First quarter 2020 results Air France-KLM

7 May 2020

FIRST QUARTER 2020 Operating result at -815 million euros, strongly impacted by the Covid-19 crisis

FIRST QUARTER 2020A strong performance at the start of the year with passenger unit revenue up +0.8% end of February 2020. March 2020 however was strongly impacted by the expansion of the virus and consequential globally imposed travel restrictions to counter the spread of the Covid-19 virus. This influenced negatively the first quarter 2020 results:

  • Revenue at 5,020 million euros, down 922 million compared to last year
  • Unit cost at constant currency and fuel reduced by 1.6% end of February 2020, and then up 3.5% end of March 2020
  • Operating result at -815 million euros, down 529 million euros compared to last year, entirely caused by March 2020 with an operating result at -560 million euros1
  • Net income at -1,801 million euros, including Covid-19 related over hedging -455 million euros, release of deferred tax assets -173 million euros and impairment of Boeing 747 aircraft -21 million euros
  • Net debt/EBITDA ratio at 1.8x, compared to 1.5x at the end of 2019

RAPID RESPONSE TO THE COVID-19 OUTBREAK

  • Implementation of the highest sanitary safety standards for frontline operation staff, crew and customers to counter virus transmission risks. The Group operated special flights for repatriation of citizens, setup of an “air bridge” fore essential  medical supplies, in close cooperation with the French and Dutch governments and is maintaining the essential links with territories
  • Swift adjustments in network and capacity, March 2020 capacity down 35% and around 95% of planned capacity to be suspended for the second quarter 2020
  • Quick and effective cash protection measures implemented, costs reduced by 500 million euros on 2020, Capex reduced to 2.4 billion euros for 2020 and positive impact of partial activity implementation and crew variable pay reduction estimated at 350 million euros per month in the second quarter 2020
  • Liquidity injections of 7 billion euros benefiting to Air France through a bank loan guaranteed by the French state and a direct shareholder loan from the French state. Ongoing discussions with the Dutch state concerning KLM support
  • As an integral part of the financing packages the Group will build a new transformation plan to ensure economic and financial sustainability over the medium and long term with integration of new ambitious environmental goals. This new plan will be communicated in summer 2020.

OUTLOOKHigh level of uncertainty on the duration of the Covid-19 crisis and impact on the macro-economic environment. The Group withdraws its earlier 2020 guidance elements.The Group now anticipates:

  • Progressive lifting of border restrictions in 2020, enabling a slow capacity resumption in Summer 2020, with capacity for the second and third quarter 2020 around respectively -95% and -80% compared to previous year
  • A prolonged negative impact on passenger demand, not expected to recover to pre-crisis levels before several years
  • A fleet repositioning including structural capacity reduction of at least -20% in 2021 compared to pre-crisis 2019 level

The Group foresees significantly  negative EBITDA in full year 2020 and a significantly higher current operating income loss in the second quarter than in the first quarter 2020.

Air France-KLM Group First Quarter
2020 Change
Passengers (thousands) 18,111 -20.1%
Passenger Unit revenue per ASK2 (€ cts) 5.80 -6.9%
Operating result (€m) -815 -529
Net income – Group part (€m) -1,801 -1,477
Adj. operating free cash flow (€m) -825 -1,066
Net debt at end of period (€m) 6,584 437

The Board of Directors of Air France-KLM, chaired by Anne-Marie Couderc, met on 6 May 2020 to approve the financial statements for the first quarter 2020. Benjamin Smith, Chief Executive Officer of the Air France-KLM Group, said: "The Air France-KLM Group had a promising start to the first quarter in line with the objectives of the strategic plan presented in November 2019. However, the acceleration of the Covid-19 crisis in March had a strong impact on the Group's first quarter results. I would like to thank our teams for their exceptional mobilization in this unprecedented crisis. The Air France-KLM Group has adapted rapidly, by implementing health safety measures essential to our staff and customers, reducing our costs to preserve our liquidity, continuously adjusting our flight schedule, and the many repatriation flights and flights to transport medical equipment. Uncertainties remain regarding the evolution of Covid-19 and we must be cautious in the assumptions of recovery in the coming months. Nevertheless, the commitment to financial support of the French and Dutch governments to our Group, as well as that our banking partners participating in these schemes, is a strong testimony of their confidence in our ability to weather this crisis and rebuild. We are working on a renewal plan to ensure that the Air France-KLM Group regains its competitiveness in a deeply shaken world and reaffirms its leadership in the sustainable transition of air transport. These new orientations will be presented in the coming months.”

Business review 

Network: First quarter 2020 operating result down 468 million euros impacted by Covid-19

Network First Quarter
2020 Change Change constant currency
Total revenues (€m) 4,278 -16.7% -17.5%
Scheduled revenues (€m) 4,070 -16.8% -17.7%
Operating result (€m) -729 -468 -500

First quarter 2020 revenues decreased by 17.7% at constant currency to 4.07 billion euros. The operating result amounted to -729 million euros, a 500 million euros decrease at constant currency compared to last year. Actions have been taken to preserve cash including reduction of investments, cost savings measures, deferral of supplier payments and partial activity measures for employees.

Passenger network: Good start in January and February 2020, the first quarter 2020 is down due to Covid-19 impact in March 2020

  First Quarter
Passenger network 2020 Change Change constant currency
Passengers (thousands) 15,762 -20.2%  
Capacity (ASK m) 62,403 -10.5%  
Traffic (RPK m) 49,848 -17.2%  
Load factor  79.9% -6.4 pt  
Total passenger revenues (€m) 3,811 -16.9% -17.7%
Scheduled passenger revenues (€m) 3,671 -17.0% -17.8%
Unit revenue per ASK (€ cts) 5.88 -7.2% -8.1%

Until the end of February 2020 the passenger network activity performance was good with stable unit revenue at constant currency compared to last year:North America unit revenues slightly down due to high capacity growth, which was mainly an Asian fleet redeployment effect, following Covid-19 outbreak.Asian network already impacted by the Covid-19, whereby all flights to China were suspended as of 30 January 2020.Strong performance in Medium-haul network unit revenue thanks to moderate industry capacity growth and ongoing rationalization of the domestic France network

For the entire first quarter 2020 capacity declined by 10.5% and unit revenues at -8.1% at constant currency compared to last year, down in all markets due to Covid-19 crisis impact acceleration during the month of March 2020.

Cargo: Performance in the first quarter 2020 impacted by reduced belly capacity, partly offset by increase in full freighter activity

  First Quarter
Cargo business 2020 Change Change constant currency
Tons (thousands) 242 -10.1%  
Capacity (ATK m) 3,191 -7.8%  
Traffic (RTK m) 1,832 -10.5%  
Load factor  57.4% -1.7 pt  
Total Cargo revenues (€m) 466 -14.8% -16.1%
Scheduled cargo revenues (€m) 399 -15.7% -17.0%
Unit revenue per ATK (€ cts ) 12.50 -8.5% -10.0%

Unit revenue remained under strong pressure till February 2020, while positive for March due to a rate increase as an effect of the wide body belly capacity crunch, overall first quarter 2020 unit revenue was down 10.0% compared to last year at constant currency.

Cargo industry capacity is impacted by the Covid-19 crisis and is approximately 35% lower compared to last year with wide-body belly capacity down 85% and full freighter capacity up 14%.  

On the demand side, world-wide air freight volumes are down due to Covid-19 crisis and supply-demand balance is foreseen to remain volatile in the next months with production lines opening up and limited belly capacity. The Group anticipates to the strong demand on certain Cargo routes, particularly Asia to Europe by adding production by means of increasing utilization of its full freighters, temporarily redeployment of phased-out 747-combi aircraft and is testing with Cargo in passenger aircraft cabins.The Group has in close cooperation with the French and Dutch governments setup an “air bridge” between its home markets and China for relieve goods and medical supplies.

Transavia operating result –12 million euros compared to last year as impacted by Covid-19 crisis

  First Quarter
Transavia 2020 Change
Passengers (thousands) 2,349 -19.8%
Capacity (ASK m) 4,892 -16.0%
Traffic (RPK m) 4,456 -17.0%
Load factor  91.1% -1.1 pt
Total passenger revenues (€m) 242 -1.6%
Unit revenue per ASK (€ cts) 4.70 +13.1%
Unit cost per ASK (€ cts) 6.37 +18.8%
Operating result (€m) -82 -12

The second half of March was severely hit by the Covid-19 outbreak with consequential reduction in activity due to Covid-19 flight cancellations. Transavia France and the Netherlands have temporarily fully grounded their fleet. Actions have been taken to preserve cash including reduction of investments, cost savings measures, deferral of supplier payments and partial activity measures.

The increase in unit revenue by 13.1% in the first quarter 2020 is explained by a good performance until end of February with unit revenues 10% above last year combined with high level of ferry flights for passenger returns in month of March 2020. The Transavia unit cost for the first quarter increased by 15.1% at constant fuel and currency, explained by the reduction in capacity at the end of the quarter.Overall the impact of Covid-19 crisis on the month of March is fully causing the first quarter 2020 operating result decline of 12 million euros compared to last year.

Maintenance business margins for first quarter 2020 at -0.3%, impacted by Covid-19

  First Quarter
Maintenance 2020 Change Change constant currency
Total revenues (€m) 1,138 -2.7%  
Third-party revenues (€m) 493 -11.0% -13.9%
Operating result  (€m) -3 -48 -54
Operating margin (%) -0.3% -4.1 pt -4.5 pt

The first quarter operating result stood at -3 million euros, a decrease of 48 million euros, highly impacted by the Covid-19 crisis with the borders closures starting from mid-March in Europe and since January with Chinese clients.Even if the PBH contracts for engines and components allow to maintain certain activity flows, the Covid-19 crisis has a major impacts on the maintenance business and difficulties encountered by the maintenance clients are a risk for the business.The Maintenance order book stood of 11.5 billion dollars at 31 December 2019, is not yet updated as there is not yet clear visibility on expected client fleet and activity reductions. The Maintenance business is carefully managing its external business including agreements with clients on payment terms.  Actions have been taken to preserve cash including reduction of investments, cost savings measures, renegotiation of payment terms with suppliers and partial activity measures.

Air France-KLM Group: First quarter 2020 revenues down 922 million euros and operating result down 529 million euros

  First Quarter
  2020 Change Change constant currency
Capacity (ASK m) 67,295 -11.0%  
Traffic (RPK m) 54,304 -17.2%  
Passenger unit revenue per ASK (€ cts)   5.80 -6.0% -6.9%
Group unit revenue per ASK (€ cts)   6.39 -6.0% -6.9%
Group unit cost per ASK (€ cts) at constant fuel   7.60 +6.0% +3.5%
Revenues (€m) 5,020 -15.5% -16.5%
EBITDA (€m) -61 -504 -542
Operating result (€m) -815 -529 -567
Operating margin (%) -16.2% -11.4 pt -12.1 pt
Net income - Group part (€m) -1,801 -1,477  

2019 results restated for LLP componentization accounting change and EU passenger compensation reclassification between revenues and external expenses

In the first quarter 2020, the Air France-KLM Group posted an operating result of -815 million euros, down by 529 million euros compared to last year, entirely caused by March 2020 with an operating result at -560 million euros.

Net income amounted to -1,801 million euros in 2020, a decrease of 1,477 million euros compared to last year, of which exceptional accounting items due to Covid-19 for impairment on 8 Boeing 747s -21 million euros, accelerated depreciation on Airbus 380 -25 million euros, fuel “over hedge” -455 million euros and reduction of deferred income tax asset -173 million euros.

Deferred income tax asset -173 million euros:Following the current COVID-19 crisis, the perspectives of recoverability within the seven years horizon have been downward revised leading to a write-off of €311 million of deferred tax assets for tax losses compared to the opening position of the fiscal year 2020 at the level of the French Tax.

Fuel “over hedge” -455 million euros for the remainder of 2020:As a result of capacity reductions and lower fuel consumption forecasts, the Group is in a position of over-hedging. The change in fair value, initially recognized in equity, has been recycled to “Other financial income and expenses”

The first quarter 2020 fuel bill including hedging stood at 1,185 million euros.

Currencies had a positive 71 million euro impact on revenues and a negative 32 million euro effect on costs (ex-fuel) including currency hedging in the first quarter of 2020.

The first quarter 2020 unit cost increased by 3.5%, primarily caused by Covid-19 related capacity reductions

On a constant currency and fuel price basis, unit costs were up 3.5% in the first quarter 2020.

Group net employee costs were down 2.8% in 2020 compared to last year, supported by partial activity implementation at Air France in last 2 weeks of March 2020, release of hired staff and no profit sharing provisions to be made at both airlines. The average number of FTEs (Full Time Equivalent) in first quarter 2020 increased by 600 compared to last year, including an additional 450 Pilots and 450 Cabin Crew.

Net debt up 437 million euros and leverage ratio at 1.8x

  First Quarter
In € million 2020 Change
Cash flow before change in WCR and Voluntary Departure Plans, continuing operations (€m) -171 -582
Cash out related to Voluntary Departure Plans (€m) -9 +19
Change in Working Capital Requirement (WCR) (€m) 482 -344
Net cash flow from operating activities (€m) 282 -907
Net investments* (€m) -858 -161
Operating free cash flow (€m) -576 -1,068
Repayment of lease debt -249 +2
Adjusted operating free cash flow** -825 -1,066

* 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.

The Group generated adjusted operating free cash flow of -825 million euros, a decrease of 1,066 million euros compared to last year, mainly explained by an operating cash flow decline of 907 million euros.

In € million 31 Mar 2020 31 Dec 2019
Net debt 6,584 6,147
EBITDA trailing 12 months 3,624 4,128
Net debt/EBITDA trailing 12 months 1.8 x 1.5 x

Both airlines results negatively impacted in the first quarter 2020

  First Quarter
  2020 Change
Air France Group Operating result (€m) -536 -287
Operating margin (%) -17.8% -11.0 pt
KLM Group Operating result (€m) -275 -228
Operating margin (%) -12.9% -10.9 pt

OUTLOOK

High level of uncertainty on the duration of the Covid-19 crisis and impact on the macro-economic environment. Therefore the Group withdraws its earlier 2020 guidance elements.The Group now anticipates:       ·Progressive lifting of border restrictions in 2020, enabling a slow capacity resumption in Summer 2020, with capacity for the second and third quarter 2020 at around respectively              ~-95% and ~-80% compared to previous year

  • A prolonged negative impact on passenger demand, not expected to recover to pre-crisis levels before several years
  • A fleet repositioning including structural reduction in capacity of at least -20% in 2021 compared to pre-crisis 2019 level

              The Group foresees significantly negative EBITDA in full year 2020 and a significantly higher current operating income loss in the second quarter than in the first quarter 2020.

As an integral part of the financing packages the Group will build a new transformation plan to ensure economic and financial sustainability over the medium and long term with integration of new ambitious environmental goals. This new plan will be communicated in the summer of 2020.

             CASH PROTECTION MEASURES IMPLEMENTED IN RESPONSE TO THE COVID-19 CRISISThe Group has implemented most stringent cash preservation measures in response to the COVID-19 crisis to ensure operational cash cost savings, including:

  • Capacity reductions delivering around 50% variable cost savings
  • Estimated savings at 350 million euros per month in the second quarter 2020 from Group partial activity and crew variable pay reduction
  • Other cost measures totaling 500 million euros in 2020, for which further revisions are ongoing including termination of most of the temporary employee contracts

Furthermore, the Group has revised its capital expenditure plan 2020 by 1.2 billion euros to 2.4 billion euros compared to 3.6 billion euros in the previous guidance, of which 0.9 billion euros was already engaged. This includes the deferral of 3 Airbus 350s to 2021 and the remaining fleet deliveries in 2020 are expected to be primarily engaged under financing arrangements.Other Cash protection measures taken include the deferral of 570 million euros of tax and social charges payments beyond 2020 and further deferrals of suppliers’ payables and the airlines of the Group have established a customer voucher policy in line with industry practice.

LIQUIDITY REQUIREMENT FORESEEN IN THE THIRD QUARTER 2020Despite these cash preservation measures the Group has indicated the need for additional liquidity in the third quarter 2020, considering an negative operational cash cost burn around 400 million euros per month in the second quarter 2020, and a high level of uncertainty on the crisis impact in third and fourth quarters. In addition there are the financial and other cash impacts3, a capital expenditure plan of 2.4 billion euros for the full year 2020, a working capital risk estimated at around 2.5 billion euros mainly from deferred ticket revenues.Therefore an initial financing package of 7 billion euros through a bank loan guaranteed by the French state and a direct shareholder loan from the French state is approved by the EU. It will enable the Group to meet Air France’s financial obligations and ensure recovery of activity beyond the current crisis. Discussions with the Dutch state and banks are ongoing on financial support directed to KLM.

******

The first quarter 2020 accounts are not audited by the Statutory Auditors.

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

A conference call hosted by Mr. Smith (CEO) and Mr. Gagey (CFO) will be held on 7 May 2020 at 08.30 CET.            To connect to the conference call, please dial:

France: Local +33 (0)1 70 72 25 50Netherlands: Local +31 (0) 20 703 8211UK: Local +44 (0)330 336 9126US: Local +1 720 452 9217

Confirmation code: 7621430

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

Confirmation code: 7621430

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

  First Quarter
€m 2020 2019 Change
Sales 5,020 5,942 -15.5%
Other revenues 0 0 nm
Revenues 5,020 5,942 -15.5%
Aircraft fuel -1,185 -1,201 -1.3%
Chartering costs -89 -134 -33.6%
Landing fees and en route charges -387 -434 -10.8%
Catering -164 -187 -12.3%
Handling charges and other operating costs -359 -410 -12.4%
Aircraft maintenance costs -614 -652 -5.8%
Commercial and distribution costs -194 -250 -22.4%
Other external expenses -404 -439 -8.0%
Salaries and related costs -1,916 -1,972 -2.8%
Taxes other than income taxes -56 -52 +7.7%
Other income and expenses 287 232 +23.7%
EBITDA -61 443 nm
Amortization, depreciation and provisions -754 -729 +3.4%
Income from current operations -815 -286 +184.9%
Sales of aircraft equipment -1 13 nm
Other non-current income and expenses -45 -40 +12.5%
Income from operating activities -861 -268 +221.3%
Cost of financial debt -102 -106 -3.8%
Income from cash and cash equivalent 7 12 -41.7%
Net cost of financial debt -95 -94 +1.3%
Other financial income and expenses -666 -92 +623.9%
Income before tax -1,622 -454 +257.5%
Income taxes -173 128 nm
Net income of consolidated companies -1,795 -326 +451.2%
Share of profits (losses) of associates -8 2 nm
Net income for the period -1,803 -324 +457.1%
Minority interest 0 0 nm
Net income for the period – Group part -1,803 -324 +457.1%

2019 results restated for LLP componentization accounting change and EU passenger compensation reclassification between revenues and external expenses

Consolidated Balance Sheet

Assets 31 Mar 2020 31 Dec 2019
€m
Goodwill 218 217
Intangible assets 1,347 1,305
Flight equipment 11,465 11,334
Other property, plant and equipment 1,578 1,580
Right-of-use assets 5,118 5,173
Investments in equity associates 299 307
Pension assets 760 420
Other financial assets 1,095 1,096
Deferred tax assets 325 523
Other non-current assets 277 241
Total non-current assets 22,482 22,196
Other short-term financial assets 433 800
Inventories 691 737
Trade receivables 1,565 2,164
Other current assets 1,246 1,123
Cash and cash equivalents 5,362 3,715
Total current assets 9,297 8,539
Total assets 31,779 30,735
Liabilities and equity 31 Mar 2020 31 Dec 2019
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 -4,732 -2,620
Equity attributable to equity holders of Air France-KLM 172 2,284
Non-controlling interests 13 15
Total Equity 185 2,299
Pension provisions 2,127 2,253
Return obligation liability and other provisions 3,803 3,750
Financial debt 6,730 6,271
Lease debt 3,078 3,149
Deferred tax liabilities 53 142
Other non-current liabilities 498 222
Total non-current liabilities 16,289 15,787
Return obligation liability and other provisions 783 714
Current portion of financial debt 2,575 842
Current portion of lease debt 970 971
Trade payables 2,056 2,379
Deferred revenue on ticket sales 3,447 3,289
Frequent flyer program 867 848
Other current liabilities 4,602 3,602
Bank overdrafts 5 4
Total current liabilities 15,305 12,649
Total equity and liabilities 31,779 30,735

Statement of Consolidated Cash Flows from 1st January until 31th March 2020

€m 31 Mar 2020 31 Dec 2019
Net income from continuing operations -1,803 -324
Amortization, depreciation and operating provisions 754 729
Financial provisions 51 53
Loss (gain) on disposals of tangible and intangible assets 1 -20
Loss (gain)on disposals of subsidiaries and associates 0 0
Derivatives – non monetary result 432 27
Unrealized foreign exchange gains and losses, net 142 76
Impairment 21 0
Other non-monetary items 48 -21
Share of (profits) losses of associates 8 -2
Deferred taxes 166 -135
Financial Capacity -180 383
(Increase) / decrease in inventories 22 -60
(Increase) / decrease in trade receivables 596 -399
Increase / (decrease) in trade payables -309 -34
Change in other receivables and payables 153 1,299
Change in working capital requirements 462 806
Net cash flow from operating activities 282 1,189
Purchase of property, plant and equipment and intangible assets -869 -737
Proceeds on disposal of property, plant and equipment and intangible assets 11 40
Proceeds on disposal of subsidiaries, of shares in non-controlled entities 356 4
Acquisition of subsidiaries, of shares in non-controlled entities -1 0
Dividends received 0 3
Decrease (increase) in net investments, more than 3 months 0 22
Net cash flow used in investing activities -503 -668
Increase of equity due to new convertible bond 0 0
Perpetual (including premium) 0 0
Issuance of debt 2,710 508
Repayment on financial debt -588 -238
Payments on lease debt -249 -251
Decrease (increase ) in loans, net -3 -1
Dividends and coupons on perpetual paid 0 0
Net cash flow from financing activities 1,870 18
Effect of exchange rate on cash and cash equivalents and bank overdrafts -3 7
Change in cash and cash equivalents and bank overdrafts 1,646 546
Cash and cash equivalents and bank overdrafts at beginning of period 3,711 3,580
Cash and cash equivalents and bank overdrafts at end of period 5,357 4,126
Change in treasury of discontinued operations 0 0

Key Performance Indicators

Restated net result, group share         

  First Quarter
In million euros 2020 2019
Net income/(loss), Group share -1,801 -324
Unrealized foreign exchange gains and losses, net 142 76
Change in fair value of financial assets and liabilities (derivatives) 432 -25
Non-current income and expenses 46 -18
Tax impact on gross adjustments net result -177 -10
Restated net income/(loss), group part -1,358 -301
Coupons on perpetual -4 -4
Restated net income/(loss), group share including coupons on perpetual (used to calculate earnings per share) -1,362 -305
Restated net income/(loss) per share (in €) -3.19 -0.71

Return on capital employed (ROCE)1

In million euros 31 Mar 2020 31 Dec 2019 30 Sep 2019 30 June 2019 31 Mar 2019 31 Dec 2018 30 Sep 2018 30 June 2018
Goodwill and intangible assets 1,564 1,522 1,481 1,465 1,485 1,411 1,391 1,379
Flight equipment 11,465 11,334 10,905 10,823 10,456 10,308 10,401 10,294
Other property, plant and equipment 1,579 1,580 1,554 1,530 1,504 1,503 1,462 1,443
Right of use assets 5,119 5,173 5,212 5,382 5,453 5,664 5,596 5,802
Investments in equity associates 299 307 310 305 306 311 299 294
Financial assets excluding marketable securities and financial deposits 142 140 131 125 127 125 116 116
Provisions, excluding pension, cargo litigation and restructuring -4,190 -4,058 -4,104 -3,892 -3,904 -3,777 -3,671 -3,616
WCR, excluding market value of derivatives -6,650 -6,310 -6,285 -6,956 -6,938 -6,133 -5,851 -6,681
Capital employed 9,328 9,688 9,204 8,782 8,489 9,412 9,743 9,031
Average capital employed (A) 9,251 9,169
Adjusted results from current operations 612 1,224
- Dividends received -2 -2
- Share of profits (losses) of associates 12 23
- Normative income tax -155 -335
Adjusted result from current operations after tax (B) 467 910
ROCE, trailing 12 months (B/A) 5.0% 9.9%

Net debt

  Balance sheet at
€m 31 Mar 2020 31 Dec 2019
Financial debt 9,076 6,886
Lease debt 3,954 4,029
Currency hedge on financial debt -11 4
Accrued interest -64 -62
Gross financial debt (A) 12,955 10,857
Cash and cash equivalents 5,362 3,715
Marketable securities 108 111
Cash securities 304 300
Deposits (bonds) 599 585
Bank overdrafts -5 -4
Others -5 3
Net cash (B) 6,363 4,710
Net debt (A) – (B) 6,584 6,147

Unit cost: net cost per ASK

  First Quarter
  2020 2019
Revenues (in €m) 5,020 5,942
Income/(loss) from current operations (in €m) -/- 815 286
Total operating expense (in €m) 5,835 6,228
Passenger network business – other revenues (in €m) -140 -167
Cargo network business – other revenues (in €m) -68 -73
Third-party revenues in the maintenance business (in €m) -493 -554
Transavia - other revenues (in €m) -13 -4
Third-party revenues of other businesses (in €m) -7 -8
Net cost  (in €m) 5,115 5,422
Capacity produced, reported in ASK* 67,295 75,586
Net cost per ASK (in € cents per ASK) 7.60 7.17
Gross change   6.0%
Currency effect on net costs (in €m)   12
Change at constant currency   5.7%
Fuel price effect (in €m)   115
Net cost per ASK on a constant currency and fuel price basis (in € cents per ASK) 7.60 7.34
Change at constant currency and fuel price basis   +3.5%

* 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

  First Quarter
  2020 Change
Revenue (in €m) 3,016 -17.8%
EBITDA (in €m) -67 -290
Operating result (en m€) -536 -287
Operating margin (%) -17.8% -11.0 pt
Operating cash flow before WCR and restructuring cash out (in €m) -124 -316
Operating cash flow (before WCR and restructuring) margin -4.1% -9.3 pt
KLM Group  First Quarter
  2020 Change
Revenue (in €m) 2,140 -9.7%
EBITDA (in €m) 11 -199
Operating result (en m€) -275 -228
Operating margin (%) -12.9% -10.9 pt
Operating cash flow before WCR and restructuring cash out (in €m) -15 -202
Operating cash flow (before WCR and restructuring) margin -0.7% -8.6 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 2020

Aircraft type AF (incl. HOP) KL (incl. KLC & MP) Transavia Owned Finance  lease Operating lease Total In operation Change /  31/12/19
B747-400   8   8     8   -4
B777-300 43 14   16 19 22 57 57  
B777-200 25 15   25 1 14 40 40  
B787-9 9 13   7 3 12 22 22  
B787-10   5   4 1   5 5 1
A380-800 10     1 4 5 10 9 -1
A350-900 4     1 3   4 4 1
A340-300 4     4     4 4  
A330-300   5       5 5 5  
A330-200 15 8   11   12 23 23  
Total Long-Haul 110 68 0 77 31 70 178 169 -7
B737-900   5   2   3 5 5  
B737-800   31 74 29 10 66 105 105 1
B737-700   16 7 3 5 15 23 23  
A321 20     11   9 20 20  
A320 44     3 5 36 44 43  
A319 33     20   13 33 33  
A318 18     18     18 18  
Total Medium-Haul 115 52 81 86 20 142 248 247 1
ATR72-600 2         2 2   -2
ATR72-500                  
ATR42-500                  
Canadair Jet 1000 14     14     14 14  
Canadair Jet 700 11     11     11 10  
Embraer 190 16 32   9 12 27 48 48 1
Embraer 175   17   3 14   17 17  
Embraer 170 15     10   5 15 15  
Embraer 145 16     16     16 11 -2
Total Regional 74 49 0 63 26 34 123 115 -3
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 301 173 81 232 77 246 555 537 -9

1 2019 results restated for LLP componentization accounting change and EU passenger compensation reclassification between revenues and external expenses

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

3 Including: secured financing & lease debt (principal & interests) payments, hybrid bond in October 2020 0.4 billion euros and a Cargo claim expected in the third quarter 2020 for around 0.4 billion euros

1 The definition of ROCE has been revised to take into account the seasonal effects of the activity.

Attachment

  • Q1_2020 Press release EN final
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