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AIR FRANCE-KLM: THIRD QUARTER 2020 RESULTS

AIR FRANCE - KLM
·38-min read

30 October 2020

THIRD QUARTER 2020

Increase of demand until mid-August,
then new governmental restrictions impacted the expected level of demand recovery

The continuation of the Covid-19 crisis severely impacted the Third quarter 2020 results:

  • Revenue at 2,524 million euros, down 67% compared to last year

  • EBITDA loss at -442 million euros, limited thanks to cost control and state aid

  • Operating result at –1,046 million euros, down 1,955 million euros compared to last year

  • Net income at -1,665 million euros, including restructuring provision at -565 million euros, Covid-19 related over-hedging at -39 million euros and fleet impairment at -31 million euros

  • Net debt at 9,308 million euros, up 3,161 million compared to end of 2019

  • At 30 September 2020, the Group has 12.4 billion euros of liquidity or credit lines at disposal

Air France and KLM have agreed with labour representatives on substantial restructuring plans and submitted them for final validation to the French and Dutch states.

OUTLOOK
Air France-KLM Group continues to implement the highest safety standards for its customers and employees to counter virus transmission risks.

After the lockdown, the Group observed a positive demand recovery trend until mid-August. Then, the negative trend reversal for the Passenger activity led the airlines of the Group to adjust downwards the capacity planned for the fall and winter period.

There is limited visibility on the demand recovery curve as customer booking behavior is much more short-term oriented and also highly dependent on the imposed travel restrictions, especially on the Long Haul network. The period of lockdown starting today in France is a new difficulty that will weigh on the Group's activities.
In this context the Group expects:

  • Capacity in Available Seat kilometers circa index 45 for KLM and inferior to index 35 for Air France in the Fourth quarter 2020 compared to 2019 for the Network passenger activity

  • Negative load factor developments for the Fourth quarter 2020, particularly on the long-haul network, and negative yield mix effects due to a delayed recovery in business traffic

The Group anticipates a challenging fourth quarter 2020, with a substantial lower EBITDA compared to Q3 2020.

Air France-KLM Group

Third quarter

Nine months

2020

Change

2020

Change

Passengers (thousands)

8,796

-69.8%

28,124

-64.7%

Passenger Unit revenue per ASK1 (€ cts)

4.01

-42.7%

5.05

-24.5%

Operating result (€m)

-1,046

-1,955

-3,414

-4,460

Net income – Group part (€m)

-1,665

-2,026

-6,078

-6,213

Adj. operating free cash flow (€m)

-1,220

-985

-3,547

-3,663

Net debt at end of period (€m)

9,308

3,161

The Board of Directors of Air France-KLM, chaired by Anne-Marie Couderc, met on 29 October 2020 to approve the financial statements for the nine months 2020. Group CEO Mr. Benjamin Smith said:

“After a promising recovery during the summer, the gradual closure of international borders in the second half of August and the resurgence of the pandemic strongly impacted our results in the Third Quarter, with the Group reporting an operating loss of 1.0 billion euros. We have accelerated the implementation of cost reduction and cash preservation measures. We are also working closely with our partners on various means, such as rapid detection tests, that would allow traffic within the best sanitary conditions for our customers and employees.
Beyond these immediate necessary measures, we are engaged in a more profound transformation of our Group, with the objective of exiting this crisis in a stronger position, ready to address the future challenges of our industry. Air transport will continue to connect people and cultures, but we foresee changes in customers’ expectations that we anticipate too.
We expect a challenging Fourth quarter 2020, with current forward booking sharply down compared to last year.”

Business review

Network: With active management of capacity to meet the increasing demand, the Group was able to ramp up capacity with incremental cash positive flights

Network

Third quarter

Nine months

2020

Change

Change
constant currency

2020

Change

Change
constant currency

Total revenues (€m)

2,004

-68.6%

-68.3%

7,220

-58.8%

-58.8%

Scheduled revenues (€m)

1,856

-69.8%

-69.4%

6,753

-59.7%

-59.7%

Operating result (€m)

-990

-1,649

-1,631

-2,842

-3,555

-3,564

Third quarter 2020 revenues decreased by 68.3% at constant currency to 2,004 million euros. The operating result amounted to -990 million euros, a -1,631 million euros decrease at constant currency compared to last year. Measures were strengthened to preserve cash, including reduction of investments, cost savings measures, deferral of supplier payments and partial activity for employees.

Passenger network: Long-haul suffering from travel restrictions, ability to capture traffic when border controls are less restrictive

Third quarter

Nine months

Passenger network

2020

Change

Change
constant currency

2020

Change

Change
constant currency

Passengers (thousands)

6,782

-71.3%

23,671

-64.3%

Capacity (ASK m)

32,100

-59.6%

103,268

-54.1%

Traffic (RPK m)

13,752

-80.7%

66,861

-66.3%

Load factor

42.8%

-46.9 pt

64.7%

-23.5 pt

Total passenger revenues (€m)

1,329

-77.4%

-77.1%

5,512

-65.4%

-65.4%

Scheduled passenger revenues (€m)

1,265

-77.9%

-77.6%

5,271

-65.7%

-65.7%

Unit revenue per ASK (€ cts)

3.94

-45.2%

-44.5%

5.10

-25.4%

-25.3%

The passenger network activity was, as anticipated strongly reduced, at around 40% of last year’s levels. The tightening of travel restrictions, border closures and absence of corporate travel delayed the expected traffic recovery. July and August were relatively strong in term of traffic compared to a disappointing September affected by restrictive travel measures.

For the third quarter, the unit revenues were down at -44.5% at constant currency compared to last year primarily due to load factors decline on Long Haul operations.
The Group’s strategy was to only operate incremental cash positive flight and several routes were taking advantage of the strong worldwide cargo demand while having few passenger on board.

The visiting friend and relative demand was driving the summer traffic, with the French Domestic, African & Middle East and Caribbean & Indian Ocean as the more resilient with a unit revenue performance between -22% and -27% at constant currency.

The medium-haul performance was mixed during summer, with some leisure destinations such as Italy, Spain, Portugal and Greece benefiting from easing travel restrictions and other strongly affected by quarantine and testing process like UK or Germany.

North Atlantic, South American and Asian networks continued to be strongly affected by the border restrictions in place with an important decline in capacity and passenger traffic during summer.

Cargo: Continued strong performance of cargo due to the gap between industry capacity and demand

Third quarter

Nine months

Cargo business

2020

Change

Change
constant currency

2020

Change

Change
constant currency

Tons (thousands)

220

-20.0%

611

-25.7%

Capacity (ATK m)

2,537

-33.3%

7,309

-32.9%

Traffic (RTK m)

1,735

-17.0%

4,747

-24.2%

Load factor

68.4%

+13.4 pt

65.0%

+7.5 pt

Total Cargo revenues (€m)

676

+31.7%

+34.1%

1,708

+7.1%

+6.9%

Scheduled cargo revenues (€m)

592

+35.7%

+38.0%

1,482

+8.7%

+8.4%

Unit revenue per ATK (€ cts )

23.35

+104.0%

+107.6%

20.28

+62.0%

+61.6%

Global air cargo capacity is at the end of the Third quarter 2020 approximately 15% lower than 2019. Tightening of supply and demand levels increased yields by significant amount over the past months.

September was the fifth consecutive month of gradual air cargo market improvements and Air France-KLM’s Cargo activity continued to strongly perform with a unit revenue at constant currency up 104.0% in the Third quarter 2020. The Cargo capacity of the Group has been down 33.3%, primarily driven by the reduction in belly capacity of passenger aircraft partly offset by the increase of the full freighters’ capacity and mini cargo flights (passenger aircraft with only belly capacity commercialized). The load factors were strongly up 13.4 points for the quarter.

On the demand side, world-wide air freight volumes are down due to Covid-19 crisis but are expected to rebound to 90 to 95% of pre Covid-19 levels in 2021. The supply-demand gap of the past months is foreseen to narrow as industry capacity supply will increase and will depend on the passenger traffic recovery. Air France-KLM is in preparation to transport the future Covid-19 vaccines.

Transavia operating loss in the Third quarter at -13 million euros, impacted by border restrictions reinstatement

Third quarter

Nine months

Transavia

2020

Change

2020

Change

Passengers (thousands)

2,014

-63.3%

4,453

-66.6%

Capacity (ASK m)

6,009

-44.7%

11,178

-57.4%

Traffic (RPK m)

3,869

-61.8%

8,505

-64.9%

Load factor

64.4%

-28.7 pt

76.1%

-16.4 pt

Total passenger revenues (€m)

262

-60.6%

521

-62.9%

Unit revenue per ASK (€ cts)

4.38

-30.2%

4.55

-16.3%

Unit cost per ASK (€ cts)

4.61

-1.3%

6.39

+32.5%

Operating result (€m)

-13

-189

-206

-364

The Third quarter operating result ended 189 million euros lower compared to last year at an operational loss of -13 million euros, as a result of the Covid-19 crisis.

Activity levels were close to 55% of last year’s level, with an unit revenue down -30,2% compared to the Third quarter 2019. Transavia France and Holland were able to capture traffic and fill their planes with reasonable load factors and good yields on several leisure destinations. Spain, Greece, Portugal and Italy routes were the most resilient during the quarter. However, severe travel restrictions from the Netherlands to Spain and Greece in the course of the third quarter, did put pressure on activity levels and loadfactor.

Transavia France will expend its French Domestic operation starting in November 2020 from Paris Orly and provinces airports.
However, the resurgence of Covid-19 and border restrictions have slowed down Transavia in the traffic recovery.

Strict cash preservation measures are still in place including reduction of investments, cost savings measures, deferral of supplier payments and partial activity measures.

Maintenance business operating result for Third quarter 2020 at -46 million euros, impacted by Covid-19

Third quarter

Nine months

Maintenance

2020

Change

Change
constant currency

2020

Change

Change
constant currency

Total revenues (€m)

616

-47.1%

2,255

-34.7%

Third-party revenues (€m)

247

-54.5%

-53.1%

963

-40.7%

-41.6%

Operating result (€m)

-46

-117

-111

-366

-536

-542

Operating margin (%)

-7.4%

-13.5 pt

-13.1 pt

-16.2%

-21.2 pt

-21.3 pt

The Third quarter operating result stood at -46 million euros, a decrease of 117 million euros, highly impacted by the Covid-19 crisis. Revenues declined and were also impacted by the Air France-KLM Group airlines decrease in activity.

During the Third quarter, contracts signature have restarted and will be included in the order book before year end. The Maintenance business is carefully managing agreements with clients on payment terms.

Operating costs have been reduced in the Third quarter 2020 by a reduced maintenance activity level, partial activity pay schemes for employees and other initiated cost savings measures.

The Maintenance order book is assessed to 9.3 billion dollars at 30 September 2020 a decrease of 2.2 billion dollars compared to 31 December 2019, explained by the Covid-19 crisis effects already occurring and expected.
Air France-KLM Group: Decline of 5 billion euros in revenues and 2 billion euros in EBITDA during the third quarter

Third quarter

Nine months

2020

Change

Change
constant currency

2020

Change

Change
constant currency

Capacity (ASK m)

38,109

-57.8%

114,446

-54.4%

Traffic (RPK m)

17,621

-78.4%

75,367

-66.2%

Passenger unit revenue per ASK (€ cts)

4.01

-43.4%

-42.7%

5.05

-24.6%

-24.5%

Group unit revenue per ASK (€ cts)

5.56

-26.5%

-25.6%

6.34

-12.3%

-12.3%

Group unit cost per ASK (€ cts) at constant fuel

8.31

+26.7%

+38.2%

9.33

+36.7%

+40.4%

Revenues (€m)

2,524

-66.8%

-66.4%

8,725

-57.6%

-57.7%

EBITDA (€m)

-442

-2,095

-2,071

-1,282

-4,545

-4,554

Operating result (€m)

-1,046

-1,955

-1,931

-3,414

-4,460

-4,470

Operating margin (%)

-41.4%

-53.4 pt

-53.2 pt

-39.1%

-44.2 pt

-44.2 pt

Net income - Group part (€m)

-1,665

-2,027

-6,078

-6,213

2019 results restated for LLP componentization accounting change and EU passenger compensation reclassification between revenues and external expenses

In the Third quarter 2020, the Air France-KLM Group posted an operating result of -1,046 million euros, down by 1,955 million euros compared to last year.

Net income amounted to -1,665 million euros in the Third quarter 2020, a decrease of 2,027 million euros compared to last year, of which exceptional accounting items due to Covid-19:

  • Restructuring costs provision of-565 million euros with Departure Plan of French Ground staff, contractual termination for Air France flight attendants, complement for contractual termination for Air France pilots, Departure Plan for Air France-KLM International Commercial staff and Departure Plan for HOP!

  • Q4 2020 and Q1 2021 fuel over hedge has been recycled to “Other financial income and expenses” for -39 million euros

  • Fleet impairment on Airbus A380 and the Canadair Jet of HOP! At -31 million euros

Currencies had a negative 92 million euro impact on revenues and a positive 67 million euro effect on costs including currency hedging in the Third quarter of 2020.

Since the beginning of the crisis, Air France, KLM and Transavia proceeded 1.8 billion euros of refunds including 300 million euros of voucher issued.

The Third quarter 2020 unit cost increased by 26.7%, primarily caused by Covid-19 related capacity reductions

Group net employee costs were down 36% in the Third quarter 2020 compared to last year, supported by partial activity implementation at Air France and KLM, release of temporary and hired staff and no profit sharing provisions to be made at both airlines. The average number of FTEs (Full Time Equivalent) in the Third quarter 2020 decreased by 5,500 compared to the Third quarter 2019, including 2,500 temporary contracts.


Net debt up 3.2 billion euros

Third quarter

Nine months

In € million

2020

Change

2020

Change

Cash flow before change in WCR and Voluntary Departure Plans, continuing operations (€m)

-594

-2,115

-1,926

-4,950

Cash out related to Voluntary Departure Plans (€m)

-137

-115

-152

-119

Change in Working Capital Requirement (WCR) (€m)

124

+831

666

+582

Net cash flow from operating activities (€m)

-609

-1,399

-1,412

-4,487

Net investments* (€m)

-362

+418

-1,473

+738

Operating free cash flow (€m)

-970

-981

-2,885

-3,749

Repayment of lease debt

-251

-5

-662

+86

Adjusted operating free cash flow**

-1,220

-985

-3,547

-3,663

* Sum of ‘Purchase of property, plant and equipment and intangible assets’ and ‘Proceeds on disposal of property, plant and equipment and intangible assets’ as presented in the consolidated cash flow statement.

** The “Adjusted operating free cash flow” is operating free cash flow after deducting the repayment of lease debt.

The Group generated adjusted operating free cash flow in the Third quarter 2020 of -1,220 million euros, a decrease of 985 million euros compared to last year, mainly explained by an operating cash flow decline of 1,399 million euros, partly offset by a reduction in net investments of 418 million euros.

Postponement of social charges, taxes and negotiation with suppliers compensated the refunds process and the low inflow of bookings and generated an improvement of +582 million euros in Change in Working Capital Requirement compared to last year.

In € million

30 Sep 2020

31 Dec 2019

Net debt

9,308

6 147

EBITDA trailing 12 months

-417

4 128

Net debt/EBITDA trailing 12 months

-22.3 x

1,5 x

Both airlines results negatively impacted in the Third quarter 2020

Third quarter

Nine months

2020

Change

2020

Change

Air France Group Operating result (€m)

-807

-1,200

-2,401

-2,699

Operating margin (%)

-54.1%

-62.6 pt

-47.4%

-49.8 pt

KLM Group Operating result (€m)

-234

-745

-1,002

-1,736

Operating margin (%)

-20.5%

-36.8 pt

-25.2%

-33.9 pt

OUTLOOK

Air France-KLM Group continues to implement highest safety standards for customers and employees to counter virus transmission risks.

After the lockdown, the Group observed a promising demand recovery trend until mid-August. Then, the negative trend reversal for the Passenger activity led the airlines of the Group to adjust downwards the capacity planned for the fall and winter period.

There is limited visibility on the demand recovery curve as customer booking behavior is much more short-term oriented than before the Covid-19 crisis and also highly dependent of the imposed travel restrictions, especially on the Long Haul network. The period of lockdown starting today in France is a new difficulty that will weigh on the Group's activities.
In this context the Group expects:

  • Capacity in Available Seat kilometers circa index 45 for KLM and inferior to index 35 for Air France in the Fourth quarter 2020 compared to 2019 for the Network passenger activity

  • Negative load factor developments for the Fourth quarter 2020, particularly on long-haul network, and negative yield mix effects due to a delayed recovery in business

The Full year 2020 Network passenger activity will be inferior to index 50 compared to 2019, due to the Covid-19 crisis.

The Group anticipates a challenging fourth quarter 2020, with a substantial lower EBITDA compared to Q3 2020.

At 30 September 2020, the Group has 12.4 billion euros of liquidity or credit lines at disposal.

The Group foresees important liquidity requirements in the Fourth quarter 2020 with:

  • Negative Fourth quarter working capital requirement influenced by deferred payments and substantial lower level of new bookings compared to Q4 2019.

  • Capex spending at 0.6 billion euros, of which half is fleet Capex fully financed. The Group has reduced to 2.1 billion euros his 2020 capex guidance. This is a reduction of -1.5 billion euros compared to the initial 2020 guidance of 3.6 billion euros.

  • The hybrid bond was repaid in October for 0.4 billion euros.

AIR FRANCE AND KLM HAVE AGREED ON SUSBTANTIAL RESTRUCTURING PLAN WITH LABOUR REPRESENTATIVES

The Group’s strategic orientations defined during the 2019 Investor day started to deliver results in 2019 and in early 2020. However, the Covid-19 which began in the first quarter of 2020 around the world is having an unprecedented impact on the industry and the Group has immediately reacted with safety, operational and cash protection measures.

The focus on reducing external expenses and the number of employees were one of the top priorities. Futhermore, the French and the Dutch governments have provided financial packages and the partial activity implemented in France and the “NOW” mechanism in Holland allowed the Group to further reduce labor costs.

To weather the crisis and cope with the new reality, Air France-KLM Group is accelerating its transformation plans and presented a substantial restructuring plan around the competitiveness and sustainability pillars. Negotiations with the trade unions have resulted in several agreements in Air France and KLM.

To better align the fleet with the lower passenger demand, Air France-KLM Group has accelerated the phase-out of the Airbus 380, Airbus 340, Boeing 747, Canadair Jet and Embraer 145 aircraft. These decisions will bring forward cost savings and efficiency gains due to operating fewer aircraft types. The Group does not anticipate to return to the pre-crisis levels of global demand before several years and the short-term recovery expected has been delayed with the resurgence of Covid-19 end of summer.

KLM business model is still both valid and valuable but needs to be reshaped to the new reality. KLM will be smaller, cheaper, more frugal, more agile and more sustainable.
Operating costs will structurally being reduced in 2021 and beyond, with 750 million euros benefits in 2021 coming from labour, fleet, procurements and fuel costs decrease.
KLM's restructuring plan calls for a reduction of 5,000 FTEs end of 2020. The plan submitted to Dutch Government early October complies with state aid conditions.

Air France will enlarge and accelerate its restructuring plan to build a post-crisis successful model on several pillars to restructure the French domestic, optimize external spendings, transform support functions, adapt the opeartions to the new activity, modernize the fleet and regain commercial success.
This will bring 800 million euros structural benefits by 2021 and 1.2 billion euros in total by 2022. Air France’s restructuring plan calls for a reduction of 4,000 FTEs end of 2020 and a total of 8,500 FTEs by 2022. The plan submitted to French Government complies with state aid conditions. The long term partial activity establishement is under discussion with representative unions.

******

The results presentation is available at www.airfranceklm.com on 30 October 2020 from 7:15 am CET.

A conference call hosted by Mr. Smith (CEO) and Mr. Gagey (CFO) will be held on 30 October 2020 at 08.30 CET.

To connect to the conference call, please dial:

France: Local +33 (0)1 70 72 25 50
Netherlands: Local +31 (0) 20 703 8211
UK: Local +44 (0)330 336 9125
US: Local +1 720 543 0214

Confirmation code: 9700330

To listen to the audio-replay of the conference call, please dial:

  • France: Local +33 (0) 1 70 48 00 94

  • Netherlands: Local +31 (0) 20 721 8903

  • UK: Local +44 (0)207 660 0134

  • US: Local +1 719-457-0820

Confirmation code: 9700330

Investor Relations Press
Olivier Gall Wouter van Beek
+33 1 49 89 52 59 +33 1 49 89 52 60 +33 1 41 56 56 00
olgall@airfranceklm.com Wouter-van.Beek@airfranceklm.com


Income Statement

Third quarter

Nine months

€m

2020

2019

Change

2020

2019

Change

Sales

2,524

7,609

-66.8%

8,725

20,572

-57.6%

Other revenues

0

0

nm

0

0

nm

Revenues

2,524

7,609

-66.8%

8,725

20,572

-57.6%

Aircraft fuel

-489

-1,513

-67.7%

-1,886

-4,118

-54.2%

Chartering costs

-68

-138

-50.7%

-181

-407

-55.5%

Landing fees and en route charges

-266

-531

-49.9%

-743

-1,471

-49.5%

Catering

-58

-221

-73.8%

-236

-617

-61.8%

Handling charges and other operating costs

-204

-453

-55.0%

-646

-1,294

-50.1%

Aircraft maintenance costs

-331

-624

-47.0%

-1,243

-1,920

-35.3%

Commercial and distribution costs

-61

-266

-77.1%

-291

-783

-62.8%

Other external expenses

-263

-419

-37.2%

-937

-1,292

-27.5%

Salaries and related costs

-1,293

-2,011

-35.7%

-4,224

-6,031

-30.0%

Taxes other than income taxes

-28

-27

+3.7%

-108

-119

-10.0%

Other income and expenses

95

247

-61.5%

488

742

-34.3%

EBITDA

-442

1,653

nm

-1,282

3,263

nm

Amortization, depreciation and provisions

-604

-744

-18.8%

-2,132

-2,217

-3.8%

Income from current operations

-1,046

909

nm

-3,414

1,046

nm

Sales of aircraft equipment

8

1

+700.0%

31

24

+29.2%

Other non-current income and expenses

-597

-103

+479.9%

-1,452

-133

+992%

Income from operating activities

-1,635

807

nm

-4,835

937

nm

Cost of financial debt

-136

-111

+22.5%

-350

-332

+5.4%

Income from cash and cash equivalent

5

14

-64.3%

18

40

-55.0%

Net cost of financial debt

-131

-97

+35.1%

-332

-292

+13.7%

Other financial income and expenses

111

-259

nm

-621

-391

+58.8%

Income before tax

-1,655

451

nm

-5,788

254

nm

Income taxes

12

-94

nm

-242

-131

+84.7%

Net income of consolidated companies

-1,643

356

nm

-6,030

123

nm

Share of profits (losses) of associates

-22

6

nm

-52

14

nm

Net income for the period

-1,665

363

nm

-6,082

137

nm

Minority interest

0

1

nm

-4

2

nm

Net income for the period – Group part

-1,665

362

nm

-6,078

135

nm

2019 results restated (with a similar impact in both years) for limited life parts componentization accounting change.

Consolidated Balance Sheet

Assets

30 Sep 2020

31 Dec 2019

€m

Goodwill

216

217

Intangible assets

1,253

1,305

Flight equipment

11,009

11,334

Other property, plant and equipment

1,535

1,580

Right-of-use assets

4,789

5,173

Investments in equity associates

224

307

Pension assets

96

420

Other financial assets

1,004

1,096

Deferred tax assets

271

523

Other non-current assets

176

241

Total non-current assets

20,573

22,196

Other short-term financial assets

443

800

Inventories

561

737

Trade receivables

1,208

2,164

Other current assets

883

1,123

Cash and cash equivalents

5,917

3,715

Total current assets

9,012

8,539

Total assets

29,585

30,735


Liabilities and equity

30 Sep 2020

31 Dec 2019

In million euros

Issued capital

429

429

Additional paid-in capital

4,139

4,139

Treasury shares

-67

-67

Perpetual

0

403

Reserves and retained earnings

-9,183

-2,620

Equity attributable to equity holders of Air France-KLM

-4,682

2,284

Non-controlling interests

9

15

Total Equity

-4,673

2,299

Pension provisions

2,123

2,253

Return obligation liability and other provisions

3,712

3,750

Financial debt

10,814

6,271

Lease debt

2,634

3,149

Deferred tax liabilities

5

142

Other non-current liabilities

532

222

Total non-current liabilities

19,820

15,787

Return obligation liability and other provisions

1,573

714

Current portion of financial debt

2,179

842

Current portion of lease debt

961

971

Trade payables

1,555

2,379

Deferred revenue on ticket sales

2,794

3,289

Frequent flyer program

913

848

Other current liabilities

4,462

3,602

Bank overdrafts

1

4

Total current liabilities

14,438

12,649

Total equity and liabilities

29,585

30,735


Statement of Consolidated Cash Flows from 1st Jan until 30 Sept 2020

€m

30 Sep 2020

30 Sep 2019

Net income from continuing operations

-6,082

137

Amortization, depreciation and operating provisions

2,132

2,217

Financial provisions

135

162

Loss (gain) on disposals of tangible and intangible assets

-43

-34

Loss (gain)on disposals of subsidiaries and associates

1

0

Derivatives – non monetary result

70

15

Unrealized foreign exchange gains and losses, net

-83

223

Impairment

670

0

Other non-monetary items

761

218

Share of (profits) losses of associates

52

-14

Deferred taxes

309

67

Financial Capacity

-2,078

2,991

(Increase) / decrease in inventories

134

-83

(Increase) / decrease in trade receivables

823

-147

Increase / (decrease) in trade payables

-792

41

Increase / (decrease) in advanced ticket sales

-435

327

Change in other receivables and payables

936

-54

Change in working capital requirements

666

84

Net cash flow from operating activities

-1,412

3,075

Purchase of property, plant and equipment and intangible assets

-1,654

-2,295

Proceeds on disposal of property, plant and equipment and intangible assets

181

84

Proceeds on disposal of subsidiaries, of shares in non-controlled entities

357

8

Acquisition of subsidiaries, of shares in non-controlled entities

-1

-1

Dividends received

0

10

Decrease (increase) in net investments, more than 3 months

-9

-9

Net cash flow used in investing activities

-1,126

-2,203

Increase of equity due to new convertible bond

0

54

Perpetual (including premium)

0

0

Issuance of debt

7,598

904

Repayment on financial debt

-2,202

-560

Payments on lease debt

-662

-748

Decrease (increase ) in loans, net

48

-17

Dividends and coupons on perpetual paid

0

-1

Net cash flow from financing activities

4,782

-368

Effect of exchange rate on cash and cash equivalents and bank overdrafts

-39

9

Change in cash and cash equivalents and bank overdrafts

2,205

513

Cash and cash equivalents and bank overdrafts at beginning of period

3,711

3,580

Cash and cash equivalents and bank overdrafts at end of period

5,916

4,093

Change in treasury of discontinued operations

0

0

Key Performance Indicators

Restated net result, group share

Third quarter

Nine months

In million euros

2020

2019

2020

2019

Net income/(loss), Group share

-1,665

361

-6,078

135

Unrealized foreign exchange gains and losses, net

-152

167

-78

223

Change in fair value of financial assets and liabilities (derivatives)

-154

11

70

-9

Non-current income and expenses

591

102

1,421

109

Tax impact on gross adjustments net result

-84

0

-401

-13

Restated net income/(loss), group part

-1,464

642

-5,066

445

Coupons on perpetual

0

-4

0

-12

Restated net income/(loss), group share including coupons on perpetual (used to calculate earnings per share)

-1,464

638

-5,066

433

Restated net income/(loss) per share (in €)

-3.42

1.49

-11.85

1.01

Return on capital employed (ROCE)1

In million euros

30 Sep 2020

30 June 2020

31 Mar 2020

31
Dec 2019

30 Sep 2019

30
June 2019

31
Mar 2019

31
Dec 2018

Goodwill and intangible assets

1,470

1,500

1,564

1,522

1,481

1,465

1,485

1,411

Flight equipment

11,009

10,919

11,465

11,334

10,829

10,747

10,456

10,308

Other property, plant and equipment

1,535

1,551

1,579

1,580

1,554

1,530

1,504

1,503

Right of use assets

4,789

4,938

5,119

5,173

5,300

5,470

5,453

5,664

Investments in equity associates

224

267

299

307

310

305

306

311

Financial assets excluding marketable securities and financial deposits

135

133

142

140

131

125

127

125

Provisions, excluding pension, cargo litigation and restructuring

-4,001

-4,130

-4,190

-4,058

-4,101

-3,888

-3,907

-3,760

WCR, excluding market value of derivatives

-6,894

-6,779

-6,650

-6,310

-6,285

-6,957

-6,938

-6,133

Capital employed

8,267

8,399

9,328

9,688

9,219

8,797

8,486

9,429

Average capital employed (A)

8,921

8,983

Adjusted results from current operations

-3,320

1,099

- Dividends received

-1

-2

- Share of profits (losses) of associates

-44

23

- Normative income tax

1,045

-305

Adjusted result from current operations after tax (B)

-2,320

815

ROCE, trailing 12 months (B/A)

-26.0%

9.1%


Net debt

Balance sheet at

€m

30 Sep 2020

31 Dec 2019

Financial debt

12,768

6,886

Lease debt

3,511

4,029

Currency hedge on financial debt

9

4

Accrued interest

-108

-62

Gross financial debt (A)

16,180

10,857

Cash and cash equivalents

5,917

3,715

Marketable securities

109

111

Cash securities

309

300

Deposits (bonds)

535

585

Bank overdrafts

-1

-4

Others

3

3

Net cash (B)

6,872

4,710

Net debt (A) – (B)

9,308

6,147

Adjusted operating free cash flow

Third quarter

Nine months

€m

2020

2019

2020

2019

Net cash flow from operating activities, continued operations

-609

792

-1,412

3,075

Investment in property, plant, equipment and intangible assets

-370

-788

-1,654

-2,295

Proceeds on disposal of property, plant, equipment and intangible assets

9

8

181

84

Operating free cash flow

-970

12

-2,885

864

Payments on lease debt

-251

-246

-662

-748

Adjusted operating free cash flow

-1,220

-234

-3,547

116

Operating cash burn



Third quarter

Nine months

2020

2019

2020

2019

EBITDA

-442

1,653

-1,282

3,263

Provisions (CO2 and other)

7

14

-26

8

Correction of spare parts inventory

2

-2

2

0

Addition to pension provisions

78

68

232

201

Reversal to pension provisions (cash-out)

-47

-49

-142

-145

Payment linked with shares

0

1

-2

1

Sales of tangible and intangible assets (excluding aeronauticals)

-1

6

40

48

Income from operation activities - cash impact

-402

1,690

-1,177

3,376

Restructuring costs

-137

-4

-152

-15

Other non-current income and expenses

0

2

-1

2

Cost of financial debt

-118

-107

-318

-319

Financial income

0

7

2

21

Realized foreign exchanges gain/loss

29

-24

28

-9

Termination of trading hedges - cash

-177

0

-499

0

Current income tax

77

-62

67

-64

Other financial charges & expenses - cash

1

-2

-25

-6

Other elements

-3

-2

-2

5

Financial capacity

-732

1,499

-2,078

2,991

Unit cost: net cost per ASK

Third quarter

Nine months

2020

2019

2020

2019

Revenues (in €m)

2,524

7,609

8,725

20,572

Income/(loss) from current operations (in €m) -/-

1,046

-909

3,414

-1,046

Total operating expense (in €m)

3,570

6,700

12,139

19,526

Passenger network business – other revenues (in €m)

-64

-163

-241

-534

Cargo network business – other revenues (in €m)

-84

-77

-226

-231

Third-party revenues in the maintenance business (in €m)

-247

-543

-963

-1,623

Transavia - other revenues (in €m)

1

17

-13

16

Third-party revenues of other businesses (in €m)

-10

-10

-21

-26

Net cost (in €m)

3,166

5,924

10,675

17,128

Capacity produced, reported in ASK*

38,109

90,317

114,446

251,110

Net cost per ASK (in € cents per ASK)

8.31

6.56

9.33

6.82

Gross change

26.7%

36.7%

Currency effect on net costs (in €m)

60

19

Change at constant currency

25.4%

36.6%

Capacity effect on net cost

-3,393

-9,345

Fuel price effect (in €m)

-179

-162

Net cost per ASK on a constant currency and fuel price basis (in € cents per ASK)

8.31

6.01

9.33

6.64

Change at constant currency and fuel price basis

+38.2%

+40.4%

* The capacity produced by the transportation activities is combined by adding the capacity of the Passenger network (in ASK) to that of Transavia (in ASK).

Group results
Air France Group

Third quarter

Nine months

2020

Change

2020

Change

Revenue (in €m)

1,492

-67.5%

5,066

-59.6%

EBITDA (in €m)

-461

-1,321

-1,095

-2,801

Operating result (en m€)

-807

-1,200

-2,401

-2,699

Operating margin (%)

-54.1%

-62.6 pt

-47.4%

-49.8 pt

Operating cash flow before WCR and restructuring cash out (in €m)

-608

-1,421

-1,519

-3,129

Operating cash flow (before WCR and restructuring) margin

-40.7%

-58.5 pt

-30.0%

-42.8 pt


KLM Group

Third quarter

Nine months

2020

Change

2020

Change

Revenue (in €m)

1,144

-63.5%

3,984

-52.5%

EBITDA (in €m)

25

-763

-176

-1,713

Operating result (en m€)

-234

-745

-1,002

-1,736

Operating margin (%)

-20.5%

-36.8 pt

-25.2%

-33.9 pt

Operating cash flow before WCR and restructuring cash out (in €m)

13

-671

-355

-1,736

Operating cash flow (before WCR and restructuring) margin

1.1%

-20.7 pt

-8.9%

-25.4 pt

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

Group fleet at 30 Sept 2020

Aircraft type

AF
(incl. HOP)

KL
(incl. KLC & MP)

Transavia

Owned

Finance lease

Operating lease

Total

In operation

Change / 31/12/19

B747-400

4

4

4

3

-5

B777-300

43

14

18

17

22

57

57

B777-200

25

15

26

14

40

40

B787-9

10

13

7

4

12

23

23

1

B787-10

5

3

2

5

5

1

A380-800

9

2

3

4

9

-10

A350-900

6

1

5

6

6

3

A340-300

3

3

3

-4

A330-300

5

5

5

5

A330-200

15

8

11

12

23

22

-1

Total Long-Haul

111

64

0

75

31

69

175

161

-15

B737-900

5

3

2

5

5

B737-800

31

75

29

10

67

106

106

2

B737-700

16

7

3

5

15

23

23

A321

20

11

9

20

20

A320

44

3

5

36

44

43

A319

33

14

19

33

33

A318

18

8

10

18

18

Total Medium-Haul

115

52

82

71

20

158

249

248

2

ATR72-600

-2

ATR72-500

ATR42-500

Canadair Jet 1000

14

14

14

14

Canadair Jet 700

11

11

11

10

Embraer 190

17

32

11

10

28

49

48

1

Embraer 175

17

3

14

17

17

Embraer 170

15

10

5

15

15

Embraer 145

15

15

15

-13

Total Regional

72

49

0

64

24

33

121

104

-14

B747-400ERF

3

3

3

3

B747-400BCF

1

1

1

1

B777-F

2

2

2

2

Total Cargo

2

4

0

6

0

0

6

6

0

Total

300

169

82

216

75

260

551

519

-27

THIRD QUARTER 2020 TRAFFIC

Passenger network activity*

Q3

Year to date

Total Passenger network*

2020

2019

Variation

2020

2019

Variation

Passengers carried (‘000s)

6,782

23,631

(71.3%)

23,671

66,286

(64.3%)

Revenue pax-kilometers (m RPK)

13,752

71,323

(80.7%)

66,861

198,566

(66.3%)

Available seat-kilometers (m ASK)

32,100

79,457

(59.6%)

103,267

224,902

(54.1%)

Load factor (%)

42.8%

89.8%

(46.9)

64.7%

88.3%

(23.5)

Long-haul

Passengers carried (‘000s)

1,219

7,660

(84.1%)

7,072

21,288

(66.8%)

Revenue pax-kilometers (m RPK)

8,705

57,382

(84.8%)

52,783

160,536

(67.1%)

Available seat-kilometers (m ASK)

23,987

63,392

(62.2%)

82,837

180,125

(54.0%)

Load factor (%)

36.3%

90.5%

(54.2)

63.7%

89.1%

(25.4)

North America

Passengers carried (‘000s)

284

2,630

(89.2%)

1,870

6,686

(72.0%)

Revenue pax-kilometers (m RPK)

2,063

18,608

(88.9%)

13,397

47,494

(71.8%)

Available seat-kilometers (m ASK)

7,597

20,456

(62.9%)

23,409

53,116

(55.9%)

Load factor (%)

27.2%

91.0%

(63.8)

57.2%

89.4%

(32.2)

Latin America

Passengers carried (‘000s)

96

934

(89.7%)

969

2,729

(64.5%)

Revenue pax-kilometers (m RPK)

942

8,900

(89.4%)

9,177

25,973

(64.7%)

Available seat-kilometers (m ASK)

3,177

9,800

(67.6%)

13,524

28,975

(53.3%)

Load factor (%)

29.6%

90.8%

(61.2)

67.9%

89.6%

(21.8)

Asia / Pacific

Passengers carried (‘000s)

173

1,723

(90.0%)

1,361

4,969

(72.6%)

Revenue pax-kilometers (m RPK)

1,526

15,066

(89.9%)

11,803

43,399

(72.8%)

Available seat-kilometers (m ASK)

6,037

16,453

(63.3%)

20,702

47,734

(56.6%)

Load factor (%)

25.3%

91.6%

(66.3)

57.0%

90.9%

(33.9)

Africa / Middle East

Passengers carried (‘000s)

328

1,453

(77.4%)

1,563

4,089

(61.8%)

Revenue pax-kilometers (m RPK)

1,674

8,164

(79.5%)

8,825

23,117

(61.8%)

Available seat-kilometers (m ASK)

3,188

9,284

(65.7%)

12,337

27,360

(54.9%)

Load factor (%)

52.5%

87.9%

(35.4)

71.5%

84.5%

(13.0)

Caribbean / Indian Ocean

Passengers carried (‘000s)

337

919

(63.3%)

1,309

2,815

(53.5%)

Revenue pax-kilometers (m RPK)

2,500

6,645

(62.4%)

9,580

20,553

(53.4%)

Available seat-kilometers (m ASK)

3,988

7,398

(46.1%)

12,864

22,941

(43.9%)

Load factor (%)

62.7%

89.8%

(27.1)

74.5%

89.6%

(15.1)

Short and Medium-haul

Passengers carried (‘000s)

5,563

15,972

(65.2%)

16,600

44,998

(63.1%)

Revenue pax-kilometers (m RPK)

5,047

13,941

(63.8%)

14,079

38,030

(63.0%)

Available seat-kilometers (m ASK)

8,113

16,066

(49.5%)

20,430

44,776

(54.4%)

Load factor (%)

62.2%

86.8%

(24.6)

68.9%

84.9%

(16.0)

* Air France and KLM

Transavia activity

Q3

Year to date

Transavia

2020

2019

Variation

2020

2019

Variation

Passengers carried (‘000s)

2,014

5,492

(63.3%)

4,453

13,315

(66.6%)

Revenue pax-kilometers (m RPK)

3,869

10,117

(61.8%)

8,505

24,239

(64.9%)

Available seat-kilometers (m ASK)

6,009

10,874

(44.7%)

11,178

26,227

(57.4%)

Load factor (%)

64.4%

93.0%

(28.7)

76.1%

92.4%

(16.3)

Total group passenger activity**

Q3

Year to date

Total group**

2020

2019

Variation

2020

2019

Variation

Passengers carried (‘000s)

8,796

29,123

(69.8%)

28,124

79,601

(64.7%)

Revenue pax-kilometers (m RPK)

17,621

81,440

(78.4%)

75,367

222,805

(66.2%)

Available seat-kilometers (m ASK)

38,109

90,331

(57.8%)

114,446

251,129

(54.4%)

Load factor (%)

46.2%

90.2%

(43.9)

65.9%

88.7%

(22.9)

** Air France, KLM and Transavia

Cargo activity

Q3

Year to date

Total Group

2020

2019

Variation

2020

2019

Variation

Revenue tonne-km (m RTK)

1,735

2,091

(17.0%)

4,747

6,260

(24.2%)

Available tonne-km (m ATK)

2,537

3,804

(33.3%)

7,309

10,896

(32.9%)

Load factor (%)

68.4%

55.0%

13.4

64.9%

57.4%

7.5


Air France activity

Q3

Year to date

Total Passenger network activity

2020

2019

Variation

2020

2019

Variation

Passengers carried (‘000s)

4,487

14,168

(68.3%)

14,635

39,844

(63.3%)

Revenue pax-kilometers (m RPK)

8,538

42,184

(79.8%)

39,394

116,449

(66.2%)

Available seat-kilometers (m ASK)

16,589

47,464

(65.0%)

56,909

133,309

(57.3%)

Load factor (%)

51.5%

88.9%

(37.4)

69.2%

87.4%

(18.1)


Long-haul

Passengers carried (‘000s)

782

4,632

(83.1%)

4,243

12,723

(66.7%)

Revenue pax-kilometers (m RPK)

5,242

33,849

(84.5%)

30,669

93,664

(67.3%)

Available seat-kilometers (m ASK)

11,526

37,664

(69.4%)

44,431

105,944

(58.1%)

Load factor (%)

45.5%

89.9%

(44.4)

69.0%

88.4%

(19.4)


Short and Medium-haul

Passengers carried (‘000s)

3,704

9,536

(61.2%)

10,393

27,121

(61.7%)

Revenue pax-kilometers (m RPK)

3,296

8,335

(60.5%)

8,725

22,785

(61.7%)

Available seat-kilometers (m ASK)

5,063

9,800

(48.3%)

12,477

27,365

(54.4%)

Load factor (%)

65.1%

85.1%

(20.0)

69.9%

83.3%

(13.3)


Q3

Year to date

Cargo activity

2020

2019

Variation

2020

2019

Variation

Revenue tonne-km (m RTK)

605

927

(34.7%)

1,802

2,794

(35.5%)

Available tonne-km (m ATK)

1,139

1,946

(41.4%)

3,390

5,489

(38.2%)

Load factor (%)

53.1%

47.7%

5.5

53.2%

50.9%

2.2

KLM activity

Q3

Year to date

Total Passenger network activity

2020

2019

Variation

2020

2019

Variation

Passengers carried (‘000s)

2,295

9,464

(75.7%)

9,036

26,442

(65.8%)

Revenue pax-kilometers (m RPK)

5,214

29,138

(82.1%)

27,468

82,117

(66.6%)

Available seat-kilometers (m ASK)

15,511

31,993

(51.5%)

46,359

91,593

(49.4%)

Load factor (%)

33.6%

91.1%

(57.5)

59.3%

89.7%

(30.4)


Long-haul

Passengers carried (‘000s)

436

3,028

(85.6%)

2,829

8,566

(67.0%)

Revenue pax-kilometers (m RPK)

3,462

23,533

(85.3%)

22,114

66,871

(66.9%)

Available seat-kilometers (m ASK)

12,461

25,728

(51.6%)

38,406

74,182

(48.2%)

Load factor (%)

27.8%

91.5%

(63.7)

57.6%

90.1%

(32.6)


Short and Medium-haul

Passengers carried (‘000s)

1,859

6,436

(71.1%)

6,207

17,876

(65.3%)

Revenue pax-kilometers (m RPK)

1,752

5,605

(68.7%)

5,353

15,246

(64.9%)

Available seat-kilometers (m ASK)

3,050

6,266

(51.3%)

7,953

17,411

(54.3%)

Load factor (%)

57.4%

89.5%

(32.0)

67.3%

87.6%

(20.2)


Q3

Year to date

Cargo activity

2020

2019

Variation

2020

2019

Variation

Revenue tonne-km (m RTK)

1,127

1,164

(3.2%)

2,942

3,466

(15.1%)

Available tonne-km (m ATK)

1,398

1,858

(24.8%)

3,919

5,407

(27.5%)

Load factor (%)

80.6%

62.6%

18.0

75.1%

64.1%

11.0





1 Passenger unit revenue is the aggregate of Passenger network and Transavia unit revenues, change at constant currency



1 The definition of ROCE has been revised to take into account the seasonal effects of the activity.



Attachment