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AIR FRANCE - KLM: First Quarter 2017 results
The Board of Directors of Air France-KLM, chaired by Jean-Marc Janaillac, met on 3 May 2017 to approve the accounts for the First Quarter 2017
The passenger capacity measured in ASKs was up 3.3% and traffic measured in RPKs up 4.2% resulting in the Group loadfactor to increase by 0.7pts to 85.4%. Revenues amounted to 5.7 billion euros, up 1.9% compared to 2016.
The operating result stood at -143 million euros, down 44 million and up 28 million euros at constant currency.
At constant currency, the Group unit revenues measured in revenues per EASK were down 1.4%, driven by a decrease in the Passenger network unit revenue of 0.5%, a Transavia unit revenue decrease of 3.4% and a Cargo unit revenue decrease of 4.9%,
, amounting to a saving of 89 million euros compared to last year. , on a constant currency, fuel price and pension-related expense basis, against a capacity increase measured in EASK of +2.8%.
The productivity, measured in EASK per FTE, increased by 5.1% at KLM where the capacity increased by 5.4%, and by 1.8% at Air France despite capacity almost stable (+0.8%). The average number of staff decreased by 400 FTEs at constant scope (scope impacted by the sale of Cobalt at year end 2016 resulting in a decrease of 746 FTEs). As a result, the total employee costs including temporary staff decreased by 1.7% at 1,812 million euros.
whereas the fuel bill in dollar was stable.
The operating result was notably impacted by currency effects, which had a negative impact of 72 million euros. Adjusted for the interest portion of operating leases (1/3 of annual operating lease expenses), the operating margin was -0.8% versus -0.2% at 31 March 2016. EBITDA amounted to 269 million euros, stable compared to previous year.
The group net result stood at -216 million euros, a decrease of 61 million euros compared to the first quarter 2016.
As announced at the Full Year 2016 results presentation, it has been decided to change the Cargo reporting as per fiscal year 2017 to include it in the passenger network results. As a result the business segment Network consists of both the passenger network and cargo business. The combined result amounted to -100 million euros, down 32 million euros and up 37 million euros at constant currency.
The capacity measured in available seat kilometer (ASK) was up by 1.9%, wheres the traffic (RPK) increased by 2.8% leading to a loadfactor increase of 0.8 point. The unit revenue at constant currency was down 0.5% strengthened by the strong premium class performance with unit revenues at constant currency up by 4.9%.
Both airlines are confirming the trend. With capacity stable (ASK +0.1%), the unit revenue at constant currency at Air France was stable at -0.1%, whereas the unit revenue at constant currency at KLM was down by 0.5% while capacity increased by 4.7%.
During the quarter, the capacity measured in ATK was reduced by 1.1% in which full-freighter capacity was reduced by 14.8%. Due to the small increase in traffic (RTK) of 0.5%, the load factor increased month-by-month leading to a 1.0 point increase during the quarter. The unit revenue decrease was limited to 4.9% at constant currency.
During the quarter, the third party revenues further increased, . Third-party revenues amounted to 460 million euros, up by 6.7% driven by the contracts gained over the past few years. Over the period, the maintenance order book recorded a 7.0% increase to reach a record of 9.5 billion dollars, securing future growth.
with capacity up by 27% in France and up by 28% in the Netherlands. Transavia carried 2.5 million passengers, up 29%, capturing the growth in the European leisure market. The timing of Easter negatively impacted the unit revenue in March and the operating result.
The operating free cash flow was positive at 329 million euros up by 133 million euros compared to 31 March 2016. As a result, net debt amounted to 3,378 million euros at 31 March 2017, versus 3,655 million euros at 31 December 2016, a decrease of 277 million euros. The adjusted net debt decrease by 137 million euros to 11,029 million euros.
The global context remains highly uncertain regarding the geopolitical environment in which we operate and regarding the fuel prices.
The forward bookings indicate a resilient start to the second quarter.
The Group is targeting a growth for the passenger group (Air France, KLM and Transavia) of between 3.0% and 3.5% measured in ASKs for 2017 in order to regain the offensive in long-haul and to improve the performance in medium-haul.
To improve its competitiveness, the Group plans to act on all levels by pursuing and amplifying the initiatives already under way in terms of unit cost reduction. The unit cost reduction target for 2017 is in excess of 1.5% at constant currency, fuel price and pension related expenses.
Based on the forward curve of 21 April 2017, the full year 2017 fuel bill is expected to be slightly down in dollars compared to 2016 and to reach 4.7 billion euros .
Regarding the balance sheet, the Group is maintaining strict capex discipline, targeting positive free cash flow before disposals. The 2017 investment plan stands at between 1.7 billion euros and 2.2 billion euros.
The Group is pursuing a further reduction in net debt, targeting an adjusted net debt to EBITDAR below 2.5x mid cycle by the end of 2020.
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The First Quarter 2017 accounts are not audited by the Statutory Auditors.
The results presentation is available at on 4 May 2017 from 7:15 am CET.
A conference call hosted by Mr Gagey (CFO) will be held on May 4 2017 at 08.30.
To connect to the conference call, please dial:
Confirmation Code: 1814008
2321 Rosecrans Avenue. Suite 2200
90245 El Segundo Stati Uniti