Full Year 2013 Results
20 February 2014
Key data: underlying improvement at every level
|
FY 13 |
FY 12(1) |
Change |
| Revenue (€bn) |
25.52 |
25.42 |
+0.4%
Reported:
+2.3%
Ex-currency: |
EBITDA(2)
(€m) |
1,855 |
1,394 |
+461m |
| Operating result (€m) |
130 |
-336 |
+466m |
| Net result, group share (€m) |
-1,827 |
-1,225 |
-602m |
Adjusted net result(2)
(€m) |
-349 |
-696 |
+347m |
Operating free cash flow(2)
(€m) |
538 |
-47 |
+585m |
Restated IAS19R
Net debt(2)
(€bn) |
5.35 |
5.97 |
-618m |
2
(1) Restated for IAS 19 revised, CityJet reclassified as discontinued operation
(2) See definition in press release
Full Year 2013 Results
Highlights of 2013
| Financial |
Return to positive operating result
in a challenging context
Further reduction in unit cost
Robust free cash flow generation
Significant reduction in net debt
|
| Efficiency |
Restructuring measures ongoing in all areas,
and reinforced where necessary
Successful implementation of new working
conditions with all categories of staff
Streamlining the portfolio of activities
and improving asset utilization |
| Customer |
Initiation of major product upgrade throughout
the group
Launch of HOP! and expansion of Transavia
Strengthening of international long-haul network
|
Activity and Results
In €
millions |
Q4-13 |
Q4-12(1) |
Change |
FY-13 |
FY-12(1) |
Change |
Revenues
Change ex-currency |
6,123 |
6,258 |
-2.2%
+0.7% |
25,520 |
25,423 |
+0.4%
+2.3% |
| EBITDA(2) |
381 |
281 |
+100 |
1,855 |
1,394 |
+461 |
| EBITDA margin |
+6.2% |
+4.5% |
+1.7 pts |
+7.3% |
+5.5% |
+1.8 pts |
| Operating result |
-65 |
-152 |
+87 |
130 |
-336 |
+466 |
| Operating margin |
-1.1% |
-2.4% |
+1.3 pts |
0.5% |
-1.3% |
+1.8 pts |
| Net result, group share |
-1,177 |
-244 |
-933 |
-1,827 |
-1,225 |
-602 |
| Adjusted net result, group share(2) |
-112 |
-126 |
+14 |
-349 |
-696 |
+347 |
| Operating free cash flow(2) |
|
|
|
538 |
-47 |
+585 |
| Net debt at end of period(2) |
|
|
|
5,348 |
5,966 |
-618 |
(1) Restated for IAS 19 revised, Cityjet reclassified as discontinued operation (2) See definition in press release
Full Year 2013 Results
Negative currency impact in H2
Full Year 2013 Results
Net result impacted by restructuring and impairment expenses
Contribution by business to Full Year results
|
|
Revenue
(€
bn) |
Change
(%) |
Change
ex-currency
(%) |
Op. result
(€m) |
Change
(€m) |
Change
ex-currency
(€m) |
| Passenger |
79% |
20.11 |
+0.7% |
+2.6% |
174 |
+434 |
+499 |
| Cargo |
11% |
2.82 |
-7.9% |
-5.7% |
-202 |
+28 |
+37 |
| Maintenance |
5% |
1.22 |
+11.8% |
+15.1% |
159 |
+19 |
+29 |
| Other |
5% |
1.37 |
+5.6% |
+5.3% |
-1 |
-15 |
+0 |
|
Total |
25.52 |
+0.4% |
+2.3% |
130 |
+466 |
+566 |
Passenger activity
- Disciplined capacity growth
- Load factor up 0.6 pts
- Unit revenue: up +0.8%*
- ► Long-haul up +0.6%*
- Premium: -0.6%*
- Economy: +1.2%*
- ► Medium-haul up +2.4%*
- Positive effect of capacity reduction on medium-haul point-to-point
- RASK up 3.2%* in hubs
- CASK reduced by 1.8%*
Operating result improved by €434m
* Ex-currency
Capacity (ASK)
Activity
+1.6%
9
Full Year 2013 Results
Unit revenue by network
Full Year 2013 Results
Cargo activity
- Weak global trade and industry overcapacity
- Full freighter capacity reduced by 11%, above initial plan
- RATK down by 4.2%*
- CATK reduced by 4.9%*
- But insufficient improvement in operating result
Additional measures announced in October 2013
* Ex-currency
Activity
Full Year 2013 Results
Strong performance of maintenance activity
- Third party revenue up 17.6% like-for-like(2)
- ► Order book up €600m thanks to new contracts
- ► Quarter to quarter volatility of revenues due to one-offs
- Targeted investments to reinforce positions
- ► US-based engine tear-down joint venture (April 2013)
- ► Component shop in Shanghai (December 2013)
- Operating result up
- ► Development of higher margin activities
- ► Transform 2015 efficiency gains
In €
millions |
FY-13 |
FY-12(1) |
Change |
| Total revenue |
3,280 |
3,134 |
+4.7% |
| Third party revenue |
1,225 |
1,096 |
+11.8% |
| Like-for-like(2) |
|
|
+17.6% |
| Operating result |
159 |
140 |
+19 |
| Operating margin |
4.8% |
4.5% |
+0.3 pt |
(1) Restated IAS19R
(2) Excluding currency impact and one-offs
Full Year 2013 Results
Other businesses
Transavia
- ► Capacity growth: +11.6%
- Netherlands: +7.6%
- France: +25.5%
- ► Unit revenue: -0.2%
- Stable in spite of high growth
- ► Operating result down
- Political unrest in some Mediterranean destinations
- Launch costs of certain routes
Catering
- ► Third party revenue up 6.9% at constant scope
- ► Positive impact of Transform 2015 on operating result
Transavia activity
* Restated IAS19R
Full Year 2013 Results
Full Year: change in operating costs
|
|
€m |
Actual
change |
Ex-currency
change |
| 29% |
Employee costs |
7,482 |
-2.3% |
-2.1% |
| 25% |
Supplier costs(1)
excluding purchasing
of maintenance services and parts |
6,429 |
+1.0% |
+2.4% |
| 12% |
Aircraft costs(2) |
3,093 |
-4.2% |
-2.4% |
| 5% |
Purchasing of maintenance services
and parts |
1,303 |
+15.2% |
+18.4% |
|
Operating costs ex-fuel(3) |
18,493 |
+0.1% |
+0.8% |
| 27% |
Fuel |
6,897 |
-5.2% |
-2.2% |
|
Grand total of operating costs |
25,390 |
-1.4% |
-0.0% |
|
Capacity (EASK) |
|
|
+1.6% |
(1) Catering, handling charges, commercial and distribution, landing fees and air-route charges, other external expenses
(2) Chartering (capacity purchases), aircraft operating leases, amortization, depreciation and provisions
(3) Including other taxes, other revenues, other income and expenses
Significant decline in employee costs
Headcount reduction ► -3,700 FTEs(1)
- General pay freeze at both Air France and KLM
- On track to achieve further reduction(2) in 2014
(1) December 2013, at constant scope (2) Like-for-like: excluding increase in pension expense
Further reduction in unit costs
Full Year 2013 Results
Cost reduction drives improvement in operating result…
In € billions
…with a positive momentum since Transform 2015 launch
In € billions
Strong free cash flow generation
In € billions
* Net cash flow from operating activities less net capex on tangibles and intangibles. See definition in press release
Full Year 2013 Results
Improved financial ratios at 31 December 2013
* Restated for IAS 19 revised, Cityjet reclassified as discontinued operation (1) Adjusted by the portion of financial costs within operating leases (34%) (2) Adjusted for the capitalization of operating leases (7x yearly charge)
Adjusted net debt(2) / EBITDAR
20
Full Year 2013 Results
- Cash of €4.2 billion at 31 December 2013
- Undrawn credit lines of €1.8bn
- Air France: €1.06bn until 2016
- KLM: €540m until 2016
- Air France-KLM: €200m until 2017
- Amadeus shares: more than €900m
- Short term debt: €1.9bn
Update on fuel bill
In \$ billions
(1) Average of forward curves of past 5 weeks (10 January to 7 February 2014) Sensitivity computation based on February-December 2014 fuel price
Outlook for 2014
- Operating environment remains uncertain
- Timing/strength of economic recovery in different regions
- Still volatile currencies and fuel prices
- Industry capacity
- Positive impact of Transform measures
- Initial measures fully delivering
- Additional measures delivering as of H2 2014
- EBITDA expected in the region of €2.5bn in 2014, subject to there being no reversal in current operating trends
- Ongoing reduction in net debt
- Towards our 2015 objective of €4.5bn
Strategy
Transform 2015: securing structural cost reductions
- Driving a new revenue dynamic
- Expanding and strengthening our international networks
Transform 2015 initiatives implemented in all divisions
More than 90 projects launched in 2012
- Central project management office driving Transform 2015 implementation within each airline
- Additional measures in Medium-Haul and Cargo announced in October 2013 and currently being implemented
Distribution of Air France Transform 2015 initiatives per area
Distribution of KLM Transform 2015 initiatives
Significant reduction in costs since launch of Transform 2015
Costs reduced by over €700 million in 2 years
* Net unit cost per EASK in € cents, at constant currency, fuel price and excluding (non cash) pension charge impact
Full Year 2013 Results
Reduction in both headcount and employee costs
* At constant pension cost, CityJet removed in 2013 and 2014
New collective agreements lead to improved efficiency and productivity at Air France
Full Year 2013 Results
Medium-haul: new measures on track
Losses reduced by €180m in 2013
- Hubs: productivity gains, cabin densification, shorter turnaround times and ancillary revenues
- Point-to-point: reduction of activity in provincial bases, sale of CityJet
- Deployment of new measures announced in October 2013
- Paris-CDG hub: additional fleet reduction and productivity improvements
- Amsterdam hub: further actions to increase asset utilization
- Point-to-point: capacity cuts
- New Voluntary Departure Plan underway targeting 1,400 FTEs in French stations
Medium-haul total operating result
Cargo restructuring: ready to further adapt
- Significant cost and capacity reduction achieved in 2013
- Full freighter capacity down 11%
- CATK down 4%
- New measures announced in October 2013 on track
- Further full freighter fleet reduction, down from 14 in 2013 to 10 in 2015
- Outsourcing of handling at Orly, VDP in France targeting 280 FTEs
- New revenue initiatives
- Ready to further adapt in the absence of market recovery
Full-freighter cargo capacity (million ATKs) 9.1 5.6 5.1 3.4 -20% -24% -38%
Targeting a further reduction in unit costs in 2014 and 2015
Trend in unit costs*
* Net unit cost per EASK in € cents, at constant currency, fuel price, and pension expense. Restated following reclassification of CityJet as discontinued operation. See definition in press release.
Transform 2015: securing structural cost reductions
Driving a new revenue dynamic
Expanding and strengthening our international networks
Air France long-haul product upgrade
- €500m investment in long-haul product by end of 2015
- New cabins in 44 B777s
- Launch in July 2014
- New seats and new In-Flight Entertainment in all cabins
- Business class seat positioned at highest standards
- "Full-flat"
- "Full access": direct aisle access
- "Full privacy"
- Incorporates "quick change" feature to match demand seasonality
KLM long-haul product upgrade
- €200m investment in long-haul product by end of 2015
- New World Business Class seat
- Launched in July 2013
- 22 B747-400s upgraded by Summer 2014
- Full-flat
- Marked improvement in customer satisfaction
- Accelerated replacement of MD11s
- KLM frontline staff ranked #1 in Europe by SkyTrax
Customer satisfaction*
* First results on 7 upgraded B747s
Full Year 2013 Results
Reorganization of medium-haul brands
- Investment in medium-haul product
- New in-flight service at Air France (October 2012)
- Introduction of Economy Comfort at KLM (December 2012)
- Revised business model on regional point-to-point activity
- New brand (HOP!) supporting product and fare adaptation
- Capacity reduction
- Adaptation of mainline fare structure
- Air France: successful launch of fares without bag (Mini)
- KLM: smooth introduction of paid first bag
Accelerated development of Transavia France
Balanced long-haul network with strong exposure to high growth markets and high quality partners
39
* Including flights and destinations served by Delta as part of JV, Summer 2013 data
Full Year 2013 Results
Targeted capacity growth in 2014
Medium-haul: -2%
North America* ~ +3%
Hubs: ~ +3% Point-to-point: ~ -16%**
Latin America ~ +9%
Africa & Middle-East ~ 0%
Caribbean & Indian Ocean ~ 0%
Total long-haul: ~ +2% Total group: ~ +1%
Asia-Pacific
~ -1%
* Including Mexico ** o/w 5% due to sale of CityJet
Full Year 2013 Results
The North Atlantic JV: a unique asset
JV represents 23% of industry transatlantic capacity
- 98 flights per day
- Revenue: \$11bn
- Leading improvement in RASK since 2008
- New initiatives
- Ancillary seat sales
- Enhanced integration of Frequent Flyer programs
- Cargo
11 point rise in profit margin since 2008
* Among 13 participating European carriers, January-September 2013 RASK compared to January-September 2008, in € cents, source: AEA
Full Year 2013 Results
Africa: reinforcement of network
- West Africa
- 22 destinations in 20 countries
- Planned deployment of A380 on Abidjan
- 2014: Extension of Joint Venture with Kenya Airways
- 27% shareholding
- Scope extended to 44 weekly intercontinental routes
- 27 destinations covered in Africa
- Doubling of JV scope to €400m in revenues
Air France-KLM / Kenya Airways Joint Venture scope, effective 2014
Accelerated development in Latin America
- Air France-KLM: strong organic growth in last 5 years
- 12 destinations, o/w 6 served from both hubs
- Summer 2014: #1 carrier between Europe and Latin America
- Air France-KLM and GOL
- A strong local player in Brazil
- Code share agreement on 28 destinations since 2009
- 2014: new strategic agreement
- Exclusive access to domestic network
- Coordination stepped up between the 2 networks
- Extension of code shares
- Coordination of sales teams in Europe and Brazil
- Maintenance agreement
- Cemented by an equity investment
Development of Air France-KLM Latin American network
Towards a deeper partnership with Etihad
- Geographic complementary with addition of destinations in Indian Ocean and Australia
- Initial cooperation involving trunks and beyonds
- Launched in October 2012
- 4 daily flights between respective hubs
- 24 codeshare destinations beyond European hubs
- 20 codeshare destinations beyond Abu Dhabi
- Cooperation extending to cargo
- Extension of existing partnership with Jet Airways under consideration
- Ongoing discussions to deepen partnership
Our priorities remain:
- The successful completion of Transform 2015
- Securing net debt reduction down to €4.5bn in 2015
- Repositioning our brands and products to reconquer our customer base and restore our revenue dynamic
- Continue to strengthen and expand our international network focused on high growth regions
Appendices
Passenger: unit revenue by network
Full Year 2013 Results
Fourth Quarter: change in operating costs
|
|
€m |
Actual
change |
Ex-currency
change |
| 29% |
Employee costs |
1,790 |
-5.7% |
-5.5% |
| 26% |
Supplier costs(1)
excluding purchasing
of maintenance services and parts |
1,585 |
+0.3% |
+2.0% |
| 12% |
Aircraft costs(2) |
771 |
-4.5% |
-2.1% |
| 5% |
Purchasing of maintenance services
and parts |
327 |
+3.8% |
+7.9% |
|
Operating costs ex-fuel(3) |
4,535 |
-2.1% |
-0.9% |
| 27% |
Fuel |
1,653 |
-7.0% |
-2.4% |
|
Grand total of operating costs |
6,188 |
-3.5% |
-1.3% |
|
Capacity (EASK) |
|
|
+1.9% |
(1) Catering, handling charges, commercial and distribution, landing fees and air-route charges, other external expenses
(2) Chartering (capacity purchases), aircraft operating leases, amortization, depreciation and provisions
(3) Including in addition other taxes, other revenues, other income and expenses
Debt reimbursement profile at 31 December 2013*
* In € millions, net of deposits on financial leases and excluding KLM perpetual debt (€550m)