Full Year and Fourth Quarter 2013 Results

Currencies had a marked negative impact of 100 million euros on the Group’s Full Year operating result, particularly in the second half of the year (86 million euros).

Full Year 2013 total revenues stood at 25,520 million euros versus 25,423 million euros in 2012, up 0.4%, and by 2.3% on a constant currency basis.

Operating costs declined by 1.4% and were flat on a constant currency basis. Ex-fuel, they rose fractionally by 0.1%, and by 0.8% on a constant currency basis. Unit cost per EASK² (Equivalent Available Seat Kilometer) was reduced by 3.8%, and by 2% on a constant currency, fuel price and pension expense basis, against capacity in EASK up by 1.6%.  The fuel bill amounted to 6,897 million euros, a decline of 5.2% reflecting a currency effect of -3.1%, a 1.8% decline in fuel price after hedging, and a 0.4% reduction in volumes. Employee costs were down 2.4% to 7,482 million euros, and by 2.2% on a constant currency basis. At constant pension expense and scope, and including temps, employee costs fell 218 million euros, in line with the target of a 200 million euro reduction over the full year.

EBITDA amounted to 1,855 million euros, up by 33%, implying an improvement of 461 million euros. The EBITDA margin stood at 7.3%, a 1.8 point improvement on 2012. The operating result for the full year was back in positive territory at 130 million euros versus -336 million euros in 2012, a 466 million euro improvement.

The net result, group share reflected a tax asset impairment of 937 million euros as well as the impact of discontinued operations (CityJet, whose disposal is underway) to the tune of -122 million euros over the full year, to stand at -1,827 million euros against -1,225 million euros a year ago.

The impairment of deferred tax assets relates to tax losses from previous fiscal years which were recognised in the balance sheet. It results from taking into account activity forecasts as they were communicated to the market in October 2013 as well as a reduced visibility on the conditions for applying prior year tax losses. Under current French tax law, deferred tax assets no longer recognised in the balance sheet nevertheless remain available, and the group maintains the right to apply them to future profits. This impairment will not involve any cash out, current or future, and has no impact on the group’s liquidity nor its solvency.

On an adjusted basis², the net result stood at -349 million euros against -696 million in 2012, a 347 million euro improvement.

Earnings and diluted earnings per share stood at -6.17 euros (-4.14 euros in 2012), and at -1.18 euros on an adjusted basis (-2.35 euros in 2012). The Board of Directors decided not to pay a dividend.

In the Fourth Quarter 2013, total revenues for the group stood at 6,123 million euros versus 6,258 million euros a year earlier, down 2.2%, but up 0.7% on a constant currency basis.

Operating costs declined by 3.5% and by 1.3% on a constant currency basis. Ex-fuel, they declined by 2.1% and by 0.9% on a constant currency basis. Unit cost per EASK (Equivalent Available Seat Kilometer) was reduced by 5.2%, and by 1.9% on a constant currency, fuel price and pension expense basis, against capacity in EASK up by 1.9%. The fuel bill amounted to 1,653 million euros, a decline of 7% reflecting a currency effect of -4.8%, a 3.3% decline in fuel price after hedging, and a 0.7% increase in volumes. Employee costs clearly reflected the impact of restructuring, declining by 5.7% to 1,790 million euros, and by 5.5% on a constant currency basis.

EBITDA gained 36% or 100 million euros to 381 million euros, implying a margin of 6.2%, up 1.7 points. The operating result amounted to -65 million euros compared with -152 million euros a year earlier, an improvement of 87 million euros. Elsewhere the group booked a provision of 82 million euros in non-recurring costs for the impairment of two full-freighter aircraft.

The net result, group share stood at -1,177 million euros versus -244 million euros a year earlier, including the impairment expense mentioned above and an impact of -80 million euros relating to discontinued operations (CityJet). Adjusted for these and other one-off items², the net result, group share was -112 million euros compared with -126 million euros in Q4 2012.

Earnings and diluted earnings per share stood at -3.98 euros (-0.83 euros in Q4 2012), and at -0.38 euros on an adjusted basis (-0.43 euros in Q4 2012).

Passenger business

For Full Year 2013, passenger revenues amounted to 20,112 million euros, up 0.7%, but up by 2.6% on a constant currency basis. The operating result of the passenger business stood at 174 million euros versus -260 million euros in 2012, an improvement of 434 million euros.

Total passenger traffic for the full year rose by 2.4% while capacity rose by 1.6%, leading to a 0.6 point improvement in load factor to 83.8%. Unit revenue per Available Seat Kilometer (RASK) declined by 1.0%, but rose 0.8% on a constant currency basis. Unit costs (CASK) were reduced by 3.3% and by 1.8% at constant currencies.

Long-haul represented 81% of the Group’s traffic and 79% of capacity. Long-haul traffic rose 2.5% for a 2.4% rise in capacity. The load factor was stable (+0.1 point) at 85.7%. Long-haul RASK rose by 0.6% on a constant currency basis, driven by economy RASK up 1.2%, while premium RASK was down 0.6%.

Medium-haul traffic rose by 1.7% while capacity was reduced by 1.2%, a clear indication of the positive effects of Transform 2015, leading to a 2.2 point improvement in load factor to 76.8%. Medium-haul RASK improved by 2.4% on a constant currency basis.

Fourth Quarter 2013 passenger revenues amounted to 4,845 million euros, down 0.9%, but up by 2.0% on a constant currency basis. The operating result of the passenger business stood at -61 million euros, versus -143 million euros in Q4 2012, an improvement of 82 million euros.

Total passenger traffic in the fourth quarter rose by 2.5% while capacity rose by 1.8% leading to a 0.5 point improvement in load factor to 82.5%. Unit revenue per Available Seat Kilometer (RASK) fell by 2.9%, but was almost stable (-0.1%) on a constant currency basis. Unit costs (CASK) were reduced by 4.5% and by 2.2% on a constant currency basis.

Long-haul traffic rose 2.5% for a 3.0% rise in capacity, leading to a 0.4 point decline in load factor to 84.2%. Long-haul RASK was down -0.8% on a constant currency basis, partly reflecting an unfavourable year-on-year comparison base.

Medium-haul traffic rose by 2.4% while capacity was reduced by 2.5% leading to a 3.5 point improvement in load factor to 76.0%. Medium-haul RASK improved by 3.4% on a constant currency basis.

Cargo Business

The cargo industry continued to experience weak global trade and industry overcapacity. In this context, Full Year 2013 revenues stood at 2,816 million euros, down 7.9% and by 5.7% on a constant currency basis. The operating result improved by 28 million euros, but remained negative at -202 million euros. 

The group reinforced its restructuring measures, with an 11.5% reduction in full freighter capacity versus 6% planned at the beginning of the year. In total though, capacity was reduced by only 2.7% due to a slight increase in belly space. Traffic declined more strongly, by 4.6% leading to a 1.3 point drop in load factor to 63.2%. Unit revenue per Available Ton Kilometer (RATK) declined by 6.3% and by 4.2% on a constant currency basis. Against this, unit cost (CATK) was reduced by 6.6% and by 4.9% on a constant currency basis but was insufficient to meaningfully reduce losses. Additional turnaround measures were announced in October 2013 which are in the process of being implemented.

Fourth Quarter 2013 cargo revenues amounted to 723 million euros, down 8.6% and by 5.4% on a constant currency basis. The operating result improved slightly from -27 million euros in Q4 2012 to-18 million euros. Traffic declined by 2.1% for a 0.9% decline in capacity, leading to a 0.9 point reduction in load factor to 66.3%). Unit revenue per Available Ton Kilometer (RATK) declined by 8.9% and by 5.8% on a constant currency basis. Unit cost per ATK was reduced by 9.8% and by 7.4% on a constant currency basis.

Maintenance

In Full Year 2013, maintenance realized third party revenues of 1,225 million euros, up 11.8% and by 15.1% at constant currencies, benefiting from a strong order book. The operating result stood at 159 million euros, up 19 million euros year-on-year, helped by the development of higher margin activities and Transform 2015 efficiency gains. The operating margin stood at 4.8% versus 4.5% a year earlier.

Fourth Quarter 2013 third party maintenance revenues were 298 million euros (316 million euros in Q4 2012), with an operating result of 48 million euros, up 12 million euros year-over-year.

Other business: Transavia

For the Full Year 2013, as planned in the framework of Transform 2015, Transavia capacity was significantly increased, up by 11.6%, of which 25.5% in France. Traffic was up by 13.5%, leading to a 1.5 point rise in load factor to 90.1%. In spite of this high growth, unit revenue was virtually stable at –0.2%. Transavia’s revenues stood at 984 million euros, up 10.7%. The operating result was -23 million euros (versus breakeven in 2012), impacted by the political unrest in some Mediterranean destinations and by the launch costs of certain routes.

In the Fourth Quarter 2013, traffic rose 12.9% for capacity up 11.0%, leading to a 1.5 point increase in load factor to 87.3%. Unit revenue was down 2.7%. Transavia’s revenue stood at 171 million euros, up 8.9%. The operating result was -35 million euros, down 11 million euros year-over-year.

Other business: Catering

In Full Year 2013, catering revenues stood at 915 million euros, of which 341 million euros with third parties, versus 355 million euros in 2012, down 3.9%, reflecting the deconsolidation of AirChef. At constant scope, third party revenues rose by 6.9%. The operating result improved from 7 million euros to 24 million euros thanks to the measures implemented within the framework of Transform 2015.

For Q4 2013, third party revenues amounted to 75 million euros, down 19% (93 million euros a year earlier). At constant scope, they were up 13.6%. The operating result was 5 million euros versus 2 million euros a year earlier.

Financial situation

The improvement in EBITDA translated into a 458 million increase in cash flow before change in WCR and Voluntary Departure Plan cash-out.

Net investments before sales & lease-back were down 466 million euros to 1,064 million euros, reflecting a strict control of investments and low capacity growth. Net investments after sale & lease-back transactions slightly increased to 941 million euros. In combination with a good performance on working capital requirement, it resulted in an operating free cash flow amounting to 538 million euros, versus -47 million euros in 2012, leading to a significant reduction in net debt from 5.97 billion euros at 31^st December 2012 to 5.35 billion euros at 31^st December 2013. The financial cover ratios therefore improved considerably, with EBITDA / net interest costs up from 4.0x a year ago to 4.6x. Net debt / EBITDA was reduced from 4.3x to 2.9x.

At 31^st December 2013, shareholders’ funds amounted to 2.29 billion euros, down 1.35 billion euros year-over-year.

The group continues to enjoy a good level of liquidity, with cash of 4.2 billion euros at December 31^st 2013, and undrawn credit lines of 1.8 billion euros. This compares with short term debt of 1.9 billion euros. The shareholding in Amadeus is valued in the region of 900 million euros.

Outlook

The operating environment at the beginning of 2014 remains uncertain in many respects, notably the timing and strength of the economic recovery in the different regions in which we operate, volatile currencies and fuel prices, and industry capacity. Against this backdrop, the initial measures of Transform 2015 are now fully delivering, while the additional measures will start to take effect as of H2 this year. Under these conditions, we continue to target EBITDA in the region of 2.5 billion euros, subject to there being no reversal in current operating trends. We aim to continue to reduce net debt, in line with our objective of 4.5 billion euros during 2015.

• On the Americas network, traffic rose by 6.5% for capacity up by 6.3%. The load factor was stable (+0.1 points)at 87.5%, Capacity growth was driven by the Latin American network (+9.6%), with slower growth in North America (+4.3%).
• The Asia network posted a 0.7% decline in traffic for stable capacity (+0.0%); the load factor declined by 0.6 points to 83.4%.
• On the Africa and Middle East network, traffic was up by 2.8% for a 3.4% increase in capacity; the load factor stood at 81.9%, down 0.5 points. 
• The Caribbean and Indian Ocean network saw traffic increase by 1.8% for capacity up by 1.0%; the load factor rose by 0.7 points to 83.7%.
• The restructuring of the European network led to a 3.8% increase in traffic. With a 2.2% reduction in capacity, the load factor was up by 4.3 points to 74.5%.

Cargo
Cargo saw a 3.7% decline in traffic for capacity down by 1.5%, leading to a 1.5 point decline in load factor to 65.3%. Unit revenue per available ton kilometer (RATK) ex-currency was lower than in December 2012.

Recent developments

• Air France-KLM continues to refocus its medium-haul activity around its hubs. In December the group received a firm offer to purchase CityJet. The transaction is expected to close in the first quarter of 2014.
• In November, Air France-KLM was named as  ‘Climate Performance Leader 2013’ by the Carbon Disclosure Project (CDP), a survey conducted on behalf of over 700 institutional investors, thereby joining the group of nine French recipients recognized within the top 250 French stock market capitalizations.

(*) In 2012: from 27th October to 12th November; in 2013: from 9th October to 4th November

• On the Americas network, traffic rose by 2.2% for capacity up by 5.3%. At 83.4%, the load factor was 2.5 points lower than the high level reached last year (86.0%). Capacity growth remains driven by the development of the Latin American network (+7.7%), the growth to/from North America being less strong (+3.8%).
• The Asia network posted a 1.5% decline in traffic for stable capacity (-0.1%), the load factor falling by 1.1 points to 81.7%.
• On the Africa and Middle East network, traffic was up by 2.0% for a 5.5% increase in capacity, the load factor standing at 75.6%, down by 2.5 points.  
• The Caribbean and Indian Ocean network remained dynamic: traffic was up by 3.7% for capacity up by 2.4%, the load factor increasing by 1.2 points to 87.4%.
• On the European network, traffic declined by 0.6% while capacity was down by 2.8%. The load factor rose by 1.6 points to 73.9%.

Cargo
Cargo posted a modest 0.4% increase in traffic for virtually stable capacity (-0.3%), leading to a 0.5 point rise in load factor to 68.7%. Unit revenue per available ton kilometer (RATK) ex-currency decreased compared with November 2012.

Recent developments
Air France-KLM continues its development in rapidly-growing markets.

• Since 25th November, Air France flies to Panama City in addition to the daily KLM service.  A leader in Central and South America and the Caribbean in terms of the number of seats offered, the Group serves 25 destinations in this region and offers over 200 weekly flights departing from Paris-Charles de Gaulle and Amsterdam-Schiphol.
• The Group has extended its partnership agreement with Kenya Airways. Starting from 1st January 2014, the joint-venture will cover six routes between Europe and East Africa: Amsterdam-Nairobi, Paris-Nairobi, London-Nairobi, Amsterdam-Entebbe/Kigali, Amsterdam-Lusaka/Harare, Amsterdam-Kilimandjaro/Dar-es-Salaam.
• For the International Forum for investments in the Ivory Coast, Air France will operate a special flight to Abidjan by Airbus A380 on 28th January 2014. For the 2014 Winter season, the airline wishes to service Abidjan by A380 on a regular basis.

• On the Americas network, traffic rose by 2.4% for capacity up by 2.9%. The load factor was slightly lower (-0.4 points) at 88.4%. Capacity growth was driven by the development of the Latin American network (+7.4%), with capacity growth to North America remaining low (+0.7%).
• The Asia network posted a 4.5% increase in traffic for capacity up by 3.7%, the load factor gaining 0.7 points to 85.9%.
• On the Africa and Middle East network, traffic was down by 1.0% for stable capacity (-0.2%), the load factor standing at 79.2%, down by 0.6 points.   
• The Caribbean and Indian Ocean network was dynamic: traffic was up by 7.7% for capacity up 3.5%, the load factor increasing by 3.3 points to 84.0%.
• On the European network, traffic increased by 1.4% while capacity was down by 3.9%. The load factor rose by 4 points, reaching the high level of 78.2%.

Cargo
Cargo recorded a 3.3% drop in traffic for capacity down by 1.2%, leading to a 1.5 point decline in load factor to 65.1%. Unit revenue per available ton kilometer (RATK) ex-currency decreased compared with October 2012.

Recent developments
Air France-KLM continued its development in rapidly-growing long-haul markets.

• In Brazil, the fifth weekly KLM flight between Amsterdam and Rio de Janeiro, launched in April 2013, was prolonged to the Winter 2013-2014 season. Furthermore, starting from 31st March 2014, Air France will serve Brasilia with three weekly frequencies on departure from Paris-Charles de Gaulle.
• In February 2014, KLM will launch its service to Santiago de Chile (Chile), in addition to the daily Air France flight.
• In Indonesia, as of 30th March 2014, Air France will operate a new daily service to Jakarta, with a stop over in Singapore, on departure from Paris-Charles de Gaulle. This new service will supplement the KLM offer with a daily flight to Jakarta on departure from Amsterdam-Schiphol.

1. The results presentation is available on www.airfranceklm-finance.com on 31^st October 2013 from 7.15h CET
2. For the complete review, please find on the righthand side on this page the PDF document.

• On the Americas network, traffic rose 1.4% for capacity up by 1.6%. The load factor was stable at 90.9%(-0.1 point). 
• The Asia network posted a 1.8% increase in traffic for capacity up by 3.4%, the load factor declining by 1.4 points to 86.9%.
• On the Africa and Middle East network, traffic was virtually stable (-0.2%); with capacity up by 1.2%, the load factor stood at 82.4% (-1.2 points).   
• The Caribbean and Indian Ocean network saw a 0.8% decrease in traffic for capacity down by 3.4%. The load factor increased by 2.1 points to 79.1%.
• On the European network, traffic declined by less than capacity (-0.7% and -2.1% respectively), enabling a 1.1 point improvement in load factor to 78.6%.  

Cargo
Cargo recorded a 4.1% drop in traffic for capacity down by 2.0%, leading to a 1.4 point decline in load factor to 62.4%. Unit revenue per available tonne kilometer (RATK) ex-currency decreased compared with September 2012.

Recent developments

• For the ninth consecutive year, Air France-KLM was ranked leader of the "Airlines" industry by the Dow Jones Sustainability index (DJSI), the main international index evaluating companies on their sustainable development performance. Moreover, for the fifth year running, Air France-KLM was ranked leader of the broader "Transport" category covering air, rail, sea and road transport as well as airport activities. Air France-KLM is thus positioned amongst the 24 most sustainable companies globally, each in their relevant sectors of activity. 
• On 24th September, Air France unveiled its new Economy and Premium Economy offer, within the framework of its “Best & Beyond” project and the strategy to move up market. In Economy, there is a new fully-revised seat with more legroom and an enhanced level of comfort. New wider High Definition screens will also soon be available to everyone. The first flight equipped with these new cabins will be operated in the summer of 2014.  
• As of 2nd February 2014, KLM will offer a scheduled service bound for Santiago in Chile, with a stop over in Buenos Aires. 
• Having been created on 7th October 1933, Air France today celebrates its 80th anniversary.

In August 2013, passenger traffic rose by 4.9% for capacity up by 2.3%. The load factor stood at 87.9%, up by 2.2 points. The group carried 7.15 million passengers (+3.0%). Unit revenue per available seat kilometre (RASK) ex-currency was up relative to August 2012.

• On the Americas network, traffic rose 5.3% for capacity up by 3.3%, leading to a 1.7 point increase in load factor to 90.6%.
• The Asia network was dynamic with a 7.6% rise in traffic for capacity up by 5.8%, the load factor gaining 1.4 points to 90.4%.
• On the Africa and Middle East network, traffic increased by 6.3% for capacity up by 2.1%, the load factor gaining 3.5 points to 88.3%.
• The Caribbean and Indian Ocean network saw a 1.6% increase in traffic for virtually stable capacity
• (-0.2%). The load factor increased by 1.5 points to 85.8%.
• On the European network, traffic increased by 2.1% for capacity down 1.6%, enabling a 2.9 point improvement in load factor to 81.7%.  

Cargo

Cargo recorded a 1.3% drop in traffic for capacity up by 0.9%, leading to a 1.3 point decline in load factor to 59.3%. Unit revenue per available tonne kilometre (RATK) ex-currency decreased compared with August 2012.

• On the Americas network, traffic rose 2.4% for capacity up by 1.6% leading to a 0.7 point rise in load factor to the record level of 91.3%
• The Asia network recorded a 4.6% rise in traffic and capacity, the load factor gaining 0.1 points to 89.4%.
• On the Africa and Middle East network, traffic increased by 1.3% for capacity up by 3.1%. The load factor declined by 1.5 points to 83.6%.
• The Caribbean and Indian Ocean network saw a 2.5% fall in traffic in line with the 2.3% reduction in capacity. The load factor was virtually unchanged (-0.2 points) at 85.2%.
• Traffic on the European network was stable (+0.1%) for capacity down 1.8%, leading to a 1.6 point improvement in load factor to 82.0%.

Cargo
Cargo recorded a 5.8% drop in traffic for capacity down 2.9%, the load factor declining by 1.8 points to 59.7%. Unit revenue per available tonne kilometre (RATK) ex-currency decreased compared with July 2012.

• On the Americas network, traffic rose 2.4% for capacity up by 1.9%  leading to a 0.5 point rise in load factor to the record level of 90.8%. 
• The Asia network recorded a 3.1% rise in traffic with a 4.8% increase in capacity.  The load factor declined by 1.4 points to 85.6%.
• On the Africa and Middle East network traffic rose in line with capacity (3.1% and 3.0% respectively). The load factor was stable at 80.9% (+0.1 points). 
• The Caribbean and Indian Ocean network was dynamic with a 4.8% rise in traffic for capacity up by 1.1%. The load factor gained 2.8 points to 79.1%.
• Traffic on the European network was up 0.9% for capacity down 3.8%, leading to a 3.8 point improvement in load factor to 80.8%. The reduction in capacity was mainly linked to the French domestic network (-9.7% after the impact of the air control strike).

Cargo

Cargo recorded a 6.3% drop in traffic for capacity down 4.3%. The load factor declined by 1.3 points, to 62.4%. Unit revenue per available tonne kiolmetre (RATK) ex-currency decreased compared with June 2012.

Recent developments

• Air France-KLM finalised a firm order for 25 Airbus A350-900s including 25 options on 19th June at the Le Bourget Airshow.
• Air France-KLM and Jet Airways, India’s leading international carrier, signed a code share agreement giving their respective customers a wider choice of destinations between Europe and India, as well as a greater number of connecting destinations in India.
• For the forthcoming Winter season, Air France and KLM will offer 10 flights per week to Panama and 200 flights to 25 destinations in Central and South America and the Caribbean.
• Air France unveiled the first features of the upscaling of its products and services. Named ‘Best & Beyond’, the project includes an investment of over 500 million euros in new products. In September 2013, Air France will present its new Economy seat and its new in-flight entertainment interface. In January 2014, the company will present its new Business seat. In April 2014 the full project will be unveiled around the new ‘La Première’ cabin.

In a persistently tough economic environment, the group pursued its cost and debt reduction measures in this traditionally difficult quarter.

Activity
The passenger activity recorded a 0.8% rise in traffic for virtually stable capacity (+0.2%). The load factor gained 0.5 points to 82.1%. Unit revenue per available seat kilometre (RASK) rose by 1.2% (+1.3% ex-currency). Passenger revenues were up 1.4% to 4.49 billion euros. The operating result stood at -447 million euros (-515 million euros a year earlier).

The cargo activity, which continued to be affected by the economic slowdown and the situation of overcapacity in the industry, reduced capacity by 4.1%. With traffic down 6.9%, the load factor declined by 1.9 points to 63.0%. Unit revenue per available tonne kilometre (RATK) fell by 1.9%, and by 1.0% ex-currency. Cargo revenues amounted to 700 million euros (-5.9%). However, thanks to the Transform 2015 measures, the cargo loss was reduced to 50 million euros (70 million euros a year earlier).

Third party maintenance revenues stood at 302 million euros (+17.1%). The operating result amounted to 20 million euros (15 million euros at 31st March 2012). This improvement was mainly due to component maintenance. 

The other businesses generated revenues of 229 million euros, of which 134 million euros for the leisure business (+14.5%). The operating result stood at -53 million euros (-41 million euros at 31st March 2012).

Total revenues amounted to 5.72 billion euros, up 1.3% after a negative currency effect limited to 0.2%. Unit revenue measured in equivalent available seat kilometre (EASK) rose 0.5% (+0.7% at constant currency).

Reduction in unit costs
Unit costs measured in EASK were down 1.0% and 1.7% on a constant currency and fuel price basis for virtually stable production in EASK (+0.2%). 

Operating costs were stable (-0.1%) with the main changes as follows: 

• Despite a rise in the fuel price after hedging of 4%, the fuel bill was slightly down (-14 million euros to 1.67 billion euros) on the back of a 3% decline in volumes. 
• Employee costs fell 1.7% to 1.89 billion euros mainly reflecting the reduction in headcount (-41 million euros), a 13 million euro rise in non cash pension costs, a consolidation effect linked to the integration of Airlinair of 9 million euros and the French competitiveness tax credit (CICE, -10 million euros).
• Maintenance purchases increased by 12.0% to 309 million euros on the back of the increase in third party maintenance.

The operating result stood at -530 million euros, an improvement of 81 million euros on previous year. The adjusted operating result was -451 million euros (-535 million euros at 31st March 2012). 

Net interest charges amounted to 97 million euros (82 million euros at 31st March 2012). ‘Other financial income and costs’ stood at 51 million euros versus 276 million euros a year earlier. This decrease was mainly due to lower foreign exchange gains (down 50 million euros) and the change in the fair value of hedging instruments, which stood at 43 million euros at 31st March 2013 versus 220 million euros at 31st March 2012, reflecting the  decline in the oil price at the end of the period.

The net result, group share, stood at -630 million euros (-379 million euros at 31st March 2012). Earnings and diluted earnings per share stood at -2.13 euros (-1.28 euros at 31st March 2012).

Reduction in net debt
Investments amounted to 282 million euros with disposals at 108 million euros (416 million euros and 25 million euros respectively at 31st March 2012). Operating free cash-flow stood at 38 million euros in a traditionally negative quarter. At 31st March 2013, Air France-KLM had cash of 4.3 billion euros of which 547 million euros generated by the convertible bond issue. Elsewhere, the group has credit lines of 1.85 billion euros. 

As already indicated, the application of revised norm IAS19 on pension, and in particular the suppression of the corridor at 1st January 2013, led to a negative adjustment of shareholders’ funds of 1.33 billion euros at 31st December 2012. At 31st March 2013, shareholders’ funds reflected a positive trend in the return on plan assets and a revaluation of the discount rate amounting to 347 million euros, as well as various positive adjustments for 200 million euros. As a result, shareholders’ funds were stable (3.59 billion euros versus 3.64 billion euros at 31st December 2012). Net debt amounted to 5.90 billion euros (5.97 billion euros at 31st December 2012). The financial cover ratios were stable or slightly improved over the 12 months at 31st March 2013.

Outlook
In a difficult and uncertain environment, the group continues the implementation of Transform 2015 which remains on track.  It confirms its objectives for 2013, of a reduction in unit cost on a constant currency and fuel price basis, and a reduction of net debt.

Additional information
The accounts for the quarter January to March 2013 are not audited.
The results presentation will be available on www.aifranceklm-finance.com on May 3rd as of 07h15 CET.

Practical information

• A audio-web conference will be organized for press on Friday 4th May 2013 at 10:00 am (Paris/Amstelveen time), only in English.
• Any journalists who wish to listen in to the conference without asking questions are welcome

To connect

• dial  from France: 01 70 99 32 08 
• from others countries: + 44 (0)20 7162 00 25 password: AKH  
• To follow the presentation, go to: http://airfranceklm.viewontv.com/webcast/ 
• To listen to the recording, dial +33 (0)1 70 99 35 29 (code: 895689)

>> On the righthandside you wil find the complete overview (PDF) <<

Passenger
Passenger activity in March 2013 recorded a rise in traffic of 2.2% for virtually stable capacity (+0.2%). The load factor stood at 84.2% (+1.7 points). The group carried 6.45 million passengers, 1.3% more than in March 2012. Unit revenue per available seat kilometer (RASK) ex-currency was slightly higher than in 2012.

• On the Americas network, traffic rose by 0.5% for capacity down by 0.6%, leading to a 1.0 point rise in load factor which reached the very high level of 89.1%. 
• The Asia network recorded a rise of 5.1% in traffic with capacity up by 4.9%. The load factor gained 0.2 points to 86.9%.
• On the Africa and Middle East network, traffic was up by 3.2% with capacity rising by 1.3%. The load factor gained 1.5 points to 80.3%. 
• The Caribbean and Indian Ocean network recorded a 1.0% rise in traffic for capacity down by 2.8%. The load factor gained 3.3 points to 87.5%.
• The European network saw traffic up by 1.8% with a 2.5% reduction in capacity. The load factor stood at 75.1%, a rise of 3.2 points. Further to the launch of ‘Hop!’ regrouping Air France’s French regional activity, March traffic includes the activity of Airlinair for the whole of the first quarter. On a comparable basis, the European network would have recorded a 1.0% rise in traffic for capacity down by 3.6%. The load factor would have stood at 75.6%, up 3.5 points.

Cargo
In March 2013, the cargo activity recorded a 12.1% decline in traffic for capacity down by 6.6%. The load factor declined by 4.1 points to 65.1%. In additition to lacklustre international trade this activity was disrupted by the snowy conditions as well as industrial action in Paris. Unit revenue per available ton kilometer (RATK) ex-currency was lower than in March 2012.

Recent developments

• KLM unveiled its new Word Business Class including a “full-flat” seat, fully reclinable and transformed into a real bed during the flight. This cabin will be progressively installed on the KLM long-haul fleet as of July 2013. The group thereby pursues its investments aimed at matching the expectations of its customers and offering them an exceptional and continually improving level of service on board.
• The group continues to develop its network, with notably, as of the Summer season, the launch by KLM of three new routes from Amsterdam to Fukuoka (Japan), Ålesund (Norway) and Manston (Kent, United Kingdom), and by Air France of routes from Paris to Minneapolis (United States), Montevideo (Uruguay) and Kuala-Lumpur (Malaysia).
• Air France and Canada’s WestJet have signed a code share agreement enabling Air France to offer its customers 15 new Canadian routes operated by WestJet.

Agenda

• May 3rd 2013: First Quarter 2013 Results
• May 14th 2013:  April 2013 Traffic
• May 16th 2013: Annual General meeting at the Carrousel du Louvre in Paris.  All documents relating to the Meeting are now available on the ‘Annual General Meeting’ page of the www.airfranceklm-finance.com website.

Passenger business
February 2013 saw stable traffic and capacity, as well as load factor at 80.4%. The group flew 5.34 million passengers the same number as in in February 2012. Unit revenues per available seat kilometre (RASK) ex-currency increased compared with February 2012.

• On the Americas network traffic declined by 1.8% while capacity was reduced by 0.9%, leading to a 0.8 point drop in load factor to 83.8%. 
• The Asia network recorded a rise of 4.4% in traffic for capacity up by 3.2%. The load factor gained one point to 85.4%.
• On the Africa and Middle East network, traffic declined by 2.3% with capacity reduced by 2.7%. The load factor gained 0.3 points to 77.5%. 
• The Caribbean and Indian Ocean network recorded a 4.7% drop in traffic, in line with the 4.8% drop in capacity. The load factor gained 0.2 points to 87.4%.
• The European network, which was most affected by industrial action in February 2012, recorded a 2.0% increase in traffic for capacity up by 2.7%. The load factor stood at 68.6%, down 0.5 points.

Cargo business
In the context of Chinese New Year, cargo recorded a 4.3% decline in traffic, in line with a 4.2% reduction in capacity. The load factor was stable at 63.6%. Unit revenue per available tonne kilometre (RATK) ex-currency increased compared with February 2012.

Recent developments

• Air France-KLM announced its Summer 2013 program. Capacity growth will be limited to 1.5% of which +2.4% on long-haul and -2.1% on medium-haul.  Long haul development will be focused on the most dynamic markets of Africa, Asia and Latin America. The medium-haul program reflects the planned changes under ‘Transform 2015’: 6% reduction in point-to-point, densification of rotations, reduction in turn-around times, and addition of seats on the B737s.
• On 20th February 2013, Air France and three unions representing the cabin crew signed a statement of agreements, enabling the drafting of a new collective agreement facilitating the necessary productivity gains in the framework of Transform 2015. Between now and March 14, these three unions will consult their members on the content of this agreement.

Once KLM phases out three of its MD-11s, they will be replaced by two Boeing 777-300s and one Airbus 330.
Clear results of Transform 2015 can be seen inside Europe. More seats per aircraft can be deployed in the Boeing 737s. KLM has also achieved greater efficiency by shortening turn-around times at Schiphol Airport.
KLM has chosen three new destinations for this summer: Fukuoka, Japan; Ålesund, Norway; and Manston, Kent in the United Kingdom. The flights to Teheran, Addis Ababa and Khartoum are being suspended due to disappointing commercial results.

Europe
The new destination of Manston offers travellers an attractive tourist destination as well as a hassle-free airport in the proximity of London.  Ålesund has a fast-growing market, including the offshore industry. It is also an interesting tourist destination. Frequencies to Basel, Linköping, Lyon, Norwich, Prague, and Budapest will increase.

North America
Together with Delta Air Lines, partner in its transatlantic joint venture, KLM is strengthening its market position between North America and Europe. KLM will start flying larger aircraft to Calgary, replacing its MD-11 to Atlanta with the newer Airbus 330-300. Delta plans to increase its capacity to Amsterdam by more than 10%. In addition to flights each day to Atlanta and Detroit, customers can fly to New York JFK four times daily in the new schedule. Delta will fly to Atlanta three times a day and KLM one more time. KLM and Delta will each fly to New York twice a day. Only Delta will fly to Detroit.

What is more, during the summer of 2013, KLM will increase its frequencies to Los Angeles and Washington. From 13 May, seasonal operations to Dallas-Fort Worth will resume.

Central and South America
In the Caribbean region and South America, the Airbus 330-300 and Boeing 777 will also replace the MD-11. In the winter of 2012/13, KLM already started using these more fuel-efficient aircraft. The frequency to Rio de Janeiro will increase from four to five time a week and the growth to Panama, which started this winter, will continue with a daily flight through the summer. To absorb the summer peak business, KLM is adding a “circle flight” from Amsterdam to Curaçao and Bonaire.

Africa
This year, KLM introduced Lusaka (Zambia), Luanda (Angola) and Harare (Zimbabwe) to its destinations. Harare will be part of a circle flight between Amsterdam and Lusaka, Zambia.

The collaboration with Kenya Airways continues to be of great importance to KLM’s position in Africa. The twice-daily Kenya Airways/KLM service to Nairobi offers an ever-greater number of destinations in Kenya and surrounding countries in East Africa. KLM’s direct flights to Addis Ababa and Khartoum will stop. However, partner Kenya Airways will offer flights there via Nairobi.

Asia and the Middle East
On 3 April, KLM will initiate regular scheduled service to Fukuoka, Japan. This makes KLM the first airline to fly directly between Fukuoka and Europe. Fukuoka is KLM’s third Japanese destination after Tokyo and Osaka. KLM will increase its frequency to Tokyo from ten flights to eleven. With the start of the new route to Fukuoka, KLM will offer a total of 21 flights to Japan this summer. In so doing, KLM will rise to growing demand from Japan.

Teheran will be discontinued as a destination in the new schedule. In contrast, the number of flights to Almaty will increase this summer.

As part of KLM’s collaboration with Etihad Airways, there will be more flights to Abu Dhabi/Bahrain. From mid-May, Etihad will fly from its home base in Abu Dhabi to Schiphol under its own flag as well as that of KLM. Since last autumn, KLM has been offering five of Etihad’s destinations in Australia and Central Asia. It will add another thirteen in May.

The capacity on Asian routes will increase further with the help of new aircraft. B777-300s will operate more often on these routes.

New Interior in World Business Class
On 19 March, KLM will introduce its new cabin interior in World Business Class. KLM has brought in leading Dutch designer Hella Jongerius for the job. KLM will be changing all of WBC in the height of Dutch design, thereby combining Dutch roots with international allure. Besides revamping the interior design, Ms Jongerius will give an all-new look to the full-flat seat.

Fleet Development: CSR
As the new schedule becomes effective, KLM will extend its fleet with new and more fuel-efficient aircraft. In April, KLM will put an A330-300 into operation. A month later, a B737 will follow.

• On the Americas network traffic and capacity declined by 0.7% and 1.2% respectively. The load factor stood at 87.4% (+0.5 points) underpinned by Latin America.
• The Asia network was dynamic with a 5.0% rise in traffic. Capacity was up 6.9%, giving a load factor of 83.8%, down 1.5 points.
• The Africa and Middle East network recorded a 1.5% increase in traffic for capacity up by 1.8%. The load factor was virtually stable at 80.2% (-0.2 points).
• On the Caribbean and Indian Ocean network capacity was down 4.1% and traffic by 2.8%. The load factor gained 1.2 points to 86.7%.
• The European network was the most affected by the weather conditions. As a result capacity was down 2.4% while traffic declined 4.3%. The load factor fell 1.3 points to 67.0%.

Cargo business
In January 2013, traffic and capacity were down by 2.9% and 1.3%. The load factor declined by 1.0 point to 60.4%. Unit revenue per available tonne kilometre (RATK) ex-currency was slightly down compared with January 2012.

Recent developments

• Air France is pursuing the restructuring of its short- and medium-haul network within the framework of the ‘Transform 2015’ plan. The company launched a new fares offer to 58 destinations within its medium-haul network. On 28 January Air France also launched its new company, Hop! Regrouping its regional subsidiaries, Brit Air, Airlinair and Regional. As of 31 March, Hop! will operate 530 daily fights to 136 destinations in France and Europe.
• KLM is the partner and official transport provider for ‘Amsterdam 2013’, an event celebrating the anniversary of many of the city’s institutions.

With more than 200 aircraft, 171 destinations and 240,000 aircraft movements, KLM’s network connects Amsterdam to all of the world’s important economic regions. This makes it an important driver for the Dutch economy. On 7 October 1919, the Royal Aviation Company for the Netherlands and its Colonies (Koninklijke Luchtvaart Maatschappij voor Nederland en Koloniën) — also known as KLM — was founded. That means KLM has been around for ninety-four years. It makes KLM the world’s oldest airline still operating under its original name.

Apart from these new destinations, KLM will focus on adjusting capacity to seasonal fluctuations in demand and on strengthening and, where possible, expanding its cooperation with partners.

Europe – Expansion in North-Western Europe
KLM will continue to focus on North-Western Europe, as it did this summer, increasing the number of daily flights to Luxembourg, to Kristiansand and Stavanger in Norway, and Nuremberg in Germany. Furthermore, KLM took over the Lyon-Amsterdam route from Air France in September 2012, while Air France took over the Marseille-Amsterdam route from KLM.

In Eastern Europe, KLM will pursue its successful Joint Venture with Ukraine International, initiated this summer, raising frequency to Kiev from one to two daily flights this winter.

KLM will increase frequency between Amsterdam and Prague from three to four daily flights.

North America – Consolidation With Partners
Together with Delta Air Lines, partner in the Transatlantic Joint Venture, KLM will consolidate its position in the transatlantic market. Owing to fluctuating seasonal demand and soaring fuel prices, KLM will not serve Miami this winter. In addition, service to Dallas-Fort Worth will be suspended until the summer, as was the case last winter.

Capacity between Amsterdam and Atlanta, Delta Air Lines’ largest hub, will increase substantially this winter, with frequency rising from 14 to 19 weekly flights, operated by KLM and Delta. Service to Delta’s other hubs will also be maintained to ensure maximum connectivity with the US market. Minneapolis will be served twice daily, and Detroit thrice daily. Together, KLM and Delta will offer customers a total of 26 flights per week between Amsterdam and New York, with three daily flights to John F. Kennedy Airport and five weekly flights to Newark.

In Western Canada/Alberta, capacity to Calgary will be increased from four to five flights a week. Together with partner WestJet, KLM will gain further access to the entire Canadian market, adding its code to 10 new destinations here, bringing the total from 15 to 25 cities.

Central and South America – Deploying a More Efficient Fleet
On various routes to Central and South America, the MD-11 will be replaced with more fuel-efficient aircraft. The daily service between Amsterdam and Panama will, from the start of the winter schedule, be operated with a Boeing 777 instead of an MD-11.

On flights to and from the Dutch Caribbean, the Airbus A330 will for the first time replace the MD-11, operating alongside the Boeing 747. KLM will operate 13 roundtrips a week to this region, with extra flights before and after the Christmas holidays.

KLM will operate direct, service to Havana this winter three times a week, as was the case this summer.
In South America, KLM will replace its MD-11 with a Boeing 747 on flights between Amsterdam and Paramaribo. In addition to the usual three weekly frequencies, KLM will operate a fourth weekly flight in December and January to meet higher seasonal demand.

The flight frequency to Ecuador will be further increased to five a week, up from three last winter.
The number of weekly frequencies to Rio de Janeiro will be increased to four. In cooperation with Brazilian partner Gol, KLM will offer service to numerous Brazilian and South American destinations via Rio de Janeiro.
Capacity to Lima will be increased by deploying a Boeing 777-300 three times per week – KLM’s largest aircraft type, with 425 seats – on the daily service to the Peruvian capital.

Africa – Balanced Growth With More Destinations
KLM’s African network has grown substantially in the past year. In addition to the new destinations Luanda and Lusaka, KLM will launch service to Harare this winter, serving the Zimbabwean capital thrice weekly, in combination with the Zambian capital, Lusaka.

Frequency to other destinations will be adjusted in accordance with fluctuating seasonal demand. One less flight will be operated on the Entebbe-Kigali route this winter, while two extra weekly flights, departing in the afternoon, will be operated to Kilimanjaro, in addition to the daily flights to this destination, which is served in combination with Dar es Salaam.

Depending on market demand, frequency to Cairo will be increased gradually. This winter, KLM will operate four weekly B777-200 flights to the Egyptian capital.

Cooperation with Kenya Airways remains of great importance to KLM’s position in Africa. The twice-daily Kenya Airways/KLM service to Nairobi is an important feeder maintaining the network of secondary destinations in Kenya and East Africa.

KLM will operate daily service to Cape Town as it did last winter.

Middle East – Pursue Existing Strategy
Last summer, KLM made extensive network changes in the Middle East. Frequency to Dammam and Doha was increased from five to six flights a week, while frequency to Dubai was reduced to daily service. KLM will pursue its existing strategy in the region this winter. To meet the relatively high demand in winter, however, frequency to Dubai will be increased from seven to ten weekly flights from December through March.

The structure of the circle service to Abu Dhabi and Bahrein will be altered. As of this winter, KLM will operate direct service between Amsterdam and Abu Dhabi five times a week, with a tail-end leg between Abu Dhabi and Bahrein.

Asia – Capacity Adjusted to Seasonal Demand
This winter, KLM will adjust its Asian network in accordance with seasonal and regional fluctuations in demand.
Frequency to Shanghai will be reduced from 12 to 10 weekly flights. Frequency to Tokyo will also be gradually reduced to seven weekly frequencies in mid-winter, returning to nine in March.

KLM’s partner China Southern Airlines will, in close cooperation with KLM, increase frequency between Amsterdam and Guangzhou to a daily service this winter.

In Southeast Asia, KLM will increase capacity by operating thrice weekly direct service to Kuala Lumpur in the early afternoon, supplementing the daily flights to Kuala Lumpur and Jakarta that depart in the evening. That means the Malaysian capital will be served 10 times a week this winter.

The new service schedule for Bangkok and Taipei/Manila, introduced this summer, will be continued this winter. That means both Bangkok and Taipei will be served directly every day, while Manila will be served daily via Taipei.
KLM will increase its flight frequency to Denpasar (Bali) to daily, with an intermediate stop in Singapore.

Fleet
KLM will continue to invest in cleaner, more efficient aircraft to assure customers of optimum service. The medium-range fleet will be adjusted by phasing out the last three Fokker 100s at the start of the winter season. The long-range fleet will welcome a new Boeing 777-300 and the phase-out of the MD-11 will continue.
For further information, please contact KLM Media Relations at +31 (0)20 649 4545.

*expressed in ASK

The twelve photos awarded the most votes will soon be decorating the twelve months in the KLM Fan Calendar.

The KLM Fan Calendar will be available for sale at the KLM webshop

This will enable customers to stay connected with the world through text messages or emails as well as internet connection and ultimately through live broadcasts of TV programmes. Thanks to this new technology, Air France and KLM will offer passengers access to a broad scope of data communications during the flight. On the specially designed in-flight website, a broad range of services will be offered for free, like latest news, TV channels relevant airline and destination information and a unique offer of online magazines.

The trial phase will be conducted over the year 2013 on two Boeing 777-300s, operated by each airline. During this period, travellers will be able to hook up to the internet via their Wi-Fi enabled smartphone, laptop or tablet PC at a fixed rate, as well as use their mobile phone for sms or e-mail, whatever their travel class. We will ask our customers to provide feedback, along with their expectations and suggestions on improving these new services to be used as input for further future deployment.