OREANDA-NEWS. Air France-KLM Financial Year 2016

FIRST HALF

  • Revenues of 11.82 billion euros, down 2.6% both reported and like-for-like
  • EBITDAR of 1,522 million euros, an improvement of 486 million euros, up 597 million euros like-for-like
  • Strong operating free cash flow2 generation: 373 million euros
  • Further net debt reduction: net debt2 of 4.04 billion euros, down 265 million euros compared to 31 December 2015
  • Adjusted net debt / EBITDAR2 ratio of 2.9x, an improvement of 0.5 points compared to 31 December 2015

FULL YEAR 2016 OUTLOOK

  • High level of geopolitical and economic uncertainties, increasing pressure on unit revenues and special concern about France as a destination
  • Impact of fuel savings on P&L expected to be more than offset in the coming quarters by downward pressure on unit revenue and negative currency impacts
  • Continued progress in unit cost reduction, targeted at around 1% ex fuel in 2016
  • Free operating cash flow generation after disposals maintained between 0.6 billion euros and 1.0 billion euros in 2016
  • Further significant net debt reduction 

The Board of Directors of Air France-KLM, chaired by Jean-Marc Janaillac, met on 26th July 2016 to approve the accounts for the First Half of the Financial Year 2016.

Second Quarter 2016 total revenues stood at 6.22 billion euros versus 6.56 billion euros in Second Quarter 2015, down 5.2% as a result of increasing pressure on unit revenue and down 3.7% like-for-like.

Currencies had a negative 104 million euro impact on revenues, primarily driven by the weakening of currencies other than the US dollar against the euro, notably the BRL, GBP, CNY, CAD and ZAR. The negative effect on revenues was partly offset by the positive effect of currencies on costs, which amounted to 58 million euros. The net impact of currencies on the operating result thus amounted to a negative 46 million euros.

Total operating costs were 7.5% lower year-on-year and down 6.7% on a like-for-like basis. Ex-fuel, they increased by 0.3% and by 0.5% on a like-for-like basis. Unit cost per EASK was down 1.5%, on a constant currency, fuel price and pension-related expense basis, against stable capacity measured in EASK (+0.3%).

The fuel bill amounted to 1,167 million euros, down 29.7% and down 27.6% like-for-like. Based on the forward curve at 15 July 2016, the Full Year 2016 fuel bill is expected to reach 4.6 billion euros[1] and the Full Year 2017 fuel bill could amount to 4.4 billion euros.

Total employee costs including temporary staff were down 2.7% to 1,862 million euros. On a constant scope and pension-related expense basis, employee costs decreased by 2.9% and by 3.6% excluding the increase in the profit sharing scheme.

Over the Second Quarter 2016, 15% of the savings achieved on the fuel bill were retained, down significantly from the 55% retained during First Quarter 2016. During the Second Quarter, the positive fuel price effect of 408 million euros was largely offset by pressure on unit revenues (negative 300 million euros) and currency impacts (negative 46 million euros).

EBITDAR amounted to 991 million euros, a reported increase of 179 million euros and up 226 million euros like-for-like.

EBITDA amounted to 728 million euros, an increase of 171 million euros. Like-for-like, EBITDA increased by 211 million euros, mainly as a result of the strong Passenger network performance, which improved by 186 million euros like-for-like.

In the First Half 2016, total revenues stood at 11.8 billion euros versus 12.1 billion euros in the first half 2015, down 2.6% reported and on a like-for-like basis. The fuel bill amounted to 2,263 million euros, a reported decrease of 28.0% and down 29.1% on a like-for-like basis.

Over the first six months, savings achieved on the fuel bill (positive 858 million euros excluding currency) were partly offset by pressure on unit revenues (negative 419 million euros excluding currency) and negative currency impacts (negative 125 million euros) resulting in 37% of the fuel savings being retained.

In the First Half 2016, EBITDA amounted to a positive 994 million euros, an increase of 463 million euros. On a like-for-like basis, EBITDA increased by 582 million euros.

At 952 million euros, the Passenger Network was the main contributor to the EBITDA, up 541 million euros like-for-like. Despite the challenging Cargo operating context, marked by structural industry overcapacity, Cargo EBITDA improved by 37 million euros like-for-like mainly as a result of restructuring efforts.

The operating result stood at 218 million euros versus negative 238 million euros in 2015, an improvement of 456 million euros. Like-for-like, the operating result increased by 580 million euros.

The net result, group share stood at negative a 114 million euros against a negative 638 million euros a year ago.

At 30 June 2016, the trailing 12 months return on capital employed (ROCE) was 11.7%, up 6.3 points compared to 30 June 2015.