, up 6.3 points compared to 30 June 2015.

Passenger network[4] business

 

Passenger network Q2 2016 Q2 2015ChangeChange

like-for-like
Passengers (thousands) 20,621 20,487 +0.7%  
Capacity (ASK m) 69,799 69,947 -0.2%  
Traffic (RPK m) 59,104 59,453 -0.6%  
Load factor  84.7% 85.0% -0.3 pt  
Total passenger revenues (€m) 4,940 5,242 -5.8% -4.3%
Scheduled passenger revenues (€m) 4,733 5,024 -5.8% -4.4%
Unit revenue per ASK (€ cts) 6.78 7.18 -5.6% -4.1%
Unit revenue per RPK (€ cts) 8.01 8.45 -5.2% -3.8%
Unit cost per ASK (€ cts) 6.30 6.88 -8.5% -7.6%
Operating result (€m) 337 210 +127 +156

       

Second Quarter 2016 total passenger network revenues amounted to 4,940 million euros, down 5.8% and down 4.3% like-for-like. The Air France pilot strike negatively impacted the operating result by an estimated 40 million euros. The operating result of the passenger network business stood at 337 million euros, versus 210 million euros for the Second Quarter 2015. Like-for-like, the operating result was up 156 million euros.

 

The Group maintained its strict capacity discipline, keeping total passenger network capacity stable    (-0.2%). Unit revenue per Available Seat Kilometer (RASK) remained volatile and was on average down by 4.1% excluding currency. The increasing pressure on unit revenue during the quarter reflected the weak supply-demand balance in the different regions of the network and increasingly soft flows to France as a destination.

 

Passenger network H1 2016 H1 2015ChangeChange

like-for-like
Passengers (thousands) 38,624 37,853 +2.0%  
Capacity (ASK m) 134,642 134,054 +0.4%  
Traffic (RPK m) 113,910 112,370 +1.4%  
Load factor  84.6% 83.8% +0.8 pt  
Total passenger revenues (€m) 9,413 9,663 -2.6% -2.4%
Scheduled passenger revenues (€m) 9,007 9,248 -2.6% -2.4%
Unit revenue per ASK (€ cts) 6.69 6.90 -3.0% -2.8%
Unit revenue per RPK (€ cts) 7.91 8.23 -3.9% -3.7%
Unit cost per ASK (€ cts) 6.45 6.98 -7.6% -8.4%
Operating result (€m) 319 -112 +431 +531

 

In the First Half 2016, passenger network revenues amounted to 9,413 million euros, down 2.6% and down 2.4% on a like-for-like basis. The operating result of the passenger network business stood at
319 million euros, versus a negative 112 million euros in the First Half 2015, an improvement of 431 million euros and 531 million euros like-for-like.

 

The capacity outlook is unchanged with an increase over the Full Year 2016 of around 1% Available Seat Kilometer (ASK) in the passenger network expected as a result.

 


 

Cargo business

 

Cargo Q2 2016 Q2 2015ChangeChange

like-for-like
Tons (thousands) 282 295 -4.6%  
Capacity (ATK m) 3,565 3,684 -3.2%  
Traffic (RTK m) 2,087 2,193 -4.8%  
Load factor  58.5% 59.5% -1.0 pt  
Total Cargo revenues (€m) 507 604 -16.1% -14.0%
Scheduled cargo revenues (€m) 465 562 -17.3% -15.2%
Unit revenue per ATK (€ cts) 13.0 15.3 -14.9% -12.9%
Unit revenue per RTK (€ cts) 22.3 25.8 -13.5% -11.4%
Unit cost per ATK (€ cts) 14.9 17.4 -14.6% -14.0%
Operating result (€m) -66 -78 +12 +21

 

The Group continued to restructure its Cargo activity to address the weak global trade and structural air cargo industry overcapacity. During Second Quarter 2016, full-freighter capacity was thus reduced by 16%, leading to a decrease in total Cargo capacity of 3.2%. Revenue per Available Ton Kilometer (ATK) was down by 12.9% like-for-like.

 

The operating result stood at negative 66 million euros, an improvement of 21 million euros like-for-like resulting from a strong decrease in unit costs (-14.0% like-for-like) due to the restructuring measures taken.

 

Cargo H1 2016 H1 2015ChangeChange

like-for-like
Tons (thousands) 558 596 -6.5%  
Capacity (ATK m) 6,999 7,418 -5.6%  
Traffic (RTK m) 4,121 4,454 -7.5%  
Load factor  58.9% 60.0% -1.2 pt  
Total Cargo revenues (€m) 1,036 1,229 -15.7% -15.5%
Scheduled cargo revenues (€m) 957 1,150 -16.8% -16.7%
Unit revenue per ATK (€ cts) 13.7 15.5 -12.0% -11.9%
Unit revenue per RTK (€ cts) 23.2 25.9 -10.3% -10.2%
Unit cost per ATK (€ cts) 15.3 17.4 -12.1% -12.8%
Operating result (€m) -116 -141 +25 +38

 

First Half 2016 Cargo revenues amounted to 1,036 million euros, down 15.5% like-for-like. At -116 million euros, the operating result increased by 38 million like-for-like.

 

One MD11 freighter was retired during the First Quarter, and two MD11 freighters were phased out during the first week of July 2016 reducing the total number of full freighters in operation to six. This reduction should enable the full-freighter business to return to operating breakeven in 2017. The operating result of the Full Freighter business stood at negative 12 million euros over the first six months of 2016, an improvement of 25 million euros compared to the First Half 2015.

 

Maintenance business

 

Maintenance Q2 2016 Q2 2015ChangeChange

like-for-like
Total revenues (€m) 1,000 999 +0.1%  
Third party revenues (€m) 435 395 +9.8% 12.9%
Operating result  (€m) 57 51 +6 +9
Operating margin (%) 5.7% 5.1% +0.6 pt +0.9 pt

 

Second Quarter 2016 third party maintenance revenues amounted to 435 million euros, up by 9.8% and by 12.9% like-for-like. Revenues benefited not only from the strong dollar relative to the euro but also from the contracts gained in previous years.

The operating result stood at 57 million euros, up 6 million euros year-on-year, and up 9 million euros like-for-like.

 

Maintenance H1 2016 H1 2015ChangeChange

like-for-like
Total revenues (€m) 2,006 1,959 +2.1%  
Third party revenues (€m) 866 775 +11.6% 9.9%
Operating result  (€m) 95 86 +9 +9
Operating margin (%) 4.7% 4.4% +0.4 pt +0.3 pt

 

During the First Half 2016, third party maintenance revenues increased by 11.6% and by 9.9% like-for-like. At 95 million euros, the operating result improved by 9 million euros.

 

Over the period, the maintenance order book recorded a further 10% increase to reach a record high of 9.2 billion dollars, including several new A350 support contracts.

 

Transavia

 

Transavia Q2 2016 Q2 2015Change
Passengers (thousands) 3,764 3,092 +21.7%
Capacity (ASK m) 7,225 6,446 +12.1%
Traffic (RPK m) 6,387 5,819 +9.8%
Load factor  88.4% 90.3% -1.9 pt
Total passenger revenues (€m) 323 304 +6.3%
Scheduled passenger revenues (€m) 322 302 +6.6%
Unit revenue per ASK (€ cts) 4.46 4.69 -4.9%
Unit revenue per RPK (€ cts) 5.04 5.19 -2.9%
Unit cost per ASK (€ cts) 4.62 4.78 -3.3%
Operating result (€m) -12 -6 -6

 

In the Second Quarter 2016, Transavia capacity was up by 12.1%, reflecting the accelerated development in France (capacity up by 30%) and the opening of the Munich base on 25th March 2016. Traffic, measured in revenue passenger kilometers (RPK), rose by 9.8%. The load factor remained high (88.4%) despite the increase in capacity.

 

The unit revenue per ASK decreased by 4.9%, mainly due to geopolitical unrest and intensification of low cost competition. Unit costs per ASK decreased by 3.3% and by 10.0% at constant currency and stage length. The operating result stood at a negative 12 million euros, down 6 million euros but stable like-for-like.

 

Transavia H1 2016 H1 2015Change
Passengers (thousands) 5,657 4,748 +19.1%
Capacity (ASK m) 10,943 9,877 +10.8%
Traffic (RPK m) 9,650 8,836 +9.2%
Load factor  88.2% 89.5% -1.3 pt
Total passenger revenues (€m) 483 450 +7.3%
Scheduled passenger revenues (€m)* 475 443 +7.2%
Unit revenue per ASK (€ cts) 4.34 4.50 -3.5%
Unit revenue per RPK (€ cts) 4.92 5.03 -2.1%
Unit cost per ASK (€ cts) 5.03 5.26 -4.3%
Operating result (€m) -75 -75 +0

 

In the First Half 2016, Transavia revenues amounted to 483 million euros, up 7.3%. The operating result remained stable at a negative 75 million euros.

 

The rapid development of Transavia will continue in the Second Half of 2016, a capacity increase, measured in Available Seat Kilometer (ASK), of around 15% for the Full Year 2016, unchanged on the previous outlook.

 

Financial situation

 

In € million H1 2016 H1 2015*Change
Cash flow before change in WCR and Voluntary Departure Plans, continuing operations +809 +318 +491
Cash out related to Voluntary Departure Plans -173 -97 -76
Change in Working Capital Requirement (WCR) +793 +853 -60
Operating cash flow +1,429 +1,074 +355
Net investments before sale & lease-back -1,056 -809 -247
Cash received through sale & lease-back transactions +0 +0 +0
Net investments after sale & lease-back -1,056 -809 -247
Operating free cash flow +373 +265 +108

*  Servair reclassified as discontinued operation.

 

In the First Half 2016, the increase of 463 million euros in EBITDA translated into a 491 million euro increase in cash flow before change in WCR and cash out related to Voluntary Departure Plans. The Group disbursed 173 million euros for Voluntary Departure Plans. The change in Working Capital Requirement contributed 793 million euros to operating cash flow. Net investments before sale & lease-back transactions stood at 1,056 million euros. As a result, operating free cash flow reached 373 million euros, up 108 million euros compared to the First Half of 2015.

 

Net debt amounted to 4.0 billion euros at 30 June 2016, versus 4.3 billion euros at 31 December 2015, an improvement of 265 million euros. Currencies had a significant negative impact of 142 million euro on net debt.

 

The trailing 12 months adjusted net debt/EBITDAR ratio stood at 2.9x at 30 June 2016, down 0.5 points compared to 31 December 2015, and down 1.0 points compared to 30 June 2015.

 

The 80 basis point fall in discount rates (for period  > 20 years) during First Half 2016 led to another significant increase in the actuarial valuation of retirement obligations of more than 2.7 billion euros. The change in asset value amounted to 811 million euros during the First Half. The balance sheet pension situation thus moved from a net liability of 177 million euros at 31 December 2015 to a net liability of 1,979 million euros at 30 June 2016.

 

At 30 June 2016, equity, group share, amounted to negative 733 million euros, down 1,006 million euros over the First Half mainly due to the increase in the net pension liability.

 

The Group continues to enjoy a good level of liquidity, with net cash of 3.8 billion euros at 30 June 2016, and undrawn credit lines of 1.8 billion euros.

 


 

Outlook

 

The global context in 2016 remains highly uncertain regarding the geopolitical and economic environment in which we operate, fuel prices and the continuation of the overcapacity in the airline industry resulting in an increasing pressure on unit revenues and a special concern about France as a destination.

 

Under these conditions, the Group is expecting for Full Year 2016:

  • Free operating cash flow generation after disposals is maintained between 0.6 billion euros and 1.0 billion euros. The updated 2016 investment plan (between 1.8 billion euros and 2.0 billion euros, including buying back aircraft under operating lease) and disposals programme (between 0.3 billion euros and 0.6 billion euros) will continue to be adjusted depending on operating cashflow generation
  • Impact of fuel savings on the P&L expected to be more than offset in the coming quarters by downward pressure on unit revenue and negative currency impacts
  • Non fuel unit cost reduction target remain around 1% at constant currency
  • Further significant reduction in net debt

 

*****

 

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 www.airfranceklm.com on July 27th 2016 from 7:15am CET.

 

An Analysts' meeting will be hosted by Mr Janaillac (CEO) and Mr Riolacci (CFO) on 27th July 2016 at 8:30am 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.com (password: AFKL) and by conference call.

 

To connect to the conference call, please dial:

  • France: +33(0)1 70 99 42 71
  • Netherlands: +31(0)20 716 8295
  • UK: +44(0)20 3427 1916
  • US: +1 646 254 3361

Password: 7461566

 

To listen to a recording of the conference in English, please dial:

  • France: +33(0)1 74 20 28 00
  • Netherlands: +31(0)20 708 5013
  • United Kingdom: +44 (0)20 3427 0598
  • USA: +1 347 366 9565

Replay Passcode:  7461566

 

Investor relations

 		  

Press
Marie-Agnès de Peslouan +33 1 41 56 56 00
Head of Investor Relations  
Tel : +33 1 49 89 52 59   
Email: madepeslouan@airfranceklm.com    Website: www.airfranceklm-finance.com  
 

Dirk Voermans

Senior manager, Investor Relations

Tel : +33 1 49 89 52 60

Email: divoermans@airfranceklm.com

  		 


 

INCOME STATEMENT

 

    Second Quarter First Half
  In millions euros 2016 2015* Change 2016 2015* Change
               
SALES 6,215 6,558 -5.2% 11,820 12,140 -2.6%
Other revenues 0 1 NA 0 2 NA
EXTERNAL EXPENSES -3,571 -4,104 -13.0% -7,019 -7,875 -10.9%
Aircraft fuel -1,167 -1,661 -29.7% -2,263 -3,141 -28.0%
Chartering costs -113 -110 2.7% -215 -217 -0.9%
Landing fees and en route charges -484 -499 -3.0% -914 -941 -2.9%
Catering -113 -120 -5.8% -215 -223 -3.6%
Handling charges and other operating costs -389 -380 2.4% -750 -741 1.2%
Aircraft maintenance costs -604 -581 4.0% -1,246 -1,160 7.4%
Commercial and distribution costs -232 -237 -2.1% -463 -465 -0.4%
Other external expenses -469 -516 -9.1% -953 -987 -3.4%
Salaries and related costs -1,862 -1,914 -2.7% -3,706 -3,744 -1.0%
Taxes other than income taxes -39 -36 8.3% -88 -82 7.3%
Other income and expenses 248 307 -19.2% 515 595 -13.4%
EBITDAR 991 812 22.0% 1,522 1,036 46.9%
Aircraft operating lease costs -263 -255 3.1% -528 -505 4.6%
EBITDA 728 557 30.7% 994 531 87.2%
Amortization, depreciation and provisions -411 -378 8.7% -776 -769 0.9%
INCOME FROM CURRENT OPERATIONS 317 179 77.1% 218 -238 NA
Sales of aircraft equipment 0 -4 NA 8 -5 NA
Other non-current income and expenses 18 -72 NA -107 89 NA
INCOME FROM OPERATING ACTIVITIES 335 103 225% 119 -154 NA
Income from cash and cash equivalents 14 13 7.7% 28 30 -6.7%
Cost of financial debt -78 -91 -14.3% -162 -198 -18.2%
Net cost of financial debt -64 -78 -17.9% -134 -168 -20.2%
Foreign exchange gains (losses), net -152 -90 -68.9% -119 -245 51.4%
Change in fair value of financial assets and liabilities 31 -40 NA 58 -96 NA
Other financial income and expenses -5 -16 68.8% 17 -45 NA
INCOME BEFORE TAX 145 -121 NA -59 -708 91.7%
Income taxes -107 49 NA -53 85 NA
NET INCOME OF CONSOLIDATED COMPANIES 38 -72 NA -112 -623 82.0%
Share of profits (losses) of associates 2 -7 NA 1 -18 NA
INCOME FROM CONTINUING OPERATIONS 40 -79 NA -111 -641 82.7%
Net income from discontinued operations 3 2 50.0% 2 4 -50.0%
NET INCOME FOR THE PERIOD 43 -77 NA -109 -637 82.9%
Minority interest -2 -2 0.0% -5 -1 -400%
NET INCOME FOR THE PERIOD - GROUP 41 -79 NA -114 -638 82.1%

 

*  Servair reclassified as discontinued operation


 

BALANCE SHEET

 

Assets
In million euros		 June 30,

2016		 December 31, 2015*
Goodwill 217 247
Intangible assets 1,021 1,018
Flight equipment 9,192 8,743
Other property, plant and equipment 1,494 1,670
Investments in equity associates 73 118
Pension assets 737 1,773
Other financial assets 1,198 1,224
Deferred tax assets 821 702
Other non-current assets 359 295
Total non-current assets 15,112 15,790
Assets held for sale 380 4
Other short-term financial assets 175 967
Inventories 574 532
Trade receivables 1,980 1,800
Other current assets 1,022 1,138
Cash and cash equivalents 3,833 3,104
Total current assets 7,964 7,545
Total assets 23,076 23,335

*  Servair reclassified as discontinued operation

 

Liabilities and equity
In million euros		 June 30,

2016		 December 31, 2015*
Issued capital 300 300
Additional paid-in capital 2,971 2,971
Treasury shares (84) (85)
Perpetual 600 600
Reserves and retained earnings (4,562) (3,561)
Equity attributable to equity holders of Air France-KLM (775) 225
Non-controlling interests 42 48
Total Equity (733) 273
Pension provisions 2,716 1,995
Other provisions 1,467 1,513
Long-term debt 7,185 7,060
Deferred tax liabilities 9 11
Other non-current liabilities 314 484
Total non-current liabilities 11,691 11,063
Liabilities relating to assets held for sale 253 -
Provisions 775 742
Current portion of long-term debt 1,527 2,017
Trade payables 2,333 2,395
Deferred revenue on ticket sales 3,602 2,515
Frequent flyer programs 787 760
Other current liabilities 2,827 3,567
Bank overdrafts 14 3
Total current liabilities 12,118 11,999
Total liabilities 23,809 23,062
Total equity and liabilities 23,076 23,335

*  Servair reclassified as discontinued operation

 


 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

In € millions

Period from January 1 to June 30,		 H1 2016 H1 2015*
Net income from continuing operations (111) (641)
Net income from discontinued operations 2 4
Amortization, depreciation and operating provisions 781 781
Financial provisions (21) 43
Loss (gain) on disposals of tangible and intangible assets (59) 5
Loss (gain)on disposals of subsidiaries and associates (7) (224)
Derivatives - non monetary result (129) 51
Unrealized foreign exchange gains and losses, net 122 237
Share of (profits) losses of associates (1) 16
Deferred taxes 33 (105)
Impairment 2 -
Other non-monetary items 33 63
Subtotal 645 230
Of which discontinued operations 9 9
(Increase) / decrease in inventories (76) (62)
(Increase) / decrease in trade receivables (238) (381)
Increase / (decrease) in trade payables 33 (29)
Change in other receivables and payables 1,074 1,325
Change in working capital from discontinued operations 2 9
Net cash flow from operating activities 1,440 1,092
Acquisition of subsidiaries, of shares in non-controlled entities (4) (6)
Purchase of property plants, equipments and intangible assets (1,152) (860)
Proceeds on disposal of subsidiaries, of shares in non-controlled entities 4 342
Proceeds on disposal of property, plant and equipment and intangible assets 96 51
Dividends received 3 1
Decrease (increase) in net investments, more than 3 months 681 (204)
Net cash flow used in investing activities of discontinued operations (5) (12)
Net cash flow used in investing activities (377) (688)
Perpetual - 599
Issuance of debt 686 803
Repayment on debt (720) (1,133)
Payment of debt resulting from finance lease liabilities (241) (380)
New loans (32) (41)
Repayment on loans 20 96
Dividends and coupons on perpetual paid (1) (4)
Net cash flow used in financing activities of discontinued operations (6) 5
Net cash flow from financing activities (294) (55)
Effect of exchange rate on cash and cash equivalents and bank overdrafts (23) (18)
Effect of exch. rate on cash and cash eq. and bank overdrafts of disc. ops. (1) (4)
Change in cash and cash equivalents and bank overdrafts 745 327
Cash and cash equivalents and bank overdrafts at beginning of period 3,073 2,902
Cash and cash equivalents and bank overdrafts at end of period 3,819 3,222
Change in cash of discontinued operations (1) 7

*  Servair reclassified as discontinued operation

 


KEY FINANCIAL INDICATORS

EBITDA and EBITDAR

In million euros Q2 2016 Q2 2015* H1 2016 H1 2015*
Income/(loss) from current operations 317 179 218 (238)
Amortization, depreciation and provisions 411 378 776 769
EBITDA 728 557 994 531
Aircraft operating lease costs 263 255 528 505
EBITDAR 991 812 1,522 1,036

*  Servair reclassified as discontinued operation

Restated net result, group share

In million euros Q2 2016 Q2 2015* H1 2016 H1 2015*
Net income/(loss), Group share (in €m) 41 (79) (114) (638)
Net income/(loss) from discontinued operations (in €m) (3) (2) (2) (4)
Unrealized foreign exchange gains and losses, net (in €m) 149 94 122 237
Change in fair value of financial assets and liabilities (derivatives) (in €m) (91) 25 (129) 51
Non-current income and expenses (in €m) (18) 76 99 (84)
Depreciation of shares available for sale (in €m) 0 (5) 0 7
De-recognition of deferred tax assets (in €m) 0 (34) 0 0
Restated net income/(loss), group share (in €m) 78 75 (24) (431)
Restated net income/(loss) per share (in €) 0.24 0.24 (0.12) (1.46)

*  Servair reclassified as discontinued operation

Return on capital employed (ROCE)

In million euros 30 June 2016 30 June. 2015* 30 June.

2015* 		30 June 2014
Goodwill and intangible assets 1,238 1,270 1,270 1,232
Flight equipment 9,192 8,843 8,843 9,235
Other property, plant and equipment 1,494 1,720 1,720 1,764
Investments in equity associates 73 131 131 159
Financial assets excluding shares available for sale, marketable securities and financial deposits 204 200 200 121
Provisions, excluding pension, cargo litigation and restructuring (1,558) (1,508) (1,508) (1,144)
WCR, excluding market value of derivatives (5,897) (5,925) (5,925) (5,590)
Capital employed before operating leases 4,746 4,731 4,731 5,777
Operating leases x7 7,343 6,636
Average capital employed (A) 12,082 11,890
Adjusted results from current operations 1,592 572
- Dividends received (2) (10)
- Share of profits (losses) of associates (16) (46)
- Tax recognized in the adjusted net result (165) 122
Adjusted result from current operations after tax (B) 1409 638
ROCE, trailing 12 months (B/A) 11.7% 5.4%

*  Servair reclassified as discontinued operation


 

Net debt

Balance sheet at

(In million euros)		 30 June 
2016		 31 December  2015*
Current and non-current financial debt 8,712 9,077
Deposits on aircraft under finance lease (331) (453)
Financial assets pledged (OCEANE swap) 0 (393)
Currency hedge on financial debt (37) (40)
Accrued interest (68) (95)
Gross financial debt (A) 8,276 8,096
Cash and cash equivalents 3,833 3,104
Marketable securities 177 466
Cash pledges 18 18
Deposits (bonds) 227 204
Bank overdrafts (21) (3)
Net cash (B) 4,234 3,789
Net debt (A) - (B) 4,042 4,307

*  Servair reclassified as discontinued operation

Adjusted net debt and adjusted net debt/EBITDAR ratio

  30 June 
2016		 31 December  2015*
Net debt (in €m) 4,042 4,307
Aircraft operating leases x 7 (trailing 12 months, in €m) 7,343 7,189
Adjusted net debt (in €m) 11,385 11,496
EBITDAR (trailing 12 months, in €m) 3,898 3,413
Adjusted net debt/EBITDAR ratio, excluding strike (trailing 12 months) 2.92 3.37

*  Servair reclassified as discontinued operation

 

Operating free cash flow

In million euros H1 2016 H1 2015*
Net cash flow from operating activities, continued operations 1,429 1,074
Investment in property, plant, equipment and intangible assets -1,152 -860
Proceeds on disposal of property, plant, equipment and intangible assets 96 51
Operating free cash flow 373 265

*  Servair reclassified as discontinued operation


 

Unit cost: net cost per EASK

  Q2 2016 Q2 2015* H1 2016 H1 2015*
Revenues (in €m) 6,215 6,557 11,820 12,140
Income/(loss) from current operations  (in €m) 317 180 218 (238)
Total operating expense (in €m) (5,898) (6,377) (11,602) (12,376)
Passenger network business - other revenues (in €m)** 207 218 406 415
Cargo business - other revenues (in €m) 42 42 79 79
Third-party revenues in the maintenance business (in €m) 435 395 866 775
Transavia - other revenues (in €m) 1 2 8 7
Third-party revenues of other businesses (in €m) 10 11 22 21
Net cost  (in €m) 5,203 5,709 10,221 11,079
Capacity produced, reported in EASK 86,234 85,949 163,678 163,181
Net cost per EASK (in € cents per EASK)   6.03    6.64    6.24    6.79 
Gross change   -9.2%   -8.0%
Currency effect on net costs (in €m)   (43)   106
Change at constant currency   -8.4%   -8.9%
Fuel price effect (in €m)   (408)   (858)
Change on a constant currency and fuel price basis   -1.4%   -1.3%
Change in pension-related expenses (in €m)***   4   5
Net cost per EASK on a constant currency, fuel price and pension-related expenses basis (in € cents per EASK)   6.03    6.12    6.24    6.33 
Change on a constant currency, fuel price and pension-related expenses basis   -1.5%   -1.3%

*  Servair reclassified as discontinued operation

INDIVIDUAL AIRLINE RESULTS

 

Air France

  H1 2016 H1 2015* Change
Revenue (€m) 7,376 7,631 -3.3%
EBITDA (€m) 532 347 +185
Operating result (€m) 15 -134 +149
Operating margin 0.2% -1.8% +2.0 pt
Operating cash flow before WCR and restructuring cash out (€m) 515 267 +248
Operating cash flow (before WCR and restructuring) margin 7.0% 3.5% +3.5 pt

*  Servair reclassified as discontinued operation

 

KLM

  H1 2016 H1 2015* Change
Revenue (€m) 4,604 4,657 -1.1%
EBITDA (€m) 459 178 +281
Operating result (€m) 207 -79 +286
Operating margin 4.5% -1.7% +6.2 pt
Operating cash flow before WCR and restructuring cash out (€m) 384 102 +282
Operating cash flow (before WCR and restructuring) margin 8.3% 2.2% +6.2 pt

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

.

 


 

Presentation of Servair Group as discontinued operation

 

The Group studied various scenarios to ensure the development of its subsidiary Servair and opted for the participation of another company in the share capital of Servair. In March 2016, both Servair and Air France informed the representative bodies of their employees about this process. Taken into consideration the offers received by Air France, this should lead to a loss of control of Servair by Air France-KLM Group, as defined in IFRS 10 standard. Servair currently constitutes the main cash-generating unit of the segment "Other".  The above elements have triggered the accounting treatment of the Servair Group in "discontinued operations" as of March 31, 2016, as defined in IFRS 5 standard. The consolidated figures as at March 31, 2015 have consequently been restated for the purpose of comparison.

During the First Half 2016, the third party revenues amounted to 195 million euros, resulting in a reported EBITDA of 15 million euros and an operating proft of 10 million euros.

In the context of this operation, the assets and liabilities of the Servair Group have been reclassified on the lines assets held for sale and liabilities relating to assets held for sale, for respectively €380 million and €253 million as of June 30, 2016.

    Full Year 2015 - Servair
  In millions euros Q1 Q2 Q3 Q4 Total
             
THIRD PARTY REVENUES 74 85 109 102 370
Other revenues 0 0 0 0 0
EXTERNAL EXPENSES 27 27 18 14 86
Catering -39 -46 -57 -51 -193
Other external expenses 66 73 75 65 279
Salaries and related costs -91 -99 -100 -98 -388
Taxes other than income taxes -5 -2 -3 -2 -12
Other income and expenses 0  2 1 2 5
EBITDAR 5 13 25 18 61
Aircraft operating lease costs 0 0 0 0 0
EBITDA 5 13 25 18 61
Amortization, depreciation and provisions -5 -7 -6 -7 -25
INCOME FROM CURRENT OPERATIONS 0 6 19 11 36
Other non-current income and expenses 0 0 0 -1 -1
INCOME FROM OPERATING ACTIVITIES 0 6 19 10 35
Income from cash and cash equivalents 0 0 0 1 1
Cost of financial debt 0 0 0 -1 -1
Net cost of financial debt 0 0 0 0 0
Other financial income and expenses 0 -1 -1 1 -1
INCOME BEFORE TAX 0 5 18 11 34
Income taxes 0 -3 -6 -4 -13
NET INCOME OF CONSOLIDATED COMPANIES 0 2 12 7 21
Share of profits (losses) of associates 2 1 1 1 5
INCOME FROM CONTINUING OPERATIONS 2 3 13 8 26
Net income from discontinued operations 0 0 0 0 0
NET INCOME FOR THE PERIOD 2 3 13 8 26
Minority interest -2 -2 -2 -2 -8
NET INCOME FOR THE PERIOD - GROUP 0 1 11 6 18

GROUP FLEET AT 30 JUNE 2016

Aircraft type AF

(incl. HOP!) 		KL

(incl. KLC & Martinair) 		Transavia Owned Finance
lease 		Operating

lease 		Total In operation Change /  31/12/15
B747-400   20   18   2 20 20 -5
B777-300 43 12   9 25 21 55 55 5
B777-200 25 15   17 10 13 40 40  
B787-9   6     1 5 6 6 4
A380-800 10     1 4 5 10 10  
A340-300 12     5 5 2 12 11 -1
A330-300   5       5 5 5  
A330-200 15 8   4 7 12 23 23 -2
Total Long-Haul 105 66 0 54 52 65 171 170 1
B737-900   5   1 1 3 5 5  
B737-800   25 55 8 9 63 80 80 10
B737-700   18 8 3 8 15 26 26  
A321 20     5 6 9 20 20  
A320 44     6 3 35 44 44 1
A319 38     19 6 13 38 38  
A318 18     11 7   18 18 3
Total Short and Medium-Haul 120 48 63 53 40 138 231 231 14
ATR72-600 5         5 5 5  
ATR72-500 5     1 3 1 5 5 -1
ATR42-500 12     5 3 4 12 12 -1
Canadair Jet 1000 14     14     14 14  
Canadair Jet 700 13     13     13 11 -2
Canadair Jet 100 3     3     3    
Embraer 190 10 30   4 15 21 40 40  
Embraer 175   2   2     2 2 2
Embraer 170 16     8 2 6 16 14 -2
Embraer 145 18     13 5   18 16  
Embraer 135 4     4     4    
Fokker 70   16   16     16 14 -2
Total Regional 100 48 0 83 28 37 148 133 -6
B747-400ERF   3   3     3 3  
B747-400BCF   3       3 3 1  
B777-F 2     2     2 2  
MD-11-CF   1   1     1 1  
MD-11-F   1   1     1 1 -1
Total Cargo 2 8 0 7 0 3 10 8 -1
                   
Total Air France-KLM 327 170 63 197 120 243 560 542 8

 


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

[2] See definition in appendix

[3] Average Brent price of USD 45, average jet fuel market price of USD 422 per ton, average exchange rate of 1.11 USD per euro for period July-December 2016. 2017 average Brent price of USD 52, average jet fuel market price of USD 493 per ton, average exchange rate of 1.11 USD per euro.

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

First Half 2016 Results


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Source: AIR FRANCE - KLM via Globenewswire
HUG#2030841