AIR FRANCE - KLM : Third quarter 2012 results


31st October 2012

FINANCIAL YEAR 2012

QUARTER JULY-SEPTEMBER 2012

  • Operating result of 506 million euros (397 million euros at 30th September 2011) 

  • Good improvement in passenger activity but deterioration in cargo 

  • Revenues of 7.2 billion euros (+6%) 

  • Ongoing reduction in unit costs at constant currency and fuel price 

OUTLOOK

  • Unchanged objectives of second half operating result above last year's level and reduction in net debt  

The Board of Directors of Air France-KLM, chaired by Jean-Cyril Spinetta, met on 30th October to examine the accounts for third quarter 2012.  

The group realised a satisfactory third quarter across all its businesses with the exception of cargo. In passenger, the limited capacity increase in the industry led to an improvement in unit revenues, which, for the group, were also helped by a positive foreign exchange effect due to the depreciation of the euro versus other currencies. On the other hand, the cargo business continued to deteriorate over the quarter. As previously indicated, measures undertaken in the context of the plan Transform 2015 are starting to have a significant impact on costs.

Key data

In millions of euros except per share data in euros Quarter to 30th September Nine months to 30th September
2012 2011 change 2012 2011 change
Revenues 7,184 6,789 5.8% 19,329 18,335 5.4%
EBITDAR[1]
1,228 1,018 20.4% 1,872 1,726 8.5%
Current operating result 506 397 27.5% -157 -151 nm

Adjusted operating result2

592 468 26.5% 87 63 38.0%

Net result, group share

306 14 nm -957 -550 nm
Net result per share 1.03 0.05 nm -3.24 -1.86 nm
Fully diluted result per share 0.85 0.05 nm -3.24 -1.86 nm

Activity

Ongoing capacity control

The group enjoyed a good Summer season in its passenger business, with traffic up by 0.9% for a rise in capacity limited to 1.0% and a high load factor of 86%. Unit revenue per available seat kilometre (RASK) progressed by 6.3% (+1.8% at constant currency). Passenger revenues grew by 7.9% after a positive currency effect of 4.4% to 5.69 billion euros. The operating result stood at 453 million euros (+27%) despite a rise in the fuel bill of 231 million euros.

The cargo business was further impacted by the economic slowdown and the situation of overcapacity in the industry. Traffic fell by 6.6% for capacity down by 3.7%. The load factor stood at 61.8% (-1.9 points). Unit revenue per available tonne kilometre (RATK) rose 0.7% on the back of a positive currency effect of 6.7%. Cargo revenues stood at 758 million euros (-1.9%) while the operating result was -67 million euros (-37 million euros at 30th September 2011).

Third party revenues at the maintenance business declined by 5.9% to 256 million euros. However the operating result was up strongly at 52 million euros (versus 18 million euros in Q3 2011 following 23 million euros in one-off costs).

Other activities, including Transavia, generated revenues of 476 million euros (+1.7%) and an operating result of 68 million euros (versus 60 million euros at 30th September 2011). Transavia generated revenues of 368 million euros (+12%) and an operating result of 69 million euros (versus 60 million euros a year earlier).  

Total revenues stood at 7.18 billion euros, up 5.8% after a favourable currency effect of 4.5%. Unit revenues in equivalent available seat kilometres (EASK) rose 5.7% (+1.1% at constant currency).

Reduction in operating costs ex-currency

Operating costs totalled 6.68 billion euros, up 4.5% (+0.7% ex-fuel). On a comparable currency basis they fell 1.1%, reflecting the strict cost control measures implemented in the context of Transform 2015. Unit cost, measured in EASK, increased by 4.2%, but declined by 1.7% on a constant currency and fuel price basis, for production measured in EASK up by 0.6%.

The fuel bill increased by 254 million euros to 1.97 billion euros (+14.8%) under the effect of a decline in volume of 2%, a negative currency effect of 15% and a rise in the fuel price after hedging of 2%.

Employee costs (excluding temporary staff) amounted to 1.88 billion euros. The measures taken in the context of Transform 2015 took effect, limiting the rise to 1.2% in spite of an additional pension charge at KLM of 18 million euros.
The operating result amounted to 506 million euros and the adjusted operating result to 592 million euros, implying an adjusted operating margin of 8.2%.

In the context of the reorganisation of the French regional pole, the group has undertaken impairment tests for assets not included in this pole, leading it to depreciate goodwill in respect of VLM, a subsidiary of CityJet, for an amount of 168 million euros. Net interest charges were stable at 94 million euros. 'Other financial income and costs' amounted to 216 million euros (-268 million euros a year ago) of which 210 millions euros relating to the change in the fair value of derivatives.

Net income, group share, amounted to 306 million euros (14 million euros at 30th September 2011). The net result per share stood at 1.03 euros and the diluted net result per share at 0.85 euros (0.05 euros at 30th September 2011 for both results).

Nine months to 30th September 2012

In passenger business, during the first nine months of 2012, capacity increased by 0.9% and traffic by 2.8%. The load factor gained 1.5 points to 83.5%. Unit revenue per available seat kilometre (RASK) rose by 6.0% and by 3.1% at constant currency.

In cargo business, traffic declined by 6.5% for capacity down by 2.9%, leading to a 2.4 point decline in the load factor to 63.6%. Unit revenue per available tonne kilometre (RATK) declined by 1.4% and by 5.5% at constant currency.

Total revenues amounted to 19.33 billion euros (+5.4% after a positive change effect of 2.8%). Operating costs increased by 5.4%, but by only 2.0% ex-fuel.

The operating result amounted to -157 million euros (-151 million euros at 30th September 2011) while the adjusted operating result was 87 million euros. The adjusted operating margin stood at 0.5%.

The net interest charge amounted to 264 million euros, a decline of 3.3% on the previous year. 'Other financial income and costs' swung from -230 million euros at 30th September 2011 to 38 million euros at 30th September 2012, thanks to a less negative foreign exchange result and a 200 million euro positive change in the fair value of derivatives.

The net result, group share, was -957 million euros (-550 million euros at 30th September 2011) after 536 million euros in non-current and non-cash charges, of which 348 million euros for the voluntary departures plan, not affecting the group's cash flow at 30th September 2012.

The result per share and fully diluted result per share stood at -3.24 euros against -1.86 euros at 30th September 2011.

Financial position

Investments amounted to 1.26 billion euros and disposals to 650 million euros (1.98 billion euros and 986 million euros respectively at 30th September 2011). Operating cash flow amounted to 712 million euros. Before changes in working capital requirement, it amounted to 716 million euros versus 308 million euros a year ago. At 30th September 2012 the group had cash of 3.4 billion euros and credit lines of 1.85 billion euros.

Shareholders' funds amounted to 5.27 billion euros. Net debt declined relative to 31st December 2011 (6.02 billion euros versus 6.52 billion euros at 31st December 2011). However, as a consequence of the reduction in shareholders' funds, the gearing ratio increased to 1.14 (1.07 at 31st December 2011).

Outlook

In a difficult economic environment in Europe, but with a good level of activity in the other markets, the group maintains its objectives of an operating result in the second half of 2012 above the level of the second half of 2011 (195 million euros) and a reduction of its net debt at 31st December 2012 relative to 31st December 2011
  

Additional information

The nine month January to September 2012 accounts are not audited by the Statutory Auditors.

Practical information

A conference call will be held on October 31th 2012 at 10.00 CET.

  • Audio-web conference:  

to connect to the conference call, please dial
        - UK 44 (0)20 7162 0125 (password: AKH)
        - US 1 334 323 6203 (password: AKH)

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

- UK 44 (0)20 7031 4064 (code: 923869)
- US 1 954 334 0342 (code: 923869)

  • The results presentation is available on the website www.airfranceklm-finance.com

 

Contact
  Dominique Barbarin                              Bertrand Delcaire
  SVP Investor Relations                         VP Investor Relations
  Tel : +33 1 41 56 88 60                         Tel : +33 1 41 56 72 59  
        Email : dobarbarin@airfrance.fr        Email : bedelcaire@airfrance.fr

 

Information by business

Passenger business

Quarter to 30th September Nine months to 30th September
2012 2011 Change 2012 2011 Change
Traffic (RPK millions) 62,098 61,563 0.9% 169,651 165,089 2.8%
Capacity  (ASK millions) 72,246 71,534 1.0% 203,093 201,215 0.9%
Load factor   86.0% 86.1% -0.1 pts 83.5% 82.0% 1.5 pts
Total passenger revenues (€m) 5,694 5,276 7.9% 15,254 14,150 7.8%
Scheduled passenger revenues (€m) 5,448 5,055 7.8% 14,552 13,537 7.5%
Unit revenue per RPK (€cts) 8.77 8.24 6.4% 8.58 8.24 4.1%
Unit revenue per RPK at constant currency (€cts) - - 1.9% - - 1.3%
Unit revenue per ASK (€cts) 7.54 7.09 6.3% 7.16 6.76 6.0%
Unit revenue per ASK at constant currency (€cts) - - 1.8% - - 3.1%
Unit cost per ASK  (€cts) 6.91 6.61 4.7% 7.21 6.85 5.3%
Unit cost per ASK at constant currency and fuel price (€cts) - - -1.2% - - 0.0%
Operating result (€m) 453 356 27,2% -98 -151 ns

Cargo business

Quarter to 30th September Nine months to 30th September
2012 2011 Variation 2012 2011 Variation
Traffic (RTK millions) 2,631 2,813 -6.5% 7,893 8,443 -6.5%
Capacity  (ATK millions) 4,264 4,419 -3.5% 12,425 12,792 -2.9%
Load factor   61.7% 63.7% -2.0 pts 63.5% 66.0% -2.5 pts
Total cargo revenues 758 773 -1.9% 2,266 2,341 -3.2%
Scheduled cargo revenues (€m) 710 731 -2.9% 2,126 2,221 -4.2%
Unit revenue per RTK (€cts) 27.01 26.02 3.8% 26.93 26.32 2.3%
Unit revenue per RTK at constant currency (€cts) - - -2,8% - - -1.9%
Unit revenue per ATK (€cts) 16.69 16.58 0.7% 17.12 17.37 -1.4%
Unit revenue per ATK at constant currency (€cts) - - -5,7% - - -5.5%
Unit cost per ATK  (€cts) 18.27 17.40 5.0% 18.71 17.85 4.8%
Unit cost per ATK at constant currency and fuel price (€cts) - - -2.4% - - -2.0%
Operating result (€m) -67 -37 ns -197 -60 ns

Maintenance

The maintenance activity realised third party revenues of 256 million euros in the third quarter of 2012 (272 million euros for the same period in 2011). The operating result amounted to 52 million euros (18 million euros at 30th September 2011 after 23 million euros in exceptional charges linked to strike action). For the first nine months of 2012, revenues amounted to 779 million euros (+1.9%). The operating result stood at 108 million euros (67 million euros at 30th September 2011).  

Other businesses

Other businesses include mainly Transavia and the catering activity. In the third quarter, total revenues for this business amounted to 476 million euros against 468 million euros a year earlier. The operating result stood at 68 million euros (60 million euros at 30th September 2011).

Transavia  

Quarter to 30th September Nine months to 30th September
2012 2011 Change 2012 2011 Change
Traffic (RPK millions) 6,024 5,804 3.8% 12,507 12,020 4.1%
Capacity  (ASK millions) 6,589 6,384 3.2% 14,267 13,815 3.3%
Load factor   91.4% 90.9% 0.5 pts 87.7% 87.0% 0.7 pts
Total passenger revenues (€m) 368 330 11.5% 732 667 9.7%
Passenger revenues (€m) 358 325 10.1% 702 643 9.2%
Unit revenue per RPK (€cts) 5.93 5.60 6.0% 5.61 5.35 4.8%
Unit revenue per RPK at constant currency (€cts) - - 6.0% - - 4.8%
Unit revenue per ASK (€cts) 5.43 5.09 6.6% 4.92 4.66 5.6%
Unit revenue per ASK at constant currency (€cts) - - 6.6% - - 5.6%
Unit cost per ASK  (€cts) 4.37 4.16 5.2% 4.76 4.53 5.1%
Unit cost per ASK at constant currency and fuel price (€cts) - - 2.0% - - -1.7%
Operating result (€m) 69 60 15.0% 23 18 27.7%

Revenues for the catering activity were flat in the third quarter at 217 million euros of which 99 million euros from third parties. The operating result was 3 million euros (10 million euros at 30th September 2011). For the nine months to at 30th September 2012, revenues amounted to 599 million euros (-5.0%) of 271 million euros with third parties, with an operating result of 2 million euros (17 million euros at 30th September 2011).

INCOME STATEMENTS (unaudited)  

 
Q3 (July to September) 9 months (January to September)
In euros million 2012 2011 Variation 2012 2011
(proforma)
Variation
SALES 7,184 6,789 5.8% 19,329 18,335 5.4%
Other revenues 2 5 -60.0% 11 27 -59.3%
EXTERNAL EXPENSES (4,332) (4,093) 5.8% (12,352) (11,618) 6.3%
Aircraft fuel (1,971) (1,717) 14.8% (5,539) (4,816) 15.0%
Chartering costs (141) (157) -10.2% (417) (431) -3.2%
Aircraft operating lease costs (254) (210) 21.0% (718) (628) 14.3%
Landing fees and en route charges (510) (485) 5.2% (1,411) (1,367) 3.2%
Catering (165) (153) 7.8% (450) (428) 5.1%
Handling charges and other operating costs (384) (356) 7.9% (1,042) (1,003) 3.9%
Aircraft maintenance costs (279) (324) -13.9% (831) (879) -5.5%
Commercial and distribution costs (236) (227) 4.0% (677) (638) 6.1%
Other external expenses (392) (464) -15.5% (1,267) (1,428) -11.3%
Salaries and related costs (1,882) (1,860) 1.2% (5,762) (5,594) 3.0%
Taxes other than income taxes (46) (50) -8.0% (140) (142) -1.4%
Amortization and depreciation (409) (411) -0.5%) (1,187) (1,226) -3.2%
Provisions (59) 0 nm (124) (23) nm
Other income and expenses 48 17 nm 68 90 -24.4%
INCOME FROM CURRENT OPERATIONS 506 397 27.5% (157) (151) -4.0%
Sales of aircraft equipment 1 9 nm 5 6 16.7%
Sales of subsidiaries 0 0 nm 97 1 nm
Other non-current income and expenses (182) (12) nm (565) (111) nm
INCOME FROM OPERATING ACTIVITIES 325 394 -17.5% (620) (255) -143.1%
Income from cash and cash equivalents 21 22 -4.5% 61 69 -11.6%
Cost of financial debt (115) (117) -1.7% (325) (342) -5.0%
Net cost of financial debt (94) (95) 1.1% (264) (273) 3.3%
Foreign exchange gains (losses), net 3 (125) nm (29) (88) nm
Change in fair value of financial assets and liabilities 210 (145) nm 58 (142) nm
Other financial income and expenses 3 2 nm 9 0 nm
INCOME BEFORE TAX 447 31 nm (846) (758) -11.6%
Income taxes (147) (9) nm (58) 242 nm
NET INCOME OF CONSOLIDATED COMPANIES 300 22 nm (904) (516) -75.2%
Share of profits (losses) of associates 11 (6) nm (49) (31) 58.1%
INCOME FROM CONTINUING OPERATIONS 311 16 nm (953) (547) -74.2%
Net income from discontinued operations
NET INCOME FOR THE PERIOD 311 16 nm (953) (547) -74.2%
Minority interest (5) (2) (4) (3)
NET INCOME FOR THE PERIOD - GROUP 306 14 nm (957) (550) -74.0%
 
 

CONSOLIDATED BALANCE SHEET (unaudited)

Assets
In € millions
September 30,
2012
December 31, 2011
Goodwill 258 426
Intangible assets 827 774
Flight equipment 10 271 10 689
Other property, plant and equipment 1 959 2 055
Investments in equity associates 413 422
Pension assets 3 400 3 217
Other financial assets(*) 1 714 2 015
Deferred tax assets 1 116 1 143
Other non-current assets 163 168
Total non-current assets
20 121 20 909
Assets held for sale
7 10
Other short term financial assets
853 751
Inventories
533 585
Trade accounts receivables
2 375 1 774
Income tax receivables
11 10
Other current assets
901 995
Cash and cash equivalents
2 697 2 283
Total current assets
7 377 6 408
Total assets
27 498 27 317

Liabilities and equity
In € millions
September 30,
2012
December 31, 2011
Issued capital 300 300
Additional paid-in capital 2 971 2 971
Treasury shares (83) (89)
Reserves and retained earnings 2 025 2 858
Equity attributable to equity holders of Air France-KLM 5 213 6 040
Non-controlling interests 56 54
Total equity
5 269 6 094
Provisions and retirement benefits
2 161 2 061
Long-term debt
9 292 9 228
Deferred tax liabilities
459 466
Other non-current liabilities
368 321
Total non-current liabilities
12 280 12 076
Provisions
610 156
Current portion of long-term debt
1 280 1 174
Trade accounts payables
2 343 2 599
Deferred revenue on ticket sales
2 405 1 885
Frequent flyer programs
766 784
Current tax liabilities
1 6
Other current liabilities
2 504 2 386
Bank overdrafts
40 157
Total current liabilities
9 949 9 147
Total liabilities
22 229 21 223
Total liabilities and equity
27 498 27 317

CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)

In € millions
Period from January 1 to september 30,
2012 2011
(proforma)
Net income for the period - Equity holders of Air France-KLM (957) (550)
Non-controlling interests 4 3
Amortization, depreciation and operating provisions 1 311 1 249
Financial provisions (9) -
Gain on disposals of tangible and intangible assets (8) (14)
Loss/ (gain) on disposals of subsidiaries and associates (97) (2)
Derivatives - non monetary results (78) 87
Unrealized foreign exchange gains and losses, net 1 62
Impairment 168 -
Share of (profits) losses of associates 49 31
Deferred taxes 28 (260)
Other non-monetary items 304 (298)
Subtotal
716 308
(Increase) / decrease in inventories
54 (8)
(Increase) / decrease in trade receivables
(619) (350)
Increase / (decrease) in trade payables
(221) 395
Change in other receivables and payables
782 294
Net cash flow from operating activities
712 639
Acquisition of subsidiaries, of shares in non-controlled entities
(38) (29)
Purchase of property, plant and equipment and intangible assets
(1 260) (1 984)
Proceeds on disposal of subsidiaries, of shares in non-controlled entities
466 -
Proceeds on disposal of property, plant and equipment and intangible assets
650 986
Dividends received
23 26
Decrease (increase) in investments
13 (85)
Net cash flow used in investing activities
(146)
(1 086)
Capital increase
- 6
Purchase of non-controlling interests, of owned shares
- (15)
Disposal of subsidiaries without loss of control,of owned shares
7 (2)
Issuance of financial debt
1 025 1 056
Repayment on financial debt
(678) (894)
Payment of debt resulting from finance lease liabilities
(415) (425)
New loans
(59) (76)
Repayment on loans
82 192
Dividends paid
(1) (3)
Net cash flow from financing activities
(39)
(161)
Effect of exchange rate on cash and cash equivalents and bank overdrafts
4 (23)
Change in cash and cash equivalents and bank overdrafts
531 (631)
Cash and cash equivalents and bank overdrafts at beginning of period
2 126 3 351
Cash and cash equivalents and bank overdrafts at end of period
2 657 2 720

AIR FRANCE-KLM FLEET

Air France fleet

Aircraft AF Brit Air City Jet Régional VLM Transavia Owned Finance lease Operating lease Total In operation Change /
12/31/11
B747-400 7 3 4 7 7 -2
B777-300 37 14 6 17 37 37 +3
B777-200 25 15 2 8 25 25
B767-300
A380-800 8 1 3 4 8 8 +2
A340-300 14 9 2 3 14 12 -3
A330-300
A330-200 15 3 2 10 15 15
MD11
Long haul 106 45 15 46 106 104
B747-400 cargo 5 2 3 5 3
B777- cargo 2 2 2 2
MD-11-CF
MD-11-F
Freighter 7 4 3 7 5
B737 900
B737-800 8 8 8 8
B737-700
B737-400
B737-300
A321 25 11 1 13 25 25
A320 60 20 3 37 60 60 +1
A319 44 21 4 19 44 41 -2
A318 18 12 6 18 18
Medium haul 147 8 64 14 77 155 152 -1
AVRO RJ 85 22 11 11 22 20 -2
Canadair Jet 1000 13 13 13 13 +2
Canadair Jet 900
Canadair Jet 700 15 6 9 15 15
Canadair Jet 100 13 12 1 13 13
Embraer 190 10 4 6 10 10
Embraer 170 16 8 2 6 16 16 +6
Embraer 145 23 11 11 1 23 23 -3
Embraer 135 7 4 3 7 2 -2
Fokker 100
Fokker 70
Fokker 50 13 12 1 13 13 -1
Regional 41 22 56 13 81 26 25 132 125
TOTAL 260 41 22 56 13 8 194 55 151 400 386 -1

KLM fleet

Aircraft KLM KLM Cityhopper Transavia Martinair Owned Finance lease Operating lease Total In operation Change /
12/31/11
B747-400 22 13 4 5 22 22
B777-300 7 7 7 7 +2
B777-200 15 6 9 15 15
B767-300
A380-800
A340-300
A330-300 3 3 3 3 +3
A330-200 11 6 5 11 11
MD11 9 8 1 9 8 -2
Long haul 67 21 24 22 67 66 +3
B747-400 cargo 4 4 3 5 8 4 -1
B777- cargo
MD-11-CF 4 3 1 4 4
MD-11-F 3 2 1 3 2 -1
Freighter 4 11 3 5 7 15 10 -2
B737 900 5 1 1 3 5 5
B737-800 23 21 12 6 26 44 44 +1
B737-700 18 10 13 15 28 28
B737-400 3 3 3
B737-300
A321
A320
A319
A318
Medium haul 49 31 16 20 44 80 77 +1
AVRO RJ 85
Canadair Jet 1000
Canadair Jet 900
Canadair Jet 700
Canadair Jet 100
Embraer 190 22 13 9 22 22 +5
Embraer 170
Embraer 145
Embraer 135
Fokker 100 3 3 3 3 -2
Fokker 70 26 26 26 26
Fokker 50
Regional 51 29 13 9 51 51 +3
KLM 120 51 31 11 69 62 82 213 204 +5
TOTAL Air France-KLM Group 263 117 233 613 590 +4

[1] Before amortisation, provisions and operating  leases
[2] Adjusted for the portion of operating leases corresponding to financial costs (34%)


Attachments

Q3 2012 results