Air France-klm Sa · EURONEXT:AF
Air France-klm Sa — Investor Presentation (May 2022)
47 slides from Air France-klm Sa's investor presentation, May 24, 2022
Slide 1: Investor Presentation
INVESTOR PRESENTATION 24 May 2022
Slide 2: Our solid track record
Q1 2021 highlights Benjamin Smith Our solid track record Chief Executive Officer Air France-KLM 2
Slide 3: A steady and solid improvement of financial performance before crisis
A steady and solid improvement of financial performance before crisis Steady revenue growth Demonstrated resilience of operating performance # Passengers 90 93 99 101 104 13% 15% 18% 16% 15% Margin (%) (m) +21% Revenue +6% EBITDA in €m in €m (EBITDAR before 2017) Established track record of reductio
Slide 4: The entire Group is committed to implement the recovery and fulfill its purpose
The entire Air France-KLM Group is committed to implement the recovery and to fulfill its purpose 71,000 Extensive and Three Passionate and Complementary Professional People Powerful Brands Networks Unique Competitive World-leading Strong Advantages of our Businesses Partnerships Home Markets Cargo,
Slide 5: We are emerging stronger
Q1 2021 highlights Benjamin Smith We are emerging stronger Chief Executive Officer Air France-KLM 5
Slide 6: We keep implementing our strategic plan towards sustainable profitability
We keep implementing our strategic plan towards sustainable profitability PROFITABLE PASSENGER OPERATING MODEL REVENUE FLEET GROUP BUSINESSES & SYNERGIES COMPETITIVENESS & SUSTAINABLE LEADERSHIP EMPLOYEES SUSTAINABILITY CON FI DEN T I AL 6
Slide 7: Significant transformation achieved in renewed social stability
Significant transformation achieved in a context of industry leading renewed social stability EMPLOYEES Since 2019 more than 100 agreements have been signed with 2 key focus Protect Adapt and answer to the crisis • Safeguarding employment • Guaranteed best sanitary working conditions on board our ai
Slide 8: Fleet renewal and simplification is well underway (Air France)
Fleet renewal and simplification is well underway FLEET 2019 PASSENGER FLEET 10 cockpits FUTURE PASSENGER FLEET 5−6 cockpits A380 10 Phased-out in 2020 777-200ER /-300ER 68 Potentially Common pilot type LONG-HAUL rating 787-9 9 A350-900 3 Common pilot type Common pilot type rating A330-200 15 rating
Slide 9: Fleet renewal and simplification is well underway (KLM)
Fleet renewal and simplification is well underway FLEET 2019 PASSENGER FLEET 5 cockpits FUTURE PASSENGER FLEET 3 cockpits 747-400 8 Phased-out in 2020 LONG-HAUL 777-200ER Phased-out 29 /-300ER Common pilot Common pilot type rating type rating 787-9/-10 17 A330-200/-300 13 To be phased-out MEDIUM-HAU
Slide 10: Transavia fleet will grow significantly around one single type of aircraft
Transavia fleet will grow significantly around one single type of aircraft … FLEET 2019 PASSENGER FLEET 1 cockpit FUTURE PASSENGER FLEET 1 cockpit 737-700/800 80 To be phased-out A320/321 NEO 0 CON FI DEN T I AL 10
Slide 11: Reinforce positions in home markets to drive profitable recovery
… and reinforce positions in home markets to drive profitable recovery P R O F I TA B L E PA S S E N G E R R E V E N U E Transavia France fleet size Optimize & grow in a constrained market Size x2 vs 2019 Increase gauge size and fly from secondary and/or tertiary airports >60 38 40 Double size by 20
Slide 12: A commercial offer successfully adjusted to new customer expectations
A commercial offer successfully adjusted to the new customers expectations P R O F I TA B L E PA S S E N G E R R E V E N U E Resilient Leisure Customers Business Customers Will Gradually Restart Expect Increased Flexibility and Pleasant Travel Traveling to Complement Virtual Events, Rising Expectati
Slide 13: We secured our cabin investments (KLM)
We secured our cabin investments to strengthen and reaffirm our optimal positioning on the market P R O F I TA B L E PA S S E N G E R R E V E N U E Premium Comfort World Business Class SEAT: 38-inch pitch and recline up to 8 inches FULL FLAT : all horizontal beds and 6.7 inches of extra legroom FULL
Slide 14: We secured our cabin investments (Air France)
We secured our cabin investments to strengthen and reaffirm our optimal positioning on the market P R O F I TA B L E PA S S E N G E R R E V E N U E SEAT: Recliner seat up to 124°, same seat as in FULL FLAT: 2m long horizontal bed NEW CONCEPT our Airbus A350-900 FULL ACCESS: All seats offer aisle acc
Slide 15: Our unique offer is reinforcing the emotional connection to our brands
Our unique offer is steadily reinforcing the emotional connection to our brands P R O F I TA B L E PA S S E N G E R R E V E N U E Net Promoter Score Net Promoter Score Net Promoter Score1 53 49 39 42 41 44 40 40 37 31 31 27 23 19 12 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 20172 2018 2019 2
Slide 16: Transformation will restore competitiveness with €~4.3bn structural benefits by 2026
Transformation is accelerating and will help restore competitiveness with €~4.3bn structural benefits1 by 2026 O PE R AT ING MO D E L Key transformation levers Transformation program benefits (€bn) Measures implemented Identified, not yet implemented 0.4 4.3 External spend optimization 0.9 0.3 3.0 L
Slide 17: A clear roadmap to reach our ambition and transform our Group
A clear roadmap to reach our ambition and transform our Group OPERATING MODEL Savings Initiative Key Examples per 2024 External spend Reduction of external cost optimization €0.5bn Restructuration of the French domestic network Labor cost ~12% FTE reduction in 20241 reduction €1.4bn Simplifi
Slide 18: Our diversified network is a core asset supported by strong partnerships
Our diversified network is a core asset for the group and is supported by strong partnerships GROUP BUSINESSES & SYNERGIES Air France-KLM Passenger capacity split per region to/from Europe Air France-KLM commercial partnerships overview2 ASK, 20191 Key partners as of May 2022 Europe 6% 2% Asia Pacif
Slide 19: Flying Blue will be further leveraged as a margin generator
Flying Blue will be further leveraged as a margin generator GROUP BUSINESSES & SYNERGIES Our ambition: Double the contribution of Solid Foundation with Room to Grow Flying Blue to the Group by 2024 vs 2019 Further increase the contribution to Group 16+ M members sales and margin: • Sale of miles: cr
Slide 20: Air France-KLM and CMA CGM sign major strategic partnership in air cargo
Air France-KLM and CMA CGM sign major strategic partnership in global air cargo… GROUP BUSINESSES & SYNERGIES Air France-KLM and CMA CGM to jointly sell air freight capacity, providing customers with more options for their transportation needs 10-Year exclusive commercial partnership • Initial capac
Slide 21: Leveraging complementary skills of Air France-KLM and CMA CGM
...leveraging the complementary skills, expertise and activities of Air France-KLM and CMA CGM GROUP BUSINESSES & SYNERGIES Objectives of a 10 years cargo partnership with CMA Cargo (CCAC) : Combine a strong belly network with modern and efficient full freighter fleet Build a player with a recognize
Slide 22: Air France-KLM E&M is well positioned to benefit from MRO market growth
Air France-KLM E&M is strong and well positioned to benefit from future growth in MRO market GROUP BUSINESSES & SYNERGIES Positive market outlook post-covid Strong Air France-KLM position on fast growing Next Gen Products market Industry E&M Revenue ($bn) 111 107 98 102 89 79 787 GEnx PW1500G A220 7
Slide 23: Destination Sustainability, a new program to accelerate our commitments
‘Destination Sustainability’, a new program to accelerate our commitments … SUSTA INAB ILITY for environment -30% CO2 emissions per passenger/km by 2030 compared to 20191 10% SAF worlwide by 2030 for people & culture 33% women within the Group Executive Committee by 2030 CON FI DEN T I AL 40% of the
Slide 24: Supporting our ultimate goal of Net Zero emissions by 2050
… and to support our ultimate goal of Net Zero emissions by 2050 SUSTA INAB ILITY Electric and hydrogen planes Sustainable aviation fuel CO2 emissions reduction Up to -25% CO2 emission Fleet reductions Compensations Regulatory Intra-EU Voluntary All domestic Operations • Ecopiloting • Ground equipme
Slide 25: Q1 paving the way to recovery
Q1 2021 highlights Benjamin Smith Q1 paving the way to recovery Chief Executive Officer Air France-KLM 25
Slide 26: Industry capacity is steadily heading towards 2019 levels
The industry capacity is steadily heading towards 2019 levels Capacity evolution Worldwide, Intra-Europe and North Atlantic-Europe index 100 = same capacity and same week in 2019 (ASK’s) 100 89 80 78 Strong willingness to travel drives capacity recovery despite international context CON FI DEN T I A
Slide 27: Strong willingness to travel materializes in steep booking curves
The strong willingness to travel materializes in steep booking curves New Bookings per Week Air France & KLM Total Passenger Network Air France - KLM Network new bookings for summer already back index 1001, 2019 2022 despite lower capacity Positive trend especially on the North Atlantic with booking
Slide 28: Long haul load factor reaches 80% in March 2022
The long haul load factor reaches 80% for both Economy and Premium classes in March 2022 Q1 Load Factor 2019 2022 Air France & KLM Long Haul Passenger Network Economy1 Premium2 -8 pts -4 pts -17 pts -13 pts -11 pts • Narrowing gap vs 2019 with only 4 points -17 pts gap for long-haul Premium classes
Slide 29: Q1 performance supported by dynamic business lines and achievements
The Q1 performance is supported by dynamic business lines and tangible achievements • Capacity at 75% of 2019 • Capacity close to 2019 • Strong demand • Entered into exclusive • Yield above 2019 • Yield far above 2019 environment negotiations for the • March long haul load • Fleet approaches 100 • Y
Slide 30: A strong month of March has driven a positive EBITDA
A strong month of March has driven a positive EBITDA (1) Change Change Q1 2022 Q1 2021 Q1 2019 versus 2021 versus 2019 Revenues (€ m) 4,445 2,161 5,942 +2,284m -1,497m Aircraft Fuel (€ m) 996 463 1,201 +533m -205m Salary cost (€ m) 1,522 1,167 1,972 +355m -450m Other operating expenses (€ m) 1,706 1
Slide 31: Load factor gap keeps narrowing versus 2019 while capacity increases
The load factor gap keeps narrowing versus 2019 while the capacity increases Total network excl. Transavia Long-haul 100% 100% 80% 80% 60% 60% 40% 40% Jan Feb Mar Apr Jan Feb Mar Apr Short & Medium-haul excl. Transavia Transavia 100% 100% 80% 80% CON FI DEN T I AL 60% 60% 40% 40% Jan Feb Mar Apr Jan
Slide 32: Unit cost contained at 2019 level despite capacity 23% below 2019
Thanks to transformation programs and despite a capacity at 23% below 2019, the unit cost is contained at 2019 level 2 Unit cost evolution Staff cost evolution FTE evolution -0.1% 1 -23% -12% -16% FTE Versus Dec 2019 € 7.37 € 7.36 €2.0bn €1.7bn €1.5bn Q1 2019 Q1 2022 Q1 2019 -14% FTE Q1 2022 excl st
Slide 33: A promising outlook
Q1 2021 highlights Benjamin Smith A promising outlook Chief Executive Officer Air France-KLM 33
Slide 34: Estimate to reach capacity levels of 85% to 90% during peak summer
Air France-KLM estimate to reach capacity levels of 85% to 90% during peak summer Network Passenger capacity and booking Snapshot of the 02nd of May 2022 and 2019 Long Haul 86% Network Passenger capacity in ASK 83% versus 2019 80%-85% 85%-90% 81% 75% 75% 44% 40% 2019 2022 2019 2022 Q2 Q3 Q1 2022 Q2
Slide 35: The outlook 2022
The outlook 2022 Q2 Q3 FY Air France- KLM network 80 to 85% 85 to 90% Capacity Transavia Above index 100 Above index 100 Break-even Significant Operating result positive CON FI DEN T I AL Capex €2.5bn 35
Slide 36: A stable mid-term guidance
Q1 2021 highlights Benjamin Smith A stable mid-term guidance Chief Executive Officer Air France-KLM 36
Slide 37: Group unit cost will decrease by 4% to 6% when capacity is back to 2019
Group unit cost will decrease by 4% to 6% at constant fuel price, when capacity is back to 2019 level, thanks to the restructuring and transformation projects 1 Unit cost evolution at constant fuel price Group FTE evolution -4% to -6% Circa -12% Price inflation Transformation projects Fuel efficienc
Slide 38: Capex reduced to an average of €2.8bn per year
Capex will be reduced to an average of €2.8bn per year and will support an ambitious fleet renewal Net Capital expenditure €3.3bn • Capex¹ in line with yearly €3.0bn €2.9bn D&A depreciation and amortization (D&A) €2.5bn which is at 2019 levels • Reduced from initial €4bn (2019 Investor Day) • 50% of
Slide 39: Medium term operating margin objective unchanged
Air France-KLM Group medium term operating margin objective unchanged Guidance elements 1. Capacity back to 2019 levels in 2024 2. Unit cost down 4% to 6% at constant fuel price when capacity are back to 2019 level 3. Operating margin at 7-8% as of 2024 4. Adjusted Operating Free Cash Flow expected
Slide 40: The purpose and the description of the operation
Q1 2021 highlights The purpose and the description Benjamin Smith of the operation Chief Executive Officer Air France-KLM 40
Slide 41: Several actions to restore balance sheet and improve senior debt profile
Air France-KLM took several actions to restore its balance sheet and improve its senior debt profile Equity strengthening measures since 2021 • Apr-21 • Capital increase of €1bn • Conversion of €3bn French State loan into Deeply-Subordinated Notes • May-22 – On-going exclusive discussions with Apoll
Slide 42: Rationale for the rights issue
Rationale for the rights issue Pursue the equity restoration, in addition to the structural benefits delivered by the restructuring and transformation programs REINFORCE GROUP’S 1 BALANCE SHEET Reduce indebtedness while improving the Group’s overall cost of debt Confirmed objective of a targeted Net
Slide 43: Key dates
Key dates Monday, May 23rd AMF Approval on the Prospectus Publication of the launch press release Tuesday, May 24th Annual Shareholder’s meeting Publication of the Note d’Opération Wednesday, May 25th Rights detach and start of rights trading period Friday, May 27th Start of the subscription period
Slide 44: Key terms of the rights issue (1/2)
Key terms of the rights issue (1/2) Equity Offering • €2,256m Capital Increase with Preferential Subscription Rights (PSR) for Existing Shareholders • 3 new shares for 1 existing share Parity • 1,927,902,102 new shares (300% of capital, in accordance with the 20th resolution of 2021 AGM) Subscriptio
Slide 45: Key terms of the rights issue (2/2)
Key terms of the rights issue (2/2) • CMA CGM has committed to subscribe to a maximum of 9% of the ex-post share capital and in the limit of a €400m investment (incl. purchase of the rights) • Delta Air Lines and China Eastern Airlines have both committed to subscribing to c. €42m and c. €69m respec
Slide 46: Appendix
Q1 2021 highlights Benjamin Smith APPENDIX Chief Executive Officer Air France-KLM 46
Slide 47: Disclaimer
Disclaimer This presentation is for information purposes only and does not constitute an offer to sell or a solicitation to purchase any securities in any jurisdiction. This presentation is not an offer for sale within the United States of any security of Air France KLM or any of its affiliates. Sec