AIR FRANCE - KLM : THIRD QUARTER 2017 RESULTS STRO
Post# of 301275
3 rd of November 2017
| THIRD QUARTER 2017 RESULTS STRONG OPERATING RESULT DRIVEN BY SOLID TRAFFIC AND INCREASE IN UNIT REVENUE |
THIRD QUARTER 2017
- The operating result stands at 1,022 million euros, up 38.7% compared to Q3 2016
- Robust traffic resulting in an improved load factor, up 1.6 pt
- Confirmation of the positive trend in Group (Passenger + Transavia) unit revenue per available seat kilometer (RASK) at constant currency: +4.1%
GOOD STRATEGIC AND COMMERCIAL MOMENTUM
- Implementation of a new distribution strategy by adopting NDC
- Upcoming launch of revamped Flying Blue program
FURTHER STRENGTHENING THE FINANCIAL STRUCTURE
- Soft call exercise of the OCEANE 2023 bond leading to deleverage by up to 520 million euros
- Finalizing the implementation of de-risked pension schemes for pilots and cabin crew in KLM
OUTLOOK
- Based on current outlook, Q4 2017 unit revenues at constant currency compared to last year expected to be positive
- Q4 2017 fuel bill in euros forecasted stable
- Full year 2017 unit cost evolution at constant currency, fuel and pension charges expected slightly negative, and between -1.0 to -1.5% excluding load factor and profit sharing effect
- Operating free cash flow 2017 above last year, with capex at € 2.2bn
- Adjusted net debt to EBITDAR expected between 2.2x and 2.3x end 2017 (before acquisition in 2018 of a 31% stake in Virgin Atlantic)
- On track to implement IFRS16 in 2018
The Board of Directors of Air France-KLM, chaired by Jean-Marc Janaillac, met on 2 nd of November 2017 to approve the accounts for the Third Quarter 2017. 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."
| Air France-KLM Group | Third Quarter | Nine months | ||
| 2017 | Change | 2017 | Change | |
| Passengers (thousands) | 27,911 | +5.1% | 75,056 | +6.0% |
| Unit revenue per ASK (€ cts) | 7.03 | +4.1% | 6.75 | +1.8% |
| Operating result (€m) | 1,022 | +38.7% | 1,375 | +44.0% |
| Net result - group (€m) | 552 | +1.5% | 703 | +63.5% |
| Operating free cash flow (€m) | 125 | +248 | 793 | +543 |
| Net debt at end of period (€m) | 2,796 | -859 | ||
Business Review
Network: Improvement in unit revenue in both the Passenger and Cargo network
| Network | Third Quarter | Nine months | ||||
| 2017 | Change | Change constant currency | 2017 | Change | Change constant currency | |
| Capacity (EASK m) | 86,312 | +1.7% | 243,247 | +2.4% | ||
| Total revenues (€m) | 6,205 | +4.2% | +4.9% | 16,995 | +3.6% | +3.4% |
| Scheduled revenues (€m) | 5,967 | +4.9% | +5.6% | 16,301 | +4.1% | +4.0% |
| Unit revenue per EASK (€ cts) | 6.92 | +3.2% | +3.8% | 6.70 | +1.7% | +1.6% |
| Unit cost per EASK (€ cts) | 6.01 | -0.5% | -0.1 % | 6.25 | -0.2% | +0.7% |
| Operating result (€m) | 782 | +218m | +235m | 1,091 | +324m | +435m |
The combined Passenger and Cargo operating result amounted to 782 million euros in Q3 2017, an improvement of 235 million euros at constant currency, driven by improvement in unit revenue in both Passenger and Cargo.
Robust Third Quarter Traffic numbers confirming improvement in Passenger unit revenue
| Third Quarter | Nine months | |||||
| Passenger network | 2017 | Change | Change constant currency | 2017 | Change | Change constant currency |
| Passengers (thousands) | 22,951 | +5.4% | 63,284 | +4.8% | ||
| Capacity (ASK m) | 76,710 | +1.9% | 215,512 | +2.7% | ||
| Traffic (RPK m) | 68,407 | +3.9% | 187,783 | +4.5% | ||
| Load factor | 89.2% | +1.7 pt | 87.1% | +1.5 pt | ||
| Total passenger revenues (€m) | 5,712 | +4.4% | +5.0% | 15,492 | +4.1% | +3.9% |
| Scheduled passenger revenues (€m) | 5,512 | +5.1% | +5.7% | 14,911 | +4.6% | +4.4% |
| Unit revenue per ASK (€ cts) | 7.19 | +3.2% | +3.7% | 6.92 | +1.9% | +1.7% |
| Unit revenue per RPK (€ cts) | 8.06 | +1.2% | +1.8% | 7.94 | +0.2% | -0.0% |
The Passenger unit revenue continued to improve in Q3 up 3.7% at constant currency. On long haul, there was a strong premium class performance with unit revenues up by 8.3%, while economy class was up by 3.1%. The improvement continued to be driven mainly by the strong recovery in Asia with unit revenue up 8.8%, and Latin America up 12.1%.
Cargo turnaround continuing
| Third Quarter | Nine months | |||||
| Cargo business | 2017 | Change | Change constant currency | 2017 | Change | Change constant currency |
| Tons (thousands) | 279 | +0.1% | 837 | +0.0% | ||
| Capacity (ATK m) | 3,726 | -0.3% | 10,745 | +0.1% | ||
| Traffic (RTK m) | 2,126 | +0.6% | 6,315 | +1.3% | ||
| Load factor | 57.1% | +0.5 pt | 58.8% | +0.7 pt | ||
| Total Cargo revenues (€m) | 493 | +1.2% | +3.2% | 1,503 | -1.3% | -1.1% |
| Scheduled cargo revenues (€m) | 455 | +1.8% | +3.6% | 1,390 | -1.0% | -0.9% |
| Unit revenue per ATK (€ cts) | 12.22 | +2.0% | +3.8% | 12.93 | -1.1% | -1.0% |
| Unit revenue per RTK (€ cts) | 21.41 | +1.1% | +2.8% | 22.01 | -2.2% | -2.2% |
During Q3, the improvement in the Cargo performance was driven by an unit revenue increase of 3.8% at constant currency, confirming the continuation of the turnaround.
Transavia: Both France and Netherlands show outstanding performance in Q3 and will have positive operating result in 2017
| Third Quarter | Nine months | |||
| Transavia | 2017 | Change | 2017 | Change |
| Passengers (thousands) | 4,960 | +3.7% | 11,772 | +12.8% |
| Capacity (ASK m) | 9,532 | +3.9% | 22,497 | +11.8% |
| Traffic (RPK m) | 8,849 | +5.7% | 20,402 | +13.2% |
| Load factor | 92.8% | +1.6 pt | 90.7% | +1.1 pt |
| Total passenger revenues (€m) | 555 | +13.3% | 1,160 | +19.2% |
| Scheduled passenger revenues (€m) | 555 | +13.3% | 1,151 | +19.3% |
| Unit revenue per ASK (€ cts) | 5.83 | +9.3% | 5.12 | +6.7% |
| Unit revenue per RPK (€ cts) | 6.28 | +7.4% | 5.64 | +5.4% |
| Unit cost per ASK (€ cts) | 4.12 | -4.8% | 4.58 | -2.7% |
| Operating result (€m) | 164 | +72m | 121 | +104m |
Continuing traffic growth (+5.5%) and strong unit revenue rise (+9.3%) resulted in a significant increase in Transavia's revenue (+13.3%). In combination with a decrease in unit costs by 4.8%, this performance led to a strong Q3 operating profit of 164 million euros.
Maintenance: Order book in line with target
| Third Quarter | Nine months | |||||
| Maintenance | 2017 | Change | Change constant currency | 2017 | Change | Change constant currency |
| Total revenues (€m) | 1,050 | +0.4% | 3,091 | +1.3% | ||
| Third party revenues (€m) | 462 | -4.1% | -1.5% | 1,362 | +1.0% | +0.6% |
| Operating result (€m) | 75 | -2m | 0m | 164 | -8m | -12m |
| Operating margin (%) | 7.1% | -0.2 pt | -0.1 pt | 5.3% | -0.3 pt | -0.4 pt |
Over the period, the Maintenance order book has further increased to a record high of 10.4 billion dollars end September 2017, exceeding the 2017 target. Margins remained at a solid level taking into account OEM supply chain pressure in engine business and change in product and business mix from mature to new contracts
Group Review
Group operating result driven by solid traffic and unit revenue performance
| Third Quarter | Nine months | |||||
| 2017 | Change | Change constant currency | 2017 | Change | Change constant currency | |
| Capacity (EASK m) | 95,844 | +1.9% | 265,744 | +3.1% | ||
| Revenues (€m) | 7,235 | +4.3% | +5.1% | 19,549 | +4.2% | +4.1% |
| EBITDAR (€m) | 1,753 | +23.5% | +26.0% | 3,497 | +18.9% | +23.8% |
| EBITDA (€m) | 1,488 | +29.5% | +32.0% | 2,670 | +24.6% | +32.2% |
| Operating result (€m) | 1,022 | +38.7% | +42.9% | 1,375 | +44.0% | +65.8% |
| Operating margin (%) | 14.1% | +3.5 pt | +3.7 pt | 7.0% | +1.9 pt | +2.6 pt |
| Lease adjusted operating result ((€m) | 1,110 | +34.3% | +37.5% | 1,651 | +35.2% | +51.0% |
| Lease adjusted operating margin (%) | 15.3% | +3.4 pt | +3.6 pt | 8.4% | +1.9 pt | +2.6 pt |
| Net result, group share (€m) | 552 | +8 | 703 | +273 | ||
The Q3 operating result is 1,022 million euros which is an improvement by 285 million euros compared to last year. The main items contributing are the positive trend in Group's unit revenues resulting in an increase of 266 million euros, whereas the decrease in fuel price including hedge results contributed 61 million euros.
Adjusted for the interest portion of operating leases, the operating margin stood at 15.3% versus 11.9% at Q3 2016.
Unit cost reduction impacted by increase in load factor and profit sharing
The reported Q3 unit cost per EASK is down -0.8%. On a constant currency, fuel price and pension-related expense basis the unit cost was up 0.6%, impacted by higher flight variable costs related to the increasing load factor and by profit sharing. Excluding these effects, the unit cost at constant currency, fuel price and pension expense is down -1.6% in Q3.
Improved employee productivity
Productivity, measured in EASK per FTE, increased by 2.7% while capacity increased by 1.9%. The average number of staff decreased by 700 FTEs including an increase in Pilots by 100 FTEs and in Cabin crew by 600 FTEs. Ground staff FTEs reduced 1400 FTEs. Net employee costs were stable before profit sharing which increased by 99 million euros.
Third Quarter 2017 fuel bill down compared to last year
The Third Quarter 2017 fuel bill amounted to 1,148 million euros, down -96 million euros compared to previous year.
Further strengthening the financial structure
Net debt reduction supported by an improvement in EBITDA and working capital
| Third Quarter | Nine months | |||
| In € million | 2017 | Change | 2017 | Change |
| Cash flow before change in WCR and Voluntary Departure Plans, continuing operations | 1,355 | +294 | 2,414 | +544 |
| Cash out related to Voluntary Departure Plans | -27 | +8 | -100 | +108 |
| Change in Working Capital Requirement (WCR) | -653 | +95 | 173 | +128 |
| Net cash flow from operating activities | 675 | +397 | 2,487 | +780 |
| Net investments before sale & lease-back* | -550 | -149 | -1,694 | -237 |
| Operating free cash flow | 125 | +248 | 793 | +543 |
* Net investments before sale & lease-back is defined as the 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
Year to date, operating free cash flow is positive at 793 million euros up 543 million euros compared to last year. The net debt at 30 September 2017 stood at 2,796 million euros, a reduction of 859 million euros compared to 31 December 2016, driven by the improvement in both EBITDA and working capital. The adjusted net debt decreased by 656 million euros to 10,510 million euros. The ratio adjusted net debt / EBITDAR, twelve months trailing, has decreased to 2.4x, achieving the target to be below 2.5x.
De-risking KLM pilot and cabin pension plans
Following a change in Dutch pension regulation and in order to mitigate its risks, KLM has conducted negotiations with its cockpit and cabin crew to adjust their pension schemes.
An agreement has been reached between KLM and the Dutch Airline Pilot VNV to modify the pilot pension scheme, subject to the approval of the VNV members. The future scheme is expected to be qualified as a collective defined contribution scheme, and according to IAS 19, the de-risking of the pilot pension fund will lead in Q4 to the derecognition of the "Pension asset" of the Group's balance sheet through non-current expense in the P&L.
Another agreement with Cabin crew has been reached in August 17 on a collective defined contribution scheme. The impact on the Group equity and related P&L non-current (and non-cash) expense amounts 311 million euros (net of tax EUR 233 million euros) in Q3 2017
Continued reduction in leverage
The reserved capital increase allowing Delta and China Eastern to acquire 10% of Air France-KLM has been completed per October 2017 for an amount of 751 million euros. The exercise by Air France-KLM of the soft call of the OCEANE 2023 will lead to a further debt reduction up to 520 million euros per 15 November 2017. With these operations, Air France-KLM will continue the deleveraging of the Group.
Contribution by airline to Third Quarter 2017 results
| Third Quarter | Nine months | |||
| 2017 | Change | 2017 | Change | |
| Air France Group | 484 | +173 | 545 | +219 |
| Operating margin (%) | 11.0% | +3.6 pt | 4.5% | +1.7 pt |
| KLM Group | 540 | +118 | 840 | +211 |
| Operating margin (%) | 18.5% | +3.5 pt | 10.7% | +2.3 pt |
Strategic initiatives in Passenger Business: Developing a new distribution strategy and a revamped loyalty program
In order to best serve customers, Air France KLM is embracing NDC (New Distribution Capability, an enriched IATA messaging standard allowing the distribution of rich content and personalized offers), and investing in options for travel partners to access, book and sell it. At the same time, in order to adapt to market circumstances and to further improve its efficiency, Air France KLM will implement a Distribution Surcharge on GDS sales, effective from April 1st 2018. The surcharge does not apply to travel agency sales via an NDC connection and to Air France and KLM direct sales channels.
A complete re-engineering of the Group's loyalty program Flying Blue will be announced on 6 th November and will be launched on 1st April 2018, with the purpose to enrich the travel experience, stimulate the loyalty towards our airlines and maximize the attractiveness.
Outlook
The global context remains highly uncertain regarding the geopolitical environment in which we operate and regarding fuel prices.
In a context of dynamic demand, the capacity growth in Q4 2017 will be 3 to 4% for Passenger network and 6 to 7% for Transavia. For the passenger network, the long haul forward bookings for the coming four months stand above last year's levels and, based on the current outlook, the variation in unit revenue is expected to be positive in Q4 2017 compared to the previous year.
The fuel bill in euros is expected to be stable in Q4 2017 compared to 2016. In 2018, it is expected to be stable in euros and up 300 million dollars compared to 2017 [1] .
The Group is pursuing its initiatives to reduce unit costs. For full year 2017, unit cost evolution at constant currency, fuel and pension charges is expected slightly negative, and between -1.0 to -1.5% excluding load factor and profit sharing effects.
The Group is continuing to improve its financial structure. The operating free cash flow 2017 is expected above last year, with a capex at 2.2 billion euros. With the reserved capital increase and the conversion of the OCEANE, the adjusted net debt to EBITDAR is expected between 2.2x and 2.3x at the end of the year (before the acquisition in 2018 of a 31% stake in Virgin Atlantic).
In 2018, the early implementation of IFRS 16 is expected, in a first assessment, to result in a consequential reduction of net debt of at least 1.5 billion euros compared to adjusted net debt (based on 31st December 2016 figures).
These initiatives show that Air France-KLM is resolutely committed to implementing Trust Together strategic priorities, by regaining the offensive and improving competitiveness.
***** The Third Quarter 2017 accounts are not audited by the Statutory Auditors.
The results presentation is available at www.airfranceklm.com on 3 rd of November 2017 from 7:15 am CET.
A conference call will be hosted by Mr Gagey (CFO) on 3 rd of November 2017 at 8:30am CET. To connect to the conference call, please dial:
- France: +33 (0)1 76 77 25 06
- Netherlands: +31 (0) 20 703 8261
- UK: +44 (0)330 336 9411
- US: +1 719 325 4787
Confirmation code: 7819012
To listen to the audio-replay of the conference call, please dial:
- France: +33 (0) 1 70 48 00 94
- Netherlands: +31 (0) 20 721 8903
- UK: +44 (0) 207 984 7568
- US: +1 719-457-0820
Confirmation code: 7819012
Investor Relations Press Marie-Agnès de Peslouan Wouter van Beek +33 1 49 89 52 59 +33 1 49 89 52 60 +33 1 41 56 56 00 madepeslouan@airfranceklm.com Wouter-van.Beek@airfranceklm.com Income Statement
| Third Quarter | Nine months | |||||
| In millions euros | 2017 | 2016 | Change | 2017 | 2016 | Change |
| Sales | 7,234 | 6,938 | +4.3% | 19,548 | 18,758 | +4.2% |
| Other revenues | 1 | 1 | +0.0% | 1 | 1 | +0.0% |
| Revenues | 7,235 | 6,938 | +4.3% | 19,549 | 18,758 | +4.2% |
| Aircraft fuel | -1,148 | -1,244 | -7.7% | -3,428 | -3,507 | -2.3% |
| Chartering costs | -104 | -109 | -4.6% | -306 | -324 | -5.6% |
| Landing fees and en route charges | -513 | -523 | -1.9% | -1,445 | -1,437 | +0.6% |
| Catering | -214 | -121 | +76.9% | -602 | -336 | +79.2% |
| Handling charges and other operating costs | -457 | -446 | +2.5% | -1,313 | -1,196 | +9.8% |
| Aircraft maintenance costs | -602 | -601 | +0.2% | -1,842 | -1,847 | -0.3% |
| Commercial and distribution costs | -233 | -227 | +2.6% | -701 | -690 | +1.6% |
| Other external expenses | -380 | -507 | -25.0% | -1,162 | -1,460 | -20.4% |
| Salaries and related costs | -1,928 | -1,837 | +5.0% | -5,655 | -5,543 | +2.0% |
| Taxes other than income taxes | -39 | -37 | +5.4% | -122 | -125 | -2.4% |
| Other income and expenses | 135 | 132 | +2.3% | 523 | 647 | -19.2% |
| EBITDAR | 1,753 | 1,419 | +23.5% | 3,497 | 2,941 | +18.9% |
| Aircraft operating lease costs | -265 | -270 | -1.9% | -827 | -798 | +3.6% |
| EBITDA | 1,488 | 1,149 | +29.5% | 2,670 | 2,143 | +24.6% |
| Amortization, depreciation and provisions | -466 | -412 | +13.1% | -1,295 | -1,188 | +9.0% |
| Income from current operations | 1,022 | 737 | +38.7% | 1,375 | 955 | +44.0% |
| Sales of aircraft equipment | 0 | 8 | -100.0% | 19 | 16 | +18.8% |
| Other non-current income and expenses | -315 | 0 | N/A | -326 | -107 | +204.7% |
| Income from operating activities | 707 | 745 | -5.1% | 1,068 | 864 | +23.6% |
| Cost of financial debt | -65 | -75 | -13.3% | -198 | -237 | -16.5% |
| Income from cash and cash equivalent | 7 | 11 | -36.4% | 27 | 39 | -30.8% |
| Net cost of financial debt | -58 | -64 | -9.4% | -171 | -198 | -13.6% |
| Other financial income and expenses | 81 | -34 | nm | 82 | -78 | nm |
| Income before tax | 730 | 647 | +12.8% | 979 | 588 | +66.5% |
| Income taxes | -186 | -113 | +64.6% | -282 | -166 | +69.9% |
| Net income of consolidated companies | 544 | 534 | +1.9% | 697 | 422 | +65.2% |
| Share of profits (losses) of associates | 9 | 2 | +350.0% | 16 | 3 | +433.3% |
| Income from continuing operations | 553 | 536 | +3.2% | 713 | 425 | +67.8% |
| Net income from discontinued operations | 0 | 12 | -100.0% | -8 | 14 | nm |
| Net income for the period | 553 | 548 | +0.9% | 705 | 439 | +60.6% |
| Minority interest | -1 | -4 | -75.0% | -2 | -9 | -77.8% |
| Net income for the period - Group | 552 | 544 | +1.5% | 703 | 430 | +63.5% |
Consolidated Balance Sheet
| Assets | 30 Sep 2017 | 31 Dec 2016 |
| In million euros | ||
| Goodwill | 216 | 218 |
| Intangible assets | 1,113 | 1,066 |
| Flight equipment | 9,813 | 9,119 |
| Other property, plant and equipment | 1,453 | 1,480 |
| Investments in equity associates | 303 | 292 |
| Pension assets | 2,487 | 1,462 |
| Other financial assets | 1,122 | 1,064 |
| Deferred tax assets | 143 | 176 |
| Other non-current assets | 187 | 448 |
| Total non-current assets | 16,837 | 15,325 |
| Assets held for sale | 0 | 0 |
| Other short-term financial assets | 444 | 130 |
| Inventories | 583 | 566 |
| Trade receivables | 2,293 | 1,868 |
| Other current assets | 1,136 | 1,105 |
| Cash and cash equivalents | 4,102 | 3,938 |
| Total current assets | 8,558 | 7,607 |
| Total assets | 25,395 | 22,932 |
| Liabilities and equity | 30 Sep 2017 | 31 Dec 2016 |
| In million euros | ||
| Issued capital | 300 | 300 |
| Additional paid-in capital | 2,971 | 2,971 |
| Treasury shares | -67 | -67 |
| Perpetual | 600 | 600 |
| Reserves and retained earnings | -883 | -2,520 |
| Equity attributable to equity holders of Air France-KLM | 2,921 | 1,284 |
| Non-controlling interests | 16 | 12 |
| Total Equity | 2,937 | 1,296 |
| Pension provisions | 2,117 | 2,119 |
| Other provisions | 1,625 | 1,673 |
| Long-term debt | 6,593 | 7,431 |
| Deferred tax liabilities | 451 | -12 |
| Other non-current liabilities | 338 | 284 |
| Total non-current liabilities | 11,124 | 11,495 |
| Provisions | 561 | 654 |
| Current portion of long-term debt | 1,412 | 1,021 |
| Trade payables | 2,367 | 2,359 |
| Deferred revenue on ticket sales | 3,062 | 2,517 |
| Frequent flyer programs | 819 | 810 |
| Other current liabilities | 3,103 | 2,775 |
| Bank overdrafts | 10 | 5 |
| Total current liabilities | 11,334 | 10,141 |
| Total equity and liabilities | 25,395 | 22,932 |
Consolidated Statement of Cash Flows from 1 st January till 30 th September
| In € millions | 30 Sep 2017 | 30 Sep 2016 |
| Net income from continuing operations | 713 | 425 |
| Net income from discontinued operations | -8 | 14 |
| Amortization, depreciation and operating provisions | 1,295 | 1,194 |
| Financial provisions | 37 | -7 |
| Loss (gain) on disposals of tangible and intangible assets | -17 | -69 |
| Loss (gain)on disposals of subsidiaries and associates | -1 | -10 |
| Derivatives - non monetary result | 34 | -131 |
| Unrealized foreign exchange gains and losses, net | -168 | 121 |
| Impairment | 0 | 2 |
| Other non-monetary items | 221 | 12 |
| Share of (profits) losses of associates | -16 | -1 |
| Deferred taxes | 224 | 141 |
| Financial Capacity | 2,314 | 1,691 |
| Of which discontinued operations | 0 | 29 |
| (Increase) / decrease in inventories | -15 | -108 |
| (Increase) / decrease in trade receivables | -487 | -198 |
| Increase / (decrease) in trade payables | 62 | 54 |
| Change in other receivables and payables | 613 | 297 |
| Change in working capital requirements | 173 | 45 |
| Change in working capital from discontinued operations | 0 | -10 |
| Net cash flow from operating activities | 2,487 | 1,726 |
| Purchase of property, plant and equipment and intangible assets | -1,769 | -1,595 |
| Proceeds on disposal of property, plant and equipment and intangible assets | 75 | 138 |
| Proceeds on disposal of subsidiaries, of shares in non-controlled entities | 3 | 4 |
| Acquisition of subsidiaries, of shares in non-controlled entities | -7 | -7 |
| Dividends received | 2 | 4 |
| Decrease (increase) in net investments, more than 3 months | -276 | 798 |
| Net cash flow used in investing activities of discontinued operations | 0 | -11 |
| Net cash flow used in investing activities | -1,972 | -669 |
| Sale of minority interest without change in control | 0 | 0 |
| Issuance of debt | 560 | 686 |
| Repayment on debt | -283 | -792 |
| Payment of debt resulting from finance lease liabilities | -533 | -387 |
| Decrease (increase ) in loans, net | -74 | -51 |
| Dividends and coupons on perpetual paid | 0 | -1 |
| Net cash flow used in financing activities of discontinued operations | 0 | -10 |
| Net cash flow from financing activities | -330 | -555 |
| Effect of exchange rate on cash and cash equivalents and bank overdrafts | -26 | -16 |
| Effect of exch. rate on cash and cash eq. and bank overdrafts of disc. ops. | 0 | -1 |
| Change in cash and cash equivalents and bank overdrafts | 159 | 485 |
| Cash and cash equivalents and bank overdrafts at beginning of period | 3,933 | 3,073 |
| Cash and cash equivalents and bank overdrafts at end of period | 4,092 | 3,561 |
| Change in treasury of discontinued operations | 0 | -3 |
Key Performance Indicators
EBITDA and EBITDAR
| Third Quarter | Nine months | |||
| In millions euros | 2017 | 2016 | 2017 | 2016 |
| Income/(loss) from current operations | 1,022 | 737 | 1,375 | 955 |
| Amortization, depreciation and provisions | 466 | 412 | 1,295 | 1,188 |
| EBITDA | 1,488 | 1,149 | 2,670 | 2,143 |
| Aircraft operating lease costs | 265 | 270 | 827 | 798 |
| EBITDAR | 1,753 | 1,419 | 3,497 | 2,941 |
Restated net result, group share
| Third Quarter | Nine months | |||
| In million euros | 2017 | 2016 | 2017 | 2016 |
| Net income/(loss), Group share | 552 | 544 | 703 | 430 |
| Net income/(loss) from discontinued operations | 0 | -12 | 8 | -14 |
| Unrealized foreign exchange gains and losses, net | -68 | -1 | -168 | 121 |
| Change in fair value of financial assets and liabilities (derivatives) | -42 | -2 | -14 | -131 |
| Non-current income and expenses | 315 | -8 | 307 | 91 |
| Depreciation of shares available for sale | 0 | 0 | 0 | 0 |
| De-recognition of deferred tax assets | -74 | 0 | -74 | 0 |
| Restated net income/(loss), group share | 683 | 521 | 762 | 497 |
| Restated net income/(loss) per share (in €) | 2.27 | 1.74 | 2.49 | 1.62 |
Return on capital employed (ROCE)
| In million euros | 30 Sep 2017 | 30 Sep 2016 | 30 Sep 2016 | 30 Sep 2015* |
| Goodwill and intangible assets | 1,329 | 1,254 | 1,254 | 1,273 |
| Flight equipment | 9,813 | 9,214 | 9,214 | 8,773 |
| Other property, plant and equipment | 1,453 | 1,485 | 1,485 | 1,702 |
| Investments in equity associates | 303 | 78 | 78 | 115 |
| Financial assets excluding shares available for sale, marketable securities and financial deposits | 195 | 198 | 198 | 214 |
| Provisions, excluding pension, cargo litigation and restructuring | -1,639 | -1,557 | -1,557 | -1,577 |
| WCR, excluding market value of derivatives | -5,532 | -5,195 | -5,195 | -5,345 |
| Capital employed before operating leases | 5,922 | 5,477 | 5,477 | 5,155 |
| Operating leases x7 | 7,714 | 7,441 | ||
| Average capital employed (A) | 13,415 | 12,761 | ||
| Adjusted results from current operations | 1,844 | 1,454 | ||
| - Dividends received | -3 | -2 | ||
| - Share of profits (losses) of associates | 7 | 5 | ||
| - Tax recognized in the adjusted net result | -439 | -191 | ||
| Adjusted result from current operations after tax (B) | 1,409 | 1,266 | ||
| ROCE, trailing 12 months (B/A) | 10.5% | 9.9% | ||
* Reclassification of Servair as a discontinued operation
Net debt
| Balance sheet at | ||
| In million euros | 30 Sep 2017 | 31 Dec 2016 |
| Current and non-current financial debt | 8,005 | 8,452 |
| Deposits on aircraft under finance lease | -337 | -336 |
| Financial assets pledged (OCEANE swap) | 0 | 0 |
| Currency hedge on financial debt | 9 | -49 |
| Accrued interest | -69 | -89 |
| Gross financial debt (A) | 7,608 | 7,978 |
| Cash and cash equivalents | 4,102 | 3,938 |
| Marketable securities | 98 | 53 |
| Cash pledges | 258 | 50 |
| Deposits (bonds) | 367 | 298 |
| Bank overdrafts | -10 | -5 |
| Other | -3 | -11 |
| Net cash (B) | 4,812 | 4,323 |
| Net debt (A) - (B) | 2,796 | 3,655 |
Adjusted net debt and adjusted net debt/EBITDAR ratio
| Trailing 12 months | 30 Sep 2017 | 31 Dec 2016 |
| Net debt (in €m) | 2,796 | 3,655 |
| Aircraft operating leases x 7 (in €m) | 7,714 | 7,511 |
| Adjusted net debt (in €m) | 10,510 | 11,166 |
| EBITDAR (in €m) | 4,342 | 3,787 |
| Adjusted net debt/EBITDAR ratio | 2.4 x | 2.9 x |
Operating free cash flow
| Third Quarter | Nine months | |||
| In million euros | 2017 | 2016 | 2017 | 2016 |
| Net cash flow from operating activities, continued operations | 675 | 278 | 2,487 | 1,707 |
| Investment in property, plant, equipment and intangible assets | -561 | -443 | -1,769 | -1,595 |
| Proceeds on disposal of property, plant, equipment and intangible assets | 11 | 42 | 75 | 138 |
| Operating free cash flow | 125 | -123 | 793 | 250 |
Lease adjusted operating result
| Third Quarter | Nine months | |||
| In million euros | 2017 | 2016 | 2017 | 2016 |
| Operating result | 1,022 | 737 | 1,375 | 955 |
| Aircraft operating leases x 1/3 | 88 | 90 | 276 | 266 |
| Lease adjusted operating result | 1,110 | 827 | 1,651 | 1,221 |
| Lease adjusted operating margin | 15.3% | 11.9% | 8.4% | 6.5% |
Unit cost: net cost per EASK
| Third Quarter | Nine months | |||
| 2017 | 2016 | 2017 | 2016 | |
| Revenues (in €m) | 7,235 | 6,938 | 19,549 | 18,758 |
| Income/(loss) from current operations (in €m) | -1,022 | -737 | -1,375 | -955 |
| Total operating expense (in €m) | 6,213 | 6,201 | 18,174 | 17,803 |
| Passenger network business - other revenues (in €m) | -200 | -227 | -581 | -633 |
| Cargo business - other revenues (in €m) | -38 | -40 | -113 | -119 |
| Third-party revenues in the maintenance business (in €m) | -462 | -482 | -1,362 | -1,348 |
| Transavia - other revenues (in €m) | 0 | 0 | -9 | -8 |
| Third-party revenues of other businesses (in €m) | -12 | -9 | -31 | -31 |
| Net cost (in €m) | 5,501 | 5,443 | 16,078 | 15,664 |
| Capacity produced, reported in EASK* | 95,844 | 94,081 | 265,744 | 257,760 |
| Net cost per EASK (in € cents per EASK) | 5.74 | 5.79 | 6.05 | 6.08 |
| Gross change | -0.8% | -0.4% | ||
| Currency effect on net costs (in €m) | -15 | 153 | ||
| Change at constant currency | -0.5% | -1.4% | ||
| Fuel price effect (in €m) | -61 | -154 | ||
| Change on a constant currency and fuel price basis | 0.6% | -0.5% | ||
| Change in pension-related expenses (in €m) | 2 | -7 | ||
| Net cost per EASK on a constant currency, fuel price and pension-related expenses basis (in € cents per EASK) | 5.74 | 5.71 | 6.05 | 6.07 |
| Change on a constant currency, fuel price and pension-related expenses basis | +0.6% | -0.4% | ||
* 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) and the Cargo business (in ATK) converted into EASK based on a separate fixed factor for Air France and for KLM..
Individual airline results Air France
| Third Quarter | Nine months | |||
| 2017 | Change | 2017 | Change | |
| Revenue (in €m) | 4,417 | +5.1% | 11,989 | +3.5% |
| EBITDA (in €m) | 806 | +217 | 1,395 | +274 |
| Operating result (en m€) | 484 | +173 | 545 | +219 |
| Operating margin (%) | 11.0% | +3.6 pt | 4.5% | +1.7 pt |
| Operating cash flow before WCR and restructuring cash out (in €m) | 756 | +236 | 1,271 | +236 |
| Operating cash flow (before WCR and restructuring) margin | 17.1% | +4.7 pt | 10.6% | +1.7 pt |
KLM
| Third Quarter | Nine months | |||
| 2017 | Change | 2017 | Change | |
| Revenue (in €m) | 2,924 | +3.5% | 7,831 | +5.4% |
| EBITDA (in €m) | 681 | +128 | 1,269 | +257 |
| Operating result (en m€) | 540 | +118 | 840 | +211 |
| Operating margin (%) | 18.5% | +3.5 pt | 10.7% | +2.3 pt |
| Operating cash flow before WCR and restructuring cash out (in €m) | 645 | +141 | 1,173 | +285 |
| Operating cash flow (before WCR and restructuring) margin | 22.1% | +4.2 pt | 15.0% | +3.0 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 September 2017
[1] Based on the current forward at October 30 th 2017 and assuming a €/$ at 1.18 for October-December 2017
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