Air France-klm Sa · EURONEXT:AF
Air France-klm Sa — FY2011 Earnings Presentation
35 slides from Air France-klm Sa's earnings presentation, March 2012
Slide 1: Information meeting
AIRFRANCE Information meeting
Slide 2: Agenda
Agenda É Full year 2011 results affected by strong rise in fuel bill É Transform 2015: immediate measures implemented and negotiations underway on employment conditions É Outlook for 2012 Annual results 2011 – Information meeting 2
Slide 3: Key data by business
Key data by business Calendar year Revenues Operating result 2011 (€bn) % ch. 2011(€m) 2010 (€m) 77% Passenger 18.83 +5.2% -375 -58 13% Cargo 3.14 +2.6% -60 15 4% Maintenance 1.04 +1.1% 110 118 6% Other 1.35 +3.0% -28 -47 Total 24.36 +4.5% -353 28 Annual results 2011 – Information meeting 3
Slide 4: Passenger: traffic holds up but unit revenues down
Passenger: traffic holds up but unit revenues down +6.6% É Traffic holds up… ASK Load +0.3 pts 82.0% 81.7% ► Rise in traffic outstrips capacity: factor load factor up 0.3 pts ► In spite of crises (Japan, Ivory Coast, RPK +6.9% Arab spring) Jan-Dec Jan-Dec 2010 2011 É …but unit revenues* down: Unit r
Slide 5: Cargo: deterioration in activity levels at the end of the year
Cargo: deterioration in activity levels at the end of the year +2.0% É Activity ATK ► Deteriorating market since the Load 68.8% -2.4 pts 66.4% factor summer ► 1% decline in volumes, acceleration RTK -1.0% in Q4 (-2.8%) ► Decline in load factor despite strict capacity control in full freighter Jan-De
Slide 6: Group results
Group results Calendar year (12 months) €m 2011 2010 % ch. Revenues 24,363 23,310 +5% EBITDAR 2,192 2,501 -12% EBITDA 1,344 1,695 -21% Income from current operations -353 28 Adjusted operating income -65 302 Adjusted operating margin -0.3% 1.3% -1.6 pt Net income, group -809 289* Net income, restate
Slide 7: Reduced unit costs
Reduced unit costs January-December 2011 Unit cost per EASK: €6.67 cts Capacity in EASK: +5.1% Actual Currency Fuel Net change effect effect change 0.9% +1.2% 4.4% -2.2% Annual results 2011 – Information meeting 7
Slide 8: Challenge 12: positive impact on unit costs
Challenge 12: positive impact on unit costs € cts per EASK Summary of total Challenge 12 Ex-fuel unit cost program 2007-08 to 2011 5.7 Processes and +14% productivity: 38% Fleet: 14% Challenge 12 impact Distribution costs: 7% -5% €2.9 bn 5.0 4.8 Procurement: 41% 2006-07 2011 Reference year Annual re
Slide 9: Change in debt
Change in debt € millions Free cash flow : -333 Currency 875 impact: 98 Other: 19 6,515 6,065 2,142 Sale and lease-back 353 operations Cash flow before 581 change in WCR Investments Change in WCR before sale and lease-back* Net debt Net debt at 31/12/2010 at 31/12/2011 * Including financial investme
Slide 10: Financial position
Financial position Net financial debt Shareholders’ Funds (€ billion) (€ billion) Net debt Shareholders’ funds x Gearing ratio Hedging instruments x Gearing ratio ex hedging instruments 6.51 7.03 6.06 6.09 1.07 7.03 6.03 0.86 0.86 1.08 0.06 31 Dec 2010 31 Dec 2011 31 Dec 2010 31 Dec 2011 Annual resu
Slide 11: Financial ratios at 31st December
Financial ratios at 31st December EBITDAR / net adjusted financial costs* Adjusted net debt** / EBITDAR 3.9x 3.3x 5.7x 4.7x 2010 2011 2010 2011 EBITDA / net financial costs Net debt / EBITDA 4.6x 3.6x 4.8x 3.6x 2010 2011 2010 2011 * Adjusted for the portion of financial charges in operating leases (
Slide 12: High level of liquidity
High level of liquidity É Cash of €2.9bn at 31st December 2011 É After €400m pledged for convertible bond swap operation É Partial sale of Amadeus in February 2012: €467m additional cash É Undrawn credit lines of €1.85bn ► Air France: €1.06bn until 2016 ► KLM: €540m until 2016 ► Air France-KLM: €250
Slide 13: Agenda
Agenda É Full year 2011 results affected by strong rise in fuel bill É Transform 2015: immediate measures implemented and negotiations underway on employment conditions É Outlook for 2012 Annual results 2011 – Information meeting 13
Slide 14: Unit costs remain too high in current environment
Unit costs remain too high in current environment 107 105 104 100 100 100 EASK Base 100 in 2006-07 At constant consolidation scope 6,9 6,9 6,7 6,8 C/EASK in €cts 6,5 6,3 6,7 6,6 6,7 R/EASK in €cts 6,5 6,4 5,9 Fuel cost: Fuel cost: €2.0 cts (+33%) €1.5 cts 5,0 5,0 4,8 4,8 4,9 4,8 C/EASK in €cts Exclu
Slide 15: Transform 2015
Transform 2015 Phase 1 Phase 2 Immediate measures Structural transformation plan ► Limit capacity growth ► Medium-haul return to break- ► Investments revised down even ► Cargo turnaround ► Immediate cost savings ► Improvement in profitability at long-haul and maintenance Targets end-2014 Debt reduce
Slide 16: Estimated 10% reduction in unit costs
Estimated 10% reduction in unit costs € cts per EASK Ex-fuel unit cost 4.9 4.8 Transform 2015 Overall target 0.5 cts 4.4 2011 2014 2014 incl. permanent target cost savings actions Annual results 2011 – Information meeting 16
Slide 17: Achievements at 20th March 2012
Achievements at 20th March 2012 Phase 1 É Limited capacity growth 5 É Investment program revised down 5 É Immediate cost savings 5 Phase 2 É Collective labor agreement renegotiations 5 opened É Agreements on framework and metho- 5 dology signed É Launch of transformation projects 5 Annual results 20
Slide 18: Limited capacity growth
Limited capacity growth Phase 1 Capacity in ASK +4.7% +4.4% +2.2% +2.2% Provincial base impact +1.1% +1.2% 2011 2012 2013 2014 Long-haul: +1.7% Medium-haul: -0.5% Annual results 2011 – Information meeting 18
Slide 19: Investment program revised down
Investment program revised down Phase 1 Investments before sale & lease-back € billions 2.1 Aircraft Ground Product Fleet maintenance and spare parts É Sharp reduction in aircraft 1.7 investments 1.6 1.2 1.5 É Investments in the product 0.6 stepped up 0.7 0.3 É Ground investments under review 0.1 0.
Slide 20: Immediate cost savings
Immediate cost savings Phase 1 € millions Main measures Impact 2012-14 É Payroll measures: more than 390 400 €500m 60 65 É Overheads: €150m 280 80 75 É Productivity and network 60 adaptation: €200m 45 45 70 60 210 210 90 Target 2012 2013 2014 Over €1bn over 3 years Payroll measures Overheads Product
Slide 21: Structural transformation plan
Structural transformation plan Phase 2 Three targets Medium-haul return to break-even Cargo turnaround Improvement in profitability at long-haul and maintenance One key lever Significant improvement in productivity by 2014 Annual results 2011 – Information meeting 21
Slide 22: Collective labor agreements renegotiations opened
Collective labor agreements renegotiations Phase 2 opened Air France KLM ► Target: +20% economic efficiency ► Transitional CLAs concluded in improvement in 2014 October 2011 for interim period ► Several levers: productivity, ► Program for discussions with the flexibility in operating modes, unions l
Slide 23: Transformation projects: medium-haul
Transformation projects: medium-haul Phase 2 É 2011: Operating loss of €700m É Projects under consideration ► Network restructuring ► Product definition ► Regional activity rationalization É 2014 target: return to break-even ► Point to point network at breakeven in 2013, and profitable in 2014 ► Sig
Slide 24: Transformation projects: other businesses
Transformation projects: other businesses Phase 2 É Long-haul: improvement in profitability ► Selected route closures ► Product positioning É Cargo: turnaround ► Sizing and organization of full-freighter fleet ► Streamlining of product portfolio ► Cost reduction É Maintenance: improvement in profita
Slide 25: Transform 2015 calendar
Transform 2015 calendar Phase 2 End March April-June Collective Employee Preparatory negotiations agreement measures at Air France and KLM renegotiation Transformation Conclusions and first Finalization of projects actions transformation plan Annual results 2011 – Information meeting 25
Slide 26: Agenda
Agenda É Full year 2011 results affected by strong rise in fuel bill É Transform 2015: immediate measures implemented and negotiations underway on employment conditions É Outlook for 2012 Annual results 2011 – Information meeting 26
Slide 27: Update on the fuel bill
Update on the fuel bill Fuel bill in billion dollars after hedging 150 $/bbl : 11.6 135 $/bbl : 10.8 2011 10.0* 2012 105 $/bbl : 9.1 9.0 90 $/bbl : 8.2 2.7* 2.2* 2.4 2.6* 2.5 2.5* 2.2 1.9 Jan-Dec Q1 Q2 Q3 Q4 Market price Brent ($ per bbl)* 119 118 122 119 117 Jet fuel ($ per mt)* 1,080 1,055 1,090 1
Slide 28: Outlook for 2012
Outlook for 2012 É Uncertain economic outlook É High fuel price É First half: operating result below last year’s level É Second half: first effects of Transform 2015 feeding through É Maximum net debt level of €6.5bn at end 2012 Annual results 2011 – Information meeting 28
Slide 29: Appendices
AIRFRANCE KLM Appendices
Slide 30: Unit revenues per region
Unit revenues per region January-December 2011 Domestic RASK ex-currency 5.9% 6.4% -0.2% ASK RPK RASK Total medium-haul North America Europe 6.2% 8.6% -1.0% ASK RPK RASK 6.8% 7.3% 0.9% 6.3% 9.3% -1.4% ASK RPK RASK ASK RPK RASK Latin America Africa and Middle East Asia 14.1% 13.1% 1.3% 0.9% 0.1% -2.8
Slide 31: Net result
Net result Calendar year (12 months) €m 2011 2010 % ch. Income from current operations -353 28 Non current income and expenses -127 606 o/w Amadeus operation 0 1 030 o/w restructuring 0 -167 Income from operating activities -480 634 Net cost of financial debt -371 -371 +0% Net foreign exchange -116
Slide 32: Change in operating costs
Change in operating costs January-December 2011 € million pro-forma Capacity in EASK +5.1% Revenues +4.5% Operating costs ex fuel +3.0% Fuel 6,438 +16.3% +1.0% Employee costs 7,460 Aircraft costs (amortization and provisions, 4,288 +3.9% maintenance costs, operating leases and chartering) Landing fe
Slide 33: Cash flow
Cash flow January-December 2011 € million Cash out from net financial 1,344 debt 369 Pension fund impact* Change in WCR 934 223 Voluntary departure plan 143 Other** 581 256 353 EBITDA Cash flow Operating before change cash flow In WCR * Cash contribution of €429m less pension fund cost of €206m alre
Slide 34: Calculation of net financial debt
Calculation of net financial debt € millions 31st Dec 2011 31st Dec 2010 Current and non current financial debt 10,402 10,647 Deposits on leased aircraft (491) (492) Financial assets pledged (swap for convertible) (393) 0 Currency hedges on debt 4 38 Interest not yet due (122) (146) = Total financia
Slide 35: Debt reimbursement profile at 1st January 2012
Debt reimbursement profile at 1st January 2012* Convertible bonds Bonds January 2014: Air France 4.75% (€750m) October 2016: Air France-KLM 6.75% (€700m) Convertible bond Other long term debt (net of Convertible bond 2005 2000 2009 (€661m) deposits) (€67m after swap) Maturity: April 2020 Maturity: A