FULL YEAR 2019 Results

Date : 02/20/2020 @ 6:15AM
Source : GlobeNewswire Inc.
Stock : Air France KLM (AF)
Quote : 5.25  0.445 (9.26%) @ 9:17AM
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FULL YEAR 2019 Results

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2 Months : From Jan 2020 to Mar 2020

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FULL YEAR 2019 Results

20 February 2020

FULL YEAR 2019 Operating result at 1,141 million euros, unit cost at -0.9%, pressure on Cargo unit revenue and a higher fuel bill

FULL YEAR 2019

  • Revenue growth for all businesses, with strong performance from Transavia and Maintenance
  • Unit cost at constant currency and fuel reduced by -0.9%, at the better end of guidance range
  • Operating result at 1,141 million euros, down 264 million euros compared to last year1
  • Net income at 290 million euros
  • Net debt/EBITDA ratio at 1.5x, in line with guidance
  • Record levels of customer satisfaction for Air France and steady-state high level for KLM
  • Leading airline group on sustainability in the Dow Jones Sustainability Index

OUTLOOKBusiness trendsAfter a good performance for the Passenger Network activity with positive unit revenue in January 2020, recent developments with regards to the Covid-19 have impacted the demand outlook, especially in the Asian network. This translates in long-haul forward booking load factors down from February to May 2020. As a consequence the Group anticipates unit revenues at constant currency to be down for the first quarter of 2020.

The Cargo activity is also impacted by Covid-19, foreseen to maintain pressure on the load factor and yield in the first part of 2020.

Based on the Group announcement regarding Covid-19 (suspension of China operations in February-March and possible resumption of operations starting from April 2020), the high-level estimated impact on operating result is of between -150 and -200 million euros for February to April 2020.

Full year 2020 guidance

  • Unit cost reduction of between -1% and 0% at constant currency and fuel price
  • The Group plans capital expenditures of 3.6 billion euros for 2020
  • Net debt/ EBITDA ratio of circa 1.5x

The 2020 fuel bill is expected to decrease by 300 million euros compared to 2019 to 5.2 billion euros, based on the forward curve of 14 February 2020

The Board of Directors of Air France-KLM, chaired by Anne-Marie Couderc, met on 19 February 2020 to approve the financial statements for the Full year 2019.

“In 2019, the Air France-KLM Group posted an operating result at 1,141 million euros with a fuel bill hit and pressure on Cargo unit revenues” said  Benjamin Smith, CEO of the Air France-KLM Group. Over the year we reinforced our foundations to build a European champion, notably through fleet optimization and restored trust that led to social stability and positive labour agreements at Air France and new CLA agreements at KLM. I am also proud that our Group was again at the top of the DJSI ranking and is recognized as an experienced and knowledgeable environmental leader in the industry. In November, we outlined our strategic plan with a substantial further step-up in financial performance foreseen, and we begin on this 5-year trajectory with a robust financial structure and strong unique assets.” 

Air France-KLM GroupFourth quarterFull year
2019Change2019       Change1
Passengers (thousands)24,612+0.6%104,205+2.7%
Passenger Unit revenue per ASK2 (€ cts) 6.58+0.6%6.67-0.2%
Operating result (€m)96+431,141-264
Net income – Group part (€m)156+373290-130
Adj. operating free cash flow (€m)-501-489-385-500
Net debt at end of period (€m)  6,147-17

2018 and 2019 results restated (with a similar impact in both years) for limited life parts componentization accounting change. See notes in the consolidated financial statements paragraph 2, page 12-15 and page 9-10 of this press release.

Business review 

Network: Resilient performance from Passenger and ongoing pressure on Cargo in the 2019 fourth quarter

NetworkFourth quarter Full year
2019ChangeChange constant currency2019ChangeChange constant currency
Total revenues (€m)5,756+1.2%+0.0%23,272+2.6%+1.5%
Scheduled revenues (€m)5,499+1.8%+0.4%22,251+2.4%+1.1%
Operating result (€m)38-8-22749-293-256

Full year 2019 revenues increased by +1.5% at constant currency to 23.3 billion euros, thanks to the growth of the network activity. The operating result amounted to 749 million euros, a 256 million euro decrease at constant currency compared to last year, mainly explained by an increased fuel bill and with a good unit cost performance offsetting the drop in Cargo unit revenue.

Passenger network: Unit revenue in the fourth quarter 2019 -0.2% as expected, with a strong performance from French domestic and Medium-haul.

 Fourth quarterFull year
Passenger network2019ChangeChange constant currency2019ChangeChange constant currency
Passengers (thousands)21,346+1.1% 87,624+2.3% 
Capacity (ASK m)74,723+2.4% 299,606+2.5% 
Traffic (RPK m) 64,941+3.4% 263,499+3.2% 
Load factor  86.9%+0.8 pt 87.9%+0.5 pt 
Total passenger revenues (€m)5,197+2.8%+1.8%21,119+3.6%+2.5%
Scheduled passenger revenues (€m)5,020+3.5%+2.3%20,408+3.4%+2.1%
Unit revenue per ASK (€ cts) 6.72+1.1%-0.2%6.81+0.8%-0.4%

The fourth quarter 2019 posted a mixed performance from the Long-haul network and an improving trend in Short & Medium-haul:

  • The North Atlantic network’s unit revenue was down -2.8% in the fourth quarter 2019 compared to last year, explained by a 5% ramp-up in Air France-KLM capacity and measures undertaken to defend market-share on specific local traffic flows.
  • The Asian network’s unit revenue was slightly down (-0.7%) in the fourth quarter 2019, with a continuing strong performance in the networks to Japan, Korea and India. The performance of the routes to Greater China continued to be subdued by the ongoing geo-political situation in Hong Kong.
  • The Caribbean & Indian Ocean network continued to post solid results with a fourth quarter unit revenue at +2.8%, supported by strong leisure demand.
  • The Africa & Middle East network saw a unit revenue improvement of 1.8%, underpinned by network rationalizations in the Middle East.
  • The Latin American network showed an improving trend but continued to post negative unit revenues (-4.2%) as the geo-political and economic context remained challenging in Argentina, Brazil and Chile. 
  • The performance from the Medium-haul hubs was strong with fourth quarter unit revenues up 3.9%, underpinned by a marked moderation in industry capacity growth. 
  • The positive effects from the rationalization measures in the Domestic France network were clearly visible, resulting in an improved performance in the fourth quarter with unit revenues up 7.8%.

Cargo: Performance impacted by continuing supply-demand imbalance in the fourth quarter 2019

 Fourth quarterFull year
Cargo business2019ChangeChange constant currency2019ChangeChange constant currency
Tons (thousands)288-5.0% 1,110-2.3% 
Capacity (ATK m)3,714+2.3% 14,609+1.7% 
Traffic (RTK m) 2,208-4.9% 8,467-2.2% 
Load factor  59.5%-4.5 pt 58.0%-2.3 pt 
Total Cargo revenues (€m)559-12.0%-13.7%2,153-5.9%-7.8%
Scheduled cargo revenues (€m)479-13.5%-15.3%1,843-7.3%-9.1%
Unit revenue per ATK (€ cts ) 12.91-15.4%-17.1%12.62-8.9%-10.7%

Fourth quarter 2019 unit revenue remained under strong pressure and was down 17.1% compared to last year at constant currency. Effective cost control measures partly mitigated the negative impact of the Cargo contribution on the Network results.

Substantial Cargo industry capacity additions in 2019 led to the worst traffic versus capacity trend for the last 10 years, driven by opportunistic growth strategies after the strong Cargo market in the second half of 2017 and Full year 2018.This caused substantial (belly) overcapacity, particularly on the North Atlantic routes.

On the demand side, at the year end world-wide air freight volumes had fallen for 14 consecutive months, caused by geo-political uncertainties resulting in weak global air freight demand, trade tensions impacting especially ex-Asia volumes and a strong decline in demand from the auto-motive industry.

In this context, the market share of Air France-KLM Cargo proved resilient, with the growth realized in alternative flows partly mitigating the ex-Asia losses.

The Group’s Cargo strategy is focused on maintaining and increasing load factors where possible and taking a pro-active approach to new revenue opportunities. A new Revenue Action plan for 2020 has been established to deliver incremental revenues.

Transavia: Strong performance in the 2019 fourth quarter and strong demand in both home markets

 Fourth quarterFull year
Transavia2019Change2019Change
Passengers (thousands)3,266-2.6%16,581+4.8%
Capacity (ASK m)6,640-2.6%32,867+6.5%
Traffic (RPK m) 6,064-2.2%30,303+6.7%
Load factor  91.3%+0.4 pt92.2%+0.2 pt
Total passenger revenues (€m)338+10.8%1,744+9.3%
Unit revenue per ASK (€ cts) 4.97+10.2%5.34+3.0%
Unit cost per ASK (€ cts)5.38+4.8%4.94+4.8%
Operating result (€m)-27+15131-14

As anticipated, capacity growth was slightly negative in the fourth quarter 2019 at -2.6% due to the increase in cockpit training needed to prepare for future growth in Transavia France.

Transavia delivered a good unit revenue performance in the fourth quarter 2019 with an increase of 10.2% compared to last year, in the context of capacity moderation combined with strong demand in both home markets.

The unit revenue for the Full year 2019 increased by 3.0% compared to last year, due to strong demand in both France and the Netherlands. For the Full year 2019, the revenue grew by 9.3% compared to last year for capacity growth of 6.5%.

The Transavia unit cost for the Full year increased by 2.7% at constant fuel and currency, explained by increased fleet related- and non-performance costs.

The Full year operating margin stood at 7.5%, with an absolute operating result of 131 million euros, 14 million euros down compared to last year.

Solid trend in Maintenance business margins in 2019

 Fourth quarterFull year
Maintenance2019ChangeChange constant currency2019ChangeChange constant currency
Total revenues (€m)1,163-3.6% 4,617+6.2% 
Third-party revenues (€m)515+5.1%+1.0%2,138+11.3%+5.8%
Operating result  (€m)9043392604627
Operating margin (%)7.7%+3.8 pt+3.6 pt5.6%+0.7 pt+0.4 pt

The fourth quarter operating result stood at 90 million euros, an increase of 43 million euros, underpinned mainly by increased Engine activity for Third-parties.Full year 2019 revenues increased compared to last year with third-party revenues up 11.3% and 5.8% at constant currency, a continuation of the growth trend underpinned by the inflow of new contracts. The Full year 2019 operating result stood at 260 million euros, an increase of 46 million euros, supported by positive contributions from all business segments: Airframe, Engines and Components. The relentless focus from the teams on turn-around times and cost efficiencies drove these margin improvements.

The Maintenance order book stood at 11.5 billion dollars at 31 December 2019, stable on last year.

Air France-KLM Group: Full year 2019 operating result at 1,141 million euros with cost efficiency measures offset by pressure on Cargo unit revenue and a fuel bill increase

 Fourth quarterFull year
 2019ChangeChange constant currency2019ChangeChange constant currency
Capacity (ASK m)81,363+2.0% 332,473+2.9% 
Traffic (RPK m)71,005+2.9% 293,802+3.5% 
Passenger unit revenue per ASK (€ cts) 6.58+1.7%+0.6%6.67+0.9%-0.2%
Group unit revenue per ASK (€ cts) 7.16-0.1%-1.1%7.22-0.0%-1.2%
Group unit cost per ASK (€ cts) at constant fuel7.05-0.5%-1.5%6.88+0.5%-0.9%
Revenues (€m)6,618+1.9%+0.5%27,189+3.7%+2.2%
EBITDA (€m)867+8.2%+6.1%4,128-3.8%-3.3%
Operating result (€m) 96+81.1%+35.9%1,141-18.8%-17.7%
Operating margin (%)1.5%+0.6 pt+0.4 pt4.2%-1.2 pt-1.0 pt
Net income - Group part (€m)156+373 290-130 

2018 and 2019 results restated (with a similar impact in both years) for LLP componentization accounting change. For details see statements paragraph 2, page 12-15

In the Full year 2019, the Air France-KLM Group posted an operating result of 1,141 million euros, down by 18.8% compared to last year, impacted by a challenging trading environment and a higher fuel bill.

Net income amounted to  290 million euros in 2019, a decrease of 130 million euros compared to last year.

The fuel bill including hedging stood at 5,511 million euros in 2019, up 550 million euros. This increase is mainly explained by a hedging gain of 50 million euros this year compared to a hedging gain of 650 million euros last year.

Currencies had a positive 367 million euro impact on revenues and a negative 122 million euro effect on costs (ex-fuel) including currency hedging in 2019.

The 2019 fourth quarter unit cost declined by -1.5%, delivering a -0.9% improvement for Full Year 2019, consistent with guidance

On a constant currency and fuel price basis, unit costs were down -1.5% in the fourth quarter 2019, with the first realizations of cost efficiency measures at Air France.

Group net employee costs were up 4.9% in 2019 compared to last year, explained by additional hires in response to the capacity growth and the impact of wage agreement implementation for Air France and KLM staff. The average number of FTEs (Full Time Equivalent) in 2019 increased by 1,400 compared to last year, including an additional 550 Pilots and 500 Cabin Crew. Productivity measured in ASK per FTE increased by 1.2% in 2019.

Net debt stable and Leverage ratio at Full year guidance of 1.5x

 Fourth quarterFull year
In € million2019Change2019Change
Cash flow before change in WCR and Voluntary Departure Plans, continuing operations (€m)814+1673,795+253
Cash out related to Voluntary Departure Plans (€m)0+0-35-35
Change in Working Capital Requirement (WCR) (€m)63-183135-121
Net cash flow from operating activities (€m)877-163,89597
Net investments* (€m)-1,118-449-3,272-561
Operating free cash flow (€m)-241-465623-464
Repayment of lease debt-260-24-1,008-36
Adjusted operating free cash flow**-501-489-385-500

* 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 flow” is operating free cash flow after deducting the repayment of lease debt.

Adjusted operating free cash flow at -385 million eurosThe Group generated adjusted operating free cash flow of -385 million euros, a decrease of 500 million euros compared to last year, mainly explained by higher net investments in 2019.

The lease debt amounted to 4,120 million euros, a reduction of 415 million euros compared to the end of 2018.

Net debt stable                    

In € million31 Dec 201931 Dec 2018
Net debt 6,1476,164
EBITDA trailing 12 months4,1284,293
Net debt/EBITDA trailing 12 months1.5 x1.4 x

The Group net debt stood at 6,147 million euros at 31 December 2019, which is comparable to last year.The net debt/EBITDA ratio stood at 1.5x at 31 December 2019, a slight increase explained by the reduction in EBITDA.

Both airlines improved their results in the fourth quarter 2019, with cost efficiency measures paying off for Air France, resulting in a +0.8pt margin increase

 Fourth quarterFull year
 2019Change2019Change
Air France Group Operating result (€m)-19+30280-41
Operating margin (%)-0.5%+0.8 pt1.7%-0.3 pt
KLM Group Operating result (€m)119+7853-238
Operating margin (%)4.4%+0.2 pt7.7%-2.3 pt

Outlook

Business trends

After a good performance for the Passenger Network activity with positive unit revenue in January 2020, recent developments with regards to the Covid-19 have impacted the demand outlook, especially in the Asian network. This translates in long-haul forward booking load factors down from February to May 2020. As a consequence the Group anticipates unit revenues at constant currency to be down for the first quarter of 2020.

The Cargo activity is also impacted by Covid-19, foreseen to maintain pressure on the load factor and yield in the first part of 2020.

Based on the Group announcement regarding Covid-19 (suspension of China operations in February-March and possible resumption of operations starting from April 20203), the high-level estimated impact on operating result is of between -150 and -200 million euros for February to April 2020.This impact on operating result is estimated as the sum of associated loss of revenue due to suspension of China operations for Passenger and Cargo, negative impact for connecting traffic and weakness in rest of Asia and variable cost savings as no redeployment so far is taken into account.

Full year 2020 guidance

Capacity:Passenger network activity: In 2020, the Air France-KLM Group plans to selectively grow capacity by 2% to 3% compared to 2019. Capacity implications due to the Covid-19-related flight suspensions are expected to reduce capacity growth to or below the lower-end of this guided range.Transavia: Continue to grow at a sustained pace of 4% to 6% in 2020, with around 10% growth foreseen in France and limited growth for Transavia Netherlands in light of the capacity constraints at Dutch airports. 

Fuel:The 2020 fuel bill is expected to decrease by 300 million euros compared to 2019 to 5.2 billion euros, based on the forward curve of 14 February 2020.4

Unit cost:The Group will pursue initiatives to reduce unit costs, with a targeted 2020 reduction of between -1% to 0% at constant currency and fuel price. Negative cost implications related to the Covid-19 foreseen due to lower-than-planned capacity growth and disruption cost.

Capex:The Group plans capital expenditures of 3.6 billion euros for 2020.

Leverage:Air France-KLM is targeting a Net debt/EBITDA ratio of circa 1.5x.             

*****

The audit procedures for the consolidated accounts have taken place. The certification report will be published following the completion of the procedures necessary for the filing of the Universal Registration Document.

The results presentation is available at www.airfranceklm.com on 20 February 2020 from 7:15 am CET.

A conference call hosted by Mr. Smith (CEO) and Mr. Gagey (CFO) will be held on 20 February 2020 at 08.30.

To connect to the conference call, please dial:

France: Local +33 (0)1 76 77 22 57Netherlands: Local +31 (0) 20 703 8261UK: Local +44 (0)330 336 9411US: Local +1 720 543 0214

Confirmation code: 5903128

To listen to the audio-replay of the conference call, please dial:

  • France: Local +33 (0) 1 70 48 00 94
  • Netherlands: Local +31 (0) 20 721 8903
  • UK: Local +44 (0)207 660 0134
  • US: Local +1 719-457-0820

Investor Relations                                                                                          PressOlivier Gall                                         Wouter van Beek                                                        +33 1 49 89 52 59                                 +33 1 49 89 52 60                                 +33 1 41 56 56 00olgall@airfranceklm.com                      Wouter-van.Beek@airfranceklm.com

Income Statement– restatement by quarter of 2019

Since January 1, 2019, the Air France-KLM Group has made changes in accounting treatment for Customer compensation and the Component approach for Life Limited Parts. A full explanation of the changes is given in the Consolidated Financial Statements January 1, 2019 – December 31, 2019, note 2, page 15.  

In accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”, these changes in accounting policies have been applied retrospectively to each previous period for which financial information is presented.

€m Q1 2019restated Q2 2019restated Q3 2019restated Q4 2019 Full year 2019
Revenues5,9427,0217,6096,61727,188
Other Revenue From Operating Activity00011
External expenses-3,707-4,028-4,166-3,992-15,893
Salaries & related costs (including external staff)-1,972-2,048-2,011-2,108-8,139
Other taxes-52-41-27-34-154
Other income and expenses2322632473831,125
EBITDA4431,1671,6528674,128
Amortization, Depreciation and provision-729-744-743-771-2,987
Income from current operations-286423909961,141
Non current result18-25-102-22-131
Income from operating activities-268398807741,010
Gross cost of financial debt-106-115-111-110-442
Income from cash & cash equivalent121513949
Net cost of financial debt-94-100-98-101-393
      
Other financial income and expenses-92-41-258120-271
      
Income before taxes-45425845193346
      
Income tax128-165-9455-76
      
Net income of consolidated companies-32693357148270
      
Share in net income of equity affiliates266923
      
Net income for the period-32499363157293
      
Net income - minority interest01113
Net income - group part-32498362156290

€m Q1 2018restated Q2 2018restated Q3 2018restated Q4 2018restated Full year 2018restated
Revenues5,7306,5237,4786,49326,224
Other Revenue From Operating Activity00123
External expenses-3,427-3,704-3,941-3,873-14,946
Salaries & related costs (including external staff)-1,853-1,959-1,916-2,031-7,759
Other taxes-49-38-40-39-166
Other income and expenses235237214249937
EBITDA6371,0591,7968014,293
Amortization, Depreciation and provision-742-690-708-748-2,888
Income from current operations-1053691,088531,405
Non current result-472021-6-12
Income from operating activities-1523891,109471,393
Gross cost of financial debt-114-122-119-110-465
Income from cash & cash equivalent1010101039
Net cost of financial debt-104-112-109-100-426
      
Other financial income and expenses25-134-73-153-336
      
Income before taxes-231142927-206631
      
Income tax-9-58-137-21-224
      
Net income of consolidated companies-24084791-227407
      
Share in net income of equity affiliates-667915
      
Net income for the period-24690797-218422
      
Net income - minority interest01112
Net income - group part-24689796-217420

Income Statement

 Fourth quarterFull year
€m20192018Change20192018Change
Sales6,6176,493+1.9%27,18826,224+3.7%
Other revenues12-50.0%13-66.7%
Revenues6,6186,495+1.9%27,18926,227+3.7%
Aircraft fuel-1,393-1,336+4.3%-5,511-4,958+11.2%
Chartering costs-118-143-17.5%-525-577-9.0%
Landing fees and en route charges-462-474-2.5%-1,933-1,893+2.1%
Catering-205-194+5.7%-822-783+4.4%
Handling charges and other operating costs-422-425-0.7%-1,715-1,673+2.5%
Aircraft maintenance costs-708-645+9.8%-2,628-2,410+9.0%
Commercial and distribution costs-246-258-4.7%-1,029-1,034-0.5%
Other external expenses -438-398+10.1%-1,730-1,618+7.2%
Salaries and related costs-2,108-2,031+3.8%-8,139-7,759+4.9%
Taxes other than income taxes-34-39-12.8%-154-166-7.2%
Other income and expenses383249+53.8%1,125937+20.1%
EBITDA867801+8.2%4,1284,293-3.8%
Amortization, depreciation and provisions-771-748+3.1%-2,987-2,888+3.4%
Income from current operations9653+81.1%1,1411,405-18.8%
Sales of aircraft equipment-25nm224+450.0%
Other non-current income and expenses-20-11+81.8%-153-16+856%
Income from operating activities7447+57.4%1,0101,393-27.5%
Cost of financial debt-110-110+0.0%-442-465-4.9%
Income from cash and cash equivalent910-10.0%4939+25.6%
Net cost of financial debt-101-100+1.0%-393-426-7.7%
Other financial income and expenses120-153nm-271-336-19.3%
Income before tax93-206nm346631-45.2%
Income taxes55-21nm-76-224-66.1%
Net income of consolidated companies148-227nm270407-33.7%
Share of profits (losses) of associates99+0.0%2315+53.3%
Net income for the period157-218nm293422-30.6%
Minority interest00nm32nm
Net income for the period – Group part157-218nm293422-30.6%

2018 and 2019 results restated (with a similar impact in both years) for limited life parts componentization accounting change. See notes in the consolidated financial statements paragraph 2, page 12-15.

Consolidated Balance Sheet

Assets31 Dec 201931 Dec 2018
€m
Goodwill217217
Intangible assets1,3051,194
Flight equipment11,33410,308
Other property, plant and equipment1,5801,503
Right-of-use assets5,1735,664
Investments in equity associates307311
Pension assets420331
Other financial assets1,0961,487
Deferred tax assets523559
Other non-current assets241264
Total non-current assets22,19621,838
Other short-term financial assets800325
Inventories737633
Trade receivables2,1642,191
Other current assets1,1231,065
Cash and cash equivalents3,7153,585
Total current assets8,5397,799
Total assets30,73529,637

Liabilities and equity31 Dec 201931 Dec 2018
In million euros
Issued capital429429
Additional paid-in capital4,1394,139
Treasury shares-67-67
Perpetual403403
Reserves and retained earnings-2,620-3,118
Equity attributable to equity holders of Air France-KLM2,2841,786
Non-controlling interests1512
Total Equity2,2991,798
Pension provisions2,2532,098
Return obligation liability and other provisions3,7503,657
Financial debt6,2715,733
Lease debt3,1493,546
Deferred tax liabilities1424
Other non-current liabilities222459
Total non-current liabilities15,78715,497
Return obligation liability and other provisions714505
Current portion of financial debt842826
Current portion of lease debt971989
Trade payables2,3792,454
Deferred revenue on ticket sales3,2893,153
Frequent flyer program848844
Other current liabilities3,6023,566
Bank overdrafts45
Total current liabilities12,64912,342
Total equity and liabilities30,73529,637

Statement of Consolidated Cash Flows from 1st January until 31th December 2019

€m31 Dec 201931 Dec 2018
Net income from continuing operations293422
Amortization, depreciation and operating provisions2,9872,888
Financial provisions217159
Loss (gain) on disposals of tangible and intangible assets-43-33
Loss (gain)on disposals of subsidiaries and associates00
Derivatives – non monetary result30-49
Unrealized foreign exchange gains and losses, net82223
Other non-monetary items238-254
Share of (profits) losses of associates-23-15
Deferred taxes-21201
Financial Capacity3,7603,542
(Increase) / decrease in inventories-93-31
(Increase) / decrease in trade receivables61-39
Increase / (decrease) in trade payables-13357
Change in other receivables and payables300269
Change in working capital requirements135256
Net cash flow from operating activities3,8953,798
Purchase of property, plant and equipment and intangible assets-3,372-2,844
Proceeds on disposal of property, plant and equipment and intangible assets100133
Proceeds on disposal of subsidiaries, of shares in non-controlled entities136
Acquisition of subsidiaries, of shares in non-controlled entities-1-9
Dividends received146
Decrease (increase) in net investments, more than 3 months-724
Net cash flow used in investing activities-3,318-2,704
Increase of equity due to new convertible bond540
Perpetual (including premium)0-211
Issuance of debt1,617539
Repayment on financial debt-1,156-1,400
Payments on lease debt-1,008-972
Decrease (increase ) in loans, net72-106
Dividends and coupons on perpetual paid-26-38
Net cash flow from financing activities-447-2,188
Effect of exchange rate on cash and cash equivalents and bank overdrafts17
Change in cash and cash equivalents and bank overdrafts131-1,087
Cash and cash equivalents and bank overdrafts at beginning of period3,5804,667
Cash and cash equivalents and bank overdrafts at end of period3,7113,580
Change in treasury of discontinued operations00

Key Performance Indicators

EBITDA

 Fourth quarterFull year
€m2019201820192018
Income/(loss) from current operations96531,1411,405
Amortization, depreciation and provisions7717482,9872,888
EBITDA8678014,1284,293

Restated net result, group share         

 Fourth quarterFull year
In million euros2019201820192018
Net income/(loss), Group share 156-217290420
Unrealized foreign exchange gains and losses, net-135798256
Change in fair value of financial assets and liabilities (derivatives) -2021-29-53
Non-current income and expenses 22613112
Tax impact on gross adjustments net result 39-39-52-4
Restated net income/(loss), group part62-150422431
Coupons on perpetual-4-6-17-25
Restated net income/(loss), group share including coupons on perpetual (used to calculate earnings per share)58-156405406
Restated net income/(loss) per share (in €)0.14-0.360.950.95

Return on capital employed (ROCE)1

In million euros31 Dec 201931 Dec 201831 Dec 201830 Dec 2017
Goodwill and intangible assets1,5221,4111,4111,338
Flight equipment11,33410,30810,3089,728
Other property, plant and equipment1,5801,5031,5031,418
Right of use assets5,1735,6645,6646,216
Investments in equity associates307311311301
Financial assets, marketable securities and financial deposits146133133113
Provisions, excluding pension, cargo litigation and restructuring-4,058-3,776-3,776-3,456
WCR, excluding market value of derivatives-6,309-6,133-6,133-5,896
Capital employed 9,6959,4219,4219,762
Average capital employed (A)9,5589,592
Income from current operations1,1411,405
- Dividends received-2-2
- Share of profits (losses) of associates2315
- Normative income tax-345-421
Income from current operations after tax, trailing 12 months (B)817997
ROCE, trailing 12 months (B/A)8.5%10.4%

Net debt

 Balance sheet at
€m31 Dec 201931 Dec 2018
Financial debt6,8866,216
Lease debt4,0294,450
Currency hedge on financial debt47
Accrued interest-62-67
Gross financial debt (A)10,85710,606
Cash and cash equivalents3,7153,585
Marketable securities11174
Cash securities300265
Deposits (bonds)585522
Bank overdrafts-4-5
Others31
Net cash (B)4,7104,442
Net debt (A) – (B)6,1476,164

Adjusted operating free cash flow

 Fourth quarterFull year
€m2019201820192018
Net cash flow from operating activities, continued operations8778933,8953,798
Investment in property, plant, equipment and intangible assets-1,134-706-3,372-2,844
Proceeds on disposal of property, plant, equipment and intangible assets 1637100133
Operating free cash flow-2412246231,087
Payments on lease debt-260-236-1,008-972
Adjusted operating free cash flow-501-12-385115

Unit cost: net cost per ASK

 Fourth quarterFull year
 2019201820192018
Revenues (in €m)6,6186,49527,18926,227
Income/(loss) from current operations (in €m) -/--96-53-1,141-1,405
Total operating expense (in €m)6,5226,44226,04824,822
Passenger network business – other revenues (in €m)-178-204-711-640
Cargo network business – other revenues (in €m)-79-81-310-300
Third-party revenues in the maintenance business (in €m)-515-490-2,138-1,920
Transavia - other revenues (in €m)-72103
Third-party revenues of other businesses (in €m)-7-10-34-38
Net cost  (in €m)5,7365,65922,86521,927
Capacity produced, reported in ASK*81,36379,793332,473323,034
Net cost per ASK (in € cents per ASK)7.057.096.886.79
Gross change -0.6% 1.3%
Currency effect on net costs (in €m) 54 305
Change at constant currency -1.5% -0.1%
Fuel price effect (in €m) -4 188
Net cost per ASK on a constant currency and fuel price basis (in € cents per ASK)7.057.166.886.94
Change at constant currency and fuel price basis -1.5% -0.9%

* 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).

Group results

Air France Group

 Fourth quarterFull year
 2019Change2019Change
Revenue (in €m)4,056+1.9%16,588+4.6%
EBITDA (in €m)466+332,171+0
Operating result (en m€)-19+30280-41
Operating margin (%)-0.5%+0.8 pt1.7%-0.3 pt
Operating cash flow before WCR and restructuring cash out (in €m)386+1131,953+161
Operating cash flow (before WCR and restructuring) margin9.5%+2.7 pt11.8%+0.5 pt

KLM Group Fourth quarterFull year
 2019Change2019Change
Revenue (in €m)2,690+1.4%11,075+1.7%
EBITDA (in €m)405+301,943-177
Operating result (en m€)119+7853-238
Operating margin (%)4.4%+0.2 pt7.7%-2.3 pt
Operating cash flow before WCR and restructuring cash out (in €m)435+1331,813+21
Operating cash flow (before WCR and restructuring) margin16.2%+4.8 pt16.4%-0.1 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 December 2019

Aircraft typeAF (incl. HOP)KL (incl. KLC & MP)TransaviaOwnedFinance  leaseOperating leaseTotalIn operationChange /  31/12/18
B747-400 8 8  88-3
B777-3004314 1421225757 
B777-2002515 251144040 
B787-9913 731222222
B787-10 4 3 444
A380-80010  1451010 
A350-9003  12 333
A340-3004  4  44-2
A330-300 5   555 
A330-200158 11 122323 
Total Long-Haul1096707432701761764
B737-900 5 2 355 
B737-800 317329106510410410
B737-700 16735152323-2
A32120  11 92020 
A32044  35364443 
A31933  20 133333-1
A31818  171 1818 
Total Medium-Haul115528085211412472467
ATR72-6003    332-4
ATR72-500        -1
ATR42-5001    11 -6
Canadair Jet 100014  14  1414 
Canadair Jet 70011  11  1110-1
Embraer 1901532 8132647474
Embraer 175 17 314 1717 
Embraer 17015  9151515 
Embraer 14517  143 1713-5
Total Regional76490593135125118-13
B747-400ERF 3 3  33 
B747-400BCF 1 1  11 
B777-F2  2  22 
Total Cargo240600660
          
Total3021728022484246554546-2

1 The Air France strike had a -335 million euros impact on the Full year 2018 operating result

2 Passenger unit revenue is the aggregate of Passenger network and Transavia unit revenues, change at constant currency

3 All flights to China were suspended as of 30 January 2020. Air France-KLM Group Mainland China network ASKs at 16.5 billion in 2019, representing 5.5% of the total Network Passenger activity

4 Based on the forward curves of 14 February 2020, average Brent price of USD 57, average jet fuel price of USD 605 per ton including into plane costs. Assuming exchange rate of EUR/USD of 1.11 in 2020

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 exists, 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.

Attachment

  • Q4_2019 Press release EN
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