Category Archives: Air France-KLM Group

Air France-KLM suspends all flights to China

The Air France-KLM Group continues to closely monitor the developments of the outbreak of the coronavirus in China, while maintaining close contact with international health and aviation authorities. After careful consideration of the developing situation, on January 30, 2020 the Air France-KLM Group decided to suspend all Air France and KLM flights to and from China until  February 9, 2020.

“The health and safety of our 85,000 employees and our 100 million customers is our highest priority,” said Benjamin Smith, CEO of the Air France KLM Group.  “I am proud of the professionalism of our employees in Europe, in China, and abroad, and their relentless dedication to ensuring their operating and non-operating colleagues, as well as our customers, can return home to their families. We continue to closely monitor the situation together with our partner China Eastern. ”

Starting Thursday, January 30, 2020 Air France will operate special flights to and from Shanghai and Beijing using volunteer crew members in order to permit employees and customers to return to Paris, while KLM’s flights departing from Amsterdam until Sunday, February 2, 2020 are intended to give as many employees and customers as possible the opportunity to return to Amsterdam from Beijing and Shanghai.

Air France-KLM Group steps up cooperation with QANTAS Group

Air France-KLM released this statement:

Loyalty Programs Collaborate to Enhance Customer Value Proposition

After the resumption of codeshare cooperation in 2018, offering best-in-class solutions to fly between Europe and Australia via Singapore and Hong Kong, the Air France-KLM Group and Qantas Group have continued working on further cooperation opportunities for the benefit of their respective customers.

Starting December 9, 2019 members of Flying Blue, the loyalty program used by the airlines of the Air France-KLM Group, can earn1 miles and XP (Experience Points) as well as spend miles on Qantas flights.

Flying Blue elite members will also have access to additional benefits such as priority airport services and additional checked baggage allowance when traveling on Qantas.

New Codeshare with Jetstar

By the end of December, both Air France and KLM plan to launch a codeshare cooperation with Jetstar Airways and Jetstar Asia Airways, two airlines which are part of the Qantas Group portfolio, connecting respectively in Denpasar and Singapore, thus expanding customer travel options to Southeast Asia and Australia.

Air France and KLM customers will benefit from a seamless travel experience with single ticket itineraries and through-checked baggage.

Under this agreement, Air France and KLM customers will have access to a wider range of destinations in Southeast Asia. Connecting in Singapore from Amsterdam or Paris, Air France and KLM will place their code on 12 additional destinations2 operated by Jetstar Asia Airways: Da Nang (Vietnam), Ho Chi Minh City (Vietnam), Denpasar (Indonesia), Medan (Indonesia), Surabaya (Indonesia), Phnom Penh (Cambodia), Siem Reap (Cambodia), Kula Lumpur (Malaysia), Penang (Malaysia), Phuket (Thailand), Yangon (Myanmar), and Darwin (Australia).

During the winter 2019 season, KLM plans to implement codeshares with Jetstar Airways providing itineraries beyond its Denpasar flight to four destinations in Australia: Adelaide, Melbourne, Perth, and Sydney2.

Also expected during December 2019, Air France, KLM and Qantas will extend their codeshare to flights connecting in Bangkok, on top of the existing codeshare via Singapore and Hong Kong, and providing a third route to connect Amsterdam and Paris with Sydney.

Additionally, the two airline groups continue to explore opportunities like potential cooperation with airport lounges.

(1) Earning of miles and XP is only possible on Qantas operated flights that are marketed by Air France, KLM or Qantas
(2) All subject to governmental authorizations

Jetstar Airways aircraft photo gallery:

Air France-KLM reports its second quarter results

Air France-KLM made this report:

July 31, 2019

RESULTS AS AT JUNE 30, 2019

Increased operating result and improved passenger unit revenue

SECOND QUARTER 2019

  • Passenger growth +5.1% and load factor +1.3 point.
  • Passenger unit revenue up by 0.8%.
  • Unit costs decrease by -2.3% at constant currency and fuel.
  • Operating result at 400 million euros, up 54 millions euros compared to the second quarter 2018 hit by Air France strikes1, and reflecting unit cost improvement partly offset by an increased fuel bill.
  • Further reduction in Group net debt, down 466 million euros to 5.7 billion euros and Net debt/EBITDA ratio at 1.4x, an improvement of -0.1pt compared to 31 December 2018.

OUTLOOK 2019

  • Based on the current data for the Passenger network:
    • Long-haul forward booking load factors from August to December are on average ahead compared to last year.
    • Network passenger unit revenue at constant currency expected to be stable versus last year for the third quarter 2019.
  • Full year guidance update:
    • The Group will pursue initiatives to reduce unit costs, with a targeted 2019 reduction of between -1% and 0% at constant currency and fuel price.
    • The 2019 fuel bill is expected to increase by 550 million euros compared to 2018 to 5.5 billion euros, based on the forward curve of 26 July 2019.
    • Net debt/ EBITDA ratio below 1.5x.

Benjamin Smith, CEO of Air France-KLM Group, said: “In a challenging environment, Air France-KLM Group posted a robust second quarter. The slight increase in passenger unit revenue that we had anticipated, together with continued execution in unit cost reduction, enabled us to more than offset rising fuel costs. These elements, combined with satisfactory long-haul forward booking trends lead us to confirm our guidance for 2019. At the same time, we continue to implement our strategic vision focused on reducing costs and making our Group more robust in the very competitive marketplace in Europe. We have also made key decisions on the renewal of our fleet to transition to cleaner aircraft in order to support a more environmentally responsible operation, including the order of sixty Airbus A220s for short- and medium-haul and the accelerated phasing out of ten Airbus A380 to be replaced by more modern fuel efficient aircraft.”

Air France-KLM Group Second Quarter First half
2019 Change1 2019 Change1
Passengers (thousands) 27,800 +5.1% 50,474 +4.2%
Passenger Unit revenue per ASK2 (€ cts) 6.75 +0.8% 6.48 -0.4%
Operating result (€m) 400 +54 97 -131
Net income – Group part (€m) 80 -30 -240 -81
Adj. operating free cash flow (€m) 110 +111 351 +210
Net debt at end of period (€m) 5,698 -466

Second quarter 2019 business review 

Network: Solid revenue growth and increase in operating result

Network Second Quarter First Half
2019 Change Change
constant currency
2019 Change Change
constant currency
Capacity (ASK m) 75,680 +3.9%   145,440 +3.2%
Total revenues (€m) 6,016 +5.6% +3.9% 11,191 +3.8% +2.6%
Scheduled revenues (€m) 5,708 +5.8% +4.0% 10,601 +3.6% +2.3%
Operating result (€m) 291 +55 +77 12 -138 -68

Second quarter 2019 combined Passenger and Cargo revenues increased by 3.9% at constant currency to 6.0 billion euros, for capacity growth of 3.9%. The operating result amounted to 291 million euros, a 77 million euro increase at constant currency compared to last year, with the non-fuel unit cost improvement partly offset by a higher fuel bill.

Passenger network: Long-haul driving the improvement of unit revenue as anticipated

  Second Quarter First Half
Passenger network 2019 Change Change
constant currency
2019 Change Change
constant currency
Passengers (thousands) 22,906 +4.8%   42,651 +3.7%  
Capacity (ASK m) 75,680 +3.9% 145,439 +3.2%
Traffic (RPK m) 67,020 +5.7% 127,241 +3.8%
Load factor 88.6% +1.5 pt 87.5% +0.6 pt
Total passenger revenues (€m) 5,482 +6.4% +4.8% 10,110 +4.2% +3.2%
Scheduled passenger revenues (€m) 5,254 +6.6% +4.8% 9,674 +4.2% +2.9%
Unit revenue per ASK (€ cts) 6.94 +2.6% +0.9% 6.65 +1.0% -0.2%

Second quarter 2019 capacity increased by 3.9%, mainly driven by the South American, North Atlantic and Asian networks, with respective growth of 7.8%, 6.7% and 4.0%.
Taking into account a positive calendar effect from the Easter shift, the passenger network posted a positive unit revenue of +0.9% at constant currency.

The industry capacity growth has been lower in North America, Caribbean & Indian Ocean and Middle East network in comparison to previous year. The long-haul network generated positive load-factors and yields compared to last year in all networks except in the Latin American network:

  • The North American network posted positive unit revenue at +2.6% compared to last year, with the strength driven in particular by US points of sale.
  • The Asian network unit revenue was up 3.9% in the second quarter, driven by the continuing strength of the Japanese network, partly offset by some competitive pressure on the Chinese network.
  • The Caribbean & Indian Ocean network posted a strong result with the unit revenue +4.7%, driven by leisure demand.
  • The Africa & Middle East network saw a substantial unit revenue improvement of 8.7%, underpinned by positive results from the West African networks and network rationalizations in the Middle East.
  • The unit revenue pressure in the Latin American network remains ongoing for the time-being due to the current economic context in Argentina and Brazil.

The medium-haul network showed a mixed picture with a positive performance for the medium-haul hubs with the unit revenue +0.2% and, as anticipated, pressure in the medium-haul point-to-point network with unit revenue down -9.1%.
 

Cargo network: Unit revenue impacted by a challenging airfreight market

  Second Quarter First Half
Cargo business 2019 Change Change
constant currency
2019 Change Change
constant currency
Tons (thousands) 279 +1.5%   549 +0.7%  
Capacity (ATK m) 3,630 +2.8% 7,092 +2.1%
Traffic (RTK m) 2,122 +1.2% 4,168 +0.9%
Load factor 58.5% -0.9 pt 58.8% -0.7 pt
Total Cargo revenues (€m) 534 -1.7% -4.1% 1,081 -0.5% -2.7%
Scheduled cargo revenues (€m) 454 -2.8% -5.2% 927 -1.7% -3.9%
Unit revenue per ATK (€ cts ) 12.54 -5.1% -7.5% 13.09 -3.6% -5.7%

Negative market dynamics and continued higher industry capacity put pressure on the unit revenue during the second quarter 2019. After two strong years, renewed overcapacity in North America and Asia is putting pressure on freight rates, resulting in unit revenue down -7.5% at constant currency.
The Group’s Cargo strategy is focused on maintaining and increasing load factors where possible and taking a pro-active approach to new opportunities.

Transavia: High capacity growth and positive unit revenue

  Second Quarter First Half
Transavia 2019 Change 2019 Change
Passengers (thousands) 4,894 +6.7% 7,823 +7.0%
Capacity (ASK m) 9,527 +9.2% 15,353 +10.0%
Traffic (RPK m) 8,754 +9.1% 14,122 +10.1%
Load factor 91.9% -0.1 pt 92.0% +0.0 pt
Total passenger revenues (€m) 500 +10.4% 748 +8.7%
Unit revenue per ASK (€ cts) 5.24 +1.3% 4.83 -0.4%
Unit cost per ASK (€ cts) 4.70 +5.1% 4.95 +2.6%
Operating result (€m) 52 -9 -19 -22

Strong capacity growth of 9.2% in the second quarter 2019. The unit revenue was up by 1.3% compared to last year, supported by the Easter shift, strong demand throughout the network and a good ancillary revenue performance.
The second quarter 2019 operating margin stands at a level of 10.4%, with an absolute operating result of 52 million euros, 9 million euros down compared to last year explained by fuel price and currency headwinds.

Maintenance: Strong third-party revenue growth and margin improvement

  Second Quarter First Half
Maintenance 2019 Change Change
constant currency
2019 Change Change
constant currency
Total revenues (€m) 1,120 +11.2% 2,290 +10.0%
Third-party revenues (€m) 527 +11.9% +5.0% 1,081 +14.9% +7.6%
Operating result  (€m) 55 +9 +1 102 +30 +18
Operating margin (%) 4.9% +0.3 pt -0.2 pt 4.5% +1.0 pt +0.6 pt

Maintenance revenues increased compared to last year with third-party revenues up by 11.9% and 5.0% at constant currency, a continuation of the growth trend underpinned by the inflow of new contracts. The Maintenance order book stood at 11.6 billion dollars at 30 June 2019, an increase of 0.2 billion dollars compared to 31 December 2018.
The operating margin expressed as a percentage of total revenues stood at 4.9%, an increase of 0.3 point primarily driven by the components activity.

Air France-KLM Group: Operating result at €400 million with positive passenger unit revenue and unit cost improvement

  Second Quarter First half
  2019 Change Change
constant currency
2019 Change Change
constant currency
Capacity (ASK m) 85,207 +4.5%   160,793 +3.8%
Traffic (RPK m) 75,774 +6.1%   141,363 +4.4%  
Passenger unit revenue per ASK (€ cts)  6.75 +2.4% +0.8% 6.48 +0.8% -0.4%
Group unit revenue per ASK (€ cts)  7.28 +1.6% +0.0%  7.05 +0.2% -1.0%
Group unit cost per ASK (€ cts) at constant fuel  6.82 -0.3% -2.3% 6.99 +0.4% -1.4%
Revenues (€m) 7,050 +6.4% +4.5% 13,036 +4.9% +3.3%
EBITDA (€m) 1,147 +98 +114 1,571 -99 -42
Operating result (€m) 400 +54 +72 97 -131 -69
Operating margin (%) 5.7% +0.5 pt +0.8 pt 0.7% -1.1 pt -0.6 pt
Net income – Group part (€m) 80 -30   -240 -81  

In the second quarter 2019, the Air France-KLM Group posted an operating result of 400 million euros, up 54 million euros compared to last year, which was impacted by the Air France strike for 260 million euros.

Compared to last year, the Group’s unit revenue was stable, the positive passenger unit revenue impact of 53 million euros being offset by a -54 million euro negative impact from Cargo.

The fuel bill including hedging amounted to 1,404 million euros for the second quarter 2019, up 220 million euros. This increase is explained mainly by a lower hedge gain for the second quarter 2019 (gain of 56 million euros compared to 212 million euro last year), and a negative currency effect on the fuel bill of 89 million euros due to a stronger dollar.

Currencies had a positive 123 million euro impact on revenues and a negative 52 million euro effect on costs (ex-fuel) including currency hedging. Together with the 89 million euro fuel currency effect, the net impact of currencies amounted to a negative 18 million euros for the second quarter 2019.

Unit cost down confirming the full year guidance
On a constant currency and fuel price basis, unit costs were down -2.3% in the second quarter 2019. This decrease is supported by the successful execution of cost focus measures in Air France and the high basis of comparaison last year due to the strikes at Air France.
However this was partly offset by higher unit costs at KLM due to the implementation of last year’s labor wage agreements.

Group net employee costs were up 4.6% in the quarter compared to last year, explained by additional hires in response to the capacity growth and the impact of wage agreement implementation for Air France and KLM staff. The average number of FTEs in the second quarter 2019 increased by 1,650 compared to last year, including +700 Pilots and +650 Cabin Crew. However, productivity measured in ASK per FTE increased by 3.1% in the second quarter 2019.

Net debt down, leverage ratio improved slightly further, on track for full year guidance of below 1.5x

  Second Quarter First Half
In € million 2019 Change 2019 Change
Cash flow before change in WCR and Voluntary Departure Plans, continuing operations (€m) 1,096 +175 1,465 +31
Cash out related to Voluntary Departure Plans (€m) -6 +92 -11 +110
Change in Working Capital Requirement (WCR) (€m) -19 -45 787 -46
Net cash flow from operating activities (€m) 1,071 +222 2,241 +95
Net investments before sale & lease-back* (€m) -711 -136 -1,389 +99
Operating free cash flow (€m) 360 +86 852 +194
Reduction of lease debt -250 +25 -501 +16
Adjusted operating free cash flow ** 110 +111 351 +210

* 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 with deduction of the repayment of lease debt.

Positive adjusted operating free cash flow
The Group generated positive adjusted operating free cash flow of 110 million euros, an increase of 111 million euros compared to last year, mainly explained by lower capex in the second quarter 2019 due to a year-on-year shift in the investment-timing pattern.

Leverage on track with full year guidance of <1.5x       

In € million 30 Jun 2019 31 Dec 2018
Net debt 5,698 6,164
EBITDA trailing 12 months 4,118 4,217
Net debt/EBITDA trailing 12 months 1.4 x 1.5 x

The Group reduced its net debt to 5,698 million euros at 30 June 2019 versus 6,164 million euros at 31 December 2018, this 466 million euro reduction being driven by operating free cash flow generation and the repayment of lease debt.
The net debt/EBITDA ratio stood at 1.4x at 30 June 2019, a decrease of 0.1 point compared to 31 December 2018, explained by the reduction in net debt.

Air France improvement explained by last year strike, KLM impacted by fuel

Second Quarter First Half
  2019 Change 2019 Change
Air France Group Operating result (€m) 143 +130 -113 +51
Operating margin (%) 3.3% +3.0 pt -1.4% +0.8 pt
KLM Group Operating result (€m) 258 -70 202 -186
Operating margin (%) 8.9% -2.8 pt 3.8% -3.7 pt

Outlook

The global economic and geopolitical context remains uncertain and the Group operates in a highly competitive marketplace.
Based on the current data for the Passenger network:

  • Long-haul forward booking load factors from August 2019 to December 2019 are on average ahead compared to last year.
  • Network passenger unit revenue at constant currency is expected to be stable compared to last year for the third quarter 2019.

Capacity growth update:

  • With the growth of Transavia France adjusted slightly downwards, Transavia is expected to grow at a sustainable pace of 7% to 9% for full year 2019.
  • Passenger network plan remains unchanged to moderately grow capacity by 2% to 3% for the full year 2019 compared to last year.

Full year guidance update:

  • The Group will pursue initiatives to reduce unit costs1, with a targeted 2019 reduction of between -1% to 0% at constant currency and fuel price.
  • The 2019 fuel bill is expected to increase by 550 million euros compared to 2018 to 5.5 billion euros2, based on the forward curve of 26 July 2019.
  • The Group plans capital expenditure of 3.2 billion euros for 2019 and is targeting a Net debt/EBITDA ratio of below 1.5x.

*****

Air France-KLM to simplify its structure

The Board of Directors of Air France-KLM on February 19 unanimously approved the presentation of Benjamin Smith, CEO Air France-KLM, outlining his ambitions for the Group, principles of managerial governance, strategic decisions and processes to be made at Group level with the goal of simplifying and improving the governance of the Group in order to reach European airline leadership.

Some key elements necessary to achieve the long-term goals of the Group:

  • Create a new Group CEO Committee to determine the strategic direction for all Group airlines and business units. This CEO committee will be chaired by Benjamin Smith. The other members of the committee include Pieter Elbers (CEO KLM), Anne Rigail (CEO Air France) and Frédéric Gagey (CFO Air France-KLM). The three of them will report directly to Benjamin Smith.
  • Increase collaboration across the Group to better capture synergies, efficiencies and economies of scale, with the aim of improving overall Group profitability
  • Celebrate the longstanding heritage, reputation and brand recognition of Air France, KLM and Transavia within their respective markets and reinforce the Group’s position at it two hubs, Amsterdam Schiphol and Paris-Charles de Gaulle
  • Simplify key Group operational processes in the following areas: fleet and network strategy, commercial and alliances strategy, human resources, purchasing, digital and data management.

The Board of Air France-KLM concurs with the Supervisory Board of KLM and proposes the renewal of Pieter Elbers as CEO of KLM during the KLM Annual General Meeting in April.

Both Anne Rigail and Pieter Elbers are hereby also appointed Air France-KLM Deputy CEOs and have expressed their commitment to build the Group’s success alongside Benjamin Smith.

The Air France-KLM Board of Directors acknowledges the entry of Benjamin Smith to the Supervisory Board of KLM at their next AGM.

Cees’t Hart will become a member of the Air France-KLM Board of Directors at the Group’s next AGM, replacing Hans Smits.

“We are convinced that Benjamin Smith and his team, with the renewal of Pieter Elbers, will drive further growth at Air France-KLM, leveraging the combined strength and experience provided by the Group and its airlines.” said Anne-Marie Couderc, Chair of the Air France-KLM Board. “The Board of Directors welcomes this new management structure adopted today, that will help the Group, under the clear leadership of Benjamin, achieve industry leadership and success”

Air France-KLM to finalize a joint venture with Air Europa for flights to Latin America

Air France-KLM and Air Europa intend to conclude a new joint venture agreement for their flights between Europe and Central and South America. This foreseen agreement will allow both to expand their offerings and enhance travel opportunities for their respective customers.

For many years, both Air France and KLM have had a fruitful cooperation with Air Europa. The current partnership consists mainly of successful codeshare agreements between and beyond Paris and Amsterdam on the one hand and Madrid on the other. Air France and Air Europa started their code share cooperation in 2003 and currently cover 21 code share routes within Europe. KLM and Air Europa have been collaborating since 2002 and now operate 19 code share routes within Europe. In 2007, Air Europa also joined the SkyTeam Alliance.

Air Europa Boeing 787-8 Dreamliner EC-MOM (msn 36419) PAE (Nick Dean). Image: 937618.

Both parties are currently conducting an integral analysis of a deeper and expanded cooperation, aiming at a joint venture agreement between Air France-KLM and Air Europa between Europe and Central/South America to strengthen the joint offer to customers.

The complementarity of the respective networks from/to Central and South America will provide significant additional benefits for customers in the form of better connectivity, increased seat availability and a basis to launch new routes and direct flights between the two continents.

Air France-KLM and Air Europa are in the midst of carrying out an in-depth legal analysis of the terms of this possible future agreement in order to ensure compliance with all applicable laws and regulations.

“The deepening of our cooperation with Air Europa through a joint venture will provide a strong foundation for us to work even closer together in order to enhance our offer on routes between Europe and Central / South America. We are striving to even increase and improve our current leading role on these markets and offer our joint customers more benefits together with our long term partner Air Europa” said Frédéric Gagey, Chief Executive Officer and Chief Financial Officer, Air France-KLM.

“We are proud to be strengthening and expanding the successful relations we have with Air France-KLM and to be working together as part of the new cooperation project between Europe and Central and South America. We are convinced that this new alliance will provide great benefits for both airlines as well as considerable advantages for our customers,” said Javier Hidalgo, Chief Executive Officer of Globalia, parent company of Air Europa.

Copyright Photo: Air Europa Boeing 787-8 Dreamliner EC-MOM (msn 36419) PAE (Nick Dean). Image: 937618.

Air Europa aircraft slide show:

Air France-KLM Group report their third quarter financial results

Air France Airbus A380-861 F-HPJA (msn 033) TLS. Image: 904814.

Air France-KLM Group reported their third quarter financial results:

Jean-Marc Janaillac made the following comments: “The strong operating performance achieved by the Group in the third quarter reflects a sustained execution on our strategic priorities, as well as a robust business environment translated into solid traffic and unit revenue trends. We continued to move forward notably with the expansion of our network of strategic alliances and the implementation of a new distribution model. At the same time, we relentlessly pursued our efforts to strengthen our financial structure. All of these accomplishments demonstrate that Air France-KLM is well on track to deliver on Trust Together strategic priorities of growing revenues and improve competitiveness.”

Third Quarter

Nine months

2017 Change

2017 Change

Passengers (thousands)
Unit revenue per ASK (€ cts) Operating result (€m)
Net result – group (€m) Operating free cash flow (€m) Net debt at end of period (€m)

27,911 7.03 1,022 552 125

+5.1%

+4.1% +38.7% +1.5% +248

75,056 6.75 1,375 703 793 2,796

+6.0%

+1.8% +44.0% +63.5%

+543 -859

Summary:

Copyright Photo: Air France Airbus A380-861 F-HPJA (msn 033) TLS. Image: 904814.

Air France:

Air France-KLM’s first quarter loss widens

Air France-KLM Group (Air France, KLM Royal Dutch Airlines, Transavia Netherlands, Transavia France, Hop! and Martinair) reported a first quarter net loss of €504 million ($56.9 million), compared to a net loss of €485 million ($546 million) in the same quarter a year ago.

Read the full report: CLICK HERE

Copyright Photo: Ton Jochems/AirlinersGallery.com. The group retired three Boeing 747 freighters in the Winter 2014-15 season, while another five Martinair McDonnell Douglas MD-11s will be retired by the end of the Winter 2015-16 season. The Group plans to operate only five full-freighters by the end of 2016. McDonnell Douglas MD-11 (F) PH-MCS (msn 48618) of Martinair taxies at the Amsterdam cargo hub.

Air France aircraft slide show: AG Airline Slide Show

KLM aircraft slide show: AG Airline Slide Show

Martinair aircraft slide show: AG Airline Slide Show