3rd November 2016
Financial Year 2016: Third Quarter results
THIRD QUARTER
- Revenues of 6.94 billion euros, down 5.1% and down 4.1% like-for-like[1]
- EBITDA of 1,149 million euros, a decrease of 174 million euros and down 84 million euros like-for-like
- Continuous decrease in ex-fuel unit costs at constant currency and pension costs, down reported 0.2%, 1.0% excluding strike
- Fuel bill savings during the quarter more than offset by downward pressure on unit revenue and negative currency impact
- Operating result of 737 million euros, down 143 million euros and down 49 million euros like-for-like
- Impact of Air France cabin crew strike on the operating result estimated at 90 millions euros
FIRST NINE MONTHS OF 2016
- Revenues of 18.76 billion euros, a decrease of 3.5%, down 3.1% like-for-like
- EBITDAR of 2,941 million euros, an increase of 324 million euros, up 526 million euros like-for-like
- Impact of Air France cockpit and cabin crew strikes estimated at 130 million euros on the operating result
- Net debt reduction: net debt[2] of 4.16 billion euros, down 144 million euros compared to 31 December 2015
- Adjusted net debt / EBITDAR2 ratio of 3.1x, an improvement of 0.3 points compared to 31 December 2015
FULL YEAR 2016 OUTLOOK
- High level of geopolitical and economic uncertainties, increasing pressure on unit revenues and continuing concern about France as a destination
- Impact of fuel savings on P&L expected to be more than offset in the coming quarter by downward pressure on unit revenue and negative currency impact
- Continued progress in unit cost reduction, targeted at around 1% ex fuel in 2016
- Operating free cash flow generation after disposals narrowed to between 0.6 billion euros and 0.8 billion euros in 2016
- Further significant net debt reduction
The Board of Directors of Air France-KLM, chaired by Jean-Marc Janaillac, met on 2nd November 2016 to approve the accounts for the Third Quarter of the Financial Year 2016.
Key data
Third Quarter | 9 months to 30 September | |||||
2016 | 2015* | Change | 2016 | 2015* | Change | |
Passengers (thousands) | 26,553 | 25,897 | +2.5% | 70,834 | 68,498 | +3.4% |
Capacity (EASK m) | 94,081 | 93,174 | +1.0% | 257,760 | 256,354 | +0.5% |
Revenues (€m) | 6,938 | 7,308 | -5.1% | 18,758 | 19,447 | -3.5% |
Change like-for-like (%) | -4.1% | -3.1% | ||||
EBITDAR (€m) | 1,419 | 1,581 | -162 | 2,941 | 2,617 | +324 |
EBITDA (€m) | 1,149 | 1,323 | -174 | 2,143 | 1,855 | +288 |
EBITDA margin (%) | 16.6 | 18.1 | -1.5 pt | 11.4 | 9.5 | +1.9 pt |
EBITDA change like-for-like (€m) | -84 | +497 | ||||
Operating result (€m) | 737 | 880 | -143 | 955 | 643 | +312 |
Operating margin (%) | 10.6% | 12.0% | -1.4 pt | 5.1% | 3.3% | +1.8 pt |
Operating result change like-for-like (€m) | -49 | +531 | ||||
Net result, group share (€m) | 544 | 481 | +63 | 430 | -158 | +588 |
Restated net result, group share2 (€m) | 521 | 612 | -91 | 497 | 181 | +316 |
Earnings per share (€) | 1.84 | 1.62 | +0.22 | 1.39 | -0.53 | +1.98 |
Diluted earnings per share (€) | 1.57 | 1.32 | +0.25 | 1.22 | -0.53 | +1.80 |
Adjusted earnings per share (€) | 1.74 | 2.11 | -0.37 | 1.68 | 0.61 | +1.00 |
Diluted adjusted earnings per share (€) | 1.49 | 1.71 | -0.22 | 1.46 | 0.61 | +0.84 |
Operating free cash flow (€m) | -123 | 257 | -380 | 250 | 522 | -272 |
Net debt at end of period (€m) | 4,163 | 4,307 | -144 |
* 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.
Third Quarter 2016 total revenues stood at 6.94 billion euros versus 7.31 billion euros in Third Quarter 2015, down 5.1% and down 4.1% like-for-like as a result of increasing pressure on unit revenue.
Currencies had a negative 77 million euro impact on revenues, primarily driven by the weakening of currencies other than the US dollar against the euro, notably the GBP, BRL and CNY. The negative effect of currencies on costs amounted to 17 million euros. The net impact of currencies on the operating result thus amounted to a negative 94 million euros.
Total operating costs were 3.5% lower year-on-year and down 3.8% on a like-for-like basis. Ex-fuel, they increased by 4.4% and by 3.8% on a like-for-like basis. Unit cost per EASK was down 0.2%, on a constant currency, fuel price and pension-related expense basis, against a capacity increase measured in EASK of +1.0%. On a strike adjusted base, the unit costs per EASK decreased by 1.0%.
The fuel bill amounted to 1,244 million euros, down 25.9% and down 25.6% like-for-like. Based on the forward curve at 21 October 2016, the Full Year 2016 fuel bill is expected to reach 4.6 billion euros[3] and the Full Year 2017 fuel bill is expected to remain stable at 4.6 billion euros[4].
Total employee costs including temporary staff were stable at 1,837 million euros (down 0.1%). On a constant scope and pension-related expense basis, employee costs also remained stable (up 0.1%) and decreased by 3.5% excluding the increase in the profit sharing scheme.
In the Third Quarter 2016, the downward pressure on unit revenues (REASK -6.5%) and the negative currency impact (94 million euros) more than offset the fuel bill savings achieved (399 million euros), where 55% of the fuel bill savings was retained during First Quarter 2016 and 15% retained during the Second Quarter 2016.
The operating result amounted to 737 million euros, a reported decrease of 143 million euros and down 49 million euros like-for-like. The operating result was notably impacted by the seven day cabin crew strike in July and August 2016, which had a negative impact of an estimated 90 million euros.
EBITDAR amounted to 1,419 million euros, a reported decrease of 162 million euros and down 72 million euros like-for-like.
EBITDA amounted to 1,149 million euros, a decrease of 174 million euros. Like-for-like, EBITDA decreased by 84 million euros, mainly as a result of the decrease in the Passenger network performance, which declined by 78 million euros like-for-like, impacted by the strike.
Third Quarter | 9 months to 30 September | |||||||
EBITDA per business (€m) | 2016 | 2015* | Change | like-for-like | 2016 | 2015* | Change | like-for-like |
Passenger network | 999 | 1,151 | -152 | -78 | 1,951 | 1,661 | +290 | +464 |
Cargo | -91 | -76 | -15 | -11 | -194 | -204 | +10 | +27 |
Maintenance | 117 | 142 | -25 | -25 | 310 | 339 | -29 | -30 |
Transavia | 117 | 98 | +19 | +30 | 67 | 39 | +28 | +51 |
Other | 7 | 8 | -1 | +0 | 9 | 20 | -11 | -15 |
Total | 1,149 | 1,323 | -174 | -84 | 2,143 | 1,855 | +288 | +497 |
* Servair reclassified as discontinued operation.
Third Quarter 2016 EBITDA decreased by 122 million euros like-for-like at Air France and improved by 35 million euros like-for-like at KLM. The EBITDA margin at Air France reached 14.0%, down 1.7 points like-for-like. At KLM, the EBITDA margin stood at 19.6%, up 1.5 points like-for-like.
Third Quarter | 9 months to 30 September | |||||||
EBITDA per airline (€m) | 2016 | 2015* | Change | like-for-like | 2016 | 2015* | Change | like-for-like |
Air France | 589 | 754 | -165 | -122 | 1,121 | 1,101 | +20 | +118 |
EBITDA margin | 14.0% | 16.7% | -2.7 pt | -1.7 pt | 9.7% | 9.1% | +0.6 pt | +1.4 pt |
KLM | 553 | 564 | -11 | +35 | 1,012 | 742 | +270 | +371 |
EBITDA margin | 19.6% | 19.7% | -0.1 pt | +1.5 pt | 13.6% | 9.9% | +3.8 pt | +5.1 pt |
Other/ eliminations | 7 | 5 | +2 | +2 | 10 | 12 | -2 | +8 |
Total | 1,149 | 1,323 | -174 | -84 | 2,143 | 1,855 | +288 | +497 |
* Servair reclassified as discontinued operation.
In the First Nine Months of 2016, total revenues stood at 18.8 billion euros versus 19.5 billion euros in the First Nine Months of 2015, down 3.5% on a reported basis and on down 3.1% like-for-like. The fuel bill amounted to 3,507 million euros, a reported decrease of 27.2% and down 27.9% on a like-for-like basis. The ex-fuel unit costs at constant currency and pension expense is down 0.9% on a reported base and down 1.4% corrected for the June pilot and July Cabin crew strike.
In the First Nine Months of 2016, EBITDA amounted to a 2,143 million euros, an increase of 288 million euros. On a like-for-like basis, EBITDA increased by 497 million euros.
At 1,951 million euros, the Passenger Network was the main contributor to EBITDA, up 464 million euros like-for-like. Despite the challenging Cargo operating context, marked by structural industry overcapacity, Cargo EBITDA improved by 27 million euros like-for-like mainly as a result of restructuring efforts.
The operating result stood at 955 million euros versus 643 million euros in 2015, an improvement of 312 million euros. Like-for-like, the operating result increased by 531 million euros.
The net result, group share stood at 430 million euros against a negative 158 million euros a year ago.
At 30 September 2016, the trailing 12 months return on capital employed (ROCE) was 9.9%, up 2.8 points compared to 30 September 2015.
Passenger network[5] business
Passenger network | Q3 2016 | Q3 2015 | Change | Change like-for-like |
Passengers (thousands) | 21,771 | 22,007 | -1.1% | |
Capacity (ASK m) | 75,253 | 75,209 | +0.1% | |
Traffic (RPK m) | 65,846 | 66,626 | -1.2% | |
Load factor | 87.5% | 88.6% | -1.1 pt | |
Total passenger revenues (€m) | 5,470 | 5,895 | -7.2% | -6.1% |
Scheduled passenger revenues (€m) | 5,243 | 5,672 | -7.6% | -6.4% |
Unit revenue per ASK (€ cts) | 6.97 | 7.54 | -7.6% | -6.5% |
Unit revenue per RPK (€ cts) | 7.96 | 8.51 | -6.5% | -5.3% |
Unit cost per ASK (€ cts) | 6.09 | 6.48 | -6.1% | -6.3% |
Operating result (€m) | 664 | 798 | -134 | -55 |
Third Quarter 2016 total passenger network revenues amounted to 5,470 million euros, down 7.2% and down 6.1% like-for-like. The Air France cabin crew strike negatively impacted the operating result by an estimated 90 million euros. The operating result of the passenger network business stood at 664 million euros, versus 798 million euros for the Third Quarter 2015. Like-for-like, the operating result was down 55 million euros.
The Group maintained its strict capacity discipline, keeping total passenger network capacity stable (+0.1% and +0.6% excluding strike). Unit revenue per Available Seat Kilometer (RASK) remained volatile and was on average down by 6.5% excluding currency. The increasing pressure on unit revenue compared to the previous quarters reflected the weak supply-demand balance in the different regions of the network and weak flows to France as a destination.
Passenger network | 9 months 2016 | 9 months 2015 | Change | Change like-for-like |
Passengers (thousands) | 60,395 | 59,860 | +0.9% | |
Capacity (ASK m) | 209,895 | 209,263 | +0.3% | |
Traffic (RPK m) | 179,756 | 178,996 | +0.4% | |
Load factor | 85.6% | 85.5% | +0.1 pt | |
Total passenger revenues (€m) | 14,883 | 15,558 | -4.3% | -3.8% |
Scheduled passenger revenues (€m) | 14,250 | 14,920 | -4.5% | -3.9% |
Unit revenue per ASK (€ cts) | 6.79 | 7.13 | -4.8% | -4.2% |
Unit revenue per RPK (€ cts) | 7.93 | 8.34 | -4.9% | -4.3% |
Unit cost per ASK (€ cts) | 6.32 | 6.80 | -7.1% | -7.7% |
Operating result (€m) | 983 | 686 | +297 | +476 |
In the First Nine Months of 2016, passenger network revenues amounted to 14,883 million euros, down 4.3% and down 3.8% on a like-for-like basis. The operating result of the passenger network business stood at 983 million euros, versus 686 million euros in the First Nine Months of 2015, an improvement of 297 million euros and 476 million euros like-for-like.
Cargo business
Cargo | Q3 2016 | Q3 2015 | Change | Change like-for-like |
Tons (thousands) | 279 | 301 | -7.1% | |
Capacity (ATK m) | 3,738 | 3,859 | -3.1% | |
Traffic (RTK m) | 2,113 | 2,257 | -6.4% | |
Load factor | 56.5% | 58.5% | -2.0 pt | |
Total Cargo revenues (€m) | 487 | 584 | -16.6% | -16.1% |
Scheduled cargo revenues (€m) | 447 | 546 | -18.1% | -17.7% |
Unit revenue per ATK (€ cts) | 11.98 | 14.10 | -15.1% | -14.6% |
Unit revenue per RTK (€ cts) | 21.18 | 24.10 | -12.1% | -11.6% |
Unit cost per ATK (€ cts) | 14.64 | 16.22 | -9.7% | -9.9% |
Operating result (€m) | -100 | -81 | -19 | -15 |
The Group continued to restructure its Cargo activity to address the weak global trade and structural air cargo industry overcapacity. During Third Quarter 2016, full-freighter capacity was thus reduced by 22%, leading to a decrease in total Cargo capacity of 3.1%. Revenue per Available Ton Kilometer (ATK) was down by 14.6% like-for-like.
The operating result stood at negative 100 million euros, a decline of 19 million euros like-for-like.
Cargo | 9 months 2016 | 9 months 2015 | Change | Change like-for-like |
Tons (thousands) | 837 | 897 | -6.7% | |
Capacity (ATK m) | 10,737 | 11,277 | -4.8% | |
Traffic (RTK m) | 6,234 | 6,711 | -7.1% | |
Load factor | 58.1% | 59.5% | -1.4 pt | |
Total Cargo revenues (€m) | 1,523 | 1,813 | -16.0% | -15.7% |
Scheduled cargo revenues (€m) | 1,404 | 1,696 | -17.2% | -17.0% |
Unit revenue per ATK (€ cts) | 13.07 | 15.04 | -13.1% | -12.8% |
Unit revenue per RTK (€ cts) | 22.51 | 25.27 | -10.9% | -10.7% |
Unit cost per ATK (€ cts) | 15.08 | 17.01 | -11.3% | -11.9% |
Operating result (€m) | -216 | -222 | +6 | +23 |
First Nine Months of 2016 Cargo revenues amounted to 1,523 million euros, down 15.7% like-for-like. At -216 million euros, the operating result increased by 23 million like-for-like resulting from a strong decrease in unit costs (-11.9% like-for-like) due to restructuring measures implemeted.
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.
Maintenance business
Maintenance | Q3 2016 | Q3 2015 | Change | Change like-for-like |
Total revenues (€m) | 1,046 | 953 | +9.8% | |
Third party revenues (€m) | 482 | 372 | +29.6% | 30.3% |
Operating result (€m) | 77 | 81 | -4 | -4 |
Operating margin (%) | 7.4% | 8.5% | -1.1 pt | -1.2 pt |
Third Quarter 2016 third party maintenance revenues amounted to 482 million euros, up by 29.6% and by 30.3% like-for-like. Revenues were up from the contracts gained in previous years. Over the period, the maintenance order book recorded an 8.4% increase from the beginning of the year to reach 9.1 billion dollars, including several new A350 support contracts.
The operating result stood at 77 million euros, down 4 million euros year-on-year.
Maintenance | 9 months 2016 | 9 months 2015 | Change | Change like-for-like |
Total revenues (€m) | 3,052 | 2,912 | +4.8% | |
Third party revenues (€m) | 1,348 | 1,148 | +17.4% | 16.4% |
Operating result (€m) | 172 | 167 | +5 | +4 |
Operating margin (%) | 5.6% | 5.7% | -0.1 pt | -0.1 pt |
During the First Nine Months of 2016, third party maintenance revenues increased by 17.4% and by 16.4% like-for-like. At 172 million euros, the operating result improved by 5 million euros.
Transavia
Transavia | Q3 2016 | Q3 2015 | Change |
Passengers (thousands) | 4,782 | 3,890 | +22.9% |
Capacity (ASK m) | 9,173 | 7,963 | +15.2% |
Traffic (RPK m) | 8,391 | 7,327 | +14.5% |
Load factor | 91.5% | 92.0% | -0.5 pt |
Total passenger revenues (€m) | 490 | 442 | +10.9% |
Scheduled passenger revenues (€m) | 490 | 438 | +11.9% |
Unit revenue per ASK (€ cts) | 5.34 | 5.50 | -3.2% |
Unit revenue per RPK (€ cts) | 5.84 | 5.98 | -2.4% |
Unit cost per ASK (€ cts) | 4.34 | 4.53 | -4.9% |
Operating result (€m) | 92 | 77 | +15 |
Operating result change like-for-like (€m) | +26 |
In the Third Quarter 2016, Transavia capacity was up by 15.2%, reflecting the accelerated development in France (capacity up by 19%) and the opening of the Munich base on 25th March 2016. Traffic, measured in revenue passenger kilometers (RPK), rose by 14.5%. The load factor remained high (91.5%) despite the increase in capacity.
The unit revenue per ASK decreased by 3.2%, mainly due to geopolitical unrest and intensification of low cost competition. Unit costs per ASK decreased by 4.9%. The operating result stood at 92 million euros, up 26 million euros like-for-like.
Transavia | 9 months 2016 | 9 months 2015 | Change |
Passengers (thousands) | 10,439 | 8,638 | +20.8% |
Capacity (ASK m) | 20,116 | 17,840 | +12.8% |
Traffic (RPK m) | 18,041 | 16,163 | +11.6% |
Load factor | 89.7% | 90.6% | -0.9 pt |
Total passenger revenues (€m) | 973 | 892 | +9.1% |
Scheduled passenger revenues (€m) | 965 | 881 | +9.5% |
Unit revenue per ASK (€ cts) | 4.80 | 4.94 | -2.9% |
Unit revenue per RPK (€ cts) | 5.35 | 5.45 | -1.9% |
Unit cost per ASK (€ cts) | 4.37 | 4.80 | -9.0% |
Operating result (€m) | 17 | 2 | +15 |
Operating result change like-for-like (€m) | +38 |
In the First Nine Months of 2016, Transavia revenues amounted to 973 million euros, up 9.1%. The operating result increased by 38 million euros like-for-like and amounted to 17 million euros.
Financial situation
In € million | 9 months 2016 | 9 months 2015* | Change |
Cash flow before change in WCR and Voluntary Departure Plans, continuing operations | 1,870 | 1,516 | +354 |
Cash out related to Voluntary Departure Plans | -208 | -154 | -54 |
Change in Working Capital Requirement (WCR) | +45 | +255 | -210 |
Operating cash flow | 1,707 | 1,617 | +90 |
Net investments before sale & lease-back | -1,457 | -1,095 | -362 |
Cash received through sale & lease-back transactions | 0 | 0 | +0 |
Net investments after sale & lease-back | -1,457 | -1,095 | -362 |
Operating free cash flow | 250 | 522 | -272 |
* Servair reclassified as discontinued operation.
In the First Nine Months of 2016, the increase of 288 million euros in EBITDA translated into a 354 million euro increase in cash flow before change in working capital requirement and cash out related to Voluntary Departure Plans. The Group disbursed 208 million euros for Voluntary Departure Plans. The change in Working Capital Requirement contributed 45 million euros to operating cash flow. Net investments before sale & lease-back transactions stood at 1,457 million euros. As a result, operating free cash flow reached 250 million euros, down 272 million euros compared to the First Nine Months of 2015.
Net debt amounted to 4.2 billion euros at 30 September 2016, versus 4.3 billion euros at 31 December 2015, an improvement of 144 million euros. Currencies had a significant negative impact of 130 million euro on net debt.
The trailing 12 months adjusted net debt/EBITDAR ratio stood at 3.1x at 30 September 2016, down 0.3 points compared to 31 December 2015, and down 0.5 points compared to 30 September 2015.
The 95 basis point fall in discount rates (for period > 15 years) during First Nine Months 2016 led to a significant increase in the actuarial valuation of retirement obligations of more than 3.4 billion euros. The change in asset value amounted to 1,304 million euros during the First Nine Months. The balance sheet pension situation thus moved from a net liability of 177 million euros at 31 December 2015 to a net liability of 2,180 million euros at 30 September 2016 of which 1,622 million euros accounted for by Air France and 558 million euros by KLM`s defined benefit schemes.
The current funding agreement with the KLM Flight Deck Crew Union could result in a significant additional contribution to reach required coverage ratio to be able to grant indexation. Discussions with the KLM Flight Deck Crew Union have been initiated to renegotiate the current funding agreement. In parallel, the Group has decided to terminate this funding agreement on a unilateral way. A court ruling on September 27th 2016 confirmed that KLM is entitled to cancel the agreement, however KLM aims to reach a mutual acceptable new funding agreement with the KLM Flight Deck Crew Union and the pension fund.
At 30 September 2016, equity, group share, amounted to negative 230 million euros, down 503 million euros over the first nine months mainly due to the increase in the net pension liability.
The Group continues to enjoy a good level of liquidity, with net cash of 3.9 billion euros at 30 September 2016, and undrawn credit lines of 1.8 billion euros. During the course of October 2016, the Group successfully placed a six-year bond for 400 million euros and reimbursed a 600 million euros bond which was due in October 2016.
Outlook
The global context remains highly uncertain regarding the geopolitical and economic environment in which we operate, fuel prices and the continuation of the overcapacity on several markets, resulting in pressures on unit revenues and a special concern about France as a destination.
Under these conditions, the Group is expecting for Full Year 2016:
- Operating free cash flow generation after disposals narrowed to between 0.6 billion euros and 0.8 billion euros. The 2016 investment plan stands between 1.8 billion euros and 2.0 billion euros (including buying back aircraft under operating lease) and the disposal program stands between 0.4 billion euros and 0.6 billion euros
- Impact of fuel savings on the P&L expected to be more than offset in the current quarter by downward pressure on unit revenue and negative currency impacts
- Unit cost reduction target remains around 1% at constant currency, fuel price and pension related expenses
- Further significant reduction in net debt
*****
The Third Quarter 2016 accounts are not audited by the Statutory Auditors.
The results presentation is available at www.airfranceklm.com on November 3rd 2016 from 8:30 am CET.
A conference call hosted by hosted by Mr Janaillac (CEO) and Mr Riolacci (CFO) will be held on November 3rd 2016 at 10.30 am CET.
To connect to the conference call, please dial:
- France: +33(0)1 76 77 22 57
- Netherlands: +31(0)20 703 8261
- United Kingdom: +44(0)20 7026 5967
- USA: +1 719 457 1036
Confirmation Code: 6217261
To listen to a recording of the conference in English, please dial:
- France: +33(0)1 70 48 00 94
- Netherlands: +31(0)20 721 8903
- United Kingdom: +44(0)207 984 7568
- USA: +1 719 457 0820
Replay Passcode: 6217261
Investor relations | Press |
Marie-Agnes de Peslouan | +33 1 41 56 56 00 |
Head of Investor Relations | |
Tel : +33 1 49 89 52 59 Email: madepeslouan@airfranceklm.com | |
Dirk Voermans Senior manager, Investor Relations Tel : +33 1 49 89 52 60 Email: divoermans@airfranceklm.com |
INCOME STATEMENT
Third Quarter | 9 months to 30 September | ||||||
In millions euros | 2016 | 2015* | Change | 2016 | 2015* | Change | |
SALES | 6,938 | 7,306 | -5.0% | 18,758 | 19,447 | -3.5% | |
Other revenues | 1 | 0 | NA | 1 | 1 | NA | |
EXTERNAL EXPENSES | -3,778 | -4,067 | -7.1% | -10,797 | -11,942 | -9.6% | |
Aircraft fuel | -1,244 | -1,679 | -25.9% | -3,507 | -4,820 | -27.2% | |
Chartering costs | -109 | -108 | 0.9% | -324 | -325 | -0.3% | |
Landing fees and en route charges | -523 | -537 | -2.6% | -1,437 | -1,478 | -2.8% | |
Catering | -121 | -127 | -4.7% | -336 | -350 | -4.0% | |
Handling charges and other operating costs | -446 | -406 | 9.9% | -1,196 | -1,147 | 4.3% | |
Aircraft maintenance costs | -601 | -497 | 20.9% | -1,847 | -1,657 | 11.5% | |
Commercial and distribution costs | -227 | -238 | -4.6% | -690 | -703 | -1.8% | |
Other external expenses | -507 | -475 | 6.7% | -1,460 | -1,462 | -0.1% | |
Salaries and related costs | -1,837 | -1,838 | -0.1% | -5,543 | -5,582 | -0.7% | |
Taxes other than income taxes | -37 | -38 | -2.6% | -125 | -120 | 4.2% | |
Other income and expenses | 132 | 218 | -39.4% | 647 | 813 | -20.4% | |
EBITDAR | 1,419 | 1,581 | -10.2% | 2,941 | 2,617 | 12.4% | |
Aircraft operating lease costs | -270 | -257 | 5.1% | -798 | -762 | 4.7% | |
EBITDA | 1,149 | 1,323 | -13.2% | 2,143 | 1,855 | 15.5% | |
Amortization, depreciation and provisions | -412 | -443 | -7.0% | -1,188 | -1,212 | -2.0% | |
INCOME FROM CURRENT OPERATIONS | 737 | 880 | -16.3% | 955 | 643 | 48.5% | |
Sales of aircraft equipment | 8 | 0 | NA | 16 | -5 | NA | |
Other non-current income and expenses | 0 | -1 | NA | -107 | 88 | NA | |
INCOME FROM OPERATING ACTIVITIES | 745 | 880 | -15.3% | 864 | 726 | 19.0% | |
Income from cash and cash equivalents | 11 | 17 | -35.3% | 39 | 47 | -17.0% | |
Cost of financial debt | -75 | -93 | -19.4% | -237 | -291 | -18.6% | |
Net cost of financial debt | -64 | -76 | -15.8% | -198 | -244 | -18.9% | |
Foreign exchange gains (losses), net | -12 | -74 | 83.8% | -131 | -319 | 58.9% | |
Change in fair value of financial assets and liabilities | -7 | -129 | 94.6% | 51 | -225 | NA | |
Other financial income and expenses | -15 | -21 | -28.6% | 2 | -66 | NA | |
INCOME BEFORE TAX | 647 | 580 | 11.6% | 588 | -128 | NA | |
Income taxes | -113 | -90 | 25.6% | -166 | -5 | NA | |
NET INCOME OF CONSOLIDATED COMPANIES | 534 | 490 | 9.0% | 422 | -133 | NA | |
Share of profits (losses) of associates | 2 | -19 | NA | 3 | -37 | NA | |
INCOME FROM CONTINUING OPERATIONS | 536 | 471 | 13.8% | 425 | -170 | NA | |
Net income from discontinued operations | 12 | 13 | -7.7% | 14 | 17 | -17.6% | |
NET INCOME FOR THE PERIOD | 548 | 484 | 13.2% | 439 | -153 | NA | |
Minority interest | -4 | -4 | 0.0% | -9 | -5 | -80.0% | |
NET INCOME FOR THE PERIOD - GROUP | 544 | 481 | 13.3% | 430 | -158 | NA |
* Servair reclassified as discontinued operation
BALANCE SHEET
AssetsIn million euros | September 30, 2016 | December 31, 2015* |
Goodwill | 217 | 247 |
Intangible assets | 1,037 | 1,018 |
Flight equipment | 9,214 | 8,743 |
Other property, plant and equipment | 1,485 | 1,670 |
Investments in equity associates | 78 | 118 |
Pension assets | 692 | 1,773 |
Other financial assets | 1,273 | 1,224 |
Deferred tax assets | 742 | 702 |
Other non-current assets | 327 | 295 |
Total non-current assets | 15,065 | 15,790 |
Assets held for sale | 392 | 4 |
Other short-term financial assets | 83 | 967 |
Inventories | 595 | 532 |
Trade receivables | 1,950 | 1,800 |
Other current assets | 973 | 1,138 |
Cash and cash equivalents | 3,567 | 3,104 |
Total current assets | 7,560 | 7,545 |
Total assets | 22,625 | 23,335 |
* Servair reclassified as discontinued operation
Liabilities and equityIn million euros | September 30, 2016 | December 31, 2015* |
Issued capital | 300 | 300 |
Additional paid-in capital | 2,971 | 2,971 |
Treasury shares | -83 | -85 |
Perpetual | 600 | 600 |
Reserves and retained earnings | -4,062 | -3,561 |
Equity attributable to equity holders of Air France-KLM | -274 | 225 |
Non-controlling interests | 44 | 48 |
Total Equity | -230 | 273 |
Pension provisions | 2,872 | 1,995 |
Other provisions | 1,490 | 1,513 |
Long-term debt | 6,845 | 7,060 |
Deferred tax liabilities | 8 | 11 |
Other non-current liabilities | 282 | 484 |
Total non-current liabilities | 11,497 | 11,063 |
Liabilities relating to assets held for sale | 254 | - |
Provisions | 719 | 742 |
Current portion of long-term debt | 1,680 | 2,017 |
Trade payables | 2,356 | 2,395 |
Deferred revenue on ticket sales | 2,702 | 2,515 |
Frequent flyer programs | 798 | 760 |
Other current liabilities | 2,843 | 3,567 |
Bank overdrafts | 6 | 3 |
Total current liabilities | 11,358 | 11,999 |
Total equity and liabilities | 22,625 | 23,335 |
* Servair reclassified as discontinued operation
CONSOLIDATED STATEMENT OF CASH FLOWS
In € millions Period from January 1 to September 30, | 9M 2016 | 9M 2015* |
Net income from continuing operations | 425 | -170 |
Net income from discontinued operations | 14 | 17 |
Amortization, depreciation and operating provisions | 1,194 | 1,230 |
Financial provisions | -7 | 65 |
Loss (gain) on disposals of tangible and intangible assets | -69 | 4 |
Loss (gain)on disposals of subsidiaries and associates | -10 | -224 |
Derivatives - non monetary result | -131 | 158 |
Unrealized foreign exchange gains and losses, net | 121 | 268 |
Share of (profits) losses of associates | -1 | 33 |
Deferred taxes | 141 | -19 |
Impairment | 2 | 0 |
Other non-monetary items | 12 | 30 |
Subtotal | 1,691 | 1,392 |
Of which discontinued operations | 29 | 30 |
(Increase) / decrease in inventories | -108 | -29 |
(Increase) / decrease in trade receivables | -198 | -240 |
Increase / (decrease) in trade payables | 54 | 3 |
Change in other receivables and payables | 297 | 521 |
Change in working capital from discontinued operations | -10 | -1 |
Net cash flow from operating activities | 1,726 | 1,646 |
Acquisition of subsidiaries, of shares in non-controlled entities | -7 | -6 |
Purchase of property plants, equipments and intangible assets | -1,595 | -1,166 |
Proceeds on disposal of subsidiaries, of shares in non-controlled entities | 4 | 342 |
Proceeds on disposal of property, plant and equipment and intangible assets | 138 | 71 |
Dividends received | 4 | 1 |
Decrease (increase) in net investments, more than 3 months | 798 | -205 |
Net cash flow used in investing activities of discontinued operations | -11 | -7 |
Net cash flow used in investing activities | -669 | -970 |
Perpetual | 0 | 599 |
Issuance of debt | 686 | 908 |
Repayment on debt | -792 | -1,377 |
Payment of debt resulting from finance lease liabilities | -387 | -540 |
New loans | -83 | -51 |
Repayment on loans | 32 | 122 |
Dividends and coupons on perpetual paid | -1 | -1 |
Net cash flow used in financing activities of discontinued operations | -10 | 5 |
Net cash flow from financing activities | -555 | -335 |
Effect of exchange rate on cash and cash equivalents and bank overdrafts | -16 | -52 |
Effect of exch. rate on cash and cash eq. and bank overdrafts of disc. ops. | -1 | -5 |
Change in cash and cash equivalents and bank overdrafts | 485 | 284 |
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 | 3,561 | 3,164 |
Change in cash of discontinued operations | -3 | 22 |
* Servair reclassified as discontinued operation
KEY FINANCIAL INDICATORS
EBITDA and EBITDAR
In million euros | Q3 2016 | Q3 2015* | 9M 2016 | 9M 2015* |
Income/(loss) from current operations | 737 | 880 | 955 | 643 |
Amortization, depreciation and provisions | 412 | 443 | 1,188 | 1,212 |
EBITDA | 1,149 | 1,323 | 2,143 | 1,855 |
Aircraft operating lease costs | 270 | 257 | 798 | 762 |
EBITDAR | 1,419 | 1,581 | 2,941 | 2,617 |
* Servair reclassified as discontinued operation
Restated net result, group share
In million euros | Q3 2016 | Q3 2015* | 9M 2016 | 9M 2015* |
Net income/(loss), Group share (in €m) | 544 | 481 | 430 | -158 |
Net income/(loss) from discontinued operations (in €m) | -12 | -13 | -14 | -17 |
Unrealized foreign exchange gains and losses, net (in €m) | -1 | 31 | 121 | 268 |
Change in fair value of financial assets and liabilities (derivatives) (in €m) | -2 | 107 | -131 | 158 |
Non-current income and expenses (in €m) | -8 | 1 | 91 | -83 |
Depreciation of shares available for sale (in €m) | 0 | 6 | 0 | 13 |
De-recognition of deferred tax assets (in €m) | 0 | 0 | 0 | 0 |
Restated net income/(loss), group share (in €m) | 521 | 612 | 497 | 181 |
Restated net income/(loss) per share (in €) | 1.74 | 2.11 | 1.62 | 0.62 |
* Servair reclassified as discontinued operation
Return on capital employed (ROCE)
In million euros | 30 Sep. 2016 | 30 Sep. 2015* | 30 Sep. 2015* | 30 Sep. 2014 |
Goodwill and intangible assets | 1,254 | 1,273 | 1,273 | 1,241 |
Flight equipment | 9,214 | 8,773 | 8,773 | 9,122 |
Other property, plant and equipment | 1,485 | 1,702 | 1,702 | 1,752 |
Investments in equity associates | 78 | 115 | 115 | 161 |
Financial assets excluding shares available for sale, marketable securities and financial deposits | 198 | 216 | 216 | 134 |
Provisions, excluding pension, cargo litigation and restructuring | -1,557 | -1,572 | -1,572 | -1,205 |
WCR, excluding market value of derivatives | -5,195 | -5,345 | -5,345 | -5,221 |
Capital employed before operating leases | 5,477 | 5,162 | 5,162 | 5,984 |
Operating leases x7 | 7,441 | 6,923 | ||
Average capital employed (A) | 12,761 | 12,496 | ||
Adjusted results from current operations | 1,454 | 897 | ||
- Dividends received | -2 | -1 | ||
- Share of profits (losses) of associates | 5 | -61 | ||
- Tax recognized in the adjusted net result | -191 | 48 | ||
Adjusted result from current operations after tax (B) | 1,266 | 883 | ||
ROCE, trailing 12 months (B/A) | 9.9% | 7.1% |
* Servair reclassified as discontinued operation
Net debt
Balance sheet at (In million euros) | 30 September 2016 | 31 December 2015* |
Current and non-current financial debt | 8,525 | 9,077 |
Deposits on aircraft under finance lease | -331 | -453 |
Financial assets pledged (OCEANE swap) | 0 | -393 |
Currency hedge on financial debt | -36 | -40 |
Accrued interest | -90 | -95 |
Gross financial debt (A) | 8,068 | 8,096 |
Cash and cash equivalents | 3,567 | 3,104 |
Marketable securities | 70 | 466 |
Cash pledges | 15 | 18 |
Deposits (bonds) | 270 | 204 |
Bank overdrafts | -6 | (3) |
Other | -11 | 0 |
Net cash (B) | 3,905 | 3,789 |
Net debt (A) - (B) | 4,163 | 4,307 |
* Servair reclassified as discontinued operation
Adjusted net debt and adjusted net debt/EBITDAR ratio
30 September 2016 | 31 December 2015* | |
Net debt (in €m) | 4,163 | 4,307 |
Aircraft operating leases x 7 (trailing 12 months, in €m) | 7,441 | 7,189 |
Adjusted net debt (in €m) | 11,604 | 11,496 |
EBITDAR (trailing 12 months, in €m) | 3,740 | 3,413 |
Adjusted net debt/EBITDAR ratio, excluding strike (trailing 12 months) | 3.1x | 3.4 x |
* Servair reclassified as discontinued operation
Operating free cash flow
In million euros | 9M 2016 | 9M 2015* |
Net cash flow from operating activities, continued operations | 1,707 | 1,617 |
Investment in property, plant, equipment and intangible assets | -1,595 | -1,166 |
Proceeds on disposal of property, plant, equipment and intangible assets | 138 | 71 |
Operating free cash flow | 250 | 522 |
* Servair reclassified as discontinued operation
Unit cost: net cost per EASK
Q3 2016 | Q3 2015* | 9M 2016 | 9M 2015* | |
Revenues (in €m) | 6,938 | 7,308 | 18,758 | 19,447 |
Income/(loss) from current operations (in €m) | 737 | 880 | 955 | 643 |
Total operating expense (in €m) | -6,201 | -6,428 | -17,803 | -18,804 |
Passenger network business - other revenues (in €m)** | 227 | 223 | 633 | 638 |
Cargo business - other revenues (in €m) | 40 | 38 | 119 | 117 |
Third-party revenues in the maintenance business (in €m) | 482 | 373 | 1,348 | 1,148 |
Transavia - other revenues (in €m) | 0 | 4 | 8 | 11 |
Third-party revenues of other businesses (in €m) | 9 | 15 | 31 | 36 |
Net cost (in €m) | 5,443 | 5,775 | 15,664 | 16,854 |
Capacity produced, reported in EASK | 94,081 | 93,174 | 257,760 | 256,354 |
Net cost per EASK (in € cents per EASK) | 5.79 | 6.20 | 6.08 | 6.58 |
Gross change | -6.7% | -7.6% | ||
Currency effect on net costs (in €m) | 23 | 129 | ||
Change at constant currency | -7.1% | -8.3% | ||
Fuel price effect (in €m) | -399 | -1,257 | ||
Change on a constant currency and fuel price basis | -0.3% | -1.0% | ||
Change in pension-related expenses (in €m)*** | 3 | 8 | ||
Net cost per EASK on a constant currency, fuel price and pension-related expenses basis (in € cents per EASK) | 5.79 | 5.80 | 6.08 | 6.14 |
Change on a constant currency, fuel price and pension-related expenses basis | -0.2% | -0.9% |
* Servair reclassified as discontinued operation
INDIVIDUAL AIRLINE RESULTS
Air France
Q3 2016 | Q3 2015* | Change | 9M 2016 | 9M 2015* | Change | |
Revenue (€m) | 4,202 | 4,516 | -7.0% | 11,578 | 12,147 | -4.7% |
EBITDA (€m) | 589 | 754 | -165 | 1,121 | 1,100 | +21 |
Operating result (€m) | 311 | 458 | -147 | 326 | 324 | +2 |
Operating margin | 7.4% | 10.1% | -2.7 pt | 2.8% | 2.7% | +0.1 pt |
Operating cash flow before WCR and restructuring cash out (€m) | 520 | 722 | -202 | 1,035 | 989 | +46 |
Operating cash flow (before WCR and restructuring) margin | 12.4% | 16.0% | -3.6 pt | 8.9% | 8.1% | +0.8 pt |
* Servair reclassified as discontinued operation
KLM
Q3 2016 | Q3 2015 | Change | 9M 2016 | 9M 2015 | Change | |
Revenue (€m) | 2,826 | 2,870 | -1.5% | 7,430 | 7,527 | -1.3% |
EBITDA (€m) | 553 | 564 | -11 | 1,012 | 742 | +270 |
Operating result (€m) | 422 | 424 | -2 | 629 | 345 | +284 |
Operating margin | 14.9% | 14.8% | +0.2 pt | 8.5% | 4.6% | +3.9 pt |
Operating cash flow before WCR and restructuring cash out (€m) | 504 | 515 | -11 | 888 | 617 | +271 |
Operating cash flow (before WCR and restructuring) margin | 17.8% | 17.9% | -0.1 pt | 12.0% | 8.2% | +3.8 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 SEPTEMBER 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 | 19 | -6 | |||
B777-300 | 43 | 12 | 9 | 25 | 21 | 55 | 55 | 5 | |
B777-200 | 25 | 15 | 19 | 10 | 11 | 40 | 40 | ||
B787-9 | 8 | 1 | 7 | 8 | 8 | 6 | |||
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 | 68 | 0 | 56 | 52 | 65 | 173 | 171 | 2 |
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 | 43 | 5 | 3 | 35 | 43 | 43 | |||
A319 | 38 | 19 | 6 | 13 | 38 | 38 | |||
A318 | 18 | 11 | 7 | 18 | 18 | 3 | |||
Total Short and Medium-Haul | 119 | 48 | 63 | 52 | 40 | 138 | 230 | 230 | 13 |
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 | 11 | 11 | 11 | 11 | -2 | ||||
Canadair Jet 100 | 3 | 3 | 3 | ||||||
Embraer 190 | 10 | 30 | 4 | 15 | 21 | 40 | 40 | ||
Embraer 175 | 3 | 3 | 3 | 3 | 3 | ||||
Embraer 170 | 15 | 8 | 2 | 5 | 15 | 15 | -1 | ||
Embraer 145 | 18 | 13 | 5 | 18 | 16 | ||||
Embraer 135 | 4 | 4 | 4 | ||||||
Fokker 70 | 15 | 15 | 15 | 13 | -3 | ||||
Total Regional | 97 | 48 | 0 | 81 | 28 | 36 | 145 | 134 | -5 |
B747-400ERF | 3 | 3 | 3 | 3 | |||||
B747-400BCF | 3 | 2 | 1 | 3 | 1 | ||||
B777-F | 2 | 2 | 2 | 2 | |||||
MD-11-CF | -1 | ||||||||
MD-11-F | -2 | ||||||||
Total Cargo | 2 | 6 | 0 | 7 | 0 | 1 | 8 | 6 | -3 |
Total Air France-KLM | 323 | 170 | 63 | 196 | 120 | 240 | 556 | 541 | 7 |
[1] Like-for-like: excluding currency. Same definition applies in rest of press release
[2] See definition in appendix
[3] 2016 average Brent price of USD 45, average jet fuel market price of USD 427 per ton, average exchange rate of 1.10 USD per euro for Q4 (October-December) 2016.
[4]. 2017 average Brent price of USD 56, average jet fuel market price of USD 519 per ton, average exchange rate of 1.10 USD per euro.
[5] Air France, KLM and HOP!. Transavia is reported in its own business segment.