Air France-klm Sa · EURONEXT:AF
Air France-klm Sa — FY2022 Earnings Presentation
37 slides from Air France-klm Sa's earnings presentation, February 2023
Slide 1: Results 2022
RESULTS 2022 1
Slide 2: Full Year 2022 Highlights
FULL YEAR 2022 HIGHLIGHTS Benjamin Smith – Chief Executive Officer Air France-KLM 2
Slide 3: Air France-KLM led the European restoration, leveraging surge in demand
AIR FRANCE-KLM LED THE EUROPEAN RESTORATION, SUCCESSFULLY LEVERAGING THE UNPRECEDENTED SURGE IN DEMAND Evolution of capacity since January 2020 ASK index vs. 20191 100 A Air France-KLM IAG Lufthansa Group Worldwide 2020 2021 2022 2023 Air France-KLM anticipated and led the European recovery, deployi
Slide 4: Air France-KLM closed its profitability gap with peers
AIR FRANCE-KLM CLOSED ITS PROFITABILITY GAP WITH PEERS, BUILDING MOMENTUM AND STRENGTHENING ITS PERFORMANCE FOUNDATION Profitability evolution (2019 vs. 2022) EBIT Margin -4.7pt IATA forecasts show disparities in 4.5% the recovery across the industry 8.9% US and Europe carriers were at the 7.1% fore
Slide 5: 2022 as a new reference for our group
2022 AS A NEW REFERENCE Passengers carried Group revenues FOR OUR GROUP a -19% -4% a 104m €27bn a €26bn a 83m • Positive Full Year operating result of €1.2bn, above 2019 level €14bn 45m €11bn 34m 2019 2020 2021 2022 2019 2020 2021 2022 • Adjusted Operating Free Cash Flow €1.9bn Operating result FTE’
Slide 6: Agile and persistent recovery for our passenger network
AGILE AND PERSISTENT RECOVERY FOR OUR PASSENGER NETWORK Evolution load factors and Corporate indicators Load Factors Premium1 cabins Load Factors Economy2 cabins 2022 Corporate Revenue & Traffic3 Air France & KLM Long Haul Passenger Network Air France & KLM Long Haul Passenger Network Air France & K
Slide 7: A successful year supported by all our businesses
A SUCCESSFUL YEAR SUPPORTED BY ALL OUR BUSINESSES WITH CONCRETE ACHIEVEMENTS Finalization of CFMi Fleet size close to 100 Renewal of full freighter LEAP Engine CBSA1: aircraft & more than 40 fleet with 8 A350F firm solidifying our position as new destinations vs. 2019 orders world-leading engine MRO
Slide 8: Q4 2022 Financial Results
Q4 2022 FINANCIAL RESULTS Steven Zaat – Chief Financial Officer Air France-KLM 8
Slide 9: Highest Q4 revenue in history and operating margin above 2019 level
HIGHEST Q4 REVENUE IN HISTORY AND OPERATING MARGIN ABOVE 2019 LEVEL 1 Change Change Q4 2022 Q4 2021 Q4 2019 versus 2021 versus 2019 Revenues (€ m) 7,128 4,838 6,615 +2,290m +513m Aircraft Fuel (€ m) 2,057 937 1,394 +1,120m +663m 2 Salary cost (€ m) 2,049 1,526 2,108 +523m -59m Other operating expens
Slide 10: Strong yields on our diversified network
STRONG YIELDS ON OUR DIVERSIFIED NETWORK Q4 2022 vs Q4 2019 North America Short & Medium Haul1 Total Long Haul 87% 80% 87% 29.4% 3.1% 24.1% 17.1% 1 1 -14.1% -0.4 pt Premium1 -2.5 pt -20.7% -3.6 pt 76% 3.6 pt 20.2% Transavia 1 Caribbean & Indian Ocean 85% Asia & Middle East -16.4% 89% 41.8% 17.8% 85%
Slide 11: Air France operating margin well above 2019; Schiphol restrictions hampered KLM
AIR FRANCE OPERATING MARGIN WELL ABOVE 2019 WHILE CAPACITY RESTRICTIONS AT SCHIPHOL HAMPERED KLM PERFORMANCE Operating 2019 Q4 2022 versus Capacity Revenues Change Change Operating Change result operating change (€ m) YoY YoY margin YoY Q4 2021 (€ m) margin +31% 4,541 +54% 144 +92 3.2% +1 pt -0.5% +
Slide 12: Full Year 2022 Financial Results
FULL YEAR 2022 FINANCIAL RESULTS Steven Zaat – Chief Financial Officer Air France-KLM 12
Slide 13: A successful year in a challenging context resulting in positive net income
A SUCCESSFUL YEAR IN A CHALLENGING CONTEXT RESULTING IN A POSITIVE NET INCOME Change Change FY 2022 FY 2021 FY 2019 versus 2021 versus 2019 Revenues (€ m) 26,393 14,315 27,187 +12,078m -794m Aircraft Fuel (€ m) 7,241 2,748 5,510 +4,493m +1,731m Salary cost (€ m) 7,289 5,340 8,139 +1,949m -850m Other
Slide 14: Strong contribution from all business lines
STRONG CONTRIBUTION FROM ALL BUSINESS LINES WITH CONTINUED INVESTMENTS IN TRANSAVIA’S GROWTH 2 Operating Unit Revenue Revenues Operating FY 2022 vs. FY 2021 Capacity 1 Constant Curr. (€ m) Change result Change margin Change (€ m) +39.4% +56.4% 19,254 +122.2% Network 1,131 +2,713m 5.0% +17.9 pt 3 +15
Slide 15: A slight increase of unit cost although 15% less capacity
A SLIGHT INCREASE OF UNIT COST ALTHOUGH 15% LESS CAPACITY Unit cost1 evolution Staff cost evolution FTE evolution +1.9% -10% AA AA AA 2 AA € 7.95 € 8.10 € 8.1bn € 7.3bn -16% FTE Versus December 2019 2019 2022 2019 2022 Unit cost increase explained by: Transformation programs -9% FTE • CLA effects fo
Slide 16: Adjusted operating free cash flow positive, net debt/EBITDA at 1.8x
ADJUSTED OPERATING FREE CASH FLOW POSITIVE LEADING TO A NET DEBT/EBITDA RATIO AT 1.8X 2022 Free cash flow evolution Net debt In € m In € m Continued deleveraging Net debt/EBITDA 11.0x 1.8x 2021 2022 8,216 -861 -1,903 +1,148 -547 6,337 +284 Net debt at 31 Payment of lease Adj.operating free New and m
Slide 17: Continued redeeming liquidity support while maintaining solid cash position
AIR FRANCE-KLM CONTINUED REDEEMING LIQUIDITY SUPPORT WHILE MAINTAINING A SOLID CASH POSITION 2021- 2022 Redemption of €4.9bn liquidity support rebalancing the Group’s debt profile December 2021 Redemption of €0.5bn of the bank loan guaranteed by the French State, “PGE”, through liquidity June 2022 €
Slide 18: In 2023, Air France-KLM will continue to strengthen its balance sheet
IN 2023, AIR FRANCE-KLM WILL CONTINUE TO STRENGTHEN ITS BALANCE SHEET 2023 March 2023 Full redemption of the outstanding €2.5bn of the PGE1 by using the €1.0bn proceeds of the Sustainability-Linked Bond which was issued in January and by using €1.5bn liquidity April 2023 Air France & Air France-KLM
Slide 19: Air France-KLM to be fully released from current States support
AIR FRANCE-KLM TO BE FULLY RELEASED FROM CURRENT STATES SUPPORT The remaining €1.2bn French State Recapitalization Aid, granted under EU State Aid Covid Temporary Framework, is currently composed by: In €bn 3.6 • €600m French State perpetual hybrids instruments. • €600m shares, acquired by the Frenc
Slide 20: Outlook
OUTLOOK Steven Zaat – Chief Financial Officer Air France-KLM 20
Slide 21: Capacity to increase in 2023 and reach 2019 levels by year end
AIR FRANCE-KLM WILL CONTINUE TO INCREASE CAPACITY IN 2023 AND WILL REACH 2019 LEVELS BY THE END OF THE YEAR Capacity in ASK versus 2019 FY 2022 Q1 Q2 H2 FY 2023 Total network 82% c.90% c.90% c.95% 90-95% Long Haul 83% c.90% c.90% c.95% 90-95% Short and 80% c.80% c.85% c.90% 85-90% medium Haul Transa
Slide 22: Encouraging booking pattern within a robust yield environment
ENCOURAGING BOOKING PATTERN WITHIN A ROBUST YIELD ENVIRONMENT Long Haul Short and Medium Haul Transavia 82% 80% 70% 69% 79% 76% Q1 2019 2023 2019 2023 2019 2023 42% 39% 30% 28% 46% 40% Q2 2019 2023 2019 2023 2019 2023 Forward booking load factor 2019 Forward booking load factor 2023 Snapshot of the
Slide 23: Fuel hedging policy unchanged, covers 50% of 2023 consumption
THE FUEL HEDGING POLICY REMAINS UNCHANGED AND COVERS ALREADY 50% OF 2023 FUEL CONSUMPTION 7.8 7.5 Fuel bill after hedge ($bn) FY 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 FY 2023 Market 99 85 85 83 82 84 Brent ($ per bbl) price Jet fuel ($ per metric ton) 1,166 1,021 943 922 902 944 Jet fuel ($ per metri
Slide 24: Outlook 2023
OUTLOOK 2023 Q1 2023 FY 2023 Group Capacity¹ 90-95% 95-100% Unit cost2 vs. 2022 Stable Net Capex €3.0bn 1) ASK capacity versus 2019 2) Against a constant fuel price, constant currency and excluding furlough contribution 24
Slide 25: Medium term outlook
MEDIUM TERM OUTLOOK 1 Capacity back to 2019 Decrease of the Unit cost2 levels (as from 2024) by -1% to -4% (versus 2022) Reach Operating Margin 7% to 8% Maintain positive Maintain Net Adj Operating debt/EBITDA ratio Free Cash Flow excl. between 1.5x and 2.0x exceptionals3 1) Refers to 2024-2026 peri
Slide 26: Update & Outlook
UPDATE & OUTLOOK Benjamin Smith – Chief Executive Officer Air France-KLM 26
Slide 27: Investments secured in fleet to drive sustainable transition
INVESTMENTS SECURED IN FLEET TO DRIVE SUSTAINABLE TRANSITION AND OFFER BEST-IN-CLASS EXPERIENCES TO OUR CUSTOMERS Fleet Modernization ongoing… Year end comparison 2022 vs. 2019 A350-900 +17 -40% Average reduction in noise B787-9/10 +4 footprint compared to the 2000s1 A220-300 +15 E195-E2 +14 -15% to
Slide 28: Investments secured in cabins for harmonized experience
INVESTMENTS SECURED IN CABINS FOR AN ENHANCED AND FURTHER HARMONIZED EXPERIENCE ACROSS THE GROUP Harmonization of our Long-Haul Business product Harmonization of our Long-Haul Premium Eco product Air France Air France Business Class Premium Economy 100% Full Flat by end 2023 Recliner seats on all A3
Slide 29: Investments secured at all stages of the customer journey
INVESTMENTS SECURED AT ALL STAGES OF THE CUSTOMER JOURNEY TO ACHIEVE HIGH PREMIUM STANDARDS Lounges Digital Air France CDG T2E M & Munich refurbishment. Improved catering with Almost 50% of flight segments sold with signature dishes offer in all CDG lounges. direct online channels (+10pts vs. 2019)
Slide 30: Teams awarded for dedication to customers
AIR FRANCE-KLM TEAMS AWARDED FOR THEIR EXCEPTIONAL DEDICATION TO THEIR CUSTOMERS Ranking Skytrax World Airline Awards1 Per year 2018 2019 2021 2022 7 Air France & KLM certified as a 5- 8 Star Airline by APEX 11 only legacy carriers Group with all airlines 5 stars 15 19 17 25 31 Air France voted best
Slide 31: 2022 commitments and actions chart a path to sustainability excellence
OUR 2022 COMMITMENTS AND ACTIONS CHART A PATH TO SUSTAINABILITY EXCELLENCE €1bn Sustainability- Air & Train SBTi Validation Investments Linked Bonds Connectivity Currently investing over €2bn annually for the acquisition of Air France & SNCF offer 100% New Generation aircraft digital solution & 33 d
Slide 32: Conclusion
CONCLUSION TURNING THE PAGE OF COVID WITH LANDMARK EMERGING STRONGER POST CRISIS, FURTHER RESULTS AND ACHIEVEMENTS IN 2022 LEVERAGING ON OUR TRANSFORMATION PROGRAM • An exceptional rebound in our activity, driven by all our • Intention of full exit from current State support and airlines and busines
Slide 33: Appendix
APPENDIX Results as of December 31st, 2022 33
Slide 34: Currency impact on operating result
CURRENCY IMPACT ON OPERATING RESULT Currency impact on revenues and costs In € m -3 153 156 Revenues and costs per currency FY 2022 REVENUES COSTS US dollar (and related US dollar Q4 2022 currencies) 20 35 Currency impact on revenues 60 20 65 Currency impact on costs, including hedging Euro Other Ot
Slide 35: Pension details as of December 31, 2022
PENSION DETAILS AS OF DECEMBER 31, 2022 In €m Dec 31, 2021 Dec 31, 2022 -1,939 -1,595 Net balance sheet situation by airline Net balance sheet situation by airline -1,540 -1,369 -225 -399 Air-France France end of service benefit plan (ICS): pursuant to French KLM Defined benefit schemes regulations
Slide 36: Debt redemption profile at 31 December 2022
DEBT REDEMPTION PROFILE AT 31 DECEMBER 2022 Debt reimbursement profile(1) In €m 1,350 1,150 750 2,450 800 650 900 750 650 550 500 2023 2024 2025 2026 2027 2028 and beyond Bonds issued by Air France-KLM French state aid package Other long-term Debt: AF and KLM January 2025 State aid package consists
Slide 37: Air France KLM Group
AIRFRANCE KLM GROUP