Activity impacted by crises in Japan, the Middle East and Africa. Stable unit revenues.
Revenues up by 8.7%. Reduction in unit cost (on a constant currency and fuel price basis). Reduction in long-haul capacity growth for Winter 2011 to 2.7%
Paris/ Amstelveen - The Board of Directors of Air France-KLM, presided by Jean-Cyril Spinetta, met on 27th July 2011 to examine the accounts for the quarter April-June 2011.The operating result stood at -145 million euros (-132 million euros at 30th June 2010) after a 16% rise in the fuel bill (+232 million euros) and a loss estimated at 100 million euros resulting from the political events in Africa and the Middle East, as well as the nuclear crisis in Japan.
Free translation into English for convenience only - French version prevails
FINANCIAL YEAR 2011
QUARTER APRIL-JUNE 2011
Activity impacted by crises in Japan, the Middle East and Africa Stable unit revenues Revenues up by 8.7% Reduction in unit cost (on a constant currency and fuel price basis) Reduction in long-haul capacity growth for Winter 2011 to 2.7%
The Board of Directors of Air France-KLM, presided by Jean-Cyril Spinetta, met on 27th July 2011 to examine the accounts for the quarter April-June 2011.
The operating result stood at -145 million euros (-132 million euros at 30th June 2010) after a 16% rise in the fuel bill (+232 million euros) and a loss estimated at 100 million euros resulting from the political events in Africa and the Middle East, as well as the nuclear crisis in Japan. .
Key Data
Quarter to 30th June In millions of euros, except earnings per share (in euros) 2011 2010 Change Revenues 6,220 5,721 +8.7% EBITDAR1 503 484 +3.9% Operating result (145) (132) nm Adjusted operating result2 (73) (64) nm Net result, group share (197) 736 nm Adjusted net result, group share3 (212) (252) nm Earnings per share (0.67) 2.50 nm Diluted earnings per share (0.67) 2.00 nm
Activity
Important markets still affected by the various geopolitical crises Activity over the quarter, and particularly in June, was strongly affected by the difficult situation in some important markets for the group.
The passenger business saw a 9.4% rise in traffic with capacity up by 10.1% (+5.2% adjusted for the airspace closure in April 2010). The load factor declined by 0.5 points to 81.1%. Unit revenue per available seat kilometre (RASK) was stable but increased by 0.8% excluding currency. Passenger revenues rose by 9.9% to 4.80 billion euros, after a negative currency effect of 0.9%. The operating result stood at -140 million euros (-142 million euros a year earlier).
The cargo business was impacted by the crisis in Japan as well as a situation of overcapacity on China departures. Traffic rose by 1.9% with capacity up by 6.2% (+2.9% adjusted for airspace closure in April 2010), leading to a 2.8 point decline in load factor to 66.7%. Unit revenue per available tonne kilometer (RATK) declined by 2.7% but increased by 0.6% excluding currency. Revenues amounted to 799 million euros (+3.2%) while the operating result was -14 million euros, (versus +11 million euros at 30th June 2010).
1 Before amortisation, provisions and operating leases 2 Adjusted for the portion of operating leases corresponding to financial charges (34%) 3 See definition in the Reference Document 2010-11, page 133. Reconciliation table available in the results presentation 2/9 Revenues of the Maintenance business rose by 7.4% to 262 million euros. The operating result stood at 23 million euros, up 15% versus 30th June 2010. The engines and components activities continued to perform well over the quarter.
Total revenues amounted to 6.22 billion euros, up by 8.7% after a negative currency effect of 1.2%.
Well controlled unit costs Operating costs rose 8.7% and by 6.2% excluding fuel. Over the quarter, the group realised 129 million euros in savings in the context of the ‘Challenge 12’ programme, the annual objective of which has been revised up from 470 million euros to 500 million euros. In equivalent available seat kilometres (EASK), unit costs were stable, and declined by 3.0% at constant fuel prices and exchange rates, for production in EASK up by 8.8%.
The fuel bill rose by 232 million euros to 1.67 billion euros (+16%) under the combined effect of a 7% rise in volume, a favourable currency effect of 8% and a rise in fuel prices after hedging of 19%. Employee costs stood at 1.93 billion euros, up by 3.5%, of which a third linked to the payment of an exceptional bonus.
The operating result amounted to -145 million euros (-132 million euros at 30th June 2010). The adjusted operating result stood at -73 millions euros. Net interest costs declined from 96 million euros at 30th June 2010 to 87 million euros at 30th June 2011. The currency result included in the item ‘Other financial income and costs’ remained negative at -33 million euros (-100 million euros a year earlier).
Net result, group share stood at -197 million euros (versus 736 million euros a year earlier, which included the capital gain of 1.03 billion euros realised on Amadeus). The net result adjusted for non-recurring items was -212 million euros versus -252 million euros a year earlier. Earnings per share and diluted earnings per share stood at -0.67 euros (2.5 euros and 2.0 euros respectively at 30th June 2010).
Operating cash flow of 345 million euros
Investments net of disposals amounted to 436 million euros at 30th June 2011 (475 million euros in the equivalent quarter 2010-11). Operating cash flow was 345 million euros. At 30th June 2011, Air France-KLM had cash of 3.9 billion euros and renewed credit lines of 1.85 billion euros of which 1.6 billion euros renewed for 5 years in 2011 at Air France and at KLM.
Shareholders’ funds declined by 312 million euros versus 31st March 2011 to 6.91 billion mainly reflecting the negative net result. Net debt stood at 6.04 billion euros (5.89 billion euros at 31st March 2011). The gearing ratio was 0.92 (0.85 at 31st March 2011).
Outlook
The operating environment remains uncertain due to the situation in Japan, Africa and the Middle-East and the Eurozone crisis. Moreover, fuel prices are still at high levels and the euro remains volatile. For the upcoming Winter season, the group has decided to reduce long-haul capacity growth (including the Martinair passenger activity) from 5.1% to 2.7% (-2.4 points). In this context, the group continues to target a positive operating result for the calendar year 2011.
3/9 Information by business
Passenger
Quarter to 30th June
2011 2010 Change Traffic (RPK millions) 53,931 49,282 +9.4% Capacity (ASK millions) 66,531 60,435 +10.1% Load factor 81.1% 81.5% -0.5 pts Total passenger revenues (€m) 4,802 4,368 +9.9% Revenues from scheduled passenger business (€m) 4,586 4,164 +10.1% Unit revenue per RPK (€cts) 8.50 8.45 +0.6% Unit revenue per RPK ex currency (€cts) - - +1.5% Unit revenue per ASK (€cts) 6.89 6.90 -0.1% Unit revenue per ASK ex currency (€cts) - - +0.8% Unit cost per ASK (€cts) 7.02 7.04 -0.3% Unit cost per ASK at constant currency and fuel price (€cts) - - -2.8% Operating income (€m) (140) (142) nm
Cargo
Quarter to 30th June
2011 2010 Change Traffic (RTK millions) 2,865 2,812 +1.9% Capacity (ATK millions) 4,293 4,041 +6.2% Load factor 66.7% 69.6% -2.8 pts Total cargo business revenues (€m) 799 774 +3.2% Revenues from scheduled cargo business (€m) 759 734 +3.4% Unit revenue per RTK (€cts) 26.47 26.09 +1.5% Unit revenue per RTK ex currency (€cts) - - +4.8% Unit revenue per ATK (€cts) 17.67 18.15 -2.7% Unit revenue per ATK ex currency (€cts) - - +0.6% Unit cost per ATK (€cts) 17.73 17.62 +0.6% Unit cost per ATK on constant currency and fuel price (€cts) - - -3.5% Operating income (€m) (14) 11 nm
Maintenance
Total maintenance revenues rose amounted to 785 million euros (+6%) of which 262 million euros with third parties (+7.4%). The operating result was up 15% to 23 million euros. High value added activities, notably engines and components, continued to perform well.
Other businesses
Other businesses comprise mainly the leisure activities of Transavia and the catering business of Servair. They realised revenues of 357 million euros against 335 million euros a year earlier. The operating result stood at -14 million euros (-21 million euros at 30th June 2010). The leisure business was affected by the uprisings in Tunisia and Egypt, but still generated a 5.8% increase in revenues to 255 million euros and an operating result of -11 million euros versus -20 million euros the previous year.
Catering generated third party revenues of 84 million euros (76million euros at 30th June 2010). The operating income stood at 2.4 million euros (-1.8 million euros the previous year).
4/9 Additional information
The Quarter April-June 2011 accounts are not audited by the Statutory Auditors.
Practical information
Conference call on 28th July 2011 at 15.30h CET To connect, dial: . from France : 01 70 99 32 08 . from the rest of the world : +44 (0)20 7162 0025 Password: AKH
The results presentation will be available on www.airfranceklm-finance.com.
5/9 INCOME STATEMENTS (unaudited)
April to June In euros millions 2011 2010 Variation
SALES 6,220 5,721 8.7% Other revenues 21 - nm EXTERNAL EXPENSES -3,959 -3,609 9.7% Aircraft fuel -1,673 -1,441 16.1% Chartering costs -144 -118 22.0% Aircraft operating lease costs -211 -201 5.0% Landing fees and en route charges -463 -426 8.7% Catering -144 -135 6.7% Handling charges and other operating costs -333 -322 3.4% Aircraft maintenance costs -290 -285 1.8% Commercial and distribution costs -234 -239 -2.1% Other external expenses -467 -442 5.7% Salaries and related costs -1,932 -1,867 3.5% Taxes other than income taxes -50 -45 11.1% Amortization and depreciation -406 -399 1.8% Provisions -31 -16 nm Other income and expenses -8 83 nm INCOME FROM CURRENT OPERATIONS -145 -132 -9.8% Sales of aircraft equipment - 11 nm Sales of subsidiaries - - - Other non-current income and expenses 2 999 nm INCOME FROM OPERATING ACTIVITIES -143 878 nm Income from cash and cash equivalents 26 23 13.0% Cost of financial debt -113 -119 -5.0% Net cost of financial debt -87 -96 -9.4% Foreign exchange gains (losses), net -33 -100 nm Change in fair value of financial assets and liabilities 5 -18 nm Other financial income and expenses -1 5 nm INCOME BEFORE TAX -259 669 nm Income taxes 81 93 12.9% NET INCOME OF CONSOLIDATED COMPANIES -178 762 nm Share of profits (losses) of associates -18 -31 41.9% INCOME FROM CONTINUING OPERATIONS -196 731 nm Net income from discontinued operations - - - NET INCOME FOR THE PERIOD -196 731 nm Minority interest -1 5 nm NET INCOME FOR THE PERIOD - GROUP -197 736 nm 6/9 CONSOLIDATED BALANCE SHEET (unaudited)
April to June in € millions Assets 2011 2010 Goodwill 420 422 Intangible assets 716 695 Flight equipment 11,069 11,040 Other property, plant and equipment 2,077 2,111 Investments in equity associates 411 422 Pension assets 3,069 2,995 Other financial assets (including €557 million of deposits related to financial leases and €70 million of investments over one year as of June 30, 2011, compared to €503 million of deposits related to financial leases as of March 31, 2011) 1,845 1,654 Deferred tax assets 1,048 933 Other non-current assets 149 156 Total non current assets 20,804 20,428 Assets held for sale 21 21 Other short term financial assets (including €130 million of deposits related to financial leases and €534 million of investments between 3 months and 1 year as of June 30, 2011,compared respectively to €149 million and €574 million as of March 31, 2011)
730 751 Inventories 593 558 Trade accounts receivable 2,172 1,938 Income tax receivables 4 6 Other current assets 1,248 1,550 Cash and cash equivalents 3,151 3,717 Total current assets 7,919 8,541 Total assets 28,723 28,969
April to June in € millions Liabilities and equity 2011 2010 Issued capital 300 300 Additional paid-in capital 2,971 2,971 Treasury shares (90) (94) Reserves and retained earnings 3,362 3,675 Equity attributable to equity holders of Air France-KLM 6,543 6,852 Non-controlling interests 51 54 Total Equity 6,594 6,906 Provisions and retirement benefits 1,955 1,930 Long-term debt 8,779 8,980 Deferred tax 463 511 Other non-current liabilities 265 272 Total non-current liabilities 11,462 11,693 Provisions 258 287 Current portion of long-term debt 1,703 1,808 Trade accounts payable 2,357 2,211 Deferred revenue on ticket sales 2,846 2,440 Frequent flyer programs 789 806 Current tax liabilities 4 3 Other current liabilities 2,610 2,686 Bank overdrafts 100 129 Total current liabilities 10,667 10,370 Total liabilities 22,129 22,063 Total liabilities and equity 28,723 28,969
7/9 CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
In € millions Period from April 1 to June 30, 2011 2010 Net income for the period – Equity holders for Air France-KLM (197) 736 Non-controlling interests 1 (5) Amortization, depreciation and operating provisions 437 415 Financial provisions 2 (4) Gain on disposals of tangible and intangible assets (3) (11) Gain on Amadeus operation - (1,030) Derivatives – non monetary result (22) (5) Unrealized foreign exchange gains and losses, net 27 113 Share of (profits) losses of associates 18 31 Deferred taxes (90) (100) Other non-monetary items (106) (52) Subtotal 67 88 (Increase) / decrease in inventories (40) (16) (Increase) / decrease in trade receivables (228) (226) Increase / (decrease) in trade payables 130 190 Change in other receivables and payables 416 534 Net cash flow from operating activities 345 570 Acquisitions of subsidiaries and investments in associates, net of cash acquired - - Purchase of property, plant and equipment and intangible assets (913) (636) Proceeds on Amadeus transaction - 193 Proceeds on disposal of property, plant and equipment and intangible assets 477 161 Dividends received - - Decrease (increase) in investments, net between 3 months and 1 year (69) (30) Net cash used in investing activities (505) (312) Purchase of non-controlling interests, of shares in non-controlled entities (7) (3) Disposal of subsidiaries without control loss, of shares in non-controlled entities 3 - Issuance of long-term debt 408 245 Repayments on long-term debt (666) (93) Payment of debt resulting from finance lease liabilities (139) (77) New loans (26) (17) Repayments on loans 59 28 Dividends paid (1) - Net cash flow from financing activities (369) 83 Effect of exchange rate on cash and cash equivalents and bank overdrafts (8) 13 Change in cash and cash equivalents and bank overdrafts (537) 354 Cash and cash equivalents and bank overdrafts at beginning of period 3,588 3,635 Cash and cash equivalents and bank overdrafts at end of period 3,051 3,989
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