AIR FRANCE-KLM: THIRD QUARTER 2020 RESULTS
*30 October 2020*
**THIRD QUARTER 2020 **
*Increase of demand until mid-August, *
*then new governmental restrictions impacted the expected level of demand recovery *
The continuation of the Covid-19 crisis severely impacted the Third quarter 2020 results:
· Revenue at 2,524 million euros, down 67% compared to last year
· EBITDA loss at -442 million euros, limited thanks to cost control and state aid
· Operating result at –1,046 million euros, down 1,955 million euros compared to last year
· Net income at -1,665 million euros, including restructuring provision at -565 million euros, Covid-19 related over-hedging at -39 million euros and fleet impairment at -31 million euros
· Net debt at 9,308 million euros, up 3,161 million compared to end of 2019
· At 30 September 2020, the Group has 12.4 billion euros of liquidity or credit lines at disposal
Air France and KLM have agreed with labour representatives on substantial restructuring plans and submitted them for final validation to the French and Dutch states.
*OUTLOOK*
Air France-KLM Group continues to implement the highest safety standards for its customers and employees to counter virus transmission risks.
After the lockdown, the Group observed a positive demand recovery trend until mid-August. Then, the negative trend reversal for the Passenger activity led the airlines of the Group to adjust downwards the capacity planned for the fall and winter period.
There is limited visibility on the demand recovery curve as customer booking behavior is much more short-term oriented and also highly dependent on the imposed travel restrictions, especially on the Long Haul network. The period of lockdown starting today in France is a new difficulty that will weigh on the Group's activities.
In this context the Group expects:
· Capacity in Available Seat kilometers circa index 45 for KLM and inferior to index 35 for Air France in the Fourth quarter 2020 compared to 2019 for the Network passenger activity
· Negative load factor developments for the Fourth quarter 2020, particularly on the long-haul network, and negative yield mix effects due to a delayed recovery in business traffic
The Group anticipates a challenging fourth quarter 2020, with a substantial lower EBITDA compared to Q3 2020.
*Air France-KLM Group* *Third quarter* *Nine months*
*2020* *Change* *2020* * Change*
Passengers (thousands) 8,796 -69.8% 28,124 -64.7%
Passenger Unit revenue per ASK^1 (€ cts) 4.01 -42.7% 5.05 -24.5%
Operating result (€m) -1,046 -1,955 -3,414 -4,460
Net income – Group part (€m) -1,665 -2,026 -6,078 -6,213
Adj. operating free cash flow (€m) -1,220 -985 -3,547 -3,663
Net debt at end of period (€m) 9,308 3,161
The Board of Directors of Air France-KLM, chaired by Anne-Marie Couderc, met on 29 October 2020 to approve the financial statements for the nine months 2020. Group CEO Mr. Benjamin Smith said:
“After a promising recovery during the summer, the gradual closure of international borders in the second half of August and the resurgence of the pandemic strongly impacted our results in the Third Quarter, with the Group reporting an operating loss of 1.0 billion euros. We have accelerated the implementation of cost reduction and cash preservation measures. We are also working closely with our partners on various means, such as rapid detection tests, that would allow traffic within the best sanitary conditions for our customers and employees.
Beyond these immediate necessary measures, we are engaged in a more profound transformation of our Group, with the objective of exiting this crisis in a stronger position, ready to address the future challenges of our industry. Air transport will continue to connect people and cultures, but we foresee changes in customers’ expectations that we anticipate too.
We expect a challenging Fourth quarter 2020, with current forward booking sharply down compared to last year.”
*Business review *
*Network: With active management of capacity to meet the increasing demand**, the Group was able to ramp up capacity with incremental cash positive flights*
*Network* *Third quarter* *Nine months*
*2020* *Change* *Change
**constant currency* *2020* *Change* *Change
**constant currency*
Total revenues (€m) 2,004 -68.6% -68.3% 7,220 -58.8% -58.8%
Scheduled revenues (€m) 1,856 -69.8% -69.4% 6,753 -59.7% -59.7%
Operating result (€m) -990 -1,649 -1,631 -2,842 -3,555 -3,564
Third quarter 2020 revenues decreased by 68.3% at constant currency to 2,004 million euros. The operating result amounted to -990 million euros, a -1,631 million euros decrease at constant currency compared to last year. Measures were strengthened to preserve cash, including reduction of investments, cost savings measures, deferral of supplier payments and partial activity for employees.
*Passenger network: **Long-haul suffering from travel restrictions, ability to capture traffic when border controls are less restrictive*
* * *Third quarter* *Nine months*
*Passenger network* *2020* *Change* *Change
**constant currency* *2020* *Change* *Change
**constant currency*
Passengers (thousands) 6,782 -71.3% * * 23,671 -64.3% * *
Capacity (ASK m) 32,100 -59.6% 103,268 -54.1%
Traffic (RPK m) 13,752 -80.7% 66,861 -66.3%
Load factor 42.8% -46.9 pt 64.7% -23.5 pt
Total passenger revenues (€m) 1,329 -77.4% -77.1% 5,512 -65.4% -65.4%
Scheduled passenger revenues (€m) 1,265 -77.9% -77.6% 5,271 -65.7% -65.7%
Unit revenue per ASK (€ cts) 3.94 -45.2% -44.5% 5.10 -25.4% -25.3%
The passenger network activity was, as anticipated strongly reduced, at around 40% of last year’s levels. The tightening of travel restrictions, border closures and absence of corporate travel delayed the expected traffic recovery. July and August were relatively strong in term of traffic compared to a disappointing September affected by restrictive travel measures.
For the third quarter, the unit revenues were down at -44.5% at constant currency compared to last year primarily due to load factors decline on Long Haul operations.
The Group’s strategy was to only operate incremental cash positive flight and several routes were taking advantage of the strong worldwide cargo demand while having few passenger on board.
The visiting friend and relative demand was driving the summer traffic, with the French Domestic, African & Middle East and Caribbean & Indian Ocean as the more resilient with a unit revenue performance between -22% and -27% at constant currency.
The medium-haul performance was mixed during summer, with some leisure destinations such as Italy, Spain, Portugal and Greece benefiting from easing travel restrictions and other strongly affected by quarantine and testing process like UK or Germany.
North Atlantic, South American and Asian networks continued to be strongly affected by the border restrictions in place with an important decline in capacity and passenger traffic during summer.
*Cargo: Continued strong performance of cargo due to the gap between industry capacity and demand
*
* * *Third quarter* *Nine months*
*Cargo business* *2020* *Change* *Change
**constant currency* *2020* *Change* *Change
**constant currency*
Tons (thousands) 220 -20.0% * * 611 -25.7% * *
Capacity (ATK m) 2,537 -33.3% 7,309 -32.9%
Traffic (RTK m) 1,735 -17.0% 4,747 -24.2%
Load factor 68.4% +13.4 pt 65.0% +7.5 pt
Total Cargo revenues (€m) 676 +31.7% +34.1% 1,708 +7.1% +6.9%
Scheduled cargo revenues (€m) 592 +35.7% +38.0% 1,482 +8.7% +8.4%
Unit revenue per ATK (€ cts ) 23.35 +104.0% +107.6% 20.28 +62.0% +61.6%
Global air cargo capacity is at the end of the Third quarter 2020 approximately 15% lower than 2019. Tightening of supply and demand levels increased yields by significant amount over the past months.
September was the fifth consecutive month of gradual air cargo market improvements and Air France-KLM’s Cargo activity continued to strongly perform with a unit revenue at constant currency up 104.0% in the Third quarter 2020. The Cargo capacity of the Group has been down 33.3%, primarily driven by the reduction in belly capacity of passenger aircraft partly offset by the increase of the full freighters’ capacity and mini cargo flights (passenger aircraft with only belly capacity commercialized). The load factors were strongly up 13.4 points for the quarter.
On the demand side, world-wide air freight volumes are down due to Covid-19 crisis but are expected to rebound to 90 to 95% of pre Covid-19 levels in 2021. The supply-demand gap of the past months is foreseen to narrow as industry capacity supply will increase and will depend on the passenger traffic recovery. Air France-KLM is in preparation to transport the future Covid-19 vaccines.
*Transavia operating loss in the Third quarter at -13 million euros, impacted by border restrictions reinstatement *
* * *Third quarter* *Nine months*
*Transavia* *2020* *Change* *2020* *Change*
Passengers (thousands) 2,014 -63.3% 4,453 -66.6%
Capacity (ASK m) 6,009 -44.7% 11,178 -57.4%
Traffic (RPK m) 3,869 -61.8% 8,505 -64.9%
Load factor 64.4% -28.7 pt 76.1% -16.4 pt
Total passenger revenues (€m) 262 -60.6% 521 -62.9%
Unit revenue per ASK (€ cts) 4.38 -30.2% 4.55 -16.3%
Unit cost per ASK (€ cts) 4.61 -1.3% 6.39 +32.5%
Operating result (€m) -13 -189 -206 -364
The Third quarter operating result ended 189 million euros lower compared to last year at an operational loss of -13 million euros, as a result of the Covid-19 crisis.
Activity levels were close to 55% of last year’s level, with an unit revenue down -30,2% compared to the Third quarter 2019. Transavia France and Holland were able to capture traffic and fill their planes with reasonable load factors and good yields on several leisure destinations. Spain, Greece, Portugal and Italy routes were the most resilient during the quarter. However, severe travel restrictions from the Netherlands to Spain and Greece in the course of the third quarter, did put pressure on activity levels and loadfactor.
Transavia France will expend its French Domestic operation starting in November 2020 from Paris Orly and provinces airports.
However, the resurgence of Covid-19 and border restrictions have slowed down Transavia in the traffic recovery.
Strict cash preservation measures are still in place including reduction of investments, cost savings measures, deferral of supplier payments and partial activity measures.
*Maintenance business operating result for Third quarter 2020 at -46 million euros, impacted by Covid-19*
* * *Third quarter* *Nine months*
*Maintenance* *2020* *Change* *Change
**constant currency* *2020* *Change* *Change
**constant currency*
Total revenues (€m) 616 -47.1% 2,255 -34.7%
Third-party revenues (€m) 247 -54.5% -53.1% 963 -40.7% -41.6%
Operating result (€m) -46 -117 -111 -366 -536 -542
Operating margin (%) -7.4% -13.5 pt -13.1 pt -16.2% -21.2 pt -21.3 pt
The Third quarter operating result stood at -46 million euros, a decrease of 117 million euros, highly impacted by the Covid-19 crisis. Revenues declined and were also impacted by the Air France-KLM Group airlines decrease in activity.
During the Third quarter, contracts signature have restarted and will be included in the order book before year end. The Maintenance business is carefully managing agreements with clients on payment terms.
Operating costs have been reduced in the Third quarter 2020 by a reduced maintenance activity level, partial activity pay schemes for employees and other initiated cost savings measures.
The Maintenance order book is assessed to 9.3 billion dollars at 30 September 2020 a decrease of 2.2 billion dollars compared to 31 December 2019, explained by the Covid-19 crisis effects already occurring and expected.
*Air France-KLM Group: Decline of 5 billion euros in revenues and 2 billion euros in EBITDA during the third quarter*
* * *Third quarter* *Nine months*
* * *2020* *Change* *Change
**constant currency* *2020* *Change* *Change
**constant currency*
Capacity (ASK m) 38,109 -57.8% 114,446 -54.4%
Traffic (RPK m) 17,621 -78.4% 75,367 -66.2%
Passenger unit revenue per ASK (€ cts) 4.01 -43.4% -42.7% 5.05 -24.6% -24.5%
Group unit revenue per ASK (€ cts) 5.56 -26.5% -25.6% 6.34 -12.3% -12.3%
Group unit cost per ASK (€ cts) at constant fuel 8.31 +26.7% +38.2% 9.33 +36.7% +40.4%
Revenues (€m) 2,524 -66.8% -66.4% 8,725 -57.6% -57.7%
EBITDA (€m) -442 -2,095 -2,071 -1,282 -4,545 -4,554
Operating result (€m) -1,046 -1,955 -1,931 -3,414 -4,460 -4,470
Operating margin (%) -41.4% -53.4 pt -53.2 pt -39.1% -44.2 pt -44.2 pt
Net income - Group part (€m) -1,665 -2,027 -6,078 -6,213
2019 results restated for LLP componentization accounting change and EU passenger compensation reclassification between revenues and external expenses
In the Third quarter 2020, the Air France-KLM Group posted an operating result of -1,046 million euros, down by 1,955 million euros compared to last year.
Net income amounted to -1,665 million euros in the Third quarter 2020, a decrease of 2,027 million euros compared to last year, of which exceptional accounting items due to Covid-19:
· Restructuring costs provision of-565 million euros with Departure Plan of French Ground staff, contractual termination for Air France flight attendants, complement for contractual termination for Air France pilots, Departure Plan for Air France-KLM International Commercial staff and Departure Plan for HOP!
· Q4 2020 and Q1 2021 fuel over hedge has been recycled to “Other financial income and expenses” for -39 million euros
· Fleet impairment on Airbus A380 and the Canadair Jet of HOP! At -31 million euros
Currencies had a negative 92 million euro impact on revenues and a positive 67 million euro effect on costs including currency hedging in the Third quarter of 2020.
Since the beginning of the crisis, Air France, KLM and Transavia proceeded 1.8 billion euros of refunds including 300 million euros of voucher issued.
*The Third quarter 2020 unit cost increased by 26.7%, primarily caused by Covid-19 related capacity reductions*
Group net employee costs were down 36% in the Third quarter 2020 compared to last year, supported by partial activity implementation at Air France and KLM, release of temporary and hired staff and no profit sharing provisions to be made at both airlines. The average number of FTEs (Full Time Equivalent) in the Third quarter 2020 decreased by 5,500 compared to the Third quarter 2019, including 2,500 temporary contracts.
*Net debt up 3.2 billion euros*
* * *Third quarter* *Nine months*
*In € million* *2020* *Change* *2020* *Change*
Cash flow before change in WCR and Voluntary Departure Plans, continuing operations (€m) -594 -2,115 -1,926 -4,950
Cash out related to Voluntary Departure Plans (€m) -137 -115 -152 -119
Change in Working Capital Requirement (WCR) (€m) 124 +831 666 +582
*Net cash flow from operating activities **(€m)* *-609* *-1,399* *-1,412* *-4,487*
Net investments* (€m) -362 +418 -1,473 +738
*Operating free cash flow **(€m)* *-970* *-981* *-2,885* *-3,749*
Repayment of lease debt -251 -5 -662 +86
*Adjusted operating free cash flow*** *-1,220* *-985* *-3,547* *-3,663*
* 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 after deducting the repayment of lease debt.
The Group generated adjusted operating free cash flow in the Third quarter 2020 of -1,220 million euros, a decrease of 985 million euros compared to last year, mainly explained by an operating cash flow decline of 1,399 million euros, partly offset by a reduction in net investments of 418 million euros.
Postponement of social charges, taxes and negotiation with suppliers compensated the refunds process and the low inflow of bookings and generated an improvement of +582 million euros in Change in Working Capital Requirement compared to last year.
In € million *30 Sep 2020* *31 Dec 2019*
Net debt 9,308 6 147
EBITDA trailing 12 months -417 4 128
*Net debt/EBITDA **trailing 12 months* *-22.3 x* *1,5 x*
*Both airlines results negatively impacted in the Third quarter 2020*
*Third quarter* *Nine months*
* * *2020* *Change* *2020* *Change*
*Air France Group Operating result (€m)* -807 -1,200 -2,401 -2,699
Operating margin (%) -54.1% -62.6 pt -47.4% -49.8 pt
*KLM Group Operating result (€m)* -234 -745 -1,002 -1,736
Operating margin (%) -20.5% -36.8 pt -25.2% -33.9 pt
*OUTLOOK*
Air France-KLM Group continues to implement highest safety standards for customers and employees to counter virus transmission risks.
After the lockdown, the Group observed a promising demand recovery trend until mid-August. Then, the negative trend reversal for the Passenger activity led the airlines of the Group to adjust downwards the capacity planned for the fall and winter period.
There is limited visibility on the demand recovery curve as customer booking behavior is much more short-term oriented than before the Covid-19 crisis and also highly dependent of the imposed travel restrictions, especially on the Long Haul network. The period of lockdown starting today in France is a new difficulty that will weigh on the Group's activities.
In this context the Group expects:
· Capacity in Available Seat kilometers circa index 45 for KLM and inferior to index 35 for Air France in the Fourth quarter 2020 compared to 2019 for the Network passenger activity
· Negative load factor developments for the Fourth quarter 2020, particularly on long-haul network, and negative yield mix effects due to a delayed recovery in business
The Full year 2020 Network passenger activity will be inferior to index 50 compared to 2019, due to the Covid-19 crisis.
The Group anticipates a challenging fourth quarter 2020, with a substantial lower EBITDA compared to Q3 2020.
At 30 September 2020, the Group has 12.4 billion euros of liquidity or credit lines at disposal.
The Group foresees important liquidity requirements in the Fourth quarter 2020 with:
· Negative Fourth quarter working capital requirement influenced by deferred payments and substantial lower level of new bookings compared to Q4 2019.
· Capex spending at 0.6 billion euros, of which half is fleet Capex fully financed. The Group has reduced to 2.1 billion euros his 2020 capex guidance. This is a reduction of -1.5 billion euros compared to the initial 2020 guidance of 3.6 billion euros.
· The hybrid bond was repaid in October for 0.4 billion euros.
*AIR FRANCE AND KLM HAVE AGREED ON SUSBTANTIAL RESTRUCTURING PLAN WITH LABOUR REPRESENTATIVES*
The Group’s strategic orientations defined during the 2019 Investor day started to deliver results in 2019 and in early 2020. However, the Covid-19 which began in the first quarter of 2020 around the world is having an unprecedented impact on the industry and the Group has immediately reacted with safety, operational and cash protection measures.
The focus on reducing external expenses and the number of employees were one of the top priorities. Futhermore, the French and the Dutch governments have provided financial packages and the partial activity implemented in France and the “NOW” mechanism in Holland allowed the Group to further reduce labor costs.
To weather the crisis and cope with the new reality, Air France-KLM Group is accelerating its transformation plans and presented a substantial restructuring plan around the competitiveness and sustainability pillars. Negotiations with the trade unions have resulted in several agreements in Air France and KLM.
To better align the fleet with the lower passenger demand, Air France-KLM Group has accelerated the phase-out of the Airbus 380, Airbus 340, Boeing 747, Canadair Jet and Embraer 145 aircraft. These decisions will bring forward cost savings and efficiency gains due to operating fewer aircraft types. The Group does not anticipate to return to the pre-crisis levels of global demand before several years and the short-term recovery expected has been delayed with the resurgence of Covid-19 end of summer.
KLM business model is still both valid and valuable but needs to be reshaped to the new reality. KLM will be smaller, cheaper, more frugal, more agile and more sustainable.
Operating costs will structurally being reduced in 2021 and beyond, with 750 million euros benefits in 2021 coming from labour, fleet, procurements and fuel costs decrease.
KLM's restructuring plan calls for a reduction of 5,000 FTEs end of 2020. The plan submitted to Dutch Government early October complies with state aid conditions.
Air France will enlarge and accelerate its restructuring plan to build a post-crisis successful model on several pillars to restructure the French domestic, optimize external spendings, transform support functions, adapt the opeartions to the new activity, modernize the fleet and regain commercial success.
This will bring 800 million euros structural benefits by 2021 and 1.2 billion euros in total by 2022. Air France’s restructuring plan calls for a reduction of 4,000 FTEs end of 2020 and a total of 8,500 FTEs by 2022. The plan submitted to French Government complies with state aid conditions. The long term partial activity establishement is under discussion with representative unions.
******
The results presentation is available at *www.airfranceklm.com* on 30 October 2020 from 7:15 am CET.
A conference call hosted by Mr. Smith (CEO) and Mr. Gagey (CFO) will be held on 30 October 2020 at 08.30 CET.
To connect to the conference call, please dial:
France: Local +33 (0)1 70 72 25 50
Netherlands: Local +31 (0) 20 703 8211
UK: Local +44 (0)330 336 9125
US: Local +1 720 543 0214
Confirmation code: 9700330
To listen to the audio-replay of the conference call, please dial:
· France: Local +33 (0) 1 70 48 00 94
· Netherlands: Local +31 (0) 20 721 8903
· UK: Local +44 (0)207 660 0134
· US: Local +1 719-457-0820
Confirmation code: 9700330
*Investor Relations Press*
*Olivier Gall Wouter van Beek *
+33 1 49 89 52 59 +33 1 49 89 52 60 +33 1 41 56 56 00
olgall@airfranceklm.com Wouter-van.Beek@airfranceklm.com
*Income Statement*
*Third quarter* *Nine months*
€m *2020* *2019* *Change* *2020* *2019* *Change*
*Sales* *2,524* *7,609* *-66.8%* *8,725* *20,572* *-57.6%*
Other revenues nm nm
*Revenues* *2,524* *7,609* *-66.8%* *8,725* *20,572* *-57.6%*
Aircraft fuel -489 -1,513 -67.7% -1,886 -4,118 -54.2%
Chartering costs -68 -138 -50.7% -181 -407 -55.5%
Landing fees and en route charges -266 -531 -49.9% -743 -1,471 -49.5%
Catering -58 -221 -73.8% -236 -617 -61.8%
Handling charges and other operating costs -204 -453 -55.0% -646 -1,294 -50.1%
Aircraft maintenance costs -331 -624 -47.0% -1,243 -1,920 -35.3%
Commercial and distribution costs -61 -266 -77.1% -291 -783 -62.8%
Other external expenses -263 -419 -37.2% -937 -1,292 -27.5%
Salaries and related costs -1,293 -2,011 -35.7% -4,224 -6,031 -30.0%
Taxes other than income taxes -28 -27 +3.7% -108 -119 -10.0%
Other income and expenses 95 247 -61.5% 488 742 -34.3%
*EBITDA* *-442* *1,653* *nm* *-1,282* *3,263* *nm*
Amortization, depreciation and provisions -604 -744 *-18.8%* -2,132 -2,217 *-3.8%*
*Income from current operations* *-1,046* *909* *nm* *-3,414* *1,046* *nm*
Sales of aircraft equipment 8 1 +700.0% 31 24 +29.2%
Other non-current income and expenses -597 -103 +479.9% -1,452 -133 +992%
*Income from operating activities* *-1,635* *807* *nm* *-4,835* *937* *nm*
Cost of financial debt -136 -111 +22.5% -350 -332 +5.4%
Income from cash and cash equivalent 5 14 -64.3% 18 40 -55.0%
*Net cost of financial debt* *-131* *-97* *+35.1%* *-332* *-292* *+13.7%*
Other financial income and expenses 111 -259 nm -621 -391 +58.8%
*Income before tax* *-1,655* *451* *nm* *-5,788* *254* *nm*
Income taxes 12 -94 nm -242 -131 +84.7%
*Net income of consolidated companies* *-1,643* *356* *nm* *-6,030* *123* *nm*
Share of profits (losses) of associates -22 6 nm -52 14 nm
*Net income for the period* *-1,665* *363* *nm* *-6,082* *137* *nm*
Minority interest 1 nm -4 2 nm
Net income for the period – Group part *-1,665* *362* *nm* *-6,078* *135* *nm*
2019 results restated (with a similar impact in both years) for limited life parts componentization accounting change.*Consolidated Balance Sheet*
*Assets* *30 Sep 2020* *31 Dec 2019*
€m
Goodwill 216 217
Intangible assets 1,253 1,305
Flight equipment 11,009 11,334
Other property, plant and equipment 1,535 1,580
Right-of-use assets 4,789 5,173
Investments in equity associates 224 307
Pension assets 96 420
Other financial assets 1,004 1,096
Deferred tax assets 271 523
Other non-current assets 176 241
*Total non-current assets* *20,573* *22,196*
Other short-term financial assets 443 800
Inventories 561 737
Trade receivables 1,208 2,164
Other current assets 883 1,123
Cash and cash equivalents 5,917 3,715
*Total current assets* *9,012* *8,539*
*Total assets* *29,585* *30,735*
*Liabilities and equity* *30 Sep 2020* *31 Dec 2019*
In million euros
Issued capital 429 429
Additional paid-in capital 4,139 4,139
Treasury shares -67 -67
Perpetual 403
Reserves and retained earnings -9,183 -2,620
*Equity attributable to equity holders of Air France-KLM* *-4,682* *2,284*
Non-controlling interests 9 15
*Total Equity* *-4,673* *2,299*
Pension provisions 2,123 2,253
Return obligation liability and other provisions 3,712 3,750
Financial debt 10,814 6,271
Lease debt 2,634 3,149
Deferred tax liabilities 5 142
Other non-current liabilities 532 222
*Total non-current liabilities* *19,820* *15,787*
Return obligation liability and other provisions 1,573 714
Current portion of financial debt 2,179 842
Current portion of lease debt 961 971
Trade payables 1,555 2,379
Deferred revenue on ticket sales 2,794 3,289
Frequent flyer program 913 848
Other current liabilities 4,462 3,602
Bank overdrafts 1 4
*Total current liabilities* *14,438* *12,649*
*Total equity and liabilities* *29,585* *30,735*
*Statement of Consolidated Cash Flows from 1^st Jan until 30 Sept 2020*
€m *30 Sep 2020* *30 Sep 2019*
Net income from continuing operations -6,082 137
Amortization, depreciation and operating provisions 2,132 2,217
Financial provisions 135 162
Loss (gain) on disposals of tangible and intangible assets -43 -34
Loss (gain)on disposals of subsidiaries and associates 1
Derivatives – non monetary result 70 15
Unrealized foreign exchange gains and losses, net -83 223
Impairment 670
Other non-monetary items 761 218
Share of (profits) losses of associates 52 -14
Deferred taxes 309 67
*Financial Capacity* *-2,078* *2,991*
(Increase) / decrease in inventories 134 -83
(Increase) / decrease in trade receivables 823 -147
Increase / (decrease) in trade payables -792 41
Increase / (decrease) in advanced ticket sales -435 327
Change in other receivables and payables 936 -54
*Change in working capital requirements* *666* *84*
*Net cash flow from operating activities* *-1,412* *3,075*
Purchase of property, plant and equipment and intangible assets -1,654 -2,295
Proceeds on disposal of property, plant and equipment and intangible assets 181 84
Proceeds on disposal of subsidiaries, of shares in non-controlled entities 357 8
Acquisition of subsidiaries, of shares in non-controlled entities -1 -1
Dividends received 10
Decrease (increase) in net investments, more than 3 months -9 -9
*Net cash flow used in investing activities* *-1,126* *-2,203*
Increase of equity due to new convertible bond 54
Perpetual (including premium)
Issuance of debt 7,598 904
Repayment on financial debt -2,202 -560
Payments on lease debt -662 -748
Decrease (increase ) in loans, net 48 -17
Dividends and coupons on perpetual paid -1
*Net cash flow from financing activities* *4,782* *-368*
Effect of exchange rate on cash and cash equivalents and bank overdrafts -39 9
*Change in cash and cash equivalents and bank overdrafts* *2,205* *513*
Cash and cash equivalents and bank overdrafts at beginning of period 3,711 3,580
Cash and cash equivalents and bank overdrafts at end of period 5,916 4,093
Change in treasury of discontinued operations
*Key Performance Indicators*
*Restated net result, group share** *
*Third quarter* *Nine months*
In million euros *2020* *2019* *2020* *2019*
Net income/(loss), Group share -1,665 361 -6,078 135
Unrealized foreign exchange gains and losses, net -152 167 -78 223
Change in fair value of financial assets and liabilities (derivatives) -154 11 70 -9
Non-current income and expenses 591 102 1,421 109
Tax impact on gross adjustments net result -84 -401 -13
*Restated net income/(loss), group part* *-1,464* *642* *-5,066* *445*
Coupons on perpetual -4 -12
*Restated net income/(loss), group share including coupons on perpetual (used to calculate earnings per share)* *-1,464* *638* *-5,066* *433*
Restated net income/(loss) per share (in €) -3.42 1.49 -11.85 1.01
*Return on capital employed (ROCE)*^1
In million euros *30 Sep 2020* *30 June 2020* *31 Mar 2020* *31 *
*Dec 2019* *30 Sep 2019* *30 *
*June 2019* *31 *
*Mar 2019* *31 *
*Dec 2018*
Goodwill and intangible assets 1,470 1,500 1,564 1,522 1,481 1,465 1,485 1,411
Flight equipment 11,009 10,919 11,465 11,334 10,829 10,747 10,456 10,308
Other property, plant and equipment 1,535 1,551 1,579 1,580 1,554 1,530 1,504 1,503
Right of use assets 4,789 4,938 5,119 5,173 5,300 5,470 5,453 5,664
Investments in equity associates 224 267 299 307 310 305 306 311
Financial assets excluding marketable securities and financial deposits 135 133 142 140 131 125 127 125
Provisions, excluding pension, cargo litigation and restructuring -4,001 -4,130 -4,190 -4,058 -4,101 -3,888 -3,907 -3,760
WCR, excluding market value of derivatives -6,894 -6,779 -6,650 -6,310 -6,285 -6,957 -6,938 -6,133
*Capital employed * *8,267* *8,399* *9,328* *9,688* *9,219* *8,797* *8,486* *9,429*
*Average capital employed (A)* *8,921* *8,983*
Adjusted results from current operations -3,320 1,099
- Dividends received -1 -2
- Share of profits (losses) of associates -44 23
- Normative income tax 1,045 -305
*Adjusted result from current operations after tax (B)* *-2,320* *815*
*ROCE, trailing 12 months (B/A)* *-26.0%* *9.1%*
*Net debt *
*Balance sheet at*
€m *30 Sep 2020* *31 Dec 2019*
Financial debt 12,768 6,886
Lease debt 3,511 4,029
Currency hedge on financial debt 9 4
Accrued interest -108 -62
*Gross financial debt (A)* *16,180* *10,857*
Cash and cash equivalents 5,917 3,715
Marketable securities 109 111
Cash securities 309 300
Deposits (bonds) 535 585
Bank overdrafts -1 -4
Others 3 3
*Net cash (B)* *6,872* *4,710*
*Net debt (A) – (B)* *9,308* *6,147*
*Adjusted operating free cash flow*
*Third quarter* *Nine months*
€m *2020* *2019* *2020* *2019*
Net cash flow from operating activities, continued operations -609 792 -1,412 3,075
Investment in property, plant, equipment and intangible assets -370 -788 -1,654 -2,295
Proceeds on disposal of property, plant, equipment and intangible assets 9 8 181 84
*Operating free cash flow* *-970* *12* *-2,885* *864*
Payments on lease debt -251 -246 -662 -748
*Adjusted operating free cash flow* *-1,220* *-234* *-3,547* *116*
*Operating cash burn*
*Third quarter* *Nine months* *2020* *2019* *2020* *2019*
*EBITDA* *-442* *1,653* *-1,282* *3,263*
Provisions (CO2 and other) 7 14 -26 8
Correction of spare parts inventory 2 -2 2
Addition to pension provisions 78 68 232 201
Reversal to pension provisions (cash-out) -47 -49 -142 -145
Payment linked with shares 1 -2 1
Sales of tangible and intangible assets (excluding aeronauticals) -1 6 40 48
*Income from operation activities - cash impact* *-402* *1,690* *-1,177* *3,376*
Restructuring costs -137 -4 -152 -15
Other non-current income and expenses 2 -1 2
Cost of financial debt -118 -107 -318 -319
Financial income 7 2 21
Realized foreign exchanges gain/loss 29 -24 28 -9
Termination of trading hedges - cash -177 -499
Current income tax 77 -62 67 -64
Other financial charges & expenses - cash 1 -2 -25 -6
Other elements -3 -2 -2 5
*Financial capacity* *-732* *1,499* *-2,078* *2,991*
*Unit cost: net cost per ASK*
*Third quarter* *Nine months* *2020* *2019* *2020* *2019*
Revenues (in €m) 2,524 7,609 8,725 20,572
Income/(loss) from current operations (in €m) -/- 1,046 -909 3,414 -1,046
Total operating expense (in €m) 3,570 6,700 12,139 19,526
Passenger network business – other revenues (in €m) -64 -163 -241 -534
Cargo network business – other revenues (in €m) -84 -77 -226 -231
Third-party revenues in the maintenance business (in €m) -247 -543 -963 -1,623
Transavia - other revenues (in €m) 1 17 -13 16
Third-party revenues of other businesses (in €m) -10 -10 -21 -26
*Net cost (in €m)* *3,166* *5,924* *10,675* *17,128*
Capacity produced, reported in ASK* 38,109 90,317 114,446 251,110
*Net cost per ASK (in € cents per ASK)* *8.31* *6.56* *9.33* *6.82*
Gross change 26.7% 36.7%
Currency effect on net costs (in €m) 60 19
Change at constant currency 25.4% 36.6%
Capacity effect on net cost -3,393 -9,345
Fuel price effect (in €m) -179 -162
*Net cost per ASK on a constant currency and fuel price basis (in € cents per ASK)* *8.31* *6.01* *9.33* *6.64*
*Change at constant currency and fuel price basis* * * *+38.2%* * * *+40.4%*
* 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).
*Group results*
*Air France Group*
*Third quarter* *Nine months* *2020* *Change* *2020* *Change*
Revenue (in €m) 1,492 -67.5% 5,066 -59.6%
EBITDA (in €m) -461 -1,321 -1,095 -2,801
Operating result (en m€) -807 -1,200 -2,401 -2,699
Operating margin (%) -54.1% -62.6 pt -47.4% -49.8 pt
Operating cash flow before WCR and restructuring cash out (in €m) -608 -1,421 -1,519 -3,129
Operating cash flow (before WCR and restructuring) margin -40.7% -58.5 pt -30.0% -42.8 pt
*KLM Group*
*Third quarter* *Nine months* *2020* *Change* *2020* *Change*
Revenue (in €m) 1,144 -63.5% 3,984 -52.5%
EBITDA (in €m) 25 -763 -176 -1,713
Operating result (en m€) -234 -745 -1,002 -1,736
Operating margin (%) -20.5% -36.8 pt -25.2% -33.9 pt
Operating cash flow before WCR and restructuring cash out (in €m) 13 -671 -355 -1,736
Operating cash flow (before WCR and restructuring) margin 1.1% -20.7 pt -8.9% -25.4 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 Sept 2020*
*Aircraft type* *AF
(incl. HOP)* *KL
(incl. KLC & MP)* *Transavia* *Owned* *Finance lease* *Operating lease* *Total* *In operation* *Change / **31/12/19*
B747-400 4 4 *4* 3 -5
B777-300 43 14 18 17 22 *57* 57
B777-200 25 15 26 14 *40* 40
B787-9 10 13 7 4 12 *23* 23 1
B787-10 5 3 2 *5* 5 1
A380-800 9 2 3 4 *9* -10
A350-900 6 1 5 *6* 6 3
A340-300 3 3 *3* -4
A330-300 5 5 *5* 5
A330-200 15 8 11 12 *23* 22 -1
*Total Long-Haul* *111* *64* ** *75* *31* *69* *175* *161* *-15*
B737-900 5 3 2 *5* 5
B737-800 31 75 29 10 67 *106* 106 2
B737-700 16 7 3 5 15 *23* 23
A321 20 11 9 *20* 20
A320 44 3 5 36 *44* 43
A319 33 14 19 *33* 33
A318 18 8 10 *18* 18
*Total Medium-Haul* *115* *52* *82* *71* *20* *158* *249* *248* *2*
ATR72-600 * * -2
ATR72-500 * *
ATR42-500 * *
Canadair Jet 1000 14 14 *14* 14
Canadair Jet 700 11 11 *11* 10
Embraer 190 17 32 11 10 28 *49* 48 1
Embraer 175 17 3 14 *17* 17
Embraer 170 15 10 5 *15* 15
Embraer 145 15 15 *15* -13
*Total Regional* *72* *49* ** *64* *24* *33* *121* *104* *-14*
B747-400ERF 3 3 *3* 3
B747-400BCF 1 1 *1* 1
B777-F 2 2 *2* 2
*Total Cargo* *2* *4* ** *6* ** ** *6* *6* **
*Total* *300* *169* *82* *216* *75* *260* *551* *519* *-27*
*THIRD QUARTER 2020 TRAFFIC *
*Passenger network activity**
* * * * *Q3* * * *Year to date *
*Total Passenger network** *2020* *2019* *Variation* * * *2020* *2019* *Variation*
Passengers carried (‘000s) 6,782 23,631 (71.3%) 23,671 66,286 (64.3%)
Revenue pax-kilometers (m RPK) 13,752 71,323 (80.7%) 66,861 198,566 (66.3%)
Available seat-kilometers (m ASK) 32,100 79,457 (59.6%) 103,267 224,902 (54.1%)
Load factor (%) 42.8% 89.8% (46.9) 64.7% 88.3% (23.5)
*Long-haul*
Passengers carried (‘000s) 1,219 7,660 (84.1%) 7,072 21,288 (66.8%)
Revenue pax-kilometers (m RPK) 8,705 57,382 (84.8%) 52,783 160,536 (67.1%)
Available seat-kilometers (m ASK) 23,987 63,392 (62.2%) 82,837 180,125 (54.0%)
Load factor (%) 36.3% 90.5% (54.2) 63.7% 89.1% (25.4)
*North America*
Passengers carried (‘000s) 284 2,630 (89.2%) 1,870 6,686 (72.0%)
Revenue pax-kilometers (m RPK) 2,063 18,608 (88.9%) 13,397 47,494 (71.8%)
Available seat-kilometers (m ASK) 7,597 20,456 (62.9%) 23,409 53,116 (55.9%)
Load factor (%) 27.2% 91.0% (63.8) 57.2% 89.4% (32.2)
*Latin America*
Passengers carried (‘000s) 96 934 (89.7%) 969 2,729 (64.5%)
Revenue pax-kilometers (m RPK) 942 8,900 (89.4%) 9,177 25,973 (64.7%)
Available seat-kilometers (m ASK) 3,177 9,800 (67.6%) 13,524 28,975 (53.3%)
Load factor (%) 29.6% 90.8% (61.2) 67.9% 89.6% (21.8)
*Asia / Pacific*
Passengers carried (‘000s) 173 1,723 (90.0%) 1,361 4,969 (72.6%)
Revenue pax-kilometers (m RPK) 1,526 15,066 (89.9%) 11,803 43,399 (72.8%)
Available seat-kilometers (m ASK) 6,037 16,453 (63.3%) 20,702 47,734 (56.6%)
Load factor (%) 25.3% 91.6% (66.3) 57.0% 90.9% (33.9)
*Africa / Middle East*
Passengers carried (‘000s) 328 1,453 (77.4%) 1,563 4,089 (61.8%)
Revenue pax-kilometers (m RPK) 1,674 8,164 (79.5%) 8,825 23,117 (61.8%)
Available seat-kilometers (m ASK) 3,188 9,284 (65.7%) 12,337 27,360 (54.9%)
Load factor (%) 52.5% 87.9% (35.4) 71.5% 84.5% (13.0)
*Caribbean / Indian Ocean*
Passengers carried (‘000s) 337 919 (63.3%) 1,309 2,815 (53.5%)
Revenue pax-kilometers (m RPK) 2,500 6,645 (62.4%) 9,580 20,553 (53.4%)
Available seat-kilometers (m ASK) 3,988 7,398 (46.1%) 12,864 22,941 (43.9%)
Load factor (%) 62.7% 89.8% (27.1) 74.5% 89.6% (15.1)
*Short and Medium-haul*
Passengers carried (‘000s) 5,563 15,972 (65.2%) 16,600 44,998 (63.1%)
Revenue pax-kilometers (m RPK) 5,047 13,941 (63.8%) 14,079 38,030 (63.0%)
Available seat-kilometers (m ASK) 8,113 16,066 (49.5%) 20,430 44,776 (54.4%)
Load factor (%) 62.2% 86.8% (24.6) 68.9% 84.9% (16.0)
* Air France and KLM
*Transavia activity *
* * * * *Q3* * * *Year to date *
*Transavia* *2020* *2019* *Variation* * * *2020* *2019* *Variation*
Passengers carried (‘000s) 2,014 5,492 (63.3%) 4,453 13,315 (66.6%)
Revenue pax-kilometers (m RPK) 3,869 10,117 (61.8%) 8,505 24,239 (64.9%)
Available seat-kilometers (m ASK) 6,009 10,874 (44.7%) 11,178 26,227 (57.4%)
Load factor (%) 64.4% 93.0% (28.7) 76.1% 92.4% (16.3)
*Total group passenger activity***
* * * * *Q3* * * *Year to date *
*Total group*** *2020* *2019* *Variation* * * *2020* *2019* *Variation*
Passengers carried (‘000s) 8,796 29,123 (69.8%) 28,124 79,601 (64.7%)
Revenue pax-kilometers (m RPK) 17,621 81,440 (78.4%) 75,367 222,805 (66.2%)
Available seat-kilometers (m ASK) 38,109 90,331 (57.8%) 114,446 251,129 (54.4%)
Load factor (%) 46.2% 90.2% (43.9) 65.9% 88.7% (22.9)
** Air France, KLM and Transavia
*Cargo activity*
* * * * *Q3* * * *Year to date*
*Total Group* *2020* *2019* *Variation* * * *2020* *2019* *Variation*
Revenue tonne-km (m RTK) 1,735 2,091 (17.0%) 4,747 6,260 (24.2%)
Available tonne-km (m ATK) 2,537 3,804 (33.3%) 7,309 10,896 (32.9%)
Load factor (%) 68.4% 55.0% 13.4 64.9% 57.4% 7.5
*Air France activity*
* * * * *Q3* * * *Year to date *
*Total Passenger network activity* *2020* *2019* *Variation* * * *2020* *2019* *Variation*
Passengers carried (‘000s) 4,487 14,168 (68.3%) 14,635 39,844 (63.3%)
Revenue pax-kilometers (m RPK) 8,538 42,184 (79.8%) 39,394 116,449 (66.2%)
Available seat-kilometers (m ASK) 16,589 47,464 (65.0%) 56,909 133,309 (57.3%)
Load factor (%) 51.5% 88.9% (37.4) 69.2% 87.4% (18.1)
*Long-haul*
Passengers carried (‘000s) 782 4,632 (83.1%) 4,243 12,723 (66.7%)
Revenue pax-kilometers (m RPK) 5,242 33,849 (84.5%) 30,669 93,664 (67.3%)
Available seat-kilometers (m ASK) 11,526 37,664 (69.4%) 44,431 105,944 (58.1%)
Load factor (%) 45.5% 89.9% (44.4) 69.0% 88.4% (19.4)
*Short and Medium-haul*
Passengers carried (‘000s) 3,704 9,536 (61.2%) 10,393 27,121 (61.7%)
Revenue pax-kilometers (m RPK) 3,296 8,335 (60.5%) 8,725 22,785 (61.7%)
Available seat-kilometers (m ASK) 5,063 9,800 (48.3%) 12,477 27,365 (54.4%)
Load factor (%) 65.1% 85.1% (20.0) 69.9% 83.3% (13.3)
* * * * *Q3* * * *Year to date*
*Cargo activity* *2020* *2019* *Variation* * * *2020* *2019* *Variation*
Revenue tonne-km (m RTK) 605 927 (34.7%) 1,802 2,794 (35.5%)
Available tonne-km (m ATK) 1,139 1,946 (41.4%) 3,390 5,489 (38.2%)
Load factor (%) 53.1% 47.7% 5.5 53.2% 50.9% 2.2
*KLM activity*
* * * * *Q3* * * *Year to date *
*Total Passenger network activity* *2020* *2019* *Variation* * * *2020* *2019* *Variation*
Passengers carried (‘000s) 2,295 9,464 (75.7%) 9,036 26,442 (65.8%)
Revenue pax-kilometers (m RPK) 5,214 29,138 (82.1%) 27,468 82,117 (66.6%)
Available seat-kilometers (m ASK) 15,511 31,993 (51.5%) 46,359 91,593 (49.4%)
Load factor (%) 33.6% 91.1% (57.5) 59.3% 89.7% (30.4)
*Long-haul*
Passengers carried (‘000s) 436 3,028 (85.6%) 2,829 8,566 (67.0%)
Revenue pax-kilometers (m RPK) 3,462 23,533 (85.3%) 22,114 66,871 (66.9%)
Available seat-kilometers (m ASK) 12,461 25,728 (51.6%) 38,406 74,182 (48.2%)
Load factor (%) 27.8% 91.5% (63.7) 57.6% 90.1% (32.6)
*Short and Medium-haul*
Passengers carried (‘000s) 1,859 6,436 (71.1%) 6,207 17,876 (65.3%)
Revenue pax-kilometers (m RPK) 1,752 5,605 (68.7%) 5,353 15,246 (64.9%)
Available seat-kilometers (m ASK) 3,050 6,266 (51.3%) 7,953 17,411 (54.3%)
Load factor (%) 57.4% 89.5% (32.0) 67.3% 87.6% (20.2)
* * * * *Q3* * * *Year to date*
*Cargo activity* *2020* *2019* *Variation* * * *2020* *2019* *Variation*
Revenue tonne-km (m RTK) 1,127 1,164 (3.2%) 2,942 3,466 (15.1%)
Available tonne-km (m ATK) 1,398 1,858 (24.8%) 3,919 5,407 (27.5%)
Load factor (%) 80.6% 62.6% 18.0 75.1% 64.1% 11.0
--------------------
^1Passenger unit revenue is the aggregate of Passenger network and Transavia unit revenues, change at constant currency^1 The definition of ROCE has been revised to take into account the seasonal effects of the activity.*Attachment*
· Q3_2020 Press release EN final