3 May 2019
| FIRST QUARTER 2019 RESULTS Unit revenue pressure as anticipated, operational performance improvement |
FIRST QUARTER 2019
- Passenger growth +3% and load factor -0.3 point.
- Unit revenue down -1.9% due to Easter shift and substantial industry capacity growth in the winter.
- Unit costs decrease by -0.4% at constant currency and fuel.
- Operating result at -303 million euros, with unit cost improvement more than offset by unit revenue, fuel bill and currency headwinds.
- Further reduction in Group net debt, down 403 million euros to 5.8 billion euros and Net debt/EBITDA ratio at 1.4x stable compared to 31 December 2018.
OUTLOOK 2019
- Long Haul industry capacity to / from Europe for the summer 2019 is projected to grow at a slower pace compared to last year, particularly to Middle East, North America and Asia.
- Based on current data for Passenger network:
- Long-haul forward booking load factors from May to September are on average ahead compared to last year.
- Network passenger unit revenues at constant currency expected to slightly improve compared to last year for the second quarter 2019, with positive long haul unit revenues largely offset by negative point-to-point unit revenues.
- Full year guidance confirmed:
- Unit cost (CASK) reduction between -1% and 0% at constant currency and fuel price,
- Net debt/EBITDA ratio below 1.5x.
Benjamin Smith, Air France-KLM Group CEO said: “As anticipated, the first quarter has been challenging for the European airline industry including the Air France-KLM Group, as substantial industry capacity growth in the off-peak business period led to unit revenue pressure. In this context, the Group achieved further improvement in unit cost while reaping the benefits of its efforts to strengthen its positioning, as evidenced by the first signs of progress in operational performance at Air France, notably in term of “Net Promoter Score” and punctuality. These elements, together with a more benign industry supply outlook for the summer, lead us to expect improving trends in the rest of the year and to confirm our full-year guidance. We aim to have a capital market day planned in November 2019 to further outline the Group strategic directions.”
| Air France-KLM Group | First quarter | |
| 2019 | Change | |
| Passengers (thousands) | 22,674 | +3.0% |
| Passenger Unit revenue per ASK1 (€ cts) | 6.17 | -1.9% |
| Operating result (€m) | -303 | -185 |
| Net income – Group part (€m) | -320 | -51 |
| Adj. operating free cash flow (€m) | 241 | +99 |
| Net debt at end of period (€m) | 5,761 | -403 |
First quarter 2019 business review
Network: Operating result impacted by unit revenue pressure and fuel bill increase
| Network | First quarter | ||
| 2019 | Change | Change constant currency | |
| Capacity (ASK m) | 69,759 | +2.3% | |
| Total revenues (€m) | 5,175 | +1.7% | +1.0% |
| Scheduled revenues (€m) | 4,893 | +1.2% | +0.4% |
| Operating result (€m) | -279 | -193 | -146 |
First quarter 2019 combined Passenger and Cargo revenues increased by 1.0% at constant currency to 5.2 billion euros, for a capacity growth of 2.3%. The operating result amounted to -279 million euros, a 146 million euros decrease at constant currency compared to last year, mostly due to unit revenue pressure and fuel bill increase as anticipated.
Passenger network: Resilient unit revenues for long-haul and premium and decline in short- and medium-haul
| First quarter | |||
| Passenger network | 2019 | Change | Change constant currency |
| Passengers (thousands) | 19,745 | +2.4% | |
| Capacity (ASK m) | 69,759 | +2.3% | |
| Traffic (RPK m) | 60,221 | +1.9% | |
| Load factor | 86.3% | -0.4 pt | |
| Total passenger revenues (€m) | 4,628 | +1.8% | +1.3% |
| Scheduled passenger revenues (€m) | 4,420 | +1.4% | +0.7% |
| Unit revenue per ASK (€ cts) | 6.34 | -0.9% | -1.6% |
First quarter 2019 capacity increased by 2.3%, mainly driven by the South American, North Atlantic and Asian networks with respective growth of 9.8%, 5.3% and 1.8%.
The passenger network experienced a supply – demand imbalance putting pressure on unit revenues. Revenue management anticipated to price competitive trends in the market and managed to contain impact on unit revenues to -1.6% at constant currency compared to last year.
- The North America network experienced competitive pricing sensitivity and posted a 2.5% unit revenue decrease, but after a strong unit revenue performance in the previous year (+4.9%).
- The 9.8% additional capacity on South America was driven by growth on the Andean routes and the opening of the Fortaleza service in April 2018. Ongoing pressure persists due to economic difficulties in Argentina and the international demand recovery of the Brazilian market progressing slower than anticipated.
- The Asian network’s solid performance trend continues, with first quarter unit revenue up 1.7%, driven in particular by the Japanese network.
- Caribbean & Indian Ocean network posted a strong result with unit revenues of +4.3%, driven by strong leisure demand.
- Africa & Middle East network was relatively stable compared to last year.
- The medium-haul network saw a unit revenue decrease of 2.4%, due to substantial intra-European industry capacity growth.
Cargo network: Unit revenues impacted by slowdown of air freight market
| First quarter | |||
| Cargo network | 2019 | Change | Change constant currency |
| Tons (thousands) | 270 | +0.0% | |
| Capacity (ATK m) | 3,462 | +1.4% | |
| Traffic (RTK m) | 2,046 | +0.5% | |
| Load factor | 59.1% | -0.5 pt | |
| Total Cargo revenues (€m) | 547 | +0.7% | -1.3% |
| Scheduled cargo revenues (€m) | 473 | -0.8% | -2.8% |
| Unit revenue per ATK (€ cts ) | 13.67 | -2.0% | -4.0% |
A slowdown of volumes in the first quarter is visible in the whole air freight market, due to economic slowdown, political uncertainties and trade disputes. This has put pressure on freight rates, resulting in a unit revenue development of -4.0% at constant currency. Several network rationalization measures have been implemented during the quarter to counterbalance the negative trend. A slight capacity increase has been offset by this unit revenue decrease, resulting in a decline of revenues by 1.3% at constant currency.
Transavia: Strong capacity growth, but unit revenue decline primarily explained by Easter shift
| First quarter | ||
| Transavia | 2019 | Change |
| Passengers (thousands) | 2,929 | +7.4% |
| Capacity (ASK m) | 5,826 | +11.4% |
| Traffic (RPK m) | 5,368 | +11.7% |
| Load factor | 92.1% | +0.2 pt |
| Total passenger revenues (€m) | 249 | +6.0% |
| Unit revenue per ASK (€ cts) | 4.15 | -3.5% |
| Unit cost per ASK (€ cts) | 5.37 | -0.8% |
| Operating result (€m) | -71 | -13 |
First quarter 2019 saw the launch of several new routes and a strong capacity growth of 11.4%. Unit revenues decreased by 3.5% compared to last year, primarily explained by Easter shift and an increase of stage length of the route network. The unit cost improved with -0.8% and -1.7% at constant fuel and currency.
The first quarter 2019 operating result stood at -71 million euros, 13 million euros lower compared to last year.
Maintenance: Strong third party revenue growth and margin improvement
| First quarter | |||
| Maintenance | 2019 | Change | Change constant currency |
| Total revenues (€m) | 1,170 | +8.7% | |
| Third party revenues (€m) | 554 | +17.6% | +9.9% |
| Operating result (€m) | 47 | 20 | 16 |
| Operating margin (%) | 4.0% | +1.5 pt | +1.3 pt |
Maintenance revenues increased compared to last year with third-party revenues up by 9.9% at constant currency, a continuation of the growth trend realized by the inflow of new contracts. The Maintenance order book stood at 11.5 billion dollars at 31 March 2019, an increase of 0.1 billion dollars compared to 31 December 2018.
The operating margin expressed as a percentage of total revenues stood at 4.0%, an increase of 1.3 point at constant currency compared to last year, explained by the focus on margin quality in both engine and component businesses.
Air France-KLM Group: Unit cost improvement more than offset by unit revenue, fuel and currency headwinds
| First quarter | |||
| 2019 | Change | Change constant currency | |
| Capacity (ASK m) | 75,586 | +3.0% | |
| Traffic (RPK m) | 65,589 | +2.6% | |
| Passenger unit revenue per ASK (€ cts) | 6.17 | -1.2% | -1.9% |
| Group unit revenue per ASK (€ cts) | 6.79 | -1.4% | -2.2% |
| Group unit cost per ASK (€ cts) at constant fuel | 7.19 | +1.2% | -0.4% |
| Revenues (€m) | 5,986 | +3.1% | +2.0% |
| EBITDA (€m) | 424 | -31.7% | -26.3% |
| Operating result (€m) | -303 | -185 | -142 |
| Operating margin (%) | -5.1% | -3.0 pt | -2.3 pt |
| Net income - Group part (€m) | -320 | -51 | |
In the first quarter 2019, the Air France-KLM Group posted an operating result of -303 million euros, down 185 million euros compared to last year, which was impacted by the Air France strike for -75 million euros.
The unit revenue at constant currency of -2.2% compared to last year had a negative impact of 115 million euros on the operating result.
The fuel bill including hedging amounted to 1,201 million euros for first quarter 2019, up 140 million euros, of which 44 million euros is explained by an increase in the fuel price and a volume effect of 34 million euros for the capacity increase compared to last year. The result of the fuel hedges has been a gain of 35 million euros.
Currencies had a positive 65 million euro impact on revenues and a negative 108 million euro effect on costs including currency hedging. The net impact of currencies thus amounted to a negative 43 million euros for first quarter 2019.
Unit costs in line with full year guidance
On a constant currency and fuel price basis, unit costs were down -0.4% in the first quarter 2019, driven in particular by the decrease in customer compensations compared to first quarter 2018 that was marked by the strikes in Air France
However this was partly offset by KLM unit cost which were impacted by a 1.3% lower than planned capacity due to weather and technical reasons.
Net employee costs were up 6.4% in the quarter compared to last year, explained by additional hirings for the capacity growth, the impact of the implemented wage agreements for Air France and KLM staff and the last year strike effect.
Compared to last year, the average number of FTEs increased by 1,050, including +450 Pilots and +50 Cabin Crew in response to the capacity growth. However, productivity measured in ASK per FTE increased by 1.7% in the first quarter 2019 while capacity increased by 3.0%.
Positive operating free cash flow and net debt reduction
| First quarter | ||
| In € million | 2019 | Change |
| Cash flow before change in WCR and Voluntary Departure Plans, continuing operations | 368 | -144 |
| Cash out related to Voluntary Departure Plans | -4 | +18 |
| Change in Working Capital Requirement (WCR) | 806 | -1 |
| Net cash flow from operating activities | 1,170 | -127 |
| Net investments before sale & lease-back* | -678 | +235 |
| Operating free cash flow | 492 | +108 |
| Reduction of lease debt | -251 | -9 |
| Adjusted operating free cash flow ** | 241 | 99 |
* 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.
** The “Adjusted operating free cash” is operating free cash flow with deduction of the repayment of lease debt.
Adjusted operating free cash flow positive
The Group generated positive adjusted operating free cash flow of 241 million euros, an increase of 99 million euros compared to last year, mainly explained by a lower capex in the first quarter 2019 due to a year-over-year shift in investment timing pattern.
Leverage stable
| In € million | 31 Mar 2019 | 31 Dec 2018 |
| Net debt | 5,761 | 6,164 |
| EBITDA trailing 12 months | 4,020 | 4,217 |
| Net debt/EBITDA trailing 12 months | 1.4x | 1.5x |
The Group reduced its net debt to 5,761 million euros at 31 March 2019 versus 6,164 million euros at 31 December 2018. This 403 million euro reduction was driven by operating free cash flow generation and the repayment of lease debt.
The net debt/EBITDA ratio stood at 1.4x at 31 March 2019, a decrease of 0.03 point compared to 31 December 2018, explained by the reduction of the net debt.
Both airlines impacted by unit revenue pressure and fuel bill increase
| First quarter | ||
| 2019 | Change | |
| Air France Group | ||
| Operating result (€m) | -256 | -78 |
| Operating margin (%) | -6.9% | -1.9 pt |
| KLM Group | ||
| Operating result (€m) | -56 | -116 |
| Operating margin (%) | -2.3% | -4.5 pt |
Outlook
The global context remains uncertain given the current geopolitical environment and fuel price trends.
For the full year 2019, the Air France-KLM Group plans to selectively grow capacity for the Passenger network by 2% to 3% compared to 2018. Transavia will continue to grow at a sustained pace of 9% to 11%.
Long Haul industry capacity to / from Europe for the summer 2019 is projected to grow at a slower pace compared to last year, particularly to Middle East, North America and Asia.
Based on the current data for the Passenger network:
- Long-haul forward booking load factors from May to September are on average ahead compared to last year.
- Network passenger unit revenues at constant currency expected to slightly improve compared to last year for the second quarter 2019, with positive long haul unit revenues largely offset by negative point-to-point unit revenues.
Full year guidance confirmed:
- The Group will pursue initiatives to reduce unit costs1, with a targeted reduction for 2019 of between -1% to 0% at constant currency and fuel price.
- The 2019 fuel bill is expected to increase by 650 million euros compared to 2018 to 5.6 billion euros2, based on the forward curve of 26 April 2019.
- The Group’s capital expenditures are planned at the level of 3.2 billion euros for the year 2019 and the Group is targeting a Net debt/EBITDA ratio below 1.5x.
*****
The first Quarter 2019 accounts are not audited by the Statutory Auditors.
The results presentation is available at www.airfranceklm.com on 3 May 2019 from 7:15 am CET.
A conference call hosted by Mr Gagey (CFO) will be held on 3 May 2019 at 08.30.
To connect to the conference call, please dial:
France: Local +33 (0)1 76 77 22 57
Netherlands: Local +31 (0)20 703 8261
UK: Local +44 (0)330 336 9411
US: Local +1 720-543-0206
Confirmation code: 3069097
To listen to the audio-replay of the conference call, please dial:
- France: +33 (0) 1 70 48 00 94
- Netherlands: +31 (0) 20 721 8903
- US: +1 719-457-0820
Confirmation code: 3069097
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 | 2019 | 2018 | Change |
| Sales | 5,986 | 5,806 | +3.1% |
| Other revenues | 0 | 0 | -100.0% |
| Revenues | 5,986 | 5,806 | +3.1% |
| Aircraft fuel | -1,201 | -1,061 | +13.2% |
| Chartering costs | -134 | -130 | +3.1% |
| Landing fees and en-route charges | -434 | -427 | +1.6% |
| Catering | -187 | -182 | +2.7% |
| Handling charges and other operating costs | -454 | -476 | -4.6% |
| Aircraft maintenance costs | -652 | -617 | +5.7% |
| Commercial and distribution costs | -250 | -232 | +7.8% |
| Other external expenses | -439 | -394 | +11.4% |
| Salaries and related costs | -1,972 | -1,853 | +6.4% |
| Taxes other than income taxes | -52 | -49 | +6.1% |
| Other income and expenses | 213 | 236 | -9.7% |
| EBITDA | 424 | 621 | -31.7% |
| Amortization, depreciation and provisions | -727 | -739 | -1.6% |
| Income from current operations | -303 | -118 | +156.8% |
| Sales of aircraft equipment | 13 | -4 | nm |
| Other non-current income and expenses | 5 | -43 | nm |
| Income from operating activities | -285 | -165 | +72.7% |
| Cost of financial debt | -106 | -114 | -7.0% |
| Income from cash and cash equivalent | 12 | 10 | +20.0% |
| Net cost of financial debt | -94 | -104 | -9.6% |
| Other financial income and expenses | -71 | 12 | nm |
| Income before tax | -450 | -257 | +75.1% |
| Income taxes | 128 | -6 | nm |
| Net income of consolidated companies | -322 | -263 | +22.4% |
| Share of profits (losses) of associates | 2 | -6 | nm |
| Income from continuing operations | -320 | -269 | +19.0% |
| Net income from discontinued operations | 0 | 0 | N/A |
| Net income for the period | -320 | -269 | +19.0% |
| Non-controlling interest | 0 | 0 | N/A |
| Net income for the period – Group part | -320 | -269 | +19.0% |
Consolidated Balance Sheet
| Assets | 31 Mar 2019 | 31 Dec 2018 |
| In million euros | ||
| Goodwill | 217 | 217 |
| Intangible assets | 1,267 | 1,194 |
| Flight equipment | 10,279 | 10,165 |
| Other property, plant and equipment | 1,504 | 1,503 |
| Right-of-use assets | 5,051 | 5,243 |
| Investments in equity associates | 306 | 311 |
| Pension assets | 533 | 331 |
| Other financial assets | 1,542 | 1,487 |
| Deferred tax assets | 520 | 544 |
| Other non-current assets | 301 | 264 |
| Total non-current assets | 21,520 | 21,259 |
| Assets held for sale | 0 | 0 |
| Other short-term financial assets | 302 | 325 |
| Inventories | 686 | 633 |
| Trade receivables | 2,592 | 2,191 |
| Other current assets | 1,322 | 1,062 |
| Cash and cash equivalents | 4,162 | 3,585 |
| Total current assets | 9,064 | 7,796 |
| Total assets | 30,584 | 29,055 |
| Liabilities and equity | 31 Mar 2019 | 31 Dec 2018 |
| In million euros | ||
| Issued capital | 429 | 429 |
| Additional paid-in capital | 4,139 | 4,139 |
| Treasury shares | -67 | -67 |
| Perpetual | 403 | 403 |
| Reserves and retained earnings | -2,984 | -3,051 |
| Equity attributable to equity holders of Air France-KLM | 1,920 | 1,853 |
| Non-controlling interests | 13 | 12 |
| Total Equity | 1,933 | 1,865 |
| Pension provisions | 2,186 | 2,098 |
| Return obligation liability and other provisions | 3,126 | 3,035 |
| Financial debt | 6,014 | 5,733 |
| Lease debt | 3,426 | 3,546 |
| Deferred tax liabilities | 48 | 4 |
| Other non-current liabilities | 289 | 459 |
| Total non-current liabilities | 15,089 | 14,875 |
| Return obligation liability and other provisions | 509 | 492 |
| Current portion of financial debt | 815 | 826 |
| Current portion of lease debt | 989 | 988 |
| Trade payables | 2,463 | 2,460 |
| Deferred revenue on ticket sales | 4,298 | 3,153 |
| Frequent flyer program | 836 | 844 |
| Other current liabilities | 3,616 | 3,547 |
| Bank overdrafts | 36 | 5 |
| Total current liabilities | 13,562 | 12,315 |
| Total equity and liabilities | 30,584 | 29,055 |
Statement of consolidated Cash Flows from 1st January until 31st March 2019
| In million euros | 31 Mar 2019 | 31 Mar 2018 |
| Net income from continuing operations | -320 | -269 |
| Net income from discontinued operations | 0 | 0 |
| Amortization, depreciation and operating provisions | 727 | 739 |
| Financial provisions | 43 | 26 |
| Loss (gain) on disposals of tangible and intangible assets | -20 | 4 |
| Loss (gain)on disposals of subsidiaries and associates | 0 | 0 |
| Derivatives – non monetary result | 27 | 13 |
| Unrealized foreign exchange gains and losses, net | 64 | -24 |
| Other non-monetary items | -21 | -6 |
| Share of (profits) losses of associates | -2 | 6 |
| Deferred taxes | -134 | 1 |
| Financial Capacity | 364 | 490 |
| Of which discontinued operations | 0 | 0 |
| (Increase) / decrease in inventories | -60 | -13 |
| (Increase) / decrease in trade receivables | -399 | -310 |
| Increase / (decrease) in trade payables | -34 | 64 |
| Change in other receivables and payables | 1,299 | 1,066 |
| Change in working capital requirements | 806 | 807 |
| Change in working capital from discontinued operations | 0 | 0 |
| Net cash flow from operating activities | 1,170 | 1,297 |
| Purchase of property, plant and equipment and intangible assets | -718 | -939 |
| Proceeds on disposal of property, plant and equipment and intangible assets | 40 | 26 |
| Proceeds on disposal of subsidiaries, of shares in non-controlled entities | 4 | 3 |
| Acquisition of subsidiaries, of shares in non-controlled entities | 0 | -8 |
| Dividends received | 3 | 3 |
| Decrease (increase) in net investments, more than 3 months | 22 | -12 |
| Net cash flow used in investing activities of discontinued operations | 0 | 0 |
| Net cash flow used in investing activities | -649 | -927 |
| Increase of capital | 0 | 0 |
| Perpetual (including premium) | 0 | 0 |
| Issuance of debt | 508 | 24 |
| Repayment on financial debt | -238 | -781 |
| Payments on lease debt | -251 | -242 |
| Decrease (increase ) in loans, net | -1 | 34 |
| 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 | 18 | -965 |
| Effect of exchange rate on cash and cash equivalents and bank overdrafts | 7 | -4 |
| 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 | 546 | -599 |
| Cash and cash equivalents and bank overdrafts at beginning of period | 3,580 | 4,667 |
| Cash and cash equivalents and bank overdrafts at end of period | 4,126 | 4,068 |
| Change in treasury of discontinued operations | 0 | 0 |
Key Performance Indicators
EBITDA
| First quarter | ||
| In millions euros | 2019 | 2018 |
| Income from current operations | -303 | -118 |
| Amortization, depreciation and provisions | 727 | 739 |
| EBITDA | 424 | 621 |
Restated net income - Group part
| First quarter | ||
| In million euros | 2019 | 2018 |
| Net income - Group part | -320 | -269 |
| Net income from discontinued operations | 0 | 0 |
| Unrealized foreign exchange gains and losses, net | 64 | -24 |
| Change in fair value of financial assets and liabilities (derivatives) | -25 | 14 |
| Non-current income and expenses | -18 | 47 |
| Depreciation of shares available for sale | -6 | -10 |
| De-recognition of deferred tax assets | 0 | 0 |
| Restated net income - Group part | -305 | -242 |
| Coupons on perpetual | -4 | -6 |
| Restated net income - Group part, including coupons on perpetual (used to calculate earnings per share) | -309 | -248 |
| Restated net income per share (in €) | -0.72 | -0.58 |
Return on capital employed (ROCE)1
| In million euros | 31 Mar 2019 | 31 Mar 2018 | 31 Mar 2018 | 31 Mar 2017 |
| Goodwill and intangible assets | 1,485 | 1,362 | 1,362 | 1,320 |
| Flight equipment | 10,279 | 10,084 | 10,084 | 9,158 |
| Other property, plant and equipment | 1,504 | 1,446 | 1,446 | 1,382 |
| Right of use assets | 5,051 | 5,769 | 5,769 | 5,511 |
| Investments in equity associates | 306 | 290 | 290 | 295 |
| Financial assets excluding shares available for sale, marketable securities and financial deposits | 136 | 117 | 117 | 110 |
| Provisions, excluding pension, cargo litigation and restructuring | -3,249 | -2,726 | -2,726 | -2,719 |
| WCR, excluding market value of derivatives | -6,928 | -6,606 | -6,606 | -6,222 |
| Capital employed | 8,584 | 9,736 | 9,736 | 8,835 |
| Average capital employed (A) | 9,160 | 9,286 | ||
| Income from current operations | 1,147 | 1,852 | ||
| - Dividends received | -2 | -3 | ||
| - Share of profits (losses) of associates | 23 | 11 | ||
| - Normative income tax | -347 | -553 | ||
| Income from current operations after tax (B) | 821 | 1,307 | ||
| ROCE, trailing 12 months (B/A) | 9.0% | 14.1% | ||
Net debt
| Balance sheet at | ||
| In million euros | 31 Mar 2019 | 31 Dec 2018 |
| Financial debt | 6,484 | 6,216 |
| Lease debt | 4,325 | 4,450 |
| Financial assets pledged (OCEANE swap) | 0 | 0 |
| Currency hedge on financial debt | -5 | 7 |
| Accrued interest | -74 | -67 |
| Gross financial debt (A) | 10,730 | 10,606 |
| Cash and cash equivalents | 4,162 | 3,585 |
| Marketable securities | 51 | 74 |
| Cash pledges | 265 | 265 |
| Deposits (bonds) | 527 | 522 |
| Bank overdrafts | -36 | -5 |
| Other | 0 | 1 |
| Net cash (B) | 4,969 | 4,442 |
| Net debt (A) – (B) | 5,761 | 6,164 |
Adjusted operating free cash flow
| First quarter | ||
| In million euros | 2019 | 2018 |
| Net cash flow from operating activities, continued operations | 1,170 | 1,297 |
| Investment in property, plant, equipment and intangible assets | -718 | -939 |
| Proceeds on disposal of property, plant, equipment and intangible assets | 40 | 26 |
| Operating free cash flow | 492 | 384 |
| Payments on lease debt | -251 | -242 |
| Adjusted operating free cash flow | 241 | 142 |
Unit cost: net cost per ASK
| First quarter | ||
| 2019 | 2018 | |
| Revenues (in €m) | 5,986 | 5,806 |
| Income/(loss) from current operations (in €m) | -303 | -118 |
| Total operating expense (in €m) | 6,289 | 5,924 |
| Passenger network business – other revenues (in €m) | -208 | -188 |
| Cargo network business – other revenues (in €m) | -73 | -67 |
| Third-party revenues in the maintenance business (in €m) | -554 | -471 |
| Transavia - other revenues (in €m) | -9 | -10 |
| Third-party revenues of other businesses (in €m) | -8 | -10 |
| Net cost (in €m) | 5,437 | 5,178 |
| Capacity produced, reported in ASK* | 75,586 | 73,403 |
| Net cost per ASK (in € cents per ASK) | 7.19 | 7.05 |
| Gross change | 2.0% | |
| Currency effect on net costs (in €m) | 83 | |
| Change at constant currency | 0.4% | |
| Fuel price effect (in €m) | 44 | |
| Net cost per ASK on a constant currency and fuel price basis (in € cents per ASK) | 7.19 | 7.22 |
| Change at constant currency and fuel price basis | -0.4% | |
* 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).
Airline results
| Air France Group | First quarter | |
| 2019 | Change | |
| Revenue (in €m) | 3,698 | +4.1% |
| EBITDA (in €m) | 204 | -91 |
| Operating result (en m€) | -256 | -78 |
| Operating margin (%) | -6.9% | -1.9 pt |
| Operating cash flow before WCR and restructuring cash out (in €m) | 174 | -92 |
| Operating cash flow (before WCR and restructuring) margin | 4.7% | -2.8 pt |
| KLM Group | First quarter | |
| 2019 | Change | |
| Revenue (in €m) | 2,385 | -0.1% |
| EBITDA (in €m) | 208 | -107 |
| Operating result (en m€) | -56 | -116 |
| Operating margin (%) | -2.3% | -4.5 pt |
| Operating cash flow before WCR and restructuring cash out (in €m) | 185 | -60 |
| Operating cash flow (before WCR and restructuring) margin | 7.8% | -2.5 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 31 March 2019
| Aircraft type | AF (incl. HOP) | KLM (incl. KLC & MP) | Transavia | Owned | Finance lease | Operating lease | Total | In operation | Change / 31/12/18 |
| B747-400 | 11 | 11 | 11 | 11 | |||||
| B777-300 | 43 | 14 | 12 | 23 | 22 | 57 | 57 | ||
| B777-200 | 25 | 15 | 24 | 1 | 15 | 40 | 40 | ||
| B787-9 | 7 | 13 | 5 | 3 | 12 | 20 | 20 | ||
| A380-800 | 10 | 1 | 4 | 5 | 10 | 10 | |||
| A340-300 | 5 | 5 | 5 | 5 | -1 | ||||
| A330-300 | 5 | 5 | 5 | 5 | |||||
| A330-200 | 15 | 8 | 11 | 12 | 23 | 23 | |||
| Total Long-Haul | 105 | 66 | 0 | 69 | 31 | 71 | 171 | 171 | -1 |
| B737-900 | 5 | 1 | 1 | 3 | 5 | 5 | |||
| B737-800 | 29 | 71 | 29 | 10 | 61 | 100 | 99 | 6 | |
| B737-700 | 17 | 7 | 4 | 5 | 15 | 24 | 23 | -2 | |
| A321 | 20 | 11 | 9 | 20 | 20 | ||||
| A320 | 43 | 3 | 5 | 35 | 43 | 43 | |||
| A319 | 33 | 20 | 13 | 33 | 33 | -1 | |||
| A318 | 18 | 16 | 2 | 18 | 18 | ||||
| Total Medium-Haul | 114 | 51 | 78 | 84 | 23 | 136 | 243 | 241 | 3 |
| ATR72-600 | 6 | 6 | 6 | 5 | -1 | ||||
| ATR72-500 | 1 | 1 | 1 | -1 | |||||
| ATR42-500 | 5 | 1 | 4 | 5 | 3 | -2 | |||
| Canadair Jet 1000 | 14 | 14 | 14 | 14 | |||||
| Canadair Jet 700 | 11 | 11 | 11 | 10 | 2 | ||||
| Embraer 190 | 11 | 32 | 7 | 14 | 22 | 43 | 43 | 1 | |
| Embraer 175 | 17 | 3 | 14 | 17 | 17 | ||||
| Embraer 170 | 15 | 9 | 1 | 5 | 15 | 15 | |||
| Embraer 145 | 18 | 14 | 4 | 18 | 13 | ||||
| Total Regional | 81 | 49 | 0 | 59 | 33 | 38 | 130 | 120 | -1 |
| 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 | 302 | 170 | 78 | 218 | 87 | 245 | 550 | 538 | 1 |
1 Passenger unit revenue is the aggregate of Passenger network and Transavia unit revenues; change at constant currency
1 To align with industry practice, the metric EASK will not be used anymore as of 2019.
New Unit Cost definition will be: Net cost per Available Seat Kilometer at constant fuel and currency
The impact of this change for the unit cost is -0.1pt for 2019
2 Based on the forward curves of 26 April 2019 average Brent price of USD 69, average jet fuel price of USD 710 per ton including into plane costs. Assuming exchange rate of EUR/USD of 1.13 in 2019
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” no longer existing having been replaced by “income from current operations” which, thanks to IFRS 16 implementation, no longer includes 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.
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