Air France-KLM SA · EURONEXT:AF
Air France-KLM SA — Investor Presentation (2007)
28 slides from Air France-KLM SA's investor presentation, 2007
Slide 1: Information meeting
Information meeting Jean-Cyril Spinetta Chairman and CEO
Slide 2: Forward-looking statements
Forward-looking statements The information herein contains forward-looking statements about Air France-KLM and its business. These forward-looking statements, which include, but are not limited to, statements concerning the financial condition, results of operations and business of Air France-KLM ar
Slide 3: Reminder: Air France-KLM key figures
Reminder: Air France-KLM key figures É Number one world-wide in terms of revenues and Europe’s leading airline in terms of passenger and cargo traffic É A fleet of 583 aircraft 165 long haul aircraft 222 medium haul aircraft 196 regional aircraft É 247 destinations in 104 countries linked by 2,500 d
Slide 4: Air France-KLM: the largest international airline and a pure carrier
Air France-KLM: the largest international airline and a pure carrier Flight revenues in €bn Other revenues % Flight revenues / total revenues 21.45 92% 18.06 13.61 77% 92% Air France-KLM Lufthansa British Airways Source: 2005 and 2005-06 figures www.airfranceklm-finance.com 4
Slide 5: A strategy of profitable growth
A strategy of profitable growth
Slide 6: A strategy of profitable growth
A strategy of profitable growth Capacity yoy Revenue per available seat kilometer yoy (excluding change) 2004-05 2005-06 2006-10 +7% +6% +5% per annum +3% +2% EBIT : 553 €m EBIT : 936 €m www.airfranceklm-finance.com 6
Slide 7: Strong foundations from which to grow
Strong foundations from which to grow É The most powerful combined network and two well coordinated hubs, with the potential to expand in the future É Leading positions on the main markets and a balanced network, allowing for targeted growth É Efficient customer loyalty tools www.airfranceklm-financ
Slide 8: Air France-KLM: the most powerful combined network linking Europe to the rest of the world
Air France-KLM: the most powerful combined network linking Europe to the rest of the world Over 182 long-haul destinations* operated out of Europe by AEA members British Airways: 83 destinations i.e 46% Lufthansa + Swiss : 81 destinations i.e 44% AF+KL Air France : 80 destinations i.e 44% = 113 dest
Slide 9: The multi-hub strategy optimizes destinations where we are in competition
The multi-hub strategy optimizes destinations where we are in competition Number of long-haul/medium-haul connecting É A wider offer in terms opportunities of less than 2 hours of schedules … New York: 12 daily flights 7,193 Schiphol Los Angeles: 5 daily flights Montreal: 4 daily flights 3,099 Zuric
Slide 10: Strong foundations from which to grow
Strong foundations from which to grow É The most powerful combined network and two well co- ordinated hubs, with the potential to expand in the future É Leading positions on the main markets and a balanced network, allowing for targeted growth É Efficient customer loyalty tools www.airfranceklm-fina
Slide 11: Leading positions on the main global markets
Leading positions on the main global markets… Capacity share on Europe- Long-haul routes AF-KL: ~ 10% rd 3 European carrier Europe North America AF-KL: ~ 12% st 1 European carrier AF-KL: ~ 8% st 1 European carrier Middle East Asia AF-KL: ~ 22% st 1 European carrier AF-KL: ~ 25% st 1 European carrier
Slide 12: ...with further potential growth
…with further potential growth Growth in long-haul demand Europe / international Average annual growth 2007-2011: +6.1% North America Middle East +6.2% China Japan +4.5% +12.0% +7.7% +4.6% +14.5% Africa +3.5% Inde +3.0% +4.8% +8.0% Latin America +4.5% +11.0% +8.5% +8.0% Natural demand growth Air Fra
Slide 13: Strong foundations from which to grow
Strong foundations from which to grow É The most powerful combined network and two well co- ordinated hubs, with the potential to expand in the future É Leading positions on the main markets and a balanced network, allowing for targeted growth É Efficient customer loyalty tools www.airfranceklm-fina
Slide 14: Corporate contracts: a key driver behind the development of our long-haul business
Corporate contracts: a key driver behind the development of our long-haul business April-September 2006 yoy Corporate contracts account for 49% of business class revenues + 21% + 15% Total long-haul Turnover from passenger turnover corporate contracts www.airfranceklm-finance.com 14
Slide 15: Frequent Flyer Programme is key for our customer loyalty
Frequent Flyer Programme is key for our customer loyalty Number of members (million) Fréquence + Flying Dutchman 12 11 3.2 2.8 2.5 2.1 1.8 1.5 1.3 6.3 6.8 1.1 4.7 5.5 0.9 3.2 3.9 1.5 2 2.5 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07* Flying Blue * Results end of September 2006
Slide 16: The drivers behind improving profitability
The drivers behind improving profitability É Synergies É Cost control and improved productivity É Investment in product and efficiency www.airfranceklm-finance.com 16
Slide 17: Integration of IT and revenue management systems will create new sources of synergies
Integration of IT and revenue management systems will create new sources of synergies 1 bn In € millions Revenue synergies 710 Cost synergies 670 Announced in May 2006 605 570 300 500 465 275 350 260 410 205 330 115 240 60 145 55 2004-05 2005-06 2006-07 2007-08 2008-09 2010-11 www.airfranceklm-finan
Slide 18: Ongoing efforts in terms of cost control
Ongoing efforts in terms of cost control… Target (in € m) Achieved (in €m) 900 +€246m +€80m 730 654 650 520 215 200 31-Mar-05 31-Mar-06 31-Mar-07 31-Mar-04 31-Mar-05 31-Mar-06 31-Mar-07 Air Air France France cost-savings cost-savings plan plan KLM KLM cost-savings cost-savings plan plan New cost-sav
Slide 19: ...and an ongoing improvement in productivity
…and an ongoing improvement in productivity EASK + 20.0% Employees - 0.20% 100 2003-04 2004-05 2005-06 2006-07 www.airfranceklm-finance.com 19
Slide 20: Our latest results reflect the success of this strategy
Our latest results reflect the success of this strategy
Slide 21: Buoyant activity in 2006-07
Buoyant activity in 2006-07…. Turnover Operating income (9 months 2006-07) (9 months 2006-07) Passenger : 14.0 €bn Passenger: 1.04 €bn +48% +9% 17.68 €bn 1.23 €bn (+8.8%) (+31%) Cargo: 2.24 €bn Cargo: 84 €m +3% -41% Maintenance: 0.74 €bn Maintenance: 41€m +14% -36% Other: 0.69 €bn Other: 70 €m +14%
Slide 22: ...with further increase in profitability
…with further increase in profitability Nine months to December 2006 in €m Turnover Operating income x% Adjusted operating margin* 1,231 17,684 16,251 14,857 940 7.8% 6.8% 585 5.0% 2004-05 2005-06 2006-07 2004-05 2005-06 2006-07 * Adjusted by the share of financial charges in operating leases (34%)
Slide 23: A free cash flow of 691 €million
A free cash flow of 691 €million…. April to December 2006 (in € millions) Net cash from Amadeus Aircraft disposals Operating cash flow Tangible and intangible investments 3,035 1,935 2,399 1,709 817 84 187 2,315 2,031 1,935 1,709 Financing Investments Financing Investments 2005-06 2006-07 www.airfra
Slide 24: ...in line with our objective of a free cash improving strongly
…in line with our objective of a free cash improving strongly In € billions Investments in the fleet Other investments (capitalized maintenance costs, spare parts, ground capex) Operating cash flow 2.6 2.5 2.3 2.1 2.0 2.1 1.8 1.5 1.0 1.2 1.0 0.8 0.7 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 ww
Slide 25: Air France-KLM: The best cash flow margin
Air France-KLM: The best cash flow margin Cash flow (in €m) April-December 2006 x% Cash flow margin 2,315 13.1% 1,784 11.6% 997 10.3% Air France-KLM Lufthansa * British Airways ** *Lufthansa: 9 months as of December 2006 **BA: Adjusted for financial charges www.airfranceklm-finance.com 25
Slide 26: Air France-KLM: Extremely healthy financial position
Air France-KLM: Extremely healthy financial position 1.28 1.06 1.12 0.97 0.76 0.59 0.46 0.35 -0.02 British Airways Air France-KLM Lufthansa net on-balance sheet debt / shareholder's equity net on-balance sheet debt + pension obligations / shareholder's equity net on-balance sheet debt + pension obli
Slide 27: To sum up
To sum up É Air France-KLM pursues its strategy of profitable growth based on: a capacity growth around 5%, in line with the expected growth of the traffic underpinned by our ongoing cost-control measures and a high level of future synergies. É Medium term objective: RoCE of 7% (post tax) by 2009-10
Slide 28: Information meeting
Information meeting Jean-Cyril Spinetta Chairman and CEO