Passenger growth +5.1% and load factor +1.3 point.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.”
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.
| 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% |
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% |
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 |
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 | ||
Income Statement
| Second Quarter | First Half | |||||
| In millions euros | 2019 | 2018 | Change | 2019 | 2018 | Change |
| Sales | 7,050 | 6,626 | +6.4% | 13,036 | 12,432 | +4.9% |
| Other revenues | 0 | 1 | -100.0% | 0 | 1 | -100.0% |
| Revenues | 7,050 | 6,626 | +6.4% | 13,036 | 12,432 | +4.9% |
| Aircraft fuel | -1,404 | -1,184 | +18.6% | -2,605 | -2,245 | +16.0% |
| Chartering costs | -135 | -146 | -7.7% | -269 | -276 | -2.5% |
| Landing fees and en route charges | -507 | -479 | +5.9% | -941 | -906 | +3.9% |
| Catering | -208 | -193 | +7.8% | -395 | -375 | +5.3% |
| Handling charges and other operating costs | -455 | -504 | -9.7% | -909 | -980 | -7.2% |
| Aircraft maintenance costs | -646 | -566 | +14.1% | -1,298 | -1,183 | +9.7% |
| Commercial and distribution costs | -267 | -278 | -4.1% | -517 | -510 | +1.4% |
| Other external expenses | -433 | -430 | +0.7% | -872 | -824 | +5.8% |
| Salaries and related costs | -2,048 | -1,959 | +4.6% | -4,020 | -3,812 | +5.5% |
| Taxes other than income taxes | -41 | -38 | +6.6% | -93 | -87 | +6.9% |
| Other income and expenses | 241 | 200 | +20.4% | 454 | 436 | +4.1% |
| EBITDA | 1,147 | 1,049 | +9.3% | 1,571 | 1,670 | -5.9% |
| Amortization, depreciation and provisions | -747 | -703 | +6.2% | -1,474 | -1,442 | +2.2% |
| Income from current operations | 400 | 346 | +15.6% | 97 | 228 | -57.5% |
| Sales of aircraft equipment | 10 | 0 | nm | 23 | -4 | nm |
| Other non-current income and expenses | -35 | 20 | nm | -30 | -23 | +30.4% |
| Income from operating activities | 375 | 366 | +2.5% | 90 | 201 | -55.2% |
| Cost of financial debt | -115 | -122 | -5.8% | -221 | -236 | -6.4% |
| Income from cash and cash equivalent | 15 | 10 | +55.2% | 27 | 20 | +35.0% |
| Net cost of financial debt | -100 | -112 | -11.1% | -194 | -216 | -10.2% |
| Other financial income and expenses | -39 | -86 | -54.7% | -110 | -74 | +48.6% |
| Income before tax | 236 | 168 | +40.5% | -214 | -89 | +140.4% |
| Income taxes | -161 | -62 | +160.7% | -33 | -68 | -51.5% |
| Net income of consolidated companies | 75 | 106 | -29.2% | -247 | -157 | +57.3% |
| Share of profits (losses) of associates | 6 | 5 | +20.0% | 8 | -1 | nm |
| Income from continuing operations | 81 | 111 | -27.0% | -239 | -158 | +51.3% |
| Net income from discontinued operations | 0 | 0 | nm | 0 | 0 | nm |
| Net income for the period | 81 | 111 | -26.4% | -239 | -158 | +50.3% |
| Minority interest | 1 | 1 | 0.0% | 1 | 1 | 0.0% |
| Net income for the period – Group part | 80 | 110 | -27.3% | -240 | -159 | +50.9% |
Consolidated Balance Sheet
| Assets | 30 June 2019 | 31 Dec 2018 |
| In million euros | ||
| Goodwill | 217 | 217 |
| Intangible assets | 1,248 | 1,194 |
| Flight equipment | 10,541 | 10,167 |
| Other property, plant and equipment | 1,530 | 1,503 |
| Right-of-use assets | 5,079 | 5,243 |
| Investments in equity associates | 305 | 311 |
| Pension assets | 174 | 331 |
| Other financial assets | 1,384 | 1,487 |
| Deferred tax assets | 441 | 544 |
| Other non-current assets | 242 | 264 |
| Total non-current assets | 21,161 | 21,261 |
| Assets held for sale | 0 | 0 |
| Other short-term financial assets | 469 | 325 |
| Inventories | 702 | 633 |
| Trade receivables | 2,558 | 2,191 |
| Other current assets | 1,224 | 1,062 |
| Cash and cash equivalents | 4,418 | 3,585 |
| Total current assets | 9,371 | 7,796 |
| Total assets | 30,532 | 29,057 |
| Liabilities and equity | 30 June 2019 | 31 Dec 2018 |
| In million euros | ||
| Issued capital | 429 | 429 |
| Additional paid-in capital | 4,139 | 4,139 |
| Treasury shares | -67 | -67 |
| Perpetual | 403 | 403 |
| Reserves and retained earnings | -3,327 | -3,051 |
| Equity attributable to equity holders of Air France-KLM | 1,577 | 1,853 |
| Non-controlling interests | 13 | 12 |
| Total Equity | 1,590 | 1,865 |
| Pension provisions | 2,285 | 2,098 |
| Return obligation liability and other provisions | 3,097 | 3,035 |
| Financial debt | 5,949 | 5,733 |
| Lease debt | 3,473 | 3,546 |
| Deferred tax liabilities | 0 | 4 |
| Other non-current liabilities | 293 | 459 |
| Total non-current liabilities | 15,097 | 14,875 |
| Return obligation liability and other provisions | 558 | 492 |
| Current portion of financial debt | 1,080 | 826 |
| Current portion of lease debt | 955 | 989 |
| Trade payables | 2,500 | 2,460 |
| Deferred revenue on ticket sales | 4,407 | 3,153 |
| Frequent flyer program | 837 | 844 |
| Other current liabilities | 3,505 | 3,548 |
| Bank overdrafts | 3 | 5 |
| Total current liabilities | 13,845 | 12,317 |
| Total equity and liabilities | 30,532 | 29,057 |
Statement of Consolidated Cash Flows from 1st January until 30th June 2019
| In million euros | 30 June 2019 | 30 June 2018 |
| Net income from continuing operations | -239 | -158 |
| Net income from discontinued operations | 0 | 0 |
| Amortization, depreciation and operating provisions | 1,475 | 1,442 |
| Financial provisions | 89 | 57 |
| Loss (gain) on disposals of tangible and intangible assets | -31 | 7 |
| Loss (gain)on disposals of subsidiaries and associates | -2 | 0 |
| Derivatives – non monetary result | 24 | -23 |
| Unrealized foreign exchange gains and losses, net | 52 | 108 |
| Other non-monetary items | 64 | -182 |
| Share of (profits) losses of associates | -8 | 1 |
| Deferred taxes | 30 | 61 |
| Financial Capacity | 1,454 | 1,313 |
| Of which discontinued operations | 0 | 0 |
| (Increase) / decrease in inventories | -73 | -67 |
| (Increase) / decrease in trade receivables | -371 | -517 |
| Increase / (decrease) in trade payables | 24 | 163 |
| Change in other receivables and payables | 1,207 | 1,254 |
| Change in working capital requirements | 787 | 833 |
| Change in working capital from discontinued operations | 0 | 0 |
| Net cash flow from operating activities | 2,241 | 2,146 |
| Purchase of property, plant and equipment and intangible assets | -1,464 | -1,534 |
| Proceeds on disposal of property, plant and equipment and intangible assets | 75 | 46 |
| Proceeds on disposal of subsidiaries, of shares in non-controlled entities | 8 | 3 |
| Acquisition of subsidiaries, of shares in non-controlled entities | 0 | -8 |
| Dividends received | 7 | 3 |
| Decrease (increase) in net investments, more than 3 months | 20 | 5 |
| Net cash flow used in investing activities of discontinued operations | 0 | 0 |
| Net cash flow used in investing activities | -1,354 | -1,485 |
| Increase of equity due to new convertible bond | 54 | 0 |
| Perpetual (including premium) | 0 | 0 |
| Issuance of debt | 762 | 295 |
| Repayment on financial debt | -339 | -998 |
| Payments on lease debt | -501 | -517 |
| Decrease (increase ) in loans, net | -14 | -49 |
| Dividends and coupons on perpetual paid | -1 | -1 |
| Net cash flow used in financing activities of discontinued operations | 0 | 0 |
| Net cash flow from financing activities | -39 | -1,270 |
| Effect of exchange rate on cash and cash equivalents and bank overdrafts | -13 | 8 |
| Effect of exch. rate on cash and cash eq. and bank overdrafts of disc. ops. | 0 | 0 |
| Change in cash and cash equivalents and bank overdrafts | 835 | -601 |
| Cash and cash equivalents and bank overdrafts at beginning of period | 3,580 | 4,667 |
| Cash and cash equivalents and bank overdrafts at end of period | 4,415 | 4,066 |
| Change in treasury of discontinued operations | 0 | 0 |
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