Air France-KLM reports 2019 results, warns of impact of coronavirus

Air France-KLM issued this financial report for 2019:

  •   Revenue growth for all businesses, with strong performance from Transavia and Maintenance
  •   Unit cost at constant currency and fuel reduced by -0.9%, at the better end of guidance range
  •   Operating result at 1,141 million euros, down 264 million euros compared to last year1
  •   Net income at 290 million euros
  •   Net debt/EBITDA ratio at 1.5x, in line with guidance
  •   Record levels of customer satisfaction for Air France and steady-state high level for KLM
  •   Leading airline group on sustainability in the Dow Jones Sustainability Index

    OUTLOOK
    Business trends
    After a good performance for the Passenger Network activity with positive unit revenue in January 2020, recent developments with regards to the Covid-19 have impacted the demand outlook, especially in the Asian network. This translates in long-haul forward booking load factors down from February to May 2020. As a consequence the Group anticipates unit revenues at constant currency to be down for the first quarter of 2020.

    The Cargo activity is also impacted by Covid-19, foreseen to maintain pressure on the load factor and yield in the first part of 2020.

    Based on the Group announcement regarding Covid-19 (suspension of China operations in February- March and possible resumption of operations starting from April 2020), the high-level estimated impact on operating result is of between -150 and -200 million euros for February to April 2020.

    Full year 2020 guidance

  •   Unit cost reduction of between -1% and 0% at constant currency and fuel price
  •   The Group plans capital expenditures of 3.6 billion euros for 2020
  •   Net debt/ EBITDA ratio of circa 1.5x

    The 2020 fuel bill is expected to decrease by 300 million euros compared to 2019 to 5.2 billion euros, based on the forward curve of 14 February 2020

    The Board of Directors of Air France-KLM, chaired by Anne-Marie Couderc, met on 19 February 2020 to approve the financial statements for the Full year 2019.

    “In 2019, the Air France-KLM Group posted an operating result at 1,141 million euros with a fuel bill hit and pressure on Cargo unit revenues” said Benjamin Smith, CEO of the Air France-KLM Group. Over the year we reinforced our foundations to build a European champion, notably through fleet optimization and restored trust that led to social stability and positive labour agreements at Air France and new CLA agreements at KLM. I am also proud that our Group was again at the top of the DJSI ranking and is recognized as an experienced and knowledgeable environmental leader in the industry. In November, we outlined our strategic plan with a substantial further step-up in financial performance foreseen, and we begin on this 5-year trajectory with a robust financial structure and strong unique assets.”

    2018 and 2019 results restated (with a similar impact in both years) for limited life parts componentization accounting change. See notes in the consolidated financial statements paragraph 2, page 12-15 and page 9-10 of this press release.

    1 The Air France strike had a -335 million euros impact on the Full year 2018 operating result
    2 Passenger unit revenue is the aggregate of Passenger network and Transavia unit revenues, change at constant currency

FULL YEAR 2019
Operating result at 1,141 million euros, unit cost at -0.9%, pressure on Cargo unit revenue and a higher fuel bill