Turismo
AIR FRANCE-KLM FIRST QUARTER 2022
First quarter :
Group CEO Mr. Benjamin Smith said:
“The performance of the Air France-KLM Group over the first quarter of 2022 confirms that recovery is here. In spite of a challenging context, with the continued effect of the Omicron variant, the situation in Ukraine and the sharp increase of fuel prices, the Group posted once again a positive EBITDA and recorded strong bookings for the following quarters. March was notably very encouraging with a significant increase in demand for corporate and premium traffic, complementing the already strong leisure and VFR (visiting friends and relatives) demand across our worldwide network. This paves the way for a successful summer season in all our activities, which we continue to strengthen through our extensive transformation plan.”
Outlook :
Context:
The start of the First quarter was hampered by the Omicron variant, mainly on the short and medium haul, while the outbreak of the Ukraine war resulted in higher fuel price and a slowdown in bookings during a very short period.
The recovery accelerated in March with highly dynamic bookings for the summer season.
Capacity
In this recovery context, the Group expects capacity in Available Seat Kilometers for Air France-KLM Network passenger activity at an index in the range of:
All indices compared to the respective period of 2019.
Capacity in Available Seat Kilometers for Transavia is expected at an index above 100 for the second and third quarter compared to 2019.
Yield
A healthy yield environment for the remainder of 2022 is expected with a strong summer demand resulting in yield levels above 2019
Operating result expected
Cash
As of March 31 2022, the Group has a sufficient 10.8 billion euros of liquidity and credit lines at disposal.
Full year 2022 Net Capex spending is estimated at circa 2.5 billion euros, which is 80% fleet & fleet related and 20% related to IT and ground.
Air France-KLM made progress on the equity strengthening measures
Thanks to KLM's strong performance, KLM's State backed RCF has been partly repaid on May 3rd for 311 million euros. In addition, KLM expects to strengthen its balance sheet with positive results. Further equity measures are being contemplated for the coming year.
Progress has been made on refinancing up to 500 million euros of Air France's assets, mainly through quasi-equity instruments to redeem French State aid. Air France is currently engaged in advanced discussions with various partners.
The Group is closely monitoring capital strengthening measures such as a capital increase with pre-emptive rights for shareholders, as well as the issuance of quasi equity instruments such as straight and convertible perpetual bonds, to further restore equity and accelerate the State aid redemption.
In total, these measures including the refinancing of Air France's assets could represent up to 4.0 billion euros. The timing and sizing of each transaction will depend on market conditions and remain subject to the approval of the European Commission as well as legal and regulatory approvals.
A ir France-KLM Group : Q1 results are promising and pave the way towards a strong summer
In the First quarter 2022, the Air France-KLM Group posted a positive EBITDA of 221 million euros, up by 864 million euros at a constant currency compared to last year, and was driven by an increase of capacity and unit cost reduction. In parallel, the increase of load factor and yield generated an increase of the unit revenue.
Net income amounted to -552 million euros in the First quarter 2022, an increase of 930 million euros compared to last year.
Thanks to transformation programs, unit cost down while
Group capacity 23% below 2019
Despite the Group capacity 23% down compared to the same quarter in 2019, the unit cost was 0.1% reduced at a constant fuel price and constant currency thanks to the ongoing transformation programs.
Compared to December 2019 the number of Full Time Equivalents (FTE's) of Air France excluding Transavia reduced by 16% and KLM by 14%. In the First quarter Air France excluding Transavia decreased 400 FTE's and another 300 FTE's will leave this year. The total reduction of FTE for Air France excluding Transavia will be 17% compared to December 2019.
The staff cost decreased in the First quarter by 23% compared to the same quarter in 2019 thanks to FTE reduction and government support on wages. Corrected for government support on wages the staff cost decreased by 12%.
B usiness r eview
Network: Significant improvement in operating result
First quarter 2022 revenues increased by 105.9% at constant currency to 3,894 million euros. The operating result was negative and amounted to -309 million euros, a 760 million euros increase at constant currency compared to last year.
Passenger network : Unit revenue increase supported by both load factor and yield
First quarter 2022, capacity in Available Seat Kilometers (ASK) was 56.5% higher than last year and at 75% of 2019 First quarter level which was in the middle of the Group's guidance provided during the Fourth quarter 2021 results presentation.
The beginning of the First quarter was impacted by the spread of Omicron variant and additional travel restrictions, with the short and medium-haul routes more impacted. The borders reopening and progressive removal of travel constraints enabled the Group to post strong March results.
In response to the rise in fuel prices and other external costs, the Group proceeded to different fares increases during the first quarter on all its long-haul flights. The amount of the increase varies according to destination and class of travel, and applies to flights operated by Air France and KLM. First quarter 2022 yield was above 2019 thanks to strong demand and the quick implementation of the fares adjustments.
The First quarter result is driven by a strong performance on Caribbean & Indian Ocean, Africa and South America:
During the First quarter, Air France added three Airbus 350-900, two Airbus A220-300 and one Embraer 190 to its fleet while Air France phased out one Boeing B777-200, one Airbus A320, two Airbus A319, three A318 and two Embrear 145.
KLM phased in two Embraer 195 E2 and phased out one Embraer 190. The Group will continue to introduce new generation aircraft to its fleet in order to improve its economic and environmental performance.
Cargo: Increase in yield drove the increase in cargo revenues
Compared to the First quarter 2021, capacity increased by 10.7% in Available Ton Kilometers, mainly due to the increase in belly capacity, while traffic decreased by 14.9% resulting in a decrease of load factor by 17.8 points. This reduction in load factor partly compensated by the yield increase led to a unit revenue per ATK down 6.1% at constant currency.
Cargo capacity in the First quarter is still 14% below the capacity in the First quarter of 2019 while the demand remains high, resulting in total revenues that are 66% higher than in the First quarter of 2019. This increase in revenues is fully driven by a higher yield thanks to the focus on Pharmaceutical and Express deliveries while the load factor is back at 2019 levels. The yield in North Asia increased significantly due to the closure of the Russian aerospace.
The Group ordered four Airbus 350 full freighter to strengthen his presence on the cargo market and signed a contract with DHL on Sustainable aviation fuel.
Transavia: Cap acity approaching pre-crisis level with a load factor close to 80%
In the First quarter of 2022 the trend of the second half 2021 continued with a further recovery in demand for leisure traffic in Europe and North Africa. Compared to last year, the capacity in the First quarter increased by 443.1% while traffic increased by 632.6% and the number of passengers increased by 633.2%. Last year First quarter was heavily impacted by lockdown measures in France and the Netherlands.
The Operating result was negative at 92 million euros, although improved by 28 million euros compared to the First quarter of 2021.
Capacity in the First quarter was close to the level of the First quarter of 2019 and unit revenue even above First quarter 2019 mainly driven by a strong yield improvement.
The fleet of Transavia is approaching 100 aircraft to further capture the strong demand of leisure traffic in Europe.
Maintenance business : O peratin g margin above 2019 level
The First quarter operating result stood at 43 million euros, an increase of 56 million euros at constant currency versus the First quarter 2021. Although the First quarter 2022 result was still impacted by the Covid-19 crisis, the operating result is improving thanks to a higher activity and an operational improvement.
Total revenues increased by 33.6% in the First quarter while third party revenues increased by 15.1% giving encouraging signs of the recovery. The increase in internal revenues is consistent with the activity increase of the Air France-KLM airlines compared to the First quarter 2021.
The operating margin stood at 5.2% which is 1.3 point higher than the operating results in the First quarter 2019.
Air France-KLM entered into exclusive negotiations with CFMI for the engine configuration of its future Airbus A320neo family fleet.
F irst quarter : The strong sales of Q1 generated positive adjusted operating free cash flow, enabling a reduction of Net Debt by €550m
* S um 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 an adjusted operating free cash flow in the First quarter 2022 of 630 million euros, an increase of 1,974 million euros compared to last year, mainly driven by a positive change in working capital of 1,325 million euros. This was the fourth quarter in a row that the adjusted operating free cash flow was positive.
O perating result for both airlines improved significantly
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The first Quarter 2022 accounts are not audited by the Statutory Auditors.
The results presentation is available at www.airfranceklm.com on from 7:15 am CET.
A conference call hosted by Mr. Smith (CEO) and Mr. Zaat (CFO) will be held on at 08.30 am 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)330 165 3655
US: Local +1 323-701-0160
Confirmation code: 8173232
Income Statement
* Restated figures include the change in accounting principles for pensions (interpretation of IAS19)
Consolidated Balance Sheet
* Restated figures include the change in accounting principles for pensions (interpretation of IAS19)
Statement of Consolidated Cash Flows from 1 January until 31 March 2022
* Restated figures include the change in accounting principles for pensions (interpretation of IAS19)
Return on capital employed (ROCE)
* Restated figures include the change in accounting principles for pensions (interpretation of IAS19)
Net debt
Adjusted operating free cash flow
Bridge from EBITDA to Financial capacity
* Restated figures include the change in accounting principles for pensions (interpretation of IAS19)
Unit cost: net cost per ASK
* Restated figures include the change in accounting principles for pensions (interpretation of IAS19)
(1) 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
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 3 1 March 202 2
FIRST QUARTER 2022 TRAF F IC
Passenger network activity*
* Air France and KLM
Transavia activity
Total Group passenger activity**
** Air France, KLM and Transavia
Cargo activity
Air France activity
KLM activity
1 Change versus 31 Dec 2021
Attachment
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