AIR FRANCE - KLM : Third Quarter 2016 results

3 rd November 2016
 
Financial Year 2016: Third Quarter results

 

 

THIRD QUARTER

  • Revenues of 6.94 billion euros, down 5.1% and down 4.1% like-for-like [1]
  • EBITDA of 1,149 million euros, a decrease of 174 million euros and down 84 million euros like-for-like
  • Continuous decrease in ex-fuel unit costs at constant currency and pension costs, down reported 0.2%, 1.0% excluding strike
  • Fuel bill savings during the quarter more than offset by downward pressure on unit revenue and negative currency impact
  • Operating result of 737 million euros, down 143 million euros and down 49 million euros like-for-like
  • Impact of Air France cabin crew strike on the operating result estimated at 90   millions euros

       

 

FIRST NINE MONTHS OF 2016

  • Revenues of 18.76 billion euros, a decrease of 3.5%, down 3.1% like-for-like
  • EBITDAR of 2,941 million euros, an increase of 324 million euros, up 526 million euros like-for-like
  • Impact of Air France cockpit and cabin crew strikes estimated at 130 million euros on the operating result
  • Net debt reduction: net debt [2] of 4.16 billion euros, down 144 million euros compared to 31 December 2015
  • Adjusted net debt / EBITDAR 2 ratio of 3.1x, an improvement of 0.3 points compared to 31 December 2015

       

 

FULL YEAR 2016 OUTLOOK

  • High level of geopolitical and economic uncertainties, increasing pressure on unit revenues and continuing concern about France as a destination
  • Impact of fuel savings on P&L expected to be more than offset in the coming quarter by downward pressure on unit revenue and negative currency impact
  • Continued progress in unit cost reduction, targeted at around 1% ex fuel in 2016
  • Operating free cash flow generation after disposals narrowed to between 0.6 billion euros and 0.8 billion euros in 2016
  • Further significant net debt reduction

 

 

The Board of Directors of Air France-KLM, chaired by Jean-Marc Janaillac, met on 2 nd November 2016 to approve the accounts for the Third Quarter of the Financial Year 2016.

 


 

Key data

 

  Third Quarter 9 months to 30 September
  2016 2015* Change 2016 2015* Change
Passengers (thousands)26,55325,897+2.5%70,83468,498+3.4%
Capacity (EASK m)94,08193,174+1.0%257,760256,354+0.5%
Revenues (€m)6,9387,308-5.1%18,75819,447-3.5%
Change like-for-like (%)   -4.1%  -3.1%
EBITDAR (€m)1,4191,581-1622,9412,617+324
EBITDA (€m)1,1491,323-1742,1431,855+288
EBITDA margin (%) 16.618.1-1.5 pt11.49.5+1.9 pt
EBITDA change like-for-like (€m)   -84  +497

Operating result (€m)

737880-143955643+312
Operating margin (%) 10.6%12.0%-1.4 pt5.1%3.3%+1.8 pt
Operating result change
like-for-like (€m)
  -49  +531
Net result, group share (€m)544481+63430-158+588
Restated net result, group share 2 (€m) 521612-91497181+316
Earnings per share (€)1.841.62+0.221.39-0.53+1.98
Diluted earnings per share (€)1.571.32+0.251.22-0.53+1.80
Adjusted earnings per share (€)1.742.11-0.371.680.61+1.00
Diluted adjusted earnings per share (€)1.491.71-0.221.460.61+0.84
Operating free cash flow (€m)-123257-380250522-272
Net debt at end of period (€m)   4,1634,307-144

*  Servair reclassified as discontinued operation.

 

The consolidated financial statements of the Group were revised as of 1 st January 2016 in order to reflect Servair as a discontinued operation. The 2015 financial statements have been restated accordingly. Details of this restatement can be found in the appendix of this press release.

 

Third Quarter 2016 total revenues stood at 6.94 billion euros versus 7.31 billion euros in Third Quarter 2015, down 5.1% and down 4.1% like-for-like as a result of increasing pressure on unit revenue.

 

Currencies had a negative 77 million euro impact on revenues, primarily driven by the weakening of currencies other than the US dollar against the euro, notably the GBP, BRL and CNY. The negative effect of currencies on costs amounted to 17 million euros. The net impact of currencies on the operating result thus amounted to a negative 94 million euros.

 

Total operating costs were 3.5% lower year-on-year and down 3.8% on a like-for-like basis. Ex-fuel, they increased by 4.4% and by 3.8% on a like-for-like basis. Unit cost per EASK was down 0.2%, on a constant currency, fuel price and pension-related expense basis, against a capacity increase measured in EASK of +1.0%. On a strike adjusted base, the unit costs per EASK decreased by 1.0%.

 

The fuel bill amounted to 1,244 million euros, down 25.9% and down 25.6% like-for-like. Based on the forward curve at 21 October 2016, the Full Year 2016 fuel bill is expected to reach 4.6 billion euros [3] and the Full Year 2017 fuel bill is expected to remain stable at 4.6 billion euros [4] .

 

Total employee costs including temporary staff were stable at 1,837 million euros (down 0.1%). On a constant scope and pension-related expense basis, employee costs also remained stable (up 0.1%) and decreased by 3.5% excluding the increase in the profit sharing scheme.

 

In the Third Quarter 2016 , the downward pressure on unit revenues (REASK -6.5%) and the negative currency impact (94 million euros) more than offset the fuel bill savings achieved (399 million euros), where 55% of the fuel bill savings was retained during First Quarter 2016 and 15% retained during the Second Quarter 2016.

 

The operating result amounted to 737 million euros, a reported decrease of 143 million euros and down 49 million euros like-for-like. The operating result was notably impacted by the seven day cabin crew strike in July and August 2016, which had a negative impact of an estimated 90 million euros.

 

EBITDAR amounted to 1,419 million euros, a reported decrease of 162 million euros and down 72 million euros like-for-like.

 

EBITDA amounted to 1,149 million euros, a decrease of 174 million euros. Like-for-like, EBITDA decreased by 84 million euros, mainly as a result of the decrease in the Passenger network performance, which declined by 78 million euros like-for-like, impacted by the strike.

 

  Third Quarter 9 months to 30 September
EBITDA per business (€m) 2016 2015* Change like-for-like 2016 2015* Change like-for-like
Passenger network9991,151-152-781,9511,661+290+464
Cargo-91-76-15-11-194-204+10+27
Maintenance117142-25-25310339-29-30
Transavia11798+19+306739+28+51
Other78-1+0920-11-15
Total 1,149 1,323 -174 -84 2,143 1,855 +288 +497

*  Servair reclassified as discontinued operation.

 

Third Quarter 2016 EBITDA decreased by 122 million euros like-for-like at Air France and improved by 35 million euros like-for-like at KLM. The EBITDA margin at Air France reached 14.0%, down 1.7 points like-for-like. At KLM, the EBITDA margin stood at 19.6%, up 1.5 points like-for-like.

 

  Third Quarter 9 months to 30 September
EBITDA per airline (€m) 2016 2015* Change like-for-like 2016 2015* Change like-for-like
Air France589754-165-1221,1211,101+20+118
EBITDA margin14.0%16.7%-2.7 pt-1.7 pt9.7%9.1%+0.6 pt+1.4 pt
KLM553564-11+351,012742+270+371
EBITDA margin19.6%19.7%-0.1 pt+1.5 pt13.6%9.9%+3.8 pt+5.1 pt
Other/ eliminations75+2+21012-2+8
Total 1,149 1,323 -174 -84 2,143 1,855 +288 +497

*  Servair reclassified as discontinued operation.

 

In the First Nine Months of 2016 , total revenues stood at 18.8 billion euros versus 19.5 billion euros in the First Nine Months of 2015, down 3.5% on a reported basis and on down 3.1% like-for-like. The fuel bill amounted to 3,507 million euros, a reported decrease of 27.2% and down 27.9% on a like-for-like basis. The ex-fuel unit costs at constant currency and pension expense is down 0.9% on a reported base and down 1.4% corrected for the June pilot and July Cabin crew strike.

 

In the First Nine Months of 2016, EBITDA amounted to a 2,143 million euros, an increase of 288 million euros. On a like-for-like basis, EBITDA increased by 497 million euros.

 

At 1,951 million euros, the Passenger Network was the main contributor to EBITDA, up 464 million euros like-for-like. Despite the challenging Cargo operating context, marked by structural industry overcapacity, Cargo EBITDA improved by 27 million euros like-for-like mainly as a result of restructuring efforts.

 

The operating result stood at 955 million euros versus 643 million euros in 2015, an improvement of 312 million euros. Like-for-like, the operating result increased by 531 million euros.

 

The net result, group share stood at 430 million euros against a negative 158 million euros a year ago.

 

At 30 September 2016, the trailing 12 months return on capital employed (ROCE) was 9.9%, up 2.8 points compared to 30 September 2015.

 

Passenger network [5] business

 

Passenger network Q3 2016 Q3 2015 Change Change

like-for-like
Passengers (thousands)21,77122,007-1.1%  
Capacity (ASK m)75,25375,209+0.1% 
Traffic (RPK m)65,84666,626-1.2% 
Load factor 87.5%88.6%-1.1 pt 
Total passenger revenues (€m)5,4705,895-7.2%-6.1%
Scheduled passenger revenues (€m)5,2435,672-7.6%-6.4%
Unit revenue per ASK (€ cts)6.977.54-7.6%-6.5%
Unit revenue per RPK (€ cts)7.968.51-6.5%-5.3%
Unit cost per ASK (€ cts)6.096.48-6.1%-6.3%
Operating result (€m)664798-134-55

        

Third Quarter 2016 total passenger network revenues amounted to 5,470 million euros, down 7.2% and down 6.1% like-for-like. The Air France cabin crew strike negatively impacted the operating result by an estimated 90 million euros. The operating result of the passenger network business stood at 664 million euros, versus 798 million euros for the Third Quarter 2015. Like-for-like, the operating result was down 55 million euros.

 

The Group maintained its strict capacity discipline, keeping total passenger network capacity stable    (+0.1% and +0.6% excluding strike). Unit revenue per Available Seat Kilometer (RASK) remained volatile and was on average down by 6.5% excluding currency. The increasing pressure on unit revenue compared to the previous quarters reflected the weak supply-demand balance in the different regions of the network and weak flows to France as a destination.

 

Passenger network 9 months 2016 9 months 2015 Change Change

like-for-like
Passengers (thousands)60,39559,860+0.9%  
Capacity (ASK m)209,895209,263+0.3% 
Traffic (RPK m)179,756178,996+0.4% 
Load factor 85.6%85.5%+0.1 pt 
Total passenger revenues (€m)14,88315,558-4.3%-3.8%
Scheduled passenger revenues (€m)14,25014,920-4.5%-3.9%
Unit revenue per ASK (€ cts)6.797.13-4.8%-4.2%
Unit revenue per RPK (€ cts)7.938.34-4.9%-4.3%
Unit cost per ASK (€ cts)6.326.80-7.1%-7.7%
Operating result (€m)983686+297+476

 

In the First Nine Months of 2016 , passenger network revenues amounted to 14,883 million euros, down 4.3% and down 3.8% on a like-for-like basis. The operating result of the passenger network business stood at 983 million euros, versus 686 million euros in the First Nine Months of 2015, an improvement of 297 million euros and 476 million euros like-for-like.

 

 


 

Cargo business

 

Cargo Q3 2016 Q3 2015 Change Change

like-for-like
Tons (thousands)279301-7.1%  
Capacity (ATK m)3,7383,859-3.1% 
Traffic (RTK m)2,1132,257-6.4% 
Load factor 56.5%58.5%-2.0 pt 
Total Cargo revenues (€m)487584-16.6%-16.1%
Scheduled cargo revenues (€m)447546-18.1%-17.7%
Unit revenue per ATK (€ cts)11.9814.10-15.1%-14.6%
Unit revenue per RTK (€ cts)21.1824.10-12.1%-11.6%
Unit cost per ATK (€ cts)14.6416.22-9.7%-9.9%
Operating result (€m)-100-81-19-15

 

The Group continued to restructure its Cargo activity to address the weak global trade and structural air cargo industry overcapacity. During Third Quarter 2016 , full-freighter capacity was thus reduced by 22%, leading to a decrease in total Cargo capacity of 3.1%. Revenue per Available Ton Kilometer (ATK) was down by 14.6% like-for-like.

 

The operating result stood at negative 100 million euros, a decline of 19 million euros like-for-like.

 

Cargo 9 months 2016 9 months 2015 Change Change

like-for-like
Tons (thousands)837897-6.7%  
Capacity (ATK m)10,73711,277-4.8% 
Traffic (RTK m)6,2346,711-7.1% 
Load factor 58.1%59.5%-1.4 pt 
Total Cargo revenues (€m)1,5231,813-16.0%-15.7%
Scheduled cargo revenues (€m)1,4041,696-17.2%-17.0%
Unit revenue per ATK (€ cts)13.0715.04-13.1%-12.8%
Unit revenue per RTK (€ cts)22.5125.27-10.9%-10.7%
Unit cost per ATK (€ cts)15.0817.01-11.3%-11.9%
Operating result (€m)-216-222+6+23

 

First Nine Months of 2016 Cargo revenues amounted to 1,523 million euros, down 15.7% like-for-like. At -216 million euros, the operating result increased by 23 million like-for-like resulting from a strong decrease in unit costs (-11.9% like-for-like) due to restructuring measures implemeted.

 

One MD11 freighter was retired during the First Quarter, and two MD11 freighters were phased out during the first week of July 2016 reducing the total number of full freighters in operation to six.

 

Maintenance business

 

Maintenance Q3 2016 Q3 2015 Change Change

like-for-like
Total revenues (€m)1,046953+9.8% 
Third party revenues (€m)482372+29.6%30.3%
Operating result  (€m)7781-4-4
Operating margin (%)7.4%8.5%-1.1 pt-1.2 pt

 

Third Quarter 2016 third party maintenance revenues amounted to 482 million euros, up by 29.6% and by 30.3% like-for-like. Revenues were up from the contracts gained in previous years. Over the period, the maintenance order book recorded an 8.4% increase from the beginning of the year to reach 9.1 billion dollars, including several new A350 support contracts.

 

The operating result stood at 77 million euros, down 4 million euros year-on-year.

 

 

 

Maintenance 9 months 2016 9 months 2015 Change Change

like-for-like
Total revenues (€m)3,0522,912+4.8% 
Third party revenues (€m)1,3481,148+17.4%16.4%
Operating result  (€m)172167+5+4
Operating margin (%)5.6%5.7%-0.1 pt-0.1 pt

 

During the First Nine Months of 2016 , third party maintenance revenues increased by 17.4% and by 16.4% like-for-like. At 172 million euros, the operating result improved by 5 million euros.

 

 

Transavia

 

Transavia Q3 2016 Q3 2015 Change
Passengers (thousands)4,7823,890+22.9%
Capacity (ASK m)9,1737,963+15.2%
Traffic (RPK m)8,3917,327+14.5%
Load factor 91.5%92.0%-0.5 pt
Total passenger revenues (€m)490442+10.9%
Scheduled passenger revenues (€m)490438+11.9%
Unit revenue per ASK (€ cts)5.345.50-3.2%
Unit revenue per RPK (€ cts)5.845.98-2.4%
Unit cost per ASK (€ cts)4.344.53-4.9%
Operating result (€m)9277+15
Operating result change like-for-like (€m)   +26

 

In the Third Quarter 2016 , Transavia capacity was up by 15.2%, reflecting the accelerated development in France (capacity up by 19%) and the opening of the Munich base on 25 th March 2016. Traffic, measured in revenue passenger kilometers (RPK), rose by 14.5%. The load factor remained high (91.5%) despite the increase in capacity.

 

The unit revenue per ASK decreased by 3.2%, mainly due to geopolitical unrest and intensification of low cost competition. Unit costs per ASK decreased by 4.9%. The operating result stood at 92 million euros, up 26 million euros like-for-like.

 

Transavia 9 months 2016 9 months 2015 Change
Passengers (thousands)10,4398,638+20.8%
Capacity (ASK m)20,11617,840+12.8%
Traffic (RPK m)18,04116,163+11.6%
Load factor 89.7%90.6%-0.9 pt
Total passenger revenues (€m)973892+9.1%
Scheduled passenger revenues (€m)965881+9.5%
Unit revenue per ASK (€ cts)4.804.94-2.9%
Unit revenue per RPK (€ cts)5.355.45-1.9%
Unit cost per ASK (€ cts)4.374.80-9.0%
Operating result (€m)172+15
Operating result change like-for-like (€m)   +38

 

In the First Nine Months of 2016 , Transavia revenues amounted to 973 million euros, up 9.1%. The operating result increased by 38 million euros like-for-like and amounted to 17 million euros.

 

 


 

Financial situation

 

In € million 9 months 2016 9 months 2015* Change
Cash flow before change in WCR and Voluntary Departure Plans, continuing operations1,8701,516+354
Cash out related to Voluntary Departure Plans-208-154-54
Change in Working Capital Requirement (WCR)+45+255-210
Operating cash flow 1,707 1,617 +90
Net investments before sale & lease-back-1,457-1,095-362
Cash received through sale & lease-back transactions00+0
Net investments after sale & lease-back-1,457-1,095-362
Operating free cash flow 250 522 -272

*  Servair reclassified as discontinued operation.

 

In the First Nine Months of 2016 , the increase of 288 million euros in EBITDA translated into a 354 million euro increase in cash flow before change in working capital requirement and cash out related to Voluntary Departure Plans. The Group disbursed 208 million euros for Voluntary Departure Plans. The change in Working Capital Requirement contributed 45 million euros to operating cash flow. Net investments before sale & lease-back transactions stood at 1,457 million euros. As a result, operating free cash flow reached 250 million euros, down 272 million euros compared to the First Nine Months of 2015.

 

Net debt amounted to 4.2 billion euros at 30 September 2016, versus 4.3 billion euros at 31 December 2015, an improvement of 144 million euros. Currencies had a significant negative impact of 130 million euro on net debt.

 

The trailing 12 months adjusted net debt/EBITDAR ratio stood at 3.1x at 30 September 2016, down 0.3 points compared to 31 December 2015, and down 0.5 points compared to 30 September 2015.

 

The 95 basis point fall in discount rates (for period > 15 years) during First Nine Months 2016 led to a significant increase in the actuarial valuation of retirement obligations of more than 3.4 billion euros. The change in asset value amounted to 1,304 million euros during the First Nine Months. The balance sheet pension situation thus moved from a net liability of 177 million euros at 31 December 2015 to a net liability of 2,180 million euros at 30 September 2016 of which 1,622 million euros accounted for by Air France and 558 million euros by KLM`s defined benefit schemes.

 

The current funding agreement with the KLM Flight Deck Crew Union could result in a significant additional contribution to reach required coverage ratio to be able to grant indexation. Discussions with the KLM Flight Deck Crew Union have been initiated to renegotiate the current funding agreement. In parallel, the Group has decided to terminate this funding agreement on a unilateral way.  A court ruling on September 27th 2016 confirmed that KLM is entitled to cancel the agreement, however KLM aims to reach a mutual acceptable new funding agreement with the KLM Flight Deck Crew Union and the pension fund.

 

At 30 September 2016, equity, group share, amounted to negative 230 million euros, down 503 million euros over the first nine months mainly due to the increase in the net pension liability.

 

The Group continues to enjoy a good level of liquidity, with net cash of 3.9 billion euros at 30 September 2016, and undrawn credit lines of 1.8 billion euros. During the course of October 2016, the Group successfully placed a six-year bond for 400 million euros and reimbursed a 600 million euros bond which was due in October 2016.

 


 

Outlook

 

The global context remains highly uncertain regarding the geopolitical and economic environment in which we operate, fuel prices and the continuation of the overcapacity on several markets, resulting in pressures on unit revenues and a special concern about France as a destination.

 

Under these conditions, the Group is expecting for Full Year 2016:

  • Operating free cash flow generation after disposals narrowed to between 0.6 billion euros and 0.8 billion euros. The 2016 investment plan stands between 1.8 billion euros and 2.0 billion euros (including buying back aircraft under operating lease) and the disposal program stands between 0.4 billion euros and 0.6 billion euros
  • Impact of fuel savings on the P&L expected to be more than offset in the current quarter by downward pressure on unit revenue and negative currency impacts
  • Unit cost reduction target remains around 1% at constant currency, fuel price and pension related expenses
  • Further significant reduction in net debt

 

*****

 

The Third Quarter 2016 accounts are not audited by the Statutory Auditors.

 

The results presentation is available at www.airfranceklm.com on November 3 rd 2016 from 8:30 am CET.

 

A conference call hosted by hosted by Mr Janaillac (CEO) and Mr Riolacci (CFO) will be held on November 3 rd 2016 at 10.30 am CET.

 

To connect to the conference call, please dial:

  • France: +33(0)1 76 77 22 57
  • Netherlands: +31(0)20 703 8261
  • United Kingdom: +44(0)20 7026 5967
  • USA: +1 719 457 1036

Confirmation Code: 6217261

 

To listen to a recording of the conference in English, please dial:

  • France: +33(0)1 70 48 00 94
  • Netherlands: +31(0)20 721 8903
  • United Kingdom: +44(0)207 984 7568
  • USA: +1 719 457 0820

Replay Passcode: 6217261

 

Investor relations

 
 

Press
Marie-Agnes de Peslouan +33 1 41 56 56 00
Head of Investor Relations 
Tel : +33 1 49 89 52 59

Email: madepeslouan@airfranceklm.com
 

 
   
Dirk Voermans

Senior manager, Investor Relations

Tel : +33 1 49 89 52 60

Email: divoermans@airfranceklm.com
 


 

INCOME STATEMENT

 

    Third Quarter 9 months to 30 September
  In millions euros 2016 2015* Change 2016 2015* Change
               
SALES 6,938 7,306 -5.0% 18,758 19,447 -3.5%
Other revenues10NA11NA
EXTERNAL EXPENSES -3,778-4,067-7.1%-10,797-11,942-9.6%
Aircraft fuel-1,244-1,679-25.9%-3,507-4,820-27.2%
Chartering costs-109-1080.9%-324-325-0.3%
Landing fees and en route charges-523-537-2.6%-1,437-1,478-2.8%
Catering-121-127-4.7%-336-350-4.0%
Handling charges and other operating costs-446-4069.9%-1,196-1,1474.3%
Aircraft maintenance costs-601-49720.9%-1,847-1,65711.5%
Commercial and distribution costs-227-238-4.6%-690-703-1.8%
Other external expenses-507-4756.7%-1,460-1,462-0.1%
Salaries and related costs-1,837-1,838-0.1%-5,543-5,582-0.7%
Taxes other than income taxes-37-38-2.6%-125-1204.2%
Other income and expenses132218-39.4%647813-20.4%
EBITDAR 1,419 1,581 -10.2% 2,941 2,617 12.4%
Aircraft operating lease costs-270-2575.1%-798-7624.7%
EBITDA 1,149 1,323 -13.2% 2,143 1,855 15.5%
Amortization, depreciation and provisions-412-443-7.0%-1,188-1,212-2.0%
INCOME FROM CURRENT OPERATIONS 737 880 -16.3% 955 643 48.5%
Sales of aircraft equipment80NA16-5NA
Other non-current income and expenses0-1NA-10788NA
INCOME FROM OPERATING ACTIVITIES 745 880 -15.3% 864 726 19.0%
Income from cash and cash equivalents1117-35.3%3947-17.0%
Cost of financial debt-75-93-19.4%-237-291-18.6%
Net cost of financial debt -64-76-15.8%-198-244-18.9%
Foreign exchange gains (losses), net-12-7483.8%-131-31958.9%
Change in fair value of financial assets and liabilities-7-12994.6%51-225NA
Other financial income and expenses-15-21-28.6%2-66NA
INCOME BEFORE TAX 647 580 11.6% 588 -128 NA
Income taxes-113-9025.6%-166-5NA
NET INCOME OF CONSOLIDATED COMPANIES 534 490 9.0% 422 -133 NA
Share of profits (losses) of associates2-19NA3-37NA
INCOME FROM CONTINUING OPERATIONS 536 471 13.8% 425 -170 NA
Net income from discontinued operations1213-7.7%1417-17.6%
NET INCOME FOR THE PERIOD 548 484 13.2% 439 -153 NA
Minority interest-4-40.0%-9-5-80.0%
NET INCOME FOR THE PERIOD - GROUP 544 481 13.3% 430 -158 NA

 

*  Servair reclassified as discontinued operation


 

BALANCE SHEET

 

Assets
In million euros
September 30,

2016
December 31, 2015*
Goodwill217247
Intangible assets1,0371,018
Flight equipment9,2148,743
Other property, plant and equipment1,4851,670
Investments in equity associates78118
Pension assets6921,773
Other financial assets1,2731,224
Deferred tax assets742702
Other non-current assets327295
Total non-current assets 15,065 15,790
Assets held for sale3924
Other short-term financial assets83967
Inventories595532
Trade receivables1,9501,800
Other current assets9731,138
Cash and cash equivalents3,5673,104
Total current assets 7,560 7,545
Total assets 22,625 23,335

*  Servair reclassified as discontinued operation

 

Liabilities and equity
In million euros
September 30,

2016
December 31, 2015*
Issued capital300300
Additional paid-in capital2,9712,971
Treasury shares-83-85
Perpetual600600
Reserves and retained earnings-4,062-3,561
Equity attributable to equity holders of Air France-KLM -274 225
Non-controlling interests4448
Total Equity -230 273
Pension provisions2,8721,995
Other provisions1,4901,513
Long-term debt6,8457,060
Deferred tax liabilities811
Other non-current liabilities282484
Total non-current liabilities 11,497 11,063
Liabilities relating to assets held for sale254-
Provisions719742
Current portion of long-term debt1,6802,017
Trade payables2,3562,395
Deferred revenue on ticket sales2,7022,515
Frequent flyer programs798760
Other current liabilities2,8433,567
Bank overdrafts63
Total current liabilities 11,358 11,999
Total equity and liabilities 22,625 23,335

*  Servair reclassified as discontinued operation

 


 

CONSOLIDATED STATEMENT OF CASH FLOWS

 

In € millions

Period from January 1 to September 30,
9M 2016 9M 2015*
Net income from continuing operations425-170
Net income from discontinued operations1417
Amortization, depreciation and operating provisions1,1941,230
Financial provisions-765
Loss (gain) on disposals of tangible and intangible assets-694
Loss (gain)on disposals of subsidiaries and associates-10-224
Derivatives - non monetary result-131158
Unrealized foreign exchange gains and losses, net121268
Share of (profits) losses of associates-133
Deferred taxes141-19
Impairment20
Other non-monetary items1230
Subtotal 1,691 1,392
Of which discontinued operations 29 30
(Increase) / decrease in inventories-108-29
(Increase) / decrease in trade receivables-198-240
Increase / (decrease) in trade payables543
Change in other receivables and payables297521
Change in working capital from discontinued operations -10-1
Net cash flow from operating activities 1,726 1,646
Acquisition of subsidiaries, of shares in non-controlled entities-7-6
Purchase of property plants, equipments and intangible assets-1,595-1,166
Proceeds on disposal of subsidiaries, of shares in non-controlled entities4342
Proceeds on disposal of property, plant and equipment and intangible assets13871
Dividends received41
Decrease (increase) in net investments, more than 3 months798-205
Net cash flow used in investing activities of discontinued operations -11 -7
Net cash flow used in investing activities -669 -970
Perpetual0599
Issuance of debt686908
Repayment on debt-792-1,377
Payment of debt resulting from finance lease liabilities-387-540
New loans-83-51
Repayment on loans32122
Dividends and coupons on perpetual paid-1-1
Net cash flow used in financing activities of discontinued operations -10 5
Net cash flow from financing activities -555 -335
Effect of exchange rate on cash and cash equivalents and bank overdrafts-16-52
Effect of exch. rate on cash and cash eq. and bank overdrafts of disc. ops. -1 -5
Change in cash and cash equivalents and bank overdrafts 485 284
Cash and cash equivalents and bank overdrafts at beginning of period3,0732,902
Cash and cash equivalents and bank overdrafts at end of period3,5613,164
Change in cash of discontinued operations -3 22

*  Servair reclassified as discontinued operation

 


KEY FINANCIAL INDICATORS

EBITDA and EBITDAR

In million euros Q3 2016 Q3 2015* 9M 2016 9M 2015*
Income/(loss) from current operations737880955643
Amortization, depreciation and provisions4124431,1881,212
EBITDA 1,1491,3232,1431,855
Aircraft operating lease costs270257798762
EBITDAR 1,4191,5812,9412,617

*  Servair reclassified as discontinued operation

Restated net result, group share

In million euros Q3 2016 Q3 2015* 9M 2016 9M 2015*
Net income/(loss), Group share (in €m)544481430-158
Net income/(loss) from discontinued operations (in €m)-12-13-14-17
Unrealized foreign exchange gains and losses, net (in €m)-131121268
Change in fair value of financial assets and liabilities (derivatives) (in €m)-2107-131158
Non-current income and expenses (in €m)-8191-83
Depreciation of shares available for sale (in €m)06013
De-recognition of deferred tax assets (in €m)0000
Restated net income/(loss), group share (in €m) 521 612 497 181
Restated net income/(loss) per share (in €)1.742.111.620.62

*  Servair reclassified as discontinued operation

Return on capital employed (ROCE)

In million euros 30 Sep. 201630 Sep. 2015*30 Sep. 2015*30 Sep. 2014
Goodwill and intangible assets1,2541,2731,2731,241
Flight equipment9,2148,7738,7739,122
Other property, plant and equipment1,4851,7021,7021,752
Investments in equity associates78115115161
Financial assets excluding shares available for sale, marketable securities and financial deposits198216216134
Provisions, excluding pension, cargo litigation and restructuring-1,557-1,572-1,572-1,205
WCR, excluding market value of derivatives-5,195-5,345-5,345-5,221
Capital employed before operating leases 5,477 5,162 5,162 5,984
Operating leases x77,4416,923
Average capital employed (A) 12,761 12,496
Adjusted results from current operations1,454897
- Dividends received-2-1
- Share of profits (losses) of associates5-61
- Tax recognized in the adjusted net result-19148
Adjusted result from current operations after tax (B) 1,266 883
ROCE, trailing 12 months (B/A) 9.9% 7.1%

*  Servair reclassified as discontinued operation


 

Net debt

Balance sheet at

(In million euros)
30 September 
2016
31 December  2015*
Current and non-current financial debt8,5259,077
Deposits on aircraft under finance lease-331-453
Financial assets pledged (OCEANE swap)0-393
Currency hedge on financial debt-36-40
Accrued interest-90-95
Gross financial debt (A) 8,068 8,096
Cash and cash equivalents3,5673,104
Marketable securities70466
Cash pledges1518
Deposits (bonds)270204
Bank overdrafts-6(3)
Other-110
Net cash (B) 3,905 3,789
Net debt (A) - (B) 4,163 4,307

*  Servair reclassified as discontinued operation

Adjusted net debt and adjusted net debt/EBITDAR ratio

  30 September
2016
31 December  2015*
Net debt (in €m)4,1634,307
Aircraft operating leases x 7 (trailing 12 months, in €m)7,4417,189
Adjusted net debt (in €m) 11,604 11,496
EBITDAR (trailing 12 months, in €m)3,7403,413
Adjusted net debt/EBITDAR ratio, excluding strike (trailing 12 months) 3.1x 3.4 x

*  Servair reclassified as discontinued operation

 

Operating free cash flow

In million euros 9M 2016 9M 2015*
Net cash flow from operating activities, continued operations1,7071,617
Investment in property, plant, equipment and intangible assets-1,595-1,166
Proceeds on disposal of property, plant, equipment and intangible assets13871
Operating free cash flow 250 522

*  Servair reclassified as discontinued operation


 

Unit cost: net cost per EASK

  Q3 2016 Q3 2015* 9M 2016 9M 2015*
Revenues (in €m)6,9387,30818,75819,447
Income/(loss) from current operations  (in €m)737880955643
Total operating expense (in €m)-6,201-6,428-17,803-18,804
Passenger network business - other revenues (in €m)**227223633638
Cargo business - other revenues (in €m)4038119117
Third-party revenues in the maintenance business (in €m)4823731,3481,148
Transavia - other revenues (in €m)04811
Third-party revenues of other businesses (in €m)9153136
Net cost  (in €m) 5,443 5,775 15,664 16,854
Capacity produced, reported in EASK94,08193,174257,760256,354
Net cost per EASK (in € cents per EASK)   5.79    6.20    6.08    6.58 
Gross change  -6.7% -7.6%
Currency effect on net costs (in €m) 23 129
Change at constant currency  -7.1% -8.3%
Fuel price effect (in €m) -399 -1,257
Change on a constant currency and fuel price basis  -0.3% -1.0%
Change in pension-related expenses (in €m)*** 3 8
Net cost per EASK on a constant currency, fuel price and pension-related expenses basis (in € cents per EASK)   5.79    5.80    6.08    6.14 
Change on a constant currency, fuel price and pension-related expenses basis   -0.2%   -0.9%

*  Servair reclassified as discontinued operation

INDIVIDUAL AIRLINE RESULTS

 

Air France

  Q3 2016 Q3 2015* Change 9M 2016 9M 2015* Change
Revenue (€m)4,2024,516-7.0%11,57812,147-4.7%
EBITDA (€m)589754-1651,1211,100+21
Operating result (€m)311458-147326324+2
Operating margin 7.4%10.1%-2.7 pt2.8%2.7%+0.1 pt
Operating cash flow before WCR and restructuring cash out (€m)520722-2021,035989+46
Operating cash flow (before WCR and restructuring) margin 12.4%16.0%-3.6 pt8.9%8.1%+0.8 pt

*  Servair reclassified as discontinued operation

 

KLM

  Q3 2016 Q3 2015 Change 9M 2016 9M 2015 Change
Revenue (€m)2,8262,870-1.5%7,4307,527-1.3%
EBITDA (€m)553564-111,012742+270
Operating result (€m)422424-2629345+284
Operating margin 14.9%14.8%+0.2 pt8.5%4.6%+3.9 pt
Operating cash flow before WCR and restructuring cash out (€m)504515-11888617+271
Operating cash flow (before WCR and restructuring) margin 17.8%17.9%-0.1 pt12.0%8.2%+3.8 pt

NB: Sum of individual airline results does not add up to Air France-KLM total due to intercompany eliminations at Group level.

.

 


 

Presentation of Servair Group as discontinued operation

 

The Group studied various scenarios to ensure the development of its subsidiary Servair and opted for the participation of another company in the share capital of Servair. In March 2016, both Servair and Air France informed the representative bodies of their employees about this process. Taken into consideration the offers received by Air France, this should lead to a loss of control of Servair by Air France-KLM Group, as defined in IFRS 10 standard. Servair currently constitutes the main cash-generating unit of the segment "Other".  The above elements have triggered the accounting treatment of the Servair Group in "discontinued operations" as of March 31, 2016, as defined in IFRS 5 standard. The consolidated figures as at March 31, 2015 have consequently been restated for the purpose of comparison.

During the First Half 2016, the third party revenues amounted to 195 million euros, resulting in a reported EBITDA of 15 million euros and an operating proft of 10 million euros.

In the context of this operation, the assets and liabilities of the Servair Group have been reclassified on the lines assets held for sale  and liabilities relating to assets held for sale , for respectively €380 million and €253 million as of June 30, 2016.

    Full Year 2015 - Servair
  In millions euros Q1 Q2 Q3 Q4 Total
             
THIRD PARTY REVENUES 74 85 109 102 370
Other revenues00000
EXTERNAL EXPENSES 27 27 18 14 86
Catering-39-46-57-51-193
Other external expenses66737565279
Salaries and related costs-91-99-100-98-388
Taxes other than income taxes-5-2-3-2-12
Other income and expenses2125
EBITDAR 5 13 25 18 61
Aircraft operating lease costs00000
EBITDA 5 13 25 18 61
Amortization, depreciation and provisions-5-7-6-7-25
INCOME FROM CURRENT OPERATIONS 0 6 19 11 36
Other non-current income and expenses000-1-1
INCOME FROM OPERATING ACTIVITIES 0 6 19 10 35
Income from cash and cash equivalents00011
Cost of financial debt000-1-1
Net cost of financial debt 0 0 0 0 0
Other financial income and expenses0-1-11-1
INCOME BEFORE TAX 0 5 18 11 34
Income taxes0-3-6-4-13
NET INCOME OF CONSOLIDATED COMPANIES 0 2 12 7 21
Share of profits (losses) of associates21115
INCOME FROM CONTINUING OPERATIONS 2 3 13 8 26
Net income from discontinued operations00000
NET INCOME FOR THE PERIOD 2 3 13 8 26
Minority interest-2-2-2-2-8
NET INCOME FOR THE PERIOD - GROUP 0 1 11 6 18

GROUP FLEET AT 30 SEPTEMBER 2016

Aircraft type AF

(incl. HOP!)
KL

(incl. KLC & Martinair)
TransaviaOwned Finance
lease
Operating

lease
Total In operationChange /  31/12/15
B747-400 20 18 2 20 19-6
B777-3004312 92521 55 555
B777-2002515 191011 40 40 
B787-9 8  17 8 86
A380-80010  145 10 10 
A340-30012  552 12 11-1
A330-300 5   5 5 5 
A330-200158 4712 23 23-2
Total Long-Haul 105 68 0 56 52 65 173 171 2
B737-900 5 113 5 5 
B737-800 25558963 80 8010
B737-700 1883815 26 26 
A32120  569 20 20 
A32043  5335 43 43 
A31938  19613 38 38 
A31818  117  18 183
Total Short and Medium-Haul 119 48 63 52 40 138 230 230 13
ATR72-6005    5 5 5 
ATR72-5005  131 5 5-1
ATR42-50012  534 12 12-1
Canadair Jet 100014  14   14 14 
Canadair Jet 70011  11   11 11-2
Canadair Jet 1003  3   3   
Embraer 1901030 41521 40 40 
Embraer 175 3 3   3 33
Embraer 17015  825 15 15-1
Embraer 14518  135  18 16 
Embraer 1354  4   4   
Fokker 70 15 15   15 13-3
Total Regional 97 48 0 81 28 36 145 134 -5
B747-400ERF 3 3   3 3 
B747-400BCF 3 2 1 3 1 
B777-F2  2   2 2 
MD-11-CF          -1
MD-11-F          -2
Total Cargo 2 6 0 7 0 1 8 6 -3
          
Total Air France-KLM 323 170 63 196 120 240 556 541 7

 



[1] Like-for-like: excluding currency. Same definition applies in rest of press release

[2] See definition in appendix

[3] 2016 average Brent price of USD 45, average jet fuel market price of USD 427 per ton, average exchange rate of 1.10 USD per euro for Q4 (October-December) 2016.

[4] . 2017 average Brent price of USD 56, average jet fuel market price of USD 519 per ton, average exchange rate of 1.10 USD per euro.

[5] Air France, KLM and HOP!. Transavia is reported in its own business segment.

Air France-KLM Q3 2016 EN



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The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: AIR FRANCE - KLM via GlobeNewswire

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