Air France-klm Sa · EURONEXT:AF
Air France-klm Sa — Investor Day (December 2023)
123 slides from Air France-klm Sa's investor day presentation, Dec 14, 2023
Slide 1: Investor Day
INVESTOR DAY December 14, 2023
Slide 2: Today's Agenda
TODAY’S AGENDA TIMING SESSION SPEAKERS Agenda M. Klinkers Introduction B. Smith Strategy B. Smith / A. Clark Transformation B. Smith / A. Rigail / M. Rintel Our people A. Rigail / M. Rintel 14:00 - Customer experience B. Smith / A. Rigail / M. Rintel 16:45 Flying Blue H. de Peyrelongue Other Busines
Slide 3: Introduction
INTRODUCTION BENJAMIN SMITH Chief Executive Officer Air France-KLM
Slide 4: Our people build our future and our success
OUR PEOPLE BUILD OUR FUTURE AND OUR SUCCESS We are thankful for the commitment of all our staff and for the trust of our customers and shareholders They are an integral part of our success 4
Slide 5: Our purpose aligns business strategy with sustainable customer expectations
OUR PURPOSE ALIGNS BUSINESS STRATEGY WITH SUSTAINABLE CUSTOMER EXPECTATIONS FOR A BETTER TOMORROW “At the forefront of a more responsible European aviation, we unite people for the world of tomorrow” 5
Slide 6: Our strengths support our businesses and enable us to deliver on strategy
OUR STRENGTHS SUPPORT OUR BUSINESSES AND ENABLE US TO DELIVER ON AIR FRANCE-KLM STRATEGY 78,000 Three Powerful Networks Sustainable Passionate and Powerful Brands Partnerships Extensive and Initiatives and Professional People Complementary Commitments 6
Slide 7: We have delivered on what we promised
WE HAVE DELIVERED ON WHAT WE PROMISED
Slide 8: 2019 Investor Day initiatives as main priorities
DURING OUR LAST INVESTOR DAY IN 2019, WE ANNOUNCED THE FOLLOWING INITIATIVES AS MAIN PRIORITIES 8
Slide 9: We have successfully delivered on these promises (1/2)
WE HAVE SUCCESSFULLY DELIVERED ON THESE PROMISES (1/2) Reduce unit cost Status Achievements since 2019 More flexible social contracts Air France Transavia Stabilized social relations Simplified fleet Air France KLM From 12 to 6 aircraft families targeted by 2030 Next Generation Aircraft Air France K
Slide 10: We have successfully delivered on these promises (2/2)
WE HAVE SUCCESSFULLY DELIVERED ON THESE PROMISES (2/2) Increase unit revenue Status Achievements since 2019 Clarified Brand Strategy Air France Streamlined portfolio: Air France, KLM and Transavia Optimized Interior Configurations & Air France KLM Optimized cabins; upgraded & harmonized Harmonized P
Slide 11: Successful trajectory towards more sustainable growth
WE HAVE EMBARKED ON A SUCCESSFUL TRAJECTORY TOWARDS A MORE SUSTAINABLE GROWTH Optimized the basics Stabilized social relations A simplified & optimized operating model Our key values: Trust, Respect, Transparency, Confidentiality Destination Sustainability Ongoing transformation Industry-leading ach
Slide 12: Important structural steps towards positioning as a leader
AIR FRANCE-KLM HAS MADE IMPORTANT STRUCTURAL STEPS TOWARDS POSITIONING ITSELF AS A LEADER Solid progress made over the past 4 years… … which allowed to reduce the profitability gap Air France-KLM EBIT margin1 EBIT margin1 of the 3 major European airline groups +2.7pts +8.0pts +5.7pts 7.8% 13.1% 13.5
Slide 13: Our strategic ambition
OUR STRATEGIC AMBITION AIRFRANCE GROUP
Slide 14: We continue to refine our 2019 strategy
WE CONTINUE TO REFINE OUR 2019 STRATEGY Our foundations Our strategic roadmap STRONG ASSETS Improve market position and strengthen business models TO LEVERAGE + Boost profitability to join Europe’s frontrunners RESTORED BALANCE SHEET Maximise customer satisfaction and enhance brand value POST-COVID
Slide 15: Ambitious financial outlook for 2026-2028
OUR STRATEGIC ROADMAP WILL TRANSLATE INTO AN AMBITIOUS FINANCIAL OUTLOOK FOR THE 2026-2028 PERIOD Adj. Operating free Operating margin Unit cost1 Leverage cash flow Significantly Reduction Investment grade Above 8% positive 1) At constant fuel price including SAF, constant currency and excluding Emi
Slide 16: Air France-KLM Group Executive Committee
AIR FRANCE-KLM GROUP EXECUTIVE COMMITTEE Air France-KLM Air-France KLM Air France-KLM CEO CEO CEO CFO Air France-KLM Air France-KLM Air France-KLM Air France-KLM CCO Marketing1 E&M Cargo 1) Includes focus on Flying Blue 2) As from Air France-KLM Air France-KLM Air France-KLM Air France-KLM 16 Januar
Slide 17: Strengthen our business model for success
STRENGTHEN OUR BUSINESS MODEL FOR SUCCESS
Slide 18: Structural changes call for business model evolution
• STRUCTURAL CHANGES CALL FOR BUSINESS MODEL EVOLUTION Passenger traffic to surpass 2019 levels by early-2024 Demand challenged by evolving market conditions Global air passengers (RPKs), billions per month, IATA Sustainability restated as a fundamental 900 800 Actual Structural growth drivers despi
Slide 19: Network: airline brands go forward strategy
NETWORK: AIR FRANCE-KLM GROUP AIRLINE BRANDS GO FORWARD STRATEGY Short-haul Medium-haul Long-haul Capture full potential at ORY with Transavia Low Cost Reinforce Transavia network footprint from secondary French cities & AMS Network Carriers Strengthen CDG with Air France & AMS with KLM to their ful
Slide 20: Extensive and diversified network
TOGETHER, AIR FRANCE, KLM AND TRANSAVIA OFFER TRAVELLERS ONE OF THE WORLD'S MOST EXTENSIVE AND DIVERSIFIED NETWORKS from CDG from ORY 181 Air France destinations from CDG 144 KLM destinations from AMS from from AMS AMS 114 Transavia destinations from ORY and AMS 20
Slide 21: Long-haul: strengthen best-in-class global network
LONG-HAUL: STRENGTHEN OUR BEST-IN-CLASS GLOBAL DIVERSIFIED NETWORK Focus on markets where our proposition generates value Air France-KLM Capacity (in ASK) in Q3 2023 Ranking versus IAG and Lufthansa Group #1 Caribbean / Indian Ocean Diversified network 12% for resilience and flexibility 37% #2 North
Slide 22: Focus Paris-CDG: traffic mix optimised
FOCUS PARIS-CDG AIRPORT: OUR TRAFFIC MIX HAS BEEN OPTIMISED ACCORDING TO PLAN Connecting Direct 49% 52% 2019 2023 +3pts direct traffic type increase +3pts premium market share 22
Slide 23: Short & medium-haul: transform loss-making domestic network
SHORT & MEDIUM-HAUL: TRANSFORM LOSS-MAKING DOMESTIC NETWORK TO ADAPT TO NEW MARKET REALITY Medium-haul network Air France and KLM short and France domestic short-haul medium-haul ASK capacity Maintain strong 9% Adapt to new customer contribution to long-haul behavior 14% Capture potential of 2019 20
Slide 24: Focus Paris-Orly: revised strategy
FOCUS PARIS-ORY AIRPORT: OUR STRATEGY HAS BEEN REVISED TO MATCH PRICE-SENSITIVE DEMAND AND VALUE-ADDED NETWORK 2019-23 slot split Air France Group destinations at Paris-Orly airport split from Paris-Orly airport At Orly, most of our competitors 3 3 use a model optimized for point- Cargo 3 3 Long-hau
Slide 25: Adapt and secure future of Air France domestic network
ADAPT AND SECURE THE FUTURE OF AIR FRANCE DOMESTIC NETWORK FROM PARIS, WITH A SIMPLIFIED OPERATING MODEL French domestic market from Orly Air France Group at Summer 2026 Structurally loss-making market for Air France and has been under restructuring Paris-CDG CDG As Air France’s global gateway Posit
Slide 26: Transavia key enabler of medium-haul network transformation
TRANSAVIA IS THE KEY ENABLER OF CURRENT GROUPWIDE MEDIUM-HAUL NETWORK TRANSFORMATION Complement Air France-KLM’s full-service offer with a low-cost carrier In line with medium-haul competitive landscape and consumer behaviour Manage transition phase To secure slot transfer, phase-in new A320/A321neo
Slide 27: Transavia roadmap to profitable growth at Orly
IN FRANCE, TRANSAVIA HAS A CLEAR ROADMAP TO DELIVER PROFITABLE GROWTH BY LEVERAGING ITS STRATEGIC POSITION AT ORLY AIRPORT A privileged slot portfolio And key levers To become the low-cost at the strategic Paris-Orly to activate market leader at Paris-Orly Top 15 destinations1 #1 carrier % Market sh
Slide 28: Transavia strategy to lead Dutch and European low-cost markets
TRANSAVIA’S STRATEGY TO LEAD DUTCH AND EUROPEAN LOW-COST MARKETS IS TWOFOLD, IN A SLOT-CONSTRAINED CONTEXT Solidify position as #1 LCC in the slot constrained Netherlands Amsterdam Upgauge fleet with A321neos Rotterdam Prioritize longer routes and explore new markets Eindhoven Reduce seasonality imp
Slide 29: Focus Amsterdam-AMS: mitigating capacity reduction at Schiphol
FOCUS AMSTERDAM-AMS AIRPORT: MITIGATING POTENTIAL CAPACITY REDUCTION AT SCHIPHOL AIRPORT Balanced approach1 related to noise KLM’s alternative Mitigation of impact Potential future movement capping at Further investment in new, Available levers if movement Amsterdam Schiphol Airport cleaner and quie
Slide 30: Consolidation: M&A approach based on synergies
CONSOLIDATION: AIR FRANCE-KLM M&A APPROACH IS BASED ON SYNERGIES AND INTEGRATION COSTS Network Commercial Cost synergies Market presence effect Shared commercial best practices Fleet planning economies of scale Better connectivity & city relevance Cross-sales for products & services Central function
Slide 31: Investment in SAS through equity
AIR FRANCE-KLM TO INVEST IN SAS THROUGH EQUITY TO ACHIEVE COMMERCIAL COOPERATION AS PART OF ITS CONSOLIDATION STRATEGY Scandinavia ranked Air France-KLM to take a 19.9% non- 4th European GDP2 controlling stake in the share capital of the reorganized SAS AB Scandinavia ranked Enhance the Group’s foot
Slide 32: Angus Clarke
ANGUS CLARKE Executive Vice President and Chief Commercial Officer Air France-KLM
Slide 33: Alliances: key enabler to reinforce global presence
ALLIANCES: A KEY ENABLER TO REINFORCE OUR GLOBAL PRESENCE AND IMPROVE PROFITABILITY Leveraging on leadership to further extend 59 Code share partners Network Coverage1 114 Interline agreements 6 Joint venture partners Additional code share 384 476 destinations 175 217 Global alliance 200 200 191 Ope
Slide 34: Focused strategy to develop the partnership portfolio
STRONG MOMENTUM AND FOCUSED STRATEGY TO FURTHER DEVELOP THE PORTFOLIO AND DRIVE VALUE Consolidate our position and Consolidate Develop lead the highly profitable NORTH ASIA North America flow AMERICA PACIFIC Partnership JV restarted expanded Reinforce Brazil & South Expand America with GOL strategic
Slide 35: Transatlantic JV and alliance positioned to lead
OUR TRANSATLANTIC JV AND ALLIANCE ARE IDEALLY POSITIONED TO CONSOLIDATE AND LEAD THE MOST PROFITABLE MARKET WORLDWIDE Joint-ventures Alliances North Atlantic Capacity (in ASK) North Atlantic Capacity (in ASK) 15% 23% 37% +2pp 35% +1pp 21% 2019 2023 20% +3 % 23% +7 % +4 % 226 233 196 187 184 KLM 180
Slide 36: Fleet: key to network, financial and environmental targets
FLEET: OUR STRATEGY IS KEY TO ACHIEVING OUR NETWORK, FINANCIAL AND ENVIRONMENTAL TARGETS Lower carbon impact Better customer Better financials satisfaction 36
Slide 37: Fleet strategy delivers environmental and financial benefits
OUR FLEET STRATEGY DELIVERS STRONG CONTRIBUTION TO OUR ENVIRON- MENTAL ROADMAP WHILE GENERATING SUBSTANTIAL FINANCIAL BENEFITS 60 100 99 A220 family firm orders for: A320neo family firm orders for: A350 family2 firm orders for: -10% -20% -10% -15% -15% -25% Unit costs1 CO2 emissions1 Unit costs1 CO2
Slide 38: Air France Group fleet simplification
AIR FRANCE GROUP PURSUES FLEET SIMPLIFICATION EFFORTS, WITH ONLY 5 TO 6 AIRCRAFT FAMILIES BY 2030 A380-800 10 777-300ER 43 777-300ER 777-200ER 25 LONG-HAUL A350-900 3 787-9 9 A340-300 4 A350-900 A330-200 15 A318 18 A220-300 MEDIUM-HAUL A319 33 A320 44 A321 20 + replacement aircraft for A320/A321 777
Slide 39: KLM Group upgauges and modernizes fleet
KLM GROUP UPGAUGES AND MODERNIZES FLEET, IN A SLOT- CONSTRAINED CONTEXT 747-400 8 777-300ER 14 777 777-200ER 15 LONG-HAUL 787-10 4 787 787-9 13 A330-300 5 A350 A330-200 8 737-900 5 MEDIUM-HAUL 737-800 31 A320neo 737-700 15 747-400F 4 A350-F E190 32 EMB-E1/E2 E175 17 End 2019 – 6 aircraft families Po
Slide 40: Transavia replaces its fleet with A320/A321neo
TRANSAVIA GRADUALLY REPLACES ITS 737 FLEET WITH MORE COST- EFFECTIVE AND FUEL-EFFICIENT A320/A321NEO 737-800 73 A320/A321neo 737-700 7 End 2019 – 1 aircraft family Potential target end 2030 – 1 aircraft family Phased-out or phase out scheduled 40
Slide 41: Continue delivering our transformation plan
CONTINUE DELIVERING OUR TRANSFORMATION PLAN BENJAMIN SMITH ANNE RIGAIL MARJAN RINTEL Chief Executive Officer Chief Executive Officer Chief Executive Officer Air France-KLM Air France KLM
Slide 42: Air France-KLM continues its transformation efforts
AIR FRANCE-KLM CONTINUES ITS TRANSFORMATION EFFORTS Actioning key levers… …through ambitious roadmap… …to achieve structural benefits1 Simplification 700+ Initiatives & Projects €4.4bn Synergies €3.0bn €2.1bn Revenues Across initiatives ALL Business Units Cost Savings 2019 2022 2024 2026 1) Structur
Slide 43: Slide 43
Slide 44: Air France has delivered more than 50% of its transformation plan
AIR FRANCE HAS ALREADY DELIVERED MORE THAN 50% OF ITS TRANSFORMATION PLAN Examples of achievements over the 2020-2023 period Network optimization Review of processes and organizations following redundancy scheme • Restructuring of the domestic network • Transform Local Ground Operational (Orly and r
Slide 45: Air France transformation roadmap
AIR FRANCE IS PURSUING ITS TRANSFORMATION EFFORT WITH A CLEAR ROADMAP Simplification Cost Optimization • Optimization of key resource • Core/Non-core activities allocation • Integrated operations • Synergies & mutualisation planning • Automation • Discipline on external expenses • Real Estate footpr
Slide 46: AirFranceKLM Group
AIRFRANCEKLM GROUP
Slide 47: 'Funding our journey' integral plan
‘FUNDING OUR JOURNEY’ IS THE INTEGRAL PLAN THAT TIES OPERATIONAL RETURNS, FINANCE, AND STRATEGIC EFFORTS TOGETHER Links and interactions between the 3 pillars… …that contribute to each other 1 2 1 Running the business generates Funds Operational returns (EBIT) and cash-flow, which Finance Returns (C
Slide 48: KLM transformation focuses on three buckets of value
KLM TRANSFORMATION FOCUSES ON THREE MAJOR BUCKETS OF VALUE Increase revenue & utilization • Reduce staff shortages in Ops and E&M • Improve fleet health and availability • Improve planning and Strategic initiatives procurement to overcome supply chain issues • Reduce fuel cost through optimized tool
Slide 49: Engage our employees in the group's journey
ENGAGE OUR EMPLOYEES IN THE GROUP’S JOURNEY ANNE RIGAIL MARJAN RINTEL Chief Executive Officer Chief Executive Officer Air France KLM
Slide 50: Slide 50
Slide 51: Air France priorities on people development
AIR FRANCE PRIORITIES ON PEOPLE DEVELOPMENT Social dialogue Employee satisfaction Resources management Diversity & inclusion and engagement Ensure conditions for Support employee engagement Execute Recruitment plans & Ensure equal conditions and permanent social dialogue Leverage Talent management o
Slide 52: AirFranceKLM Group
AIRFRANCEKLM GROUP
Slide 53: KLM priorities on people development
KLM PRIORITIES ON PEOPLE DEVELOPMENT Labor Employee Investing in Addressing Diversity agreements satisfaction the workplace & Inclusion • CLA’s are signed for a two- • Results of the 1st new KLM • Lifting equipment in the • Gender balance targets in year period with Cabin, employee survey baggage ha
Slide 54: Enhance customer experience and increase brand recognition
ENHANCE CUSTOMER EXPERIENCE AND INCREASE BRAND RECOGNITION BENJAMIN SMITH ANNE RIGAIL MARJAN RINTEL Chief Executive Officer Chief Executive Officer Chief Executive Officer Air France-KLM Air France KLM
Slide 55: Portfolio of three recognized brands
A COMPREHENSIVE PORTFOLIO OF THREE RECOGNIZED BRANDS, WITH UNIQUE IDENTITIES AND POSITIONING Showcasing the Best of Pioneering global We Make Low Cost France Around the World aviation since 1919 Feel Good A SHARED DNA OF CUSTOMER CENTRICITY 55
Slide 56: Each brand addresses a complementary market segment
EACH BRAND ADRESSES A WELL-DEFINED AND COMPLEMENTARY MARKET SEGMENT, IN LINE WITH PASSENGER DEMAND UNIQUE BRAND PORTFOLIO Paris Global Gateway LONG- HAUL Amsterdam as Global Hub Connection to Paris and hub feeding SHORT & MEDIUM- Hub feeding and corporate point-to-point traffic HAUL Hybrid leisure a
Slide 57: Slide 57
Slide 58: Air France established as a European leader
CONTINUED INVESTMENT IN THE BRAND AND CUSTOMER EXPERIENCE HAS ENABLED AIR FRANCE TO ESTABLISH ITSELF AS A EUROPEAN LEADER Ranking Skytrax World Airline 2018 2019 2020 2021 2022 2023 7 8 7 10 11 9 15 13 18 For the third year running, Air France was voted best 23 airline in Western Europe 25 21 And 3
Slide 59: Improving global customer experience
IMPROVING GLOBAL CUSTOMER EXPERIENCE IS ONE OF OUR TOP PRIORITIES OPERATIONAL BRAND PREMIUMIZATION INVEST FOR THE FUTURE EXCELLENCE 59
Slide 60: Leveraging brand to make it even more desirable
LEVERAGING BRAND TO MAKE IT EVEN MORE DESIRABLE Strengthen Brand differentiation based on: 1 Strong communication Air France unique Premium customer opportunities: 90 years French heritage experience industry leading sustainability celebration and Paris 2024 commitments and actions Olympic Games 1)
Slide 61: Showcasing Air France elegance and excellence
SHOWCASES THE BEST OF AIR FRANCE ELEGANCE AND EXCELLENCE Service Awarded A new Ambition • Best First-Class in Europe 2023 • More exclusive ground experience • Best First-Class Lounge worldwide 2023 • New cabin with 3 modular and totally private suites • Best First-Class Onboard dining worldwide 2023
Slide 62: Upgrading products for premium classes
KEEPS UPGRADING ITS PRODUCTS TO LEVEL UP ITS PREMIUM CLASSES AND MAINTAIN ECONOMY CLASS COMPETITIVE Along the journey experience Cabin experience Onboard services Lounge upgrades Improve Wi-Fi New First-Class cabins • Catering in 2024 • Comfort Redesigned in-flight • Design New Business class entert
Slide 63: Enhance operational excellence and customer experience
FURTHER ENHANCE OPERATIONAL EXCELLENCE AND OVERALL CUSTOMER EXPERIENCE Ensure a smooth passenger journey Operational robustness Deliver on our flight schedules Passenger experience • Additional automated border control • Spare aircraft availability gates in CDG and extension of number of • Supply ch
Slide 64: More sustainable travel experience
EMPHASIZE A MORE SUSTAINABLE TRAVEL EXPERIENCE IN LINE WITH EVOLVING CUSTOMERS’ NEEDS Extend sustainable Renew fleet catering Strengthen caring attitude Promote SAF options towards customers with special needs Integrate societal Optimize CO2 footprint evolutions in our of operations customer relatio
Slide 65: AirFranceKLM Group
AIRFRANCEKLM GROUP
Slide 66: Further strengthen KLM brand
FURTHER STRENGTHEN BRAND KLM 104 YEARS DUTCH AT PIONEERING SUSTAINABLE BRINGING PEOPLE TOGETHER HEART AVIATION 66
Slide 67: Improving customer intimacy through data and AI
IMPROVING CUSTOMER INTIMACY THROUGH THE USE OF DATA & AI Digitization, social media and customer experience are all an integral part of the KLM brand By using artificial intelligence, KLM makes conversations with our customers even more timely, correct and personal 67
Slide 68: Full focus on enhancing customer experience
FULL FOCUS ON FURTHER ENHANCING CUSTOMER EXPERIENCE INVEST IN PRODUCTS RECOVER OPERATIONAL FURTHER STRENGTHEN INVEST FOR THE FUTURE & SERVICES STABILITY SCHIPHOL HUB 68
Slide 69: Continue to invest in our onboard product
CONTINUE TO INVEST IN OUR ONBOARD PRODUCT… Renewing Business Class on Boeing 777 Continued Premium Comfort roll-out, with direct aisle access and privacy doors being very well received by customers Wi-Fi stability improvement and further roll-out 69
Slide 70: Investing in Crown Lounges
… AND IN OUR CROWN LOUNGES FOR OUR CUSTOMERS Upgrade of our KLM-branded lounges with specific developments for our most loyal customers 70
Slide 71: Recover operational stability and leverage Schiphol hub
RECOVER OPERATIONAL STABILITY AND LEVERAGE SCHIPHOL HUB Operational robustness Deliver flight schedule and Ensure a smooth passenger Passenger experience restore network potential journey • Spare aircraft availability • Clear and on-time communication • Supply chain • Enhance self-service functional
Slide 72: Sustainable and inclusive travel at the core of our DNA
INVEST IN A SUSTAINABLE AND INCLUSIVE TRAVEL IS AT THE CORE OF OUR DNA AND PASSENGER EXPECTATIONS Renew fleet and develop SAF options Develop Extend sustainable intermodality catering and reduce waste Special attention for Gender neutrality passengers with in digital channels specific needs (pre-ord
Slide 73: Transavia Group
@ transavia GROUP
Slide 74: Transavia expanding its offer to enlarged network and customer base
TRANSAVIA IS EXPANDING ITS OFFER TO INCLUDE ITS NEW ENLARGED NETWORK AND CUSTOMER BASE Leisure and VFR Corporate Strengthen leadership on Mediterranean Address corporate demand from Paris-Orly destinations, develop winter network Flying Blue earning and burning Transavia Holidays, to increase leisur
Slide 75: Improve operational performance and passenger experience
FURTHER IMPROVE OPERATIONAL PERFORMANCE AND PASSENGER EXPERIENCE IN A FAST-PACED GROWTH CONTEXT Organisation Cabin Operational robustness Passenger experience • Investment in integral planning • A320neo deployment with new cabin and continuous improvement design and seat Fleet growth Onboard experie
Slide 76: Flying Blue as a business contribution
FLYING BLUE AS A BUSINESS CONTRIBUTION HENRI DE PEYRELONGUE Executive Vice President Marketing Air France-KLM
Slide 77: Flying Blue is a leading European loyalty program
FLYING BLUE IS A LEADING EUROPEAN LOYALTY PROGRAM The loyalty program of the Group’s airlines… …featuring more than 40 airline partners… including …and an extensive network of non-airline partners European loyalty program with the highest 100+ commercial partners number of co-branded card partners w
Slide 78: Affluent member base spread globally
ITS AFFLUENT MEMBER BASE IS SPREAD OUT GLOBALLY AND GROWS STEADILY 22m members worldwide(1) France: 33% 12% 72% Benelux: 12% 6 sec North America Europe 6% 1 new member every 6 seconds(1) 5% Asia 5% ME & Africa 13m Active South America members(1)(2) 1) As of October 2023 2) Defined as member having e
Slide 79: Flying Blue financial performance and member behavior
FLYING BLUE SHOWS GREAT FINANCIAL PERFORMANCE AND STRONG IMPACT ON MEMBERS BEHAVIOR Financial performance Members behavior Flying Blue members Loyalty effect2 41% 1 15% 46% incl. other FFP 47% 1 members Partners Frequent Flyer Program members direct contribution of Flying of 2023 flight coupons sold
Slide 80: Flying Blue growth ambition serves financial priorities
FLYING BLUE GROWTH AMBITION IS BEING LEVERAGED TO SERVE AIR FRANCE-KLM FINANCIAL PRIORITIES Flying Blue Miles Miles Bank • As announced on 30th November 2023, a €1.5bn quasi-equity financing has been raised thanks to a dedicated Air France-KLM subsidiary encapsulating the Miles business of Flying Bl
Slide 81: Growth strategy already delivering results
THE STRATEGY SUSTAINING THE GROWTH IS ALREADY PUT INTO ACTIONS DELIVERING PROMISING RESULTS First airline group to reward customer Steer customer 1 behavior while Sustainable Aviation Fuel voluntary purchase with XP (status Miles) inducing a 800% SAF Projected sales of Miles split rewarding sustaina
Slide 82: Partnerships portfolio enlargement across verticals
THE PARTNERSHIPS PORTFOLIO ENLARGEMENT AMBITION IS PURSUED ACROSS VARIOUS VERTICALS 1. Financial partners 2. Travel related partners 3. Day-to-day partners New CBC in Canada Renewed group-wide Earn Miles on Amazon launched with BRIM partnership with Hertz June 23 (including Transavia) Taking advanta
Slide 83: Flying Blue direct partner revenue growth
FLYING BLUE CURRENT STRATEGY IS SET TO REACH 8% DIRECT PARTNERS REVENUE GROWTH PER YEAR OVER NEXT 6 YEARS Flying Blue direct revenue from partners in €m ~600 +8% revenue average annual growth 371 282 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 83
Slide 84: Leverage Engineering & Maintenance and Cargo contributions
LEVERAGE ENGINEERING & MAINTENANCE AND CARGO CONTRIBUTIONS BENJAMIN SMITH Chief Executive Officer Air France-KLM
Slide 85: MRO industry back on a growth track
MRO INDUSTRY BACK ON A GROWTH TRACK, SUPPORTED BY TRAFFIC RECOVERY AND FLEET RENEWAL MRO market expected to grow together with global fleet Global MRO demand ($bn)1 140 Overall average annual growth: +3.0% Fleet renewal and next-generation 120 aircraft engines are redefining the market 100 Average a
Slide 86: Air France-KLM E&M a key asset for the group
AS A PROFITABLE WORLD-LEADING MULTI-PRODUCT MRO PROVIDER, AIR FRANCE-KLM E&M IS A KEY ASSET FOR THE GROUP Air France-KLM E&M in 2023 3,000 12,800 aircraft supported employees 200+ €8.9bn1 customer airlines order book €3.0bn2 €1.2bn2 total revenues external revenues 1) As per 31 October 2023; 2) 9m 2
Slide 87: Investing in next generation product portfolio
CONTINUOUSLY INVESTING IN OUR NEXT GENERATION PRODUCT PORTFOLIO, INCLUDING HIGH-MARGIN DIGITAL SERVICES Engines Components Digital Operating margin6 +1.8pts LEAP1 GEnx2 A220 A320 737 5.6% 6.0% 4.2% PW 1500G3 Trent XWB4 A350 787 Predictive maintenance • LEAP Market expected • Exclusive negotiations •
Slide 88: Air cargo volumes eased
AIR CARGO VOLUMES EASED, AS A RESULT OF GEOPOLITICAL SITUATION, MACROECONOMIC TRENDS AND RESURGENCE OF BELLY CAPACITY Air cargo demand and supply projection (index to 2019) 1 Global air cargo capacity has almost 94 99 97 103 100 105 104 108 107 110 recovered at 2019 level this year Demand Supply Mar
Slide 89: Air France-KLM Cargo remains a strong player
AIR FRANCE-KLM CARGO REMAINS A STRONG PLAYER IN A RAPIDLY CHANGING MARKET Air France-KLM Cargo in 2023 #2 and #3 120+ direct European Cargo intercontinental Hubs 1 connections €1.5bn 0.6m traffic revenues2 freight tons2 77% of initial 3,200 employees bookings online 1) Excluding integrator airlines
Slide 90: Cargo Vision 2030
CARGO VISION 2030: BECOMING A LEADER IN SUSTAINABLE AIRFREIGHT, WHILE DELIVERING BEST-IN-CLASS CUSTOMER EXPERIENCES Customer centricity Increasingly decarbonized operations Strong local presence, close to our customers Fuel efficient fleet and SAF1 supported by customers Global footprint Technologic
Slide 91: Lead the way in sustainable aviation
LEAD THE WAY IN SUSTAINABLE AVIATION
Slide 92: Major levers to reach 2030 emission reduction targets
MAJOR LEVERS TO REACH AIR FRANCE-KLM’S EMISSION REDUCTION TARGETS BY 2030 2030 Fleet renewal Sustainable Aviation Fuel Operational measures -30% CO2 / RTK (vs 2019) 92
Slide 93: Fleet renewal strategy contributes to environmental roadmap
OUR FLEET RENEWAL STRATEGY DELIVERS STRONG CONTRIBUTION TO OUR ENVIRONMENTAL ROADMAP A220 family firm orders for: A320neo family firm orders for: A350 family2 firm orders for: CO2 emissions1 -20% -15% -25% NOX emissions1 between -30% and -40% Noise1 between -34% and -50% % of new generation aircraft
Slide 94: Operational and commercial decarbonization levers
LEVERAGE EFFICIENCY IN OUR OPERATIONS AND ADDITIONAL COMMERCIAL MEASURES IN OUR DECARBONIZATION TRAJECTORY Main levers currently identified OPERATIONAL COMMERCIAL • Eco-piloting & speed flying • Load factor (potential network impact) • Aircraft performance improvement (maintenance, • Cabin layout op
Slide 95: Journey to at least 10% SAF in 2030
AIR FRANCE-KLM IS LEADING THE JOURNEY TO REACH AT LEAST 10% SAF INCORPORATION IN 2030 EUROPEAN MANDATORY SAF AIR FRANCE-KLM EXTERNAL APPLIED TO AIR FRANCE-KLM AVERAGE BLENDING RATIO FORECAST COMMITMENTS World’s 1st SAF user (17% of global prod.) 2022 0.6% SAF BLENDING RATIO World’s 1st SAF user (16%
Slide 96: SAF sourcing initiatives to reach 2030 target
AIR FRANCE-KLM SOURCING INITIATIVES TO REACH 2030 SAF TARGET KEEPING FLEXIBILITY IN VOLUMES TO MATCH OUR DEMAND Air France-KLM possible offtakes – Key SAF Projects start-up date Air France-KLM sourcing strategy • We have prospects covering our needs for Grandpuits starts 0.3 Mton Biofuel, MoU up 0.8
Slide 97: Our financial journey
OUR FINANCIAL JOURNEY STEVEN ZAAT Chief Financial Officer Air France-KLM
Slide 98: Group has executed an accelerated transformation since 2019
THE GROUP HAS EXECUTED AN ACCELERATED TRANSFORMATION SINCE 2019…
Slide 99: We overcame the Covid crisis and paved the way for the future
WE OVERCAME THE COVID CRISIS AND PAVED THE WAY FOR THE FUTURE Rebuilt equity Continued transformation Secured liquidity Sustainable investments • Cumulative €10bn net losses • >€2.0bn structural benefits • A minimum of €8.5bn cash • Significant capital in 2020-2021 secured end 2022 at hand expenditu
Slide 100: Air France transformation bridged the gap with competition
THE DEEP TRANSFORMATION AT AIR FRANCE IS PAYING OFF AND BRIDGED THE GAP WITH COMPETITION 9m 2019 EBIT margin -3.2pt Air France-KLM EBIT Margin 9m 2023 EBIT margin 13.8% +2.7pt +7.7pt -0.8pt 10.6% 7.8% 9.0% 7.6% 6.8% 5.1% 1.3% 1 2 9m 2019 9m 2023 1) Air France network = Passenger business + cargo bus
Slide 101: Foundation for a new financial ambition
… WHICH CREATES A FOUNDATION FOR A NEW FINANCIAL AMBITION
Slide 102: Key finance priorities to deliver our ambition
OUR KEY FINANCE PRIORITIES TO DELIVER OUR AMBITION 01. Cost effectiveness and continuation of transformation efforts 03. Optimized balance sheet and capital structure 02. Disciplined capital allocation supporting our sustainability trajectory 102
Slide 103: Key finance priorities to deliver our ambition
OUR KEY FINANCE PRIORITIES TO DELIVER OUR AMBITION 01. Cost effectiveness and continuation of transformation efforts 03. Optimized balance sheet and capital structure 02. Disciplined capital allocation supporting our sustainability trajectory 103
Slide 104: Air France-KLM continues its transformation efforts
AIR FRANCE-KLM CONTINUES ITS TRANSFORMATION EFFORTS Actioning key levers… …through ambitious roadmap… Cumulative structural benefits Simplification 700+ Initiatives & Projects since 2019 €4.4bn Synergies €3.0bn Revenues Across €2.1bn initiatives ALL Business Units Cost Savings 2019 2022 2024 2026 1)
Slide 105: Productivity to improve by more than 20% by 2028
PRODUCTIVITY WILL IMPROVE IN 2028 BY MORE THAN 20% WITH LESS STAFF COMPARED TO 2019 Productivity development over the period 2019-2028 >20% +17% +4% 86 82 78 75 75 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Productivity measured as Available Seat Kilometers / Average staff xx Average staff in
Slide 106: Group EBIT to improve by €2.0bn
GROUP EBIT GRADUALLY TO IMPROVE BY €2.0BN OVER THE PERIOD WITH ALL BUSINESSES CONTRIBUTING ~€200m ~€700m 1 ~€2.0bn ~€400m EBIT improvement ~€700m 1 1) Excluding Transavia and Maintenance activities 106
Slide 107: Initiatives boosting the EBIT improvement
SEVERAL INITIATIVES BOOSTING THE EBIT IMPROVEMENT Unit cost initiatives and productivity € 450m Organic growth and other initiatives € 230m € 430m ~€2.0bn Fleet renewal and sustainability EBIT improvement Operational and business optimization € 450m € 430m Revenue initiatives including loyalty 107
Slide 108: Initiatives within the businesses driving EBIT improvement
MANY INITIATIVES WITHIN THE BUSINESSES GRADUALLY DRIVING THE €2.0BN EBIT IMPROVEMENT ~€200m ~€700m ~€400m ~€2.0bn EBIT improvement ~€700m Unit cost initiatives and productivity Fleet renewal and sustainability Organic growth and other initiatives Revenue initiatives including loyalty Operational exc
Slide 109: New hedging policy increases hedge maturities
NEW HEDGING POLICY INCREASES HEDGE MATURITIES AND WILL ADD 20% HEDGING ON 1 YEAR CONSUMPTION Current rolling fuel hedging policy1 New rolling fuel hedging policy1 as per end of Q1 2024 70% 70% 70% 55% 55% 40% 40% 25% 25% 10% 0% Current Quarter +1 Quarter +2 Quarter +3 Quarter +4 quarter Current quar
Slide 110: Key finance priorities to deliver our ambition
OUR KEY FINANCE PRIORITIES TO DELIVER OUR AMBITION 01. Cost effectiveness and continuation of transformation efforts 03. Optimized balance sheet and capital structure 02. Disciplined capital allocation supporting our sustainability trajectory 110
Slide 111: Capacity back at 2019 level in 2024 then growing
CAPACITY WILL BE BACK AT 2019 LEVEL IN 2024 AND THEN STEADILY INCREASE EVERY YEAR Capacity growth in ASK over the period +4% p.a. +6% p.a. 2019 2023 2024 2025 2026 2027 2028 111
Slide 112: Net capital expenditures driven by fleet renewal and maintenance
NET CAPITAL EXPENDITURES DRIVEN BY FLEET RENEWAL AND MAINTENANCE A sustained level of net capex/revenue ratio over the upcoming period and in line with our ESG ambitions €3.5bn to €3.8bn p.a. 11.8% €3.0bn to €3.5bn p.a. 5,000 7.5% 80% 64% 4,500 10.0% 50% of net capex is fleet of next generation 4,00
Slide 113: Key finance priorities to deliver our ambition
OUR KEY FINANCE PRIORITIES TO DELIVER OUR AMBITION 01. Cost effectiveness and continuation of transformation efforts 03. Optimized balance sheet and capital structure 02. Disciplined capital allocation supporting our sustainability trajectory 113
Slide 114: Inaugural credit rating
INAUGURAL CREDIT RATING ILLUSTRATING OUR ONGOING TRANSFORMATION AND AN IMPROVED FINANCIAL STRUCTURE • Long Term Issuer Rating of ‘BBB-’/Stable • Senior Unsecured Long Term Debt rating of ‘BBB-’ • Issuer Credit Rating of BB+/Stable • 2028 Senior Unsecured Notes rating of ‘BB+’ 114
Slide 115: Financial structure
FINANCIAL STRUCTURE Solid liquidity level Gross debt2 90% fixed at favorable interest rates €10.2bn 90% 91% 90% % Fixed interest rate RCF €6.5bn 2.2 10.0 €8.5bn €7.5bn 4.0% Targeted liquidity Total debt2 €5.8bn 1.8 level: c.€6-8bn 3.9% Balance sheet 7.9 5.0 Cost of fixed debt 3.8% 3.8% liquidity 4.7
Slide 116: Outlook
OUTLOOK AIRFRANCEKLM GROUP
Slide 117: Further improvement expected from 2026 onwards
A FURTHER IMPROVEMENT EXPECTED FROM 2026 ONWARDS 2024-2026 2026-2028 Confirmed New ambition Operating margin 7% to 8% Above 8% Adj. Operating free Positive2 Significantly positive cash flow Unit cost1 Reduction Reduction Leverage 1.5x-2.0x Investment grade 1) At constant fuel price including SAF, co
Slide 118: Key financial takeaways
KEY FINANCIAL TAKEAWAYS 1 Increased ambition and outlook revised upwards for 2026-2028 €2.0bn additional EBIT improvement over the period 2 with contribution from all businesses Disciplined capital allocation with flexibility in capital expenditures 3 and cash level 4 Inaugural ratings showcasing ou
Slide 119: Conclusion
CONCLUSION BENJAMIN SMITH Chief Executive Officer Air France-KLM
Slide 120: Key messages from today
KEY MESSAGES FROM TODAY Airlines Network Fleet Customers KEY BUSINESS & FINANCIAL TAKEAWAYS Boost our profitability Above 8% operating margin by 2026-2028 An ambitious transformation roadmap Accelerate transformation efforts across all businesses to deliver sustained results €4.4bn structural benefi
Slide 121: AirFranceKLM Group
AIRFRANCEKLM GROUP
Slide 122: Closing
AIRFRANCEKL™ GROUP
Slide 123: Investor Relations department
Investor Relations department Michiel Klinkers Marouane Mami Michiel.klinkers@airfranceklm.com Marouane.mami@airfranceklm.com