4th May 2018
FIRST QUARTER 2018 RESULTSSTRONG ONGOING DEMAND, STRIKE WEIGHING ON RESULTS |
FIRST QUARTER 2018
Strong ongoing demand in the first quarter 2018:
- Number of passengers carried up 5.2% at 22 million.
- Traffic up 5.7%, leading to a load factor improvement by 1.7 pt.
- Group unit revenue +1.2% at constant currency compared to last year.
However, Air France strikes have weighed on the economic performance of the Group:
- Unit costs up 2.1% at constant currency, fuel and pension charges, of which 1.7% related to strikes.
- Operating income at -118 million euros, including around 75 million euros of strike impact, compared to -33 million euros in first quarter 20171.
The Group financial structure has been further improved:
- Net debt reduction of 285 million euros, particularly thanks to an adjusted operating free cash flow of 142 million euros1.
- Net debt / EBITDA ratio of 1.3x at 31 March 2018, an improvement of 0.1 points compared to 31 December 20171.
OUTLOOK FOR FULL YEAR 2018
The demand remains well oriented in a favourable business environment:
- Long haul forward booking load factors continue to be ahead of last year in average for the next four months.
- Second quarter 2018 unit revenue expected to be flat at constant currency compared to last year.
Some guidance elements have been adjusted to take into account the Air France strike impact of at least 300 million euros on the operating result, and the macroeconomic context:
- Capacity increase at 2.5% to 3.5% for Passenger network.
- Unit cost change expected between 0% and +1.0% at constant currency, fuel and pension charges, including strike related costs and associated capacity adjustment.
- Fuel bill increase of 350 million euros compared to 2017.
- Currency headwind of around 100 million euros due to the strengthening of the Euro compared to other currencies.
As a consequence, full year 2018 operating result is expected to be notably below 2017[1].
The Group is targeting to further reduce its net debt compared to 31 December 20171.
The Board of Directors of Air France-KLM, chaired by Jean-Marc Janaillac, met on 3rd May 2018 to approve the accounts for the first quarter 2018.
| Air France-KLM Group | First quarter | |
| 2018 | Change | |
| Passengers (thousands) | 22,014 | +5.2% |
| Unit revenue per ASK (€ cts) | 6.24 | +1.2% |
| Operating result1 (€m) | -118 | -85 |
| Net result - group1 (€m) | -269 | -126 |
| Adjusted operating free cash flow1 (€m) | 142 | -182 |
| Net debt at end of period1(€m) | 6,282 | -285 |
Restatement of accounts due to implementation of new accounting standards of IFRS
Since January 1, 2018, Air France-KLM Group applies the three following new standards:
- IFRS 9 "Financial Instruments"
- IFRS 15 "Revenue Recognition from Contracts with Customers": this standard is applied retrospectively to each previous period in which financial information is presented, according to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
- IFRS 16 "Leases": the Group has opted for the early adoption of this standard starting January 1, 2018. It has been applied using the retrospective restatement to each prior reporting period presented applying IAS 8. With IFRS 16, all lease contracts will be recognized on the balance sheet except for two capitalization exemptions proposed by the standard (lease contracts with a duration of less than 12 months and lease contracts for which the underlying asset has a value in new of below 5,000 €).
Detailed information on the changes of IFRS are provided in the published document "Consolidated financial statements" of the first quarter 2018, Chapter 2: Restatement of accounts 2017, page 11-15.
Impact on the consolidated income statement
| Q1 2017 | ||||
| In million euros | Published accounts | Restated | Change | Impact by |
| Revenues | 5,709 | 5,705 | -4 | IFRS 15 |
| External expenses | -5,155 | -5,057 | +98 | IFRS 15 & 16 |
| Operating leases | -285 | 0 | +285 | IFRS 16 |
| EBITDA | 269 | 648 | +379 | IFRS 15 & 16 |
| Amortizations and depreciation | -412 | -681 | -269 | IFRS 16 |
| Current operating income | -143 | -33 | +110 | IFRS 15 & 16 |
| Cost of financial debt | -56 | -140 | -84 | IFRS 16 |
| Operating income -/- cost of debt | -199 | -173 | +26 | IFRS 15 & 16 |
| Other financial items | -31 | 46 | +77 | IFRS 9 & 16 |
| Income tax | 9 | -21 | -30 | |
| Net result | -216 | -143 | +73 | |
| 2017 | ||||
| In million euros | Published accounts | Restated | Change | Impact by |
| Revenues | 25,784 | 25,860 | +76 | IFRS 15 |
| External expenses | -21,432 | -21,086 | +346 | IFRS 15 & 16 |
| Operating leases | -1,088 | 0 | +1,088 | IFRS 16 |
| EBITDA | 3,264 | 4,774 | +1,510 | IFRS 15 & 16 |
| Amortizations and depreciation | -1,776 | -2,837 | -1,061 | IFRS 16 |
| Current operating income | 1,488 | 1,937 | +449 | IFRS 15 & 16 |
| Cost of financial debt | -214 | -537 | -322 | IFRS 16 |
| Operating income -/- cost of debt | 1,273 | 1,400 | +127 | IFRS 15 & 16 |
| Other financial items | 116 | 582 | +466 | IFRS 9 & 16 |
| Income tax | 229 | 74 | -155 | |
| Net result | -274 | 162 | +436 | |
Impact on the consolidated balance sheet per 31 December 2017
| In billion euros | Published accounts | Restated | Change | Published accounts | Restated | Change | |
| Asset | 24.4 | 30.2 | +5.8 | Liabilities & Equity | 24.4 | 30.2 | +5.8 |
| Fixed Assets: Equipment | 11.4 | 11.1 | -0.3 | Equity | 3.0 | 2.5 | -0.5 |
| Fixed Assets: right of use | 0.0 | 5.9 | +5.9 | Liabilities | 21.4 | 27.7 | +6.3 |
| Deferred tax asset | 0.2 | 0.5 | +0.2 | Lease debt | 0.0 | 5.1 | +5.1 |
| Maintenance provision | 2.2 | 3.2 | +1.0 |
Impact on the consolidated statement of cash flows
| Q1 2017 | |||
| In million euros | Published accounts | Restated | Change |
| Operating free cash flow | 329 | 581 | +252 |
| Cash flow from financing activities | -192 | -444 | -252 |
| Change in cash and cash equivalents | 126 | 126 | 0 |
All the changes shown in this press release are based on 2017 restated financial statements.
Business Review
Network: Revenue growth in context of strikes impacting margin
| Network | First quarter | ||
| 2018 | Change | Change constant currency | |
| Capacity (EASK m) | 76,993 | +2.8% | |
| Total revenues (€m) | 5,090 | +0.8% | +4.5% |
| Scheduled revenues (€m) | 4,836 | +0.8% | +4.6% |
| Unit revenue per EASK (€ cts) | 6.28 | -2.0% | +1.7% |
| Unit cost per EASK (€ cts) | 6.39 | -0.5% | +3.7% |
| Operating result (€m) | -86 | -76 | -97 |
There has been a positive business environment in the first quarter of 2018, with strong ongoing demand. The Group has increased its Network capacity by 2.8% compared to last year, slightly lower than planned mainly as a result of three days of strikes at Air France. Despite this unfavourable event, the network revenues grew by +4.5% compared to last year at constant currency, which enabled to partly offsett the strike and fuel cost negative impacts. The combined Passenger and Cargo operating result amounted to -86 million euros for first quarter 2018, including around 75 million euros of negative strike impact, a decrease of 97 million euros compared to last year at constant currency.
Passenger: Strong ongoing demand for long-haul and medium-haul hubs, pressure in point-to-point network
| First quarter | |||
| Passenger network | 2018 | Change | Change constant currency |
| Passengers (thousands) | 19,287 | +4.4% | |
| Capacity (ASK m) | 68,174 | +3.2% | |
| Traffic (RPK m) | 59,112 | +4.9% | |
| Load factor | 86.7% | +1.4 pt | |
| Total passenger revenues (€m) | 4,547 | +0.6% | +4.1% |
| Scheduled passenger revenues (€m) | 4,359 | +0.6% | +4.2% |
| Unit revenue per ASK (€ cts) | 6.39 | -2.4% | +1.0% |
The number of passengers carried in the first quarter of 2018 grew by 4.4% to 19.3 million and unit revenue increased by 1.0% at constant currency.
The long-haul network benefitted from a dynamic demand resulting in an unit revenue increase of 1.9% at constant currency. This good performance was driven by the North America, Latin America and Asia networks, with unit revenue increases of respectively 4.9%, 6.2% and 2.4% at constant currency.
The medium-haul network was more mixed: the unit revenue was up 2.3% at constant currency for medium-haul hubs, but down -8.9% on the point-to-point network in France, mainly due to the new TGV competition on Bordeaux and Britanny.
Cargo: Increase in unit revenues compared to last year drives growth of revenues
| First quarter | ||||
| Cargo business | 2018 | Change | Change at constant currency | |
| Tons (thousands) | 270 | -0.8% | ||
| Capacity (ATK m) | 3,415 | +0.6% | ||
| Traffic (RTK m) | 2,036 | -0.4% | ||
| Load factor | 59.6% | -0.6 pt | ||
| Total Cargo revenues (€m) | 543 | +2.6% | +7.9% | |
| Scheduled cargo revenues (€m) | 477 | +2.4% | +8.0% | |
| Unit revenue per ATK (€ cts) | 13.95 | +1.8% | +7.3% | |
The Cargo business has continued its turnaround in the first quarter of 2018, with a market demand remaining strong, especially on outbound Europe and inbound Asia.
Capacity grew by 0.6% and, despite a load factor slightly decreasing, the unit revenue increased by 7.3% at constant currency.
Transavia: Strong capacity growth and strong unit revenue performance contribute to an improvement in operating result
| First quarter | ||
| Transavia | 2018 | Change |
| Passengers (thousands) | 2,727 | +11.3% |
| Capacity (ASK m) | 5,229 | +10.1% |
| Traffic (RPK m) | 4,807 | +16.0% |
| Load factor | 91.9% | +4.6 pt |
| Total passenger revenues (€m) | 235 | +19.3% |
| Unit revenue per ASK (€ cts) | 4.30 | +8.4% |
| Unit cost per ASK (€ cts) | 5.41 | +1.3% |
| Operating result (€m) | -58 | +7 |
Transavia carried 2.7 million passengers in the first quarter 2018, an increase of 11.3% compared to last year. Capacity of Transavia France was strongly up by 25.0%, while capacity of Transavia Holland was up 2.2%. Transavia benefitted from shift of Easter leisure peak traffic from the month of April to March: in total the traffic growth was 16.0%, increasing the load factor by 4.6 pt compared to last year. The unit revenue was clearly up with 8.4% compared to last year.
The first quarter 2018 operating result stood at -58 million euros, an improvement of 7 million euros compared to last year.
Maintenance: Increase of third party revenues
| First quarter | |||
| Maintenance | 2018 | Change | Change at constant currency |
| Total revenues (€m) | 1,075 | +3.7% | |
| Third party revenues (€m) | 471 | +5.1% | +17.2% |
| Operating result (€m) | 27 | -17 | -14 |
| Operating margin (%) | 2.5% | -1.7 pt | -1.7 pt |
The Maintenance revenues increased in the first quarter 2018 compared to last year, with third-party revenues up by 17.2% at constant currency, driven by both engines and components activities. The operating margin expressed as a percentage of total revenues stood at 2.5%, a decrease of 1.7 points at constant currency, but stable excluding an exceptional effect related to the early termination of a components contract.
The Maintenance order book further increased to 10.8 billion dollars at end of the first quarter 2018, an increase of 0.4 billion dollars compared to end of 2017.
Air France-KLM Group: First quarter 2018 impacted by Air France strike
| First quarter | ||||
| 2018 | Change | Change at constant currency | ||
| Capacity (EASK m) | 82,221 | +3.3% | ||
| Capacity excl. Cargo (ASK m) | 73,403 | +3.6% | ||
| Revenues (€m) | 5,806 | +1.8% | +5.9% | |
| EBITDA (€m) | 621 | -4.2% | -6.4% | |
| Operating result (€m) | -118 | -85 | -105 | |
| Operating margin (%) | -2.0% | -1.5 pt | -1.8 pt | |
| Net result, group share (€m) | -269 | -126 | ||
In first quarter 2018, the Air France-KLM Group realized an operating result of -118 million euros, down by 85 million euros compared to last year. This decrease is mainly explained by the strikes at Air France with a negative impact of around 75 million euros and by the fuel price increase.
Unit revenue contributed positively with 91 million euros and unit cost showed a negative effect of 106 million euros, both including strike related effects.
The fuel bill amounted to 1,058 million euros, down 61 million euros, but up 83 million euros at constant currency due to the increase in jet fuel price including hedging.
Currencies had a negative 224 million euros impact on revenues versus first quarter 2017, due to the strengthening of the euro against other currencies. The positive impact on costs reached 245 million euros, including a tailwind from currency hedging. In the first quarter 2018, the net impact of currencies thus amounted to a positive 20 million euros.
Unit cost
On a constant currency, fuel price and pension-related expense basis, the unit cost was up +2.1% in the first quarter 2018, of which +1.7% was resulting from the strikes at Air France and +0.4% from a one-off item.
Increased productivity supported by capacity growth
Productivity, measured in EASK per FTE, increased by 2.1% with a capacity increase of 3.3%. The average number of staff increased by 900 FTEs including +100 FTEs in Pilots and +1100 FTEs in Cabin crew relating to the capacity increase. Ground staff were reduced by -300 FTEs.
Net employee costs in the first quarter 2018 were up 1.9% compared to last year, including a profit sharing component for KLM. Excluding this effect, the net employee costs were up 0.6%.
Further strengthening of the financial structure
| First quarter | ||
| In million euros | 2018 | Change |
| Cash flow before change in WCR and Voluntary Departure Plans, continuing operations | 512 | -49 |
| Cash out related to Voluntary Departure Plans | -22 | +15 |
| Change in Working Capital Requirement (WCR) | 807 | +125 |
| Net cash flow from operating activities | 1,297 | +91 |
| Net investments before sale & lease-back* | -913 | -288 |
| Operating free cash flow | 384 | -197 |
| Reduction of lease debt | -242 | +15 |
| Adjusted operating free cash flow ** | 142 | -182 |
* Sum of 'Purchase of property, plant and equipment and intangible assets' and 'Proceeds on disposal of property, plant and equipment and intangible assets' as presented in the consolidated cash flow statement.
** With the implementation of new accounting standards IFRS 16, the cash-out related to the repayment of lease debt is not deducted from the "Operating free cash flow". The "Adjusted operating free cash" is the Operating free cash flow" after deduction of the repayment of lease debt.
Positive adjusted operating free cash flow
The Group has generated an adjusted operating free cash flow of 142 million euros in the first quarter 2018, compared to 324 million euros in the first quarter 2017. The change in working capital amounted to 807 million euros, an increase by 125 million euros compared to last year, and net investments amounted to 913 million euros, an increase of 288 million euros.
Net debt reduction by the generated adjusted operating free cash flow and reduction of lease debt
| In million euros | 31 Mar 2018 | 31 Dec 2017 |
| Net debt | 6,282 | 6,567 |
| EBITDA1 | 4,748 | 4,774 |
| Net debt/EBITDA1 | 1.3 x | 1.4 x |
At 31 March 2018, net debt had been further reduced to 6,282 million euros versus 6,567 million euros at 31 December 2017, an improvement of 329 million euros generated by the operating free cash flow and the net reduction of lease debt.
The net debt / EBITDA ratio decreased from 1.4x at 31 December 2017 to 1.3x at 31 March 2018.
Air France results impacted by strike and domestic market, KLM improvement benefitting from robust demand
| First quarter | ||
| Operating result | 2018 | Change |
| Air France Group (€m) | -178 | -121 |
| Operating margin (%) | -5.0% | -3.4 pt |
| KLM Group (€m) | 60 | +32 |
| Operating margin (%) | 2.5% | +1.3pt |
First Quarter 2018 operating income was down by -121 million euros at Air France due to strike and competitive pressure in the domestic market.
KLM operating income improved by 32 million euros benefitting from a robust demand environment.
Outlook
The global context remains uncertain given the current geopolitical environment, labour wage inflation pressure, strengthening of the euro compared to other currencies and rising fuel price trends.
Demand and revenue environement:
- The latest available data from the Passenger network show a continuing positive trend in demand for May until August 2018: the current long haul forward bookings for the coming four months are on average ahead of last year levels.
- Passenger Network unit revenue is expected to be flat in second quarter 2018 at constant currency compared to last year.
Some guidance elements have been adjusted to take into account the Air France strike impact of at least 300 million euros on the operating result, and the macroeconomic context:
- Air France-KLM plans to increase its 2018 capacity between 2.5% and 3.5% in available seat kilometers for the Passenger Network, compared to a previous forecast of 3.0% to 4.0%.
- The full year unit cost change is expected between 0% and +1.0% at constant currency, fuel and pension charges, including strike related costs and associated capacity adjustement, compared to an initial target of -1.0% to -1.5%.
- The 2018 fuel bill, is expected to increase compared to last year by 350 million euros1, based on the forward curve of 27 April 2018 and after positive hedge result of 750 million dollars.
- A currency headwind of around 100 million euros is expected due to the strengthening of the Euro compared to other currencies.
As a consequence, the full year 2018 operating result is expected to be notably below 2017.
Capex plan and net debt target:
- The investment plan will be managed in the target range of 2.0 billion to 2.5 billion euros.
- The Group is targeting to further reduce its net debt compared to 31 December 2017.
Due to the strike impacts on the 2018 Air France results, the management will carefully continue to manage the financial structure of the Group and its growth plan.
*****
The First Quarter 2017 accounts are not audited by the Statutory Auditors.
The results presentation is available at www.airfranceklm.com on 4th May 2018 from 7:15 am CET.
A conference call hosted by Mr Gagey (CFO) will be held on May 4th 2018 at 08.15.
To connect to the conference call, please dial:
Confirmation code: 9332673
- France: +33 (0)1 76 77 22 57
- Netherlands: +31 (0)20 703 8261
- UK: +44 (0)330 336 9411
- US: +1 323 794 2551
Investor Relations Press
Marie-Agnès de Peslouan Wouter van Beek
+33 1 49 89 52 59 +33 1 49 89 52 60 +33 1 41 56 56 00
madepeslouan@airfranceklm.com Wouter-van.Beek@airfranceklm.com
Income Statement
| First quarter | |||
| In millions euros | 2018 | 2017 | Change |
| Sales | 5,806 | 5,705 | +1.8% |
| Other revenues | 0 | 0 | nm |
| Revenues | 5,806 | 5,705 | +1.8% |
| Aircraft fuel | -1,061 | -1,120 | -5.3% |
| Chartering costs | -130 | -126 | +3.2% |
| Landing fees and en route charges | -427 | -437 | -2.3% |
| Catering | -182 | -185 | -1.6% |
| Handling charges and other operating costs | -476 | -419 | +13.6% |
| Aircraft maintenance costs | -617 | -592 | +4.2% |
| Commercial and distribution costs | -232 | -228 | +1.8% |
| Other external expenses | -394 | -358 | +10.1% |
| Salaries and related costs | -1,853 | -1,812 | +2.3% |
| Taxes other than income taxes | -49 | -45 | +8.9% |
| Other income and expenses | 236 | 265 | -10.9% |
| EBITDA | 621 | 648 | -4.2% |
| Amortization, depreciation and provisions | -739 | -681 | +8.5% |
| Income from current operations | -118 | -33 | +257.6% |
| Sales of aircraft equipment | -5 | 9 | nm |
| Other non-current income and expenses | -42 | -7 | +500.0% |
| Income from operating activities | -165 | -31 | +432.3% |
| Cost of financial debt | -114 | -149 | -23.5% |
| Income from cash and cash equivalent | 10 | 9 | +11.1% |
| Net cost of financial debt | -104 | -140 | -25.7% |
| Other financial income and expenses | 12 | 46 | -73.9% |
| Income before tax | -257 | -125 | +105.6% |
| Income taxes | -6 | -21 | -71.4% |
| Net income of consolidated companies | -263 | -146 | +80.1% |
| Share of profits (losses) of associates | -6 | 3 | nm |
| Income from continuing operations | -269 | -143 | +88.1% |
| Net income from discontinued operations | 0 | 0 | nm |
| Net income for the period | -269 | -143 | +88.1% |
| Minority interest | 0 | 0 | nm |
| Net income for the period - Group | -269 | -143 | +88.1% |
Consolidated Balance Sheet
| Assets | 31 Mar 2018 | 31 Dec 2017 |
| In million euros | ||
| Goodwill | 215 | 216 |
| Intangible assets | 1,147 | 1,122 |
| Flight equipment | 10,084 | 9,634 |
| Other property, plant and equipment | 1,446 | 1,418 |
| Right-of-use assets | 5,769 | 5,863 |
| Investments in equity associates | 290 | 301 |
| Pension assets | 602 | 590 |
| Other financial assets | 1,229 | 1,242 |
| Deferred tax assets | 430 | 479 |
| Other non-current assets | 207 | 239 |
| Total non-current assets | 21,419 | 21,104 |
| Assets held for sale | 0 | 0 |
| Other short-term financial assets | 399 | 421 |
| Inventories | 576 | 557 |
| Trade receivables | 2,452 | 2,165 |
| Other current assets | 1,325 | 1,242 |
| Cash and cash equivalents | 4,074 | 4,673 |
| Total current assets | 8,826 | 9,058 |
| Total assets | 30,245 | 30,162 |
| Liabilities and equity | 31 Mar 2018 | 31 Dec 2017 |
| In million euros | ||
| Issued capital | 429 | 429 |
| Additional paid-in capital | 4,139 | 4,139 |
| Treasury shares | -67 | -67 |
| Perpetual | 600 | 600 |
| Reserves and retained earnings | -2,780 | -2,620 |
| Equity attributable to equity holders of Air France-KLM | 2,321 | 2,481 |
| Non-controlling interests | 12 | 12 |
| Total Equity | 2,333 | 2,493 |
| Pension provisions | 2,175 | 2,202 |
| Other provisions | 2,971 | 2,927 |
| Financial debt | 5,766 | 5,919 |
| Lease debt | 3,831 | 4,148 |
| Deferred tax liabilities | 8 | 6 |
| Other non-current liabilities | 364 | 361 |
| Total non-current liabilities | 15,115 | 15,563 |
| Provisions | 279 | 284 |
| Current portion of financial debt | 774 | 1,378 |
| Current portion of lease debt | 1,151 | 993 |
| Trade payables | 2,428 | 2,366 |
| Deferred revenue on ticket sales | 4,042 | 3,017 |
| Frequent flyer programs | 816 | 819 |
| Other current liabilities | 3,301 | 3,243 |
| Bank overdrafts | 6 | 6 |
| Total current liabilities | 12,797 | 12,106 |
| Total equity and liabilities | 30,245 | 30,162 |
Consolidated Statement of Cash Flows from 1st January until 31st March 2018
| In million euros | 31 Mar 2018 | 31 Mar 2017 |
| Net income from continuing operations | -269 | -143 |
| Net income from discontinued operations | 0 | 0 |
| Amortization, depreciation and operating provisions | 739 | 681 |
| Financial provisions | 26 | 30 |
| Loss (gain) on disposals of tangible and intangible assets | 4 | -9 |
| Loss (gain)on disposals of subsidiaries and associates | 0 | 0 |
| Derivatives - non monetary result | 13 | 16 |
| Unrealized foreign exchange gains and losses, net | -24 | -56 |
| Impairment | 0 | 0 |
| Other non-monetary items | -6 | -4 |
| Share of (profits) losses of associates | 6 | -4 |
| Deferred taxes | 1 | 13 |
| Financial Capacity | 490 | 524 |
| Of which discontinued operations | 0 | 0 |
| (Increase) / decrease in inventories | -13 | -115 |
| (Increase) / decrease in trade receivables | -310 | -275 |
| Increase / (decrease) in trade payables | 64 | 81 |
| Change in other receivables and payables | 1,066 | 991 |
| Change in working capital requirements | 807 | 682 |
| Change in working capital from discontinued operations | 0 | 0 |
| Net cash flow from operating activities | 1,297 | 1,206 |
| Purchase of property, plant and equipment and intangible assets | -939 | -668 |
| Proceeds on disposal of property, plant and equipment and intangible assets | 26 | 43 |
| Proceeds on disposal of subsidiaries, of shares in non-controlled entities | 3 | 1 |
| Acquisition of subsidiaries, of shares in non-controlled entities | -8 | -1 |
| Dividends received | 3 | 1 |
| Decrease (increase) in net investments, more than 3 months | -12 | -4 |
| Net cash flow used in investing activities of discontinued operations | 0 | 0 |
| Net cash flow used in investing activities | -927 | -628 |
| Increase of capital | 0 | 0 |
| Sale of minority interest without change in control | 0 | 0 |
| Issuance of debt | 24 | 45 |
| Repayment on financial debt | -781 | -234 |
| Payments on leases debt | -242 | -257 |
| Decrease (increase ) in loans, net | 34 | 2 |
| Dividends and coupons on perpetual paid | 0 | 0 |
| Net cash flow used in financing activities of discontinued operations | 0 | 0 |
| Net cash flow from financing activities | -965 | -444 |
| Effect of exchange rate on cash and cash equivalents and bank overdrafts | -4 | -8 |
| Effect of exch. rate on cash and cash eq. and bank overdrafts of disc. ops. | 0 | 0 |
| Change in cash and cash equivalents and bank overdrafts | -599 | 126 |
| Cash and cash equivalents and bank overdrafts at beginning of period | 4,667 | 3,933 |
| Cash and cash equivalents and bank overdrafts at end of period | 4,068 | 4,059 |
| Change in treasury of discontinued operations | 0 | 0 |
Key Performance Indicators
EBITDA
| First quarter | ||
| In million euros | 2018 | 2017 |
| Income/(loss) from current operations | -118 | -33 |
| Amortization, depreciation and provisions | 739 | 681 |
| EBITDA | 621 | 648 |
Restated net result, group share
| First quarter | ||
| In million euros | 2018 | 2017 |
| Net income/(loss), Group share | -269 | -143 |
| Net income/(loss) from discontinued operations | 0 | 0 |
| Unrealized foreign exchange gains and losses, net | -24 | -56 |
| Change in fair value of financial assets and liabilities (derivatives) | 14 | -6 |
| Non-current income and expenses | 47 | -2 |
| Depreciation of shares available for sale | 0 | 0 |
| De-recognition of deferred tax assets | 0 | 0 |
| Restated net income/(loss), group share | -232 | -207 |
| Coupons on perpetual | 0 | -6 |
| Restated net income/(loss), group share including coupons on perpetual (used to calculate earnings per share) | -232 | -213 |
| Restated net income/(loss) per share (in €) | -0.54 | -0.71 |
Return on capital employed (ROCE)1
| In million euros | 31 Mar 2018 | 31 Mar 2017 | 31 Mar 2017 | 31 Mar 2016 |
| Goodwill and intangible assets | 1,362 | 1,320 | 1,320 | 1,242 |
| Flight equipment | 10,084 | 9,158 | 9,158 | 8,746 |
| Other property, plant and equipment | 1,446 | 1,382 | 1,382 | 1,475 |
| Right of use assets | 5,725 | 5,511 | 5,511 | 5,746 |
| Investments in equity associates | 290 | 295 | 295 | 74 |
| Financial assets excluding shares available for sale, marketable securities and financial deposits | 117 | 110 | 110 | 93 |
| Provisions, excluding pension, cargo litigation and restructuring | -2,726 | -2,719 | -2,719 | -2,505 |
| WCR, excluding market value of derivatives | -6,606 | -6,222 | -6,222 | -5,881 |
| Capital employed | 9,692 | 8,835 | 8,835 | 8,993 |
| Average capital employed (A) | 9,264 | 8,914 | ||
| Adjusted results from current operations | 1,852 | 1,253 | ||
| - Dividends received | -3 | -2 | ||
| - Share of profits (losses) of associates | 11 | -2 | ||
| - Tax recognized in the adjusted net result | -553 | -371 | ||
| Adjusted result from current operations after tax (B) | 1,307 | 878 | ||
| ROCE, trailing 12 months (B/A) | 14.1% | 9.8% | ||
Net debt
| Balance sheet at | ||
| In million euros | 31 Mar 2018 | 31 Dec 2017 |
| Current and non-current financial debt | 6,540 | 7,297 |
| Deposits on aircraft under finance lease | 4,560 | 4,713 |
| Financial assets pledged (OCEANE swap) | 0 | 0 |
| Currency hedge on financial debt | 19 | 19 |
| Accrued interest | -71 | -76 |
| Gross financial debt (A) | 11,048 | 11,953 |
| Cash and cash equivalents | 4,074 | 4,673 |
| Marketable securities | 84 | 73 |
| Cash pledges | 269 | 269 |
| Deposits (bonds) | 346 | 379 |
| Bank overdrafts | -6 | -6 |
| Other | -1 | -2 |
| Net cash (B) | 4,766 | 5,386 |
| Net debt (A) - (B) | 6,282 | 6,567 |
Adjusted operating free cash flow
| First quarter | ||
| In million euros | 2018 | 2017 |
| Net cash flow from operating activities, continued operations | 1,297 | 1,206 |
| Investment in property, plant, equipment and intangible assets | -939 | -668 |
| Proceeds on disposal of property, plant, equipment and intangible assets | 26 | 43 |
| Operating free cash flow | 384 | 581 |
| Payments on lease debt | -242 | -257 |
| Adjusted operating free cash flow | 142 | 324 |
Unit cost: net cost per EASK
| First quarter | ||
| 2018 | 2017 | |
| Revenues (in €m) | 5,806 | 5,705 |
| Income/(loss) from current operations (in €m) | 118 | 33 |
| Total operating expense (in €m) | 5,924 | 5,738 |
| Passenger network business - other revenues (in €m) | -188 | -189 |
| Cargo business - other revenues (in €m) | -67 | -64 |
| Third-party revenues in the maintenance business (in €m) | -471 | -448 |
| Transavia - other revenues (in €m) | -10 | -9 |
| Third-party revenues of other businesses (in €m) | -10 | -10 |
| Net cost (in €m) | 5,178 | 5,018 |
| Capacity produced, reported in EASK* | 82,221 | 79,607 |
| Net cost per EASK (in € cents per EASK) | 6.30 | 6.30 |
| Gross change | -0.1% | |
| Currency effect on net costs (in €m) | -191 | |
| Change at constant currency | 3.9% | |
| Fuel price effect (in €m) | 83 | |
| Change on a constant currency and fuel price basis | 2.2% | |
| Change in pension-related expenses (in €m) | 6 | |
| Net cost per EASK on a constant currency, fuel price and pension-related expenses basis (in € cents per EASK) | 6.30 | 6.17 |
| Change on a constant currency, fuel price and pension-related expenses basis | +2.1% | |
* The capacity produced by the transportation activities is combined by adding the capacity of the Passenger network (in ASK) to that of Transavia (in ASK) and the Cargo business (in ATK) converted into EASK based on a separate fixed factor for Air France and for KLM..
Airline results
Air France Group
| First quarter | ||
| 2018 | Change | |
| Revenue (in €m) | 3,553 | -0.8% |
| EBITDA (in €m) | 305 | -79 |
| Operating result (en m€) | -178 | -121 |
| Operating margin (%) | -5.0% | -3.4 pt |
| Operating cash flow before WCR and restructuring cash out (in €m) | 266 | -79 |
| Operating cash flow (before WCR and restructuring) margin | 7.5% | -2.1 pt |
KLM Group
| First quarter | ||
| 2018 | Change | |
| Revenue (in €m) | 2,387 | +7.4% |
| EBITDA (in €m) | 313 | +47 |
| Operating result (en m€) | 60 | +32 |
| Operating margin (%) | 2.5% | +1.3 pt |
| Operating cash flow before WCR and restructuring cash out (in €m) | 245 | +33 |
| Operating cash flow (before WCR and restructuring) margin | 10.3% | +0.7 pt |
NB: Sum of individual airline results does not add up to Air France-KLM total due to intercompany eliminations at Group level
Group fleet at 31st of March 2018
| Aircraft type | AF (incl. HOP) | KL (incl. KLC & MP) | Transavia | Owned | Finance lease | Operating lease | Total | In operation | Change / 31/12/17 |
| B747-400 | 12 | 12 | 12 | 12 | -1 | ||||
| B777-300 | 43 | 14 | 10 | 25 | 22 | 57 | 57 | ||
| B777-200 | 25 | 15 | 22 | 3 | 15 | 40 | 40 | ||
| B787-9 | 5 | 12 | 3 | 2 | 12 | 17 | 17 | 2 | |
| A380-800 | 10 | 1 | 4 | 5 | 10 | 10 | |||
| A340-300 | 7 | 7 | 7 | 7 | |||||
| A330-300 | 5 | 5 | 5 | 5 | |||||
| A330-200 | 15 | 8 | 10 | 1 | 12 | 23 | 23 | ||
| Total Long-Haul | 105 | 66 | 0 | 65 | 35 | 71 | 171 | 171 | 1 |
| B737-900 | 5 | 1 | 1 | 3 | 5 | 5 | |||
| B737-800 | 27 | 64 | 24 | 9 | 58 | 91 | 91 | 4 | |
| B737-700 | 18 | 8 | 3 | 8 | 15 | 26 | 26 | ||
| A321 | 20 | 11 | 9 | 20 | 20 | ||||
| A320 | 43 | 4 | 4 | 35 | 43 | 43 | 1 | ||
| A319 | 38 | 20 | 5 | 13 | 38 | 35 | -3 | ||
| A318 | 18 | 12 | 6 | 18 | 18 | ||||
| Total Medium-Haul | 119 | 50 | 72 | 75 | 33 | 133 | 241 | 238 | 2 |
| ATR72-600 | 6 | 6 | 6 | 6 | |||||
| ATR72-500 | 2 | 1 | 1 | 2 | 2 | -1 | |||
| ATR42-500 | 10 | 6 | 4 | 10 | 9 | -2 | |||
| Canadair Jet 1000 | 14 | 14 | 14 | 14 | |||||
| Canadair Jet 700 | 11 | 11 | 11 | 10 | -1 | ||||
| Embraer 190 | 10 | 32 | 8 | 13 | 21 | 42 | 42 | 2 | |
| Embraer 175 | 16 | 5 | 11 | 16 | 16 | 4 | |||
| Embraer 170 | 15 | 8 | 2 | 5 | 15 | 15 | |||
| Embraer 145 | 18 | 14 | 4 | 18 | 13 | ||||
| Total Regional | 86 | 48 | 0 | 66 | 31 | 37 | 134 | 127 | 2 |
| B747-400ERF | 3 | 3 | 3 | 3 | |||||
| B747-400BCF | 1 | 1 | 1 | 1 | |||||
| B777-F | 2 | 2 | 2 | 2 | |||||
| Total Cargo | 2 | 4 | 0 | 6 | 0 | 0 | 6 | 6 | 0 |
| Total | 312 | 168 | 72 | 212 | 99 | 241 | 552 | 542 | 5 |
[1] Since January 1st, 2018, Air France-KLM Group applies the new accounting standards IFRS 9, 15 and 16. For the purpose of comparison, the Group consolidated financial statements have been restated as of 1st January 2017.
1 Sliding 12 months
1 Based on the forward curves of 27 April 2018, 2018 average Brent price of USD 71, average jet fuel price of USD 681 per ton and and exchange rate of EUR/USD of 1.23 in 2018
1 The ROCE definition has been updated within the framework of IFRS 16 implementation. The asset value linked to the aircraft lease contracts now corresponds to the net book value of the right-of-use asset of all the lease contracts. Moreover, the "operating result, adjusted for operating leases" does not exist anymore and has been replaced by the "income from current operations" which, thanks to IFRS 16 implementation, does not contain anymore the financial cost of lease contracts. Finally, the Group now uses a normative income tax rate, calculated according to the tax rates applied in France and in the Netherlands.
