Air France-klm Sa · EURONEXT:AF
Air France-klm Sa — Non-Deal Roadshow (May 2018)
33 slides from Air France-klm Sa's roadshow presentation, May 2018
Slide 1: Air France-KLM Roadshow Presentation May 2018
AIR FRANCE-KLM ROADSHOW PRESENTATION May 2018 mpression Editions Air France
Slide 2: Air France-KLM Results Full Year 2017
AIR FRANCE-KLM RESULTS Full Year 2017
Slide 3: 2017: Strong Operating Result and Significant Strengthening of the Financial Structure
2017: STRONG OPERATING RESULT AND SIGNIFICANT STRENGTHENING OF THE FINANCIAL STRUCTURE 3
Slide 4: Significant Strengthening of the Financial Structure
SIGNIFICANT STRENGTHENING OF THE FINANCIAL STRUCTURE 4
Slide 5: Network: Growth in Passenger Traffic and Unit Revenue
NETWORK: GROWTH IN PASSENGER TRAFFIC AND UNIT REVENUE
Slide 6: Network: Cargo Turnaround Confirmation
NETWORK: CARGO TURNAROUND CONFIRMATION 6
Slide 7: Transavia Accelerated Growth
TRANSAVIA ACCELERATED GROWTH 7
Slide 8: A World Leader in Maintenance
A WORLD LEADER IN MAINTENANCE 8
Slide 9: Air France-KLM Results First Quarter 2018
AIR FRANCE-KLM RESULTS First quarter 2018 4th May 2018 Note: 2017 restated for implementation of accounting standards IFRS
Slide 10: First Quarter 2018: Key Highlights
FIRST QUARTER 2018: KEY HIGHLIGHTS Strong ongoing demand Results impacted by strike +5.2% +1.2% -€85 m -€182 m -33 -118 324 142 (2) (2) Q1 17 Q1 18 Q1 17 Q1 18 Q1 17 Q1 18 Q1 17 Q1 18 Passengers RASK(1) Operating result Adj. operating At constant currency free cash flow (3) • Positive business envir
Slide 11: First Quarter 2018
FIRST QUARTER 2018 (1) (1) Change Q1 2018 Q1 2017 Change at constant currency Revenues (€ bn) 5.81 5.71 +1.8% +5.9% EBITDA (€ m) 621 648 -27 m -42 m Operating result (€ m) -118 -33 -85 m -105 m Operating margin -2.0% -0.6% -1.5 pt -1.8 pt Net result, group share (€ m) -269 -143 -126 m Adjusted opera
Slide 12: Revenue Growth in All Businesses, Network Margin Impacted by Strike
REVENUE GROWTH IN ALL BUSINESSES, NETWORK MARGIN IMPACTED BY STRIKE Operating Unit Revenue (2) Revenues Operating Capacity (1) Change result (3) Change Change Constant Currency (€ m) margin (3) (€ m) +3.2% +1.0% Network 5,090 +0.8% -86 -76 m -1.7% -1.5 pt +0.6% +7.3% Transavia +10.1% +8.4% 235 +19.3
Slide 13: Network: Strong Ongoing Demand for Long-Haul and Hubs, Pressure in Point-to-Point
NETWORK: STRONG ONGOING DEMAND FOR LONG-HAUL AND HUBS, PRESSURE IN POINT-TO-POINT Q1 2018 Total RASK ex cur. 3.2% 4.9% 1.0% Premium Economy +7.6% -0.1% ASK RPK RASK ex cur. Medium-haul point-to-point Medium-haul hubs Total medium-haul 4.3% 7.2% 2.3% 2.6% 5.2% -4.3% -4.2% -0.9% -8.9% ASK RPK RASK ex
Slide 14: Unit Cost Impacted Mainly by Air France Strike
UNIT COST IMPACTED MAINLY BY AIR FRANCE STRIKE Of which: +4.0% -1.7% • Strikes at Air France +1.7% • Exceptional +0.4% +2.1% • Productivity & labor cost -0.3% -0.1% (1) Reported change Currency effect Fuel price effect At constant currency, fuel and pension expenses (1) 2017 restated for implementat
Slide 15: Increased Productivity Supported by Capacity Growth
INCREASED PRODUCTIVITY SUPPORTED BY CAPACITY GROWTH Employee productivity Continuous focus on productivity improvement: Average FTEs, including temporary staff > First quarter 2018 average FTEs at 83,750, up 52,000 51,750 +1,150 FTE -250 FTE 900 FTEs compared to first quarter 2017 average 30,850 +
Slide 16: Operating Result Down -€85 m
OPERATING RESULT DOWN - €85 M In € m +91 -33 0 -106 Revenue: -224 m Cost: -245 m +20 -6 -118 -83 (1) Q1 2017 Activity change Unit revenue Unit cost at Fuel price Currency impact Change in Q1 2018 constant ex-currency pension-related currency, fuel expense -72 and pension (non-cash) expenses (1) Rest
Slide 17: Air France Impacted by Strike and Domestic Market, KLM Improving
AIR FRANCE IMPACTED BY STRIKE AND DOMESTIC MARKET, KLM IMPROVING AND BENEFITTING FROM ROBUST DEMAND In € m Revenue In € m EBITDA 3,583 3,553 384 305 313 2,387 266 2,222 (1) Q1 2017 (1) Q1 2018 Q1 2017 (1) Q1 2018 Q1 2017 Q1 2018 Q1 2017 (1) Q1 2018 Operating result Operating margin In € m 60 2.5% 28
Slide 18: Adjusted Operating Free Cash Flow +€142 m
ADJUSTED OPERATING FREE CASH FLOW + €142 M In € m +807 -22 (Q1 2017: -37) (Q1 2017: +561) 512 -913 (Q1 2017: -625) (Q1 2017: 324) 142 Gross investments: (Q1 2017: +682) 939 -242 (Q1 2017: -257) (1) (2) Cash flow before VDP Change in WCR Voluntary Departure Plans Net investments Payment of lease debt
Slide 19: Balance Sheet Continues to Improve
BALANCE SHEET CONTINUES TO IMPROVE In € m 6,567 162 6,282 -242 -63 -142 (1) Net debt at 31 Dec 2017 Payment of lease debt Adjusted operating (2) (Re)newed lease debt Currency & other Net debt at 31 Mar 2018 free cash flow Change in Net Debt / EBITDA(3) -0.1 - 1.4x 1.3x 31 Dec 2017 (1) 31 Mar 2018 (1
Slide 20: Outlook 2018
AIRFRANCE KLM CE OUTLOOK 2018
Slide 21: Revenue Outlook
REVENUE OUTLOOK Long haul forward bookings (change vs previous year) +2 pts +2 pts +2 pts +1 pts Easter shift 0 pts + 0 pts -1 pts -3 pts Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Actual Long haul load factor Long Haul forward booking load factor Long haul forward booking load factor
Slide 22: Fuel Bill Increase Estimated at +€350 m
FUEL BILL INCREASE ESTIMATED AT + €350 M 2017: fuel bill €4.5 bn (1) 2018: 6.4 (1) fuel bill €4.9 bn(2) 6.0 2019: 5.0 fuel bill €5.1 bn(2) $ bn (1) 1.5(1) 1.7(1) 1.5(1) 2017 1.2 1.3 1.3 1.3 1.3 2018 2019 FY Jan-Dec Q1 Q2 Q3 Q4 MARKET Brent ($ per bbl)(1) 71 67 73 72 71 PRICE Jet fuel ($ per metric t
Slide 23: Full Year 2018 Guidance
FULL YEAR 2018 GUIDANCE Previous guidance 2018 New Guidance 2018 Passenger +3% to +4% +2.5% to +3.5% > Downwards adjustment due to Air France strikes Capacity Transavia +6% to +7% +6% to +7% > Unchanged > Reflecting expected further increase of oil price Fuel +€150 m +€350 m throughout the year Curr
Slide 24: Air France-KLM Commercial Developments
AIR FRANCE-KLM Commercial developments
Slide 25: Successful Commercial Developments: Unrivaled Network of Alliances
SUCCESSFUL COMMERCIAL DEVELOPMENTS: UNRIVALED NETWORK OF ALLIANCES • Air France-KLM, Delta Air Lines and Virgin Atlantic have signed definitive agreements paving the way forward for their expanded trans-Atlantic joint venture: The Joint Venture Agreement signed between Air France- KLM, Delta and V
Slide 26: Successful Commercial Developments: Innovative Offer and Adapted Cost Structure
SUCCESSFUL COMMERCIAL DEVELOPMENTS: INNOVATIVE OFFER AND AN ADAPTED COST STRUCTURE Adapted cost structure Profitable point-to-point to complement our hub operations low-cost airline 2018 summer schedule: 2018 summer schedule: 6 long haul routes 24 new routes 8 medium haul routes 26
Slide 27: Successful Commercial Developments: Digital Innovation
SUCCESSFUL COMMERCIAL DEVELOPMENTS: DIGITAL INNOVATION New distribution Flying Blue strategy Branded fares 27
Slide 28: Appendix First Quarter 2018
AIRFRANCE KLM CE APPENDIX First Quarter 2018
Slide 29: IFRS Restatement of Q1 and Full Year 2017 Consolidated Income Statement
IFRS RESTATEMENT OF Q1 AND FULL YEAR 2017 CONSOLIDATED INCOME STATEMENT (1) First quarter 2017 Full year 2017 Published Restated Published Restated In € m Change Change Impact by: accounts accounts accounts accounts Revenues 5,709 5,705 -4 25,784 25,860 76 IFRS 15 External expenses -5,155 -5,057 98
Slide 30: IFRS Restatement for 2017 Balance Sheet and Q1 2017 Operating Free Cash Flow
IFRS RESTATEMENT FOR 2017 BALANCE SHEET AND Q1 2017 OPERATING FREE CASH FLOW (1) Balance sheet restatement per 31 Dec 2017 Published Restated Published Restated In € bn Change Change accounts accounts accounts accounts Asset 24.4 30.2 5.8 Liabilities & Equity 24.4 30.2 5.8 Fixed Assets: equipments 1
Slide 31: Fuel Bill Sensitivity
FUEL BILL SENSITIVITY 10 $ Bln 9 $ Bln 8 $ Bln Market 70.7 $/bbl AFKL price 2018 62.3 $/bbl 7 $ Bln Hedge gain + 8.4 $/bbl 6 $ Bln Fuel bill 5 $ Bln 4 $ Bln 3 $ Bln 2 $ Bln Fuel expenses without hedging 1 $ Bln Fuel expenses with hedging 0 $ Bln 35 40 45 50 55 60 65 70 75 80 85 90 95 100 Brent price
Slide 32: Currency Impact on Operating Result
CURRENCY IMPACT ON OPERATING RESULT Currency impact on revenues and costs FY 2018 guidance In € m FX FY 2018 estimated circa €100 m headwind, +20 based on spot €/$ 1.23 Hedging policy on USD, GBP: ~60% and JPY ~40% net operational exposure 2018 Revenues and costs per currency FY 2017 Revenues Co
Slide 33: Financial Debt Reimbursement Profile at 31 March 2018
FINANCIAL DEBT REIMBURSEMENT PROFILE AT 31 MARCH 2018 Debt Reimbursement Profile(1) 2015 6.25% undated hybrid bond (€600 m) Call: October 2020 In € m 600 600 100 400 1 050 800 750 800 550 450 350 200 2018 2019 2020 2021 2022 2023 2024 2025 and beyond Plain vanilla bonds Hybrid bond (recognized as eq