Air France-KLM

INVESTOR ROADSHOW PRESENTATION FULL YEAR 2019

MARCH 2020

Overview

Resilient operating results in a challenging macro-economic context

Net improved operating performance since 2012

Leverage successfully taken down to investment grade like levels

Group guidance for 2020-2024: Capacity growth +2 to +3% p.a.

Commitment to Global Environmental Sustainability

Group numerous unique strengths

  • France #1 world inbound destination
  • Schiphol Best-In-Class European hub

New 4-pillar strategy recently unveiled

  • Optimize the operating model: Reduce operating costs and increase efficiency
  • Refocus growth of passenger revenue on most profitable segments by leveraging hubs and powerful brand identities
  • Continue to grow other group's businesses and leverage customer data, Flying Blue, Cargo, and Engineering & Maintenance
  • Continue to pragmatically evaluate consolidation opportunities

2

3

A I R F R A N C E - K L M

G R O U P

Results 2019 FY

2019 highlights

Labor stability

  • Improved social dialogue based on trust, respect, transparency & confidentiality
  • 37 staff agreements signed in
    2019 for Air France and new CLAs for all KLM staff categories

Operational reliability

  • Air France operational measures resulting in strongly-improvedArrival-punctuality.
  • Customer satisfaction scores (NPS) at a record level for Air France and at a steady-state high level for KLM

Sustainability

  • A step up in sustainability, launching new impactful initiatives by Air France-KLM
  • Regaining the world leader position 2019 in the Dow Jones Sustainability Index

4

2019 KPI targets achieved

Guidance 2019

Full Year 2019

Unit cost

ex-currency at

-1% to 0%

-0.9%

constant fuel price

Capex

€3.2bn - €3.3bn

€3.3 bn

Net Debt / EBITDA at/below 1.5x

1.5x

Passengers carried

Group revenue

+2.7%

+3.7%

101.4m

104.2m

26.2bn

27.2bn

FY 2018

FY 2019

FY 2018

FY 2019

Operating result (1)

Net debt

-18.8%

- €17m

1,405

6,164

6,147

1,141

FY 2018 FY 2019

31 Dec

31 Dec

2018

2019

(1) 2018 and 2019 results restated (with a similar impact in both years) for LLP componentization

5 accounting change. For details see slide 36 and/or notes to the consolidated financial statements paragraph 2, page 12-15

Full Year operating result at €1,141m,

with revenues +3.7% and fuel expenses +11.2%

FY 2019

FY 2018

Change

Change

at constant currency

Revenues (€ bn)

27.19

26.23

+3.7%

+2.2%

Fuel expenses (€ bn)

5.51

4.96

+11.2%

+5.5%

EBITDA (€ m)

4,128

4,293

-3.8%

-3.3%

Operating result (€ m)

1,141

1,405

-18.8%

-17.7%

Operating margin

4.2%

5.4%

-1.2 pt

-1.0 pt

Net income - Group part (€ m)

290

420

-130m

Adjusted operating free cash flow (€ m)

-385

115

-500m

ROCE 12 months sliding

8.5%

10.4%

-1.9 pt

31 Dec 2019

31 Dec 2018

Change

Net debt (€ m)

6,147

6,164

-17m

Net debt/EBITDA 12 months sliding

1.5x

1.4x

+0.1x

6 (1) 2018 and 2019 results restated (with a similar impact in both years) for LLP componentization accounting change. For details see slide 36 and/or notes to the consolidated financial statements paragraph 2, page 12-15

Operating result at €1,141m with cost-efficiency measures

offset by pressure on Cargo unit revenue and a higher fuel bill

FY 2019

Operating result evolution in € m

1,405

+40

-300

+203-188

-191,141

Passenger -80m

Cargo -220m

FY 2018

Activity change

Unit revenue

Unit cost

Fuel price ex-currency

Currency impact

FY 2019

2018 and 2019 results restated (with a similar impact in both years) for LLP componentization accounting change. For details see slide 36 and/or notes to the consolidated financial statements paragraph 2, page 12-15

7

Revenue growth for all businesses, margin

decline in Passenger airlines and a positive margin trend in Maintenance at 5.6%, +0.7pt

Full Year 2019

Network

Transavia

Maintenance

Group

Capacity

(1)

Unit Revenue

(2)

Constant Curr.

+2.5%

-0.4%

+1.7%

-10.7%

+6.5%

+3.0%

+2.9%

-1.2%

Revenues

Change

Operating

Change

Operating

Change

(€ m)

result (3)

margin (3)

(€ m)

23,272

+2.6%

749

-293m

3.2%

-1.4 pt

1,744

+9.3%

131

-14m

7.5%

-1.6 pt

2,138

+11.3%

260

+46m

5.6%

+0.7 pt

27,189

+3.7%

1,141

-264m

4.2%

-1.2 pt

(1). Capacity is defined as Available Seat Kilometers (ASK), except for Network Cargo capacity which is Available Ton Kilometers (ATK). Group capacity is defined as Passenger ASK (Network Passenger ASK + Transavia ASK)

8

(2). Unit revenues = revenue per ASK, Cargo unit revenues = Cargo revenue per ATK, Group unit revenue = (Network traffic revenues + Transavia traffic revenues) / (Network Passenger ASK + Transavia ASK).

  1. 2018 and 2019 results restated (with a similar impact in both years) for LLP componentization accounting change. For details see slide 36 and/or notes to the consolidated financial statements paragraph 2, page 12-15

Growth in traffic +3.2% underpinned by load-factor improvements, mitigating yield pressure on unit revenue at -0.4%

Total

RASK ex cur.

FY 2019

2.5%

3.2%

-0.4%

Premium

Economy

1

ASK

RPK

RASK ex cur.

-0.7%

-0.3%

French domestic

Medium-haul hubs

Total short & medium-haul

1

2.9%

4.7%

1.0%

2.8%

0.1%

-0.3%

0.6%

1

1

-7.5%

-7.3%

ASK

RPK

RASK ex cur.

ASK

RPK

RASK ex cur.

ASK

RPK

RASK ex cur.

North America

Caribbean & Indian Ocean

Asia

5.2%

5.8%

0.6%

4.2%

3.3%

3.3%

0.4%

-0.6%

1

1

1

-1.0%

ASK

RPK

RASK ex cur.

ASK

RPK

RASK ex cur.

ASK

RPK

RASK ex cur.

Latin America

Africa & Middle East

Total long-haul

6.4%

5.3%

2.9%

2.9%

3.3%

1

1

1

-7.2%

-2.3%

-1.3%

-0.4%

ASK

RPK

RASK ex cur.

ASK

RPK

RASK ex cur.

ASK

RPK

RASK ex cur.

9

Network: Strong improvement in Air France operational and NPS performance, steady solid appreciation in KLM

Net Promoter Score trend

Air France rated 7th airline in the On Time

Performance (A14) 2019 worldwide ranking

42

40

38

39

41

KLM

All indicators improved for Air France, on the back of a

successful "Cancel the cancellation" program

27

22

Completion factor

Departure

17

19

Air France

%

punctuality D0 %

12

2018

2019

2018

2019

Missing luggage

Connection

success @CDG %

2015

2016

2017

2018

2019

@CDG ‰

2018

2019

2018

2019

10

Both airlines improved results in Q4 2019, with cost efficiency measures paying off for Air France resulting in a margin increase of +0.8pt

Q4 2019

Capacity

Revenues

Change

Operating

Change

Operating

Change

change

(€ m)

YoY

result (1)

YoY

margin(1)

YoY

(€ m)

+1.9%

4,056

+1.9%

-19

+30

-0.5%

+0.8 pt

+2.1%

2,690

+1.4%

119

+7

4.4%

+0.2 pt

+2.0%

6,618

+1.9%

96

+43

1.5%

+0.6 pt

FY 2019

Capacity

Revenues

Change

Operating

Change

Operating

Change

Net debt

Change

Net debt /

Change

change

(€ m)

YoY

result (1)

YoY

margin (1)

YoY

(€ m)

31 Dec 2018

EBITDA (2)

31 Dec 2018

(€ m)

+3.7%

16,588

+4.6%

280

-41

1.7%

-0.3 pt

3,941

+384

1.8x

+0.1pt

+1.9%

11,075

+1.7%

853

-238

7.7%

-2.3 pt

2,525

-301

1.3x

-0.0pt

+2.9%

27,189

+3.7%

1,141

-264

4.2%

-1.2 pt

6,147

-17

1.5x

+0.1pt

  1. 2018 and 2019 results restated (with a similar impact in both years) for LLP componentization accounting change. For details see slide 36 and/or notes to the consolidated financial statements paragraph 2, page 12-15

11 (2) Net Debt / EBITDA: 12 months sliding, see calculation in press release

Net debt stable and Leverage ratio at full year guidance of 1.5x(1)

FY 2019 Free cash flow evolution

In € m

(FY 2018: +3542) (FY 2018: +256)

(FY 2018: -2711)

3,760

+135

-3,272

(FY 2018: +1087) (FY 2018: -972)

623

-1,008

-385

(FY 2018: 115)

Cash flow

Change in

Net

Operating

Payment of

Adjusted

before change

WCR

investments

Free Cash

lease debt

operating free

in WCR

Flow

cash flow (2)

Net debt stable

In € m

6,164

-1,008

+607

-1

6,147

+385

Net debt at 31

Payment of lease Adj.operating free New lease debt Currency & other

Net debt at 31

Dec 2018

debt

cash flow

Dec 2019

12 (1) Net Debt / EBITDA: 12 months sliding, see calculation in press release

(2) Adjusted operating free cash flow = Operating free cash flow with deduction of repayment of lease debt

13

A I R F R A N C E - K L M

G R O U P

OUTLOOK

Network: Passenger

unit revenue outlook for Q1 2020 impacted by Covid-19

After a good performance with positive unit revenue in January, recent developments with regards to the Covid-19 have impacted the demand outlook, especially in the Asian network.

Due to Covid-19:

  • Passenger network unit revenues now expected to be down for Q1 2020
  • Cargo unit revenue under pressure in the first part of the year
  • Impact on operating result (Feb-Apr 2020) estimated at between -€150 to -€200m, with:
    • Suspension of China operations in February-March and
      possible resumption of operations starting from April 2020(1)
    • Negative impact for connecting traffic and weakness in rest of Asia taken into account
    • Variable cost savings as no redeployment so far is taken into account

Long-haul forward booking load factor

(change vs previous year)

-3 pt

-3 pt

-4 pt

-5 pt

Feb-20Mar-20Apr-20May-20

14

(1) All flights to China were suspended as of 30 January 2020. Air France-KLM Group Mainland China network ASKs at 16.5 billion in

2019, representing 5.5% of the total Network Passenger activity

Fuel bill to decrease by €450m in 2020

$ bn

6.2

2019:

(1)

2019

Fuel bill €5.5bn(2)

5.6

5.3(1)

2020:

2020

Fuel bill €5.1bn(2)

(1)

1.4(1)

1.4

1.5

(1)

(1)

1.5

(1)

2021:

2021

1.3

Fuel bill €4.8bn(2)

2019

2020

2021

Q4 19

Q1 20

Q2 20

Q3 20

Q4 20

Market

Brent ($ per bbl)(1)

64

52

51

62

56

50

50

50

price

Jet fuel ($ per metric ton)(1)

682

549

565

680

608

520

532

542

Price

Jet fuel ($ per metric ton) (1)

678

619

583

692

664

612

605

601

% of consumption already hedged

60%

66%

34%

61%

63%

63%

70%

70%

after hedge

50

-650

-50

-50

-100

-200

-200

-150

Hedge result (in $ m)

15

(1) Based on forward curve at 28 February 2020. Sensitivity computation based on 2020 fuel price,

assuming constant crack spread between Brent and Jet Fuel. Jet fuel price including into plane cost

  1. Assuming average exchange rate on US dollar/ Euro of 1.11 for 2020 and 1.12 for 2021

Currency impact

on operating result

Currency impact

on revenues and costs In € m

-19

FY 2020 guidance update 2 March 2020

Currency impact FY 2020: +€100m, based on spot €/$ 1.11 Net operational exposure hedging for 2020:

USD ˜58%

JPY ˜57%

GBP ˜69%

122

141

Revenues and costs per country

108

92

87

70

FY 2019

65

68

REVENUES

COSTS

Q1 2019

Q2 2019

Q3 2019

Q4 2019

US dollar

US dollar

(and related

Currency impact on revenues

26

currencies)

38

Currency impact on costs, including hedging

54

62

20

Euro

Other

-XX

Currency impact on operating result

Other

currencies

currencies

(mainly euro)

16

Unit cost ex-currency at constant fuel price between -1% and 0%

  • 2020 unit cost trend for Air France foreseen to be more than at target
  • KLM unit cost performance impacted by Pension plan(1) and new CLAs
  • Negative cost implications related to Covid-19 are foreseen due to lower-than-planned capacity growth and expenses for disruptions
  • Simplification plan measures on track for
    2020:
    • Transformation well underway in Group and Airlines, foreseen to deliver over €90m of structural savings in 2020
    • Over 150 identified simplification and optimization projects started in 2020

17 (1) Lower discount rate for KLM Ground Pension fund (2019: 1.85%, 2020: 1.15%) €70m

Summary of Full Year 2020 guidance

In view of the recent evolutions of Covid-19 The Group is monitoring closely the situation and will communicate an updated guidance in due time, but at the moment, there is too much uncertainty to provide a precise direction

Guidance 2020

Passenger

(1)

Capacity

+2.0% to +3.0%

Transavia

+4% to +6%

Fuel

-€450m

Currency

+€100m

on operating result

Unit cost

(2)

ex-currency at constant fuel price

-1% to 0%

Capex

€3.6bn

Net debt/EBITDA

Circa 1.5x

(1)

Capacity implications due to the Covid-19 related flight suspensions are foreseen to reduce capacity growth to at or below the

18

lower-end of this guided range.

(2)

Negative cost implications related to the Covid-19 foreseen due to lower-than-planned capacity growth and disruption cost

Debt reimbursement

profile at 31 December 2019

Debt reimbursement profile(1)

In € m

600

400

600

400

2,000

850

650

600

500

450

2020

2021

2022

2023

2024

2025 and beyond

Bonds issued by Air France-KLM

Air-France KLM

September 2021:

March 2026:

Hybrid Unsecured Bond:

AFKL 3.875% (€600m)

AFKL 0.125% (€500m, Convertible « Océane »)

AFKL 6.25% Perp Call 2020 (€403m)

October 2022:

December 2026:

AFKL 3.75% (€400m)

AFKL 4.35% ($145m)

(1) Excluding operating lease debt payments and KLM perpetual debt.

19

New 5 year bond issue for €750m with a 1.875% annual coupon & Tender offer accepted for June 2021 and

October 2022 bond issues amounting to €350m, completed in January 2020

Other Long-term Debt : AF and KLM Secured Debt, mainly "Asset-backed"

(Net Deposits)

20

A I R F R A N C E - K L M

G R O U P

Achievements Financial Key

Leverage Successfully Taken Down

to Investment Grade Like Level

Air France-KLM successfully deleveraged post-crisis years

Air France-KLM vs peers

Net Debt/EBITDA trailing 12 months(1)

Net Debt/EBITDA trailing 12 months

In € bn

5.4

4.2

4.0

3.4

2.9

1.4x

1.4x

1.5x

1.5x

1.3

1.4

1.5

2012

2013

2014

2015

2016

2017

2018

2019

IAG (2)

Lufthansa

Air France-

Investment

Group (3)

KLM (2)

grade

indicator

  1. Pre-IFRS16restatement as per 2017, Restatement 2018 and 2019 for LLP accounting change, Adjusted Net Debt/EBITDAR, with Adjusted net debt =

Net Debt + 7 times yearly operating lease costs

21

(2)

Air France-KLM and IAG end of December 2019 (IAG Source: press release 28 February 2020)

(3)

Lufthansa Group end of June 2019

Strong Focus on Unit cost Reduction and Increasing Productivity

Unit Costs reduction evolution

At constant currency, fuel price

1.0%

0.6%

0.5%

0.0%0.1%

0.0%

-0.5%

-1.0%

-0.7%

-0.6%

-0.9%

-1.0%

-1.5%

FTE reduction and productivity improvement

Average FTE

Productivity(1)

105

120,000

4.0

100,000

100

3.5

80,000

95

60,000

3.0

90 40,000

-2.0%

-2.5%

-1.9%

2.5

20,000

85

2012

2013

2014

2015

2016

2017

2018

2019

0

2.0

2016 (2)

2012

2013

2014

2015

2017

2018

2019

Cumulative change index since 2012

Productivity 1000 ASK/FTE

22

(1)

Productivity measured as 1000 Available Seat Kilometers / Average FTE

(2)

2016 FTE reduction includes partly disposal of Servair

Improved Operating Performance

Though Not Yet Up to the Level of Peers

Operating result evolution(1)

In € bn

1.9

1.41.4

1.1

1.14

0.4

0.2

0

2012

2013

2014

2015

2016

2017

2018

2019

Operating margin evolution versus peers

Revenues in € bn

40

7.9%

30

1.9%

6.2%(2)

0.1%

20

14.3%

0.7%

10

-

-2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Operating margin (1)

2012 2018

Source: Companies published results

(1)

IFRS16 restatement as per 2017, Pre-IFRS16 Operating result adjusted for the interest portion (1/3) of the operating leases.

23

Restatement 2018 and 2019 for LLP accounting change,

(2)

Air France-KLM Group operating margin is adjusted for strike impact €335m in 2018

A I R F R A N C E - K L M G R O U P

Building A European Champion Based on a New Value-Focused Model

24

Air France-KLM has Numerous Unique Strengths

Our Core Assets

Three Powerful

85 000 Engaged and

Extensive and

Powerful PARTNERSHIPS

BRANDS

Professional PEOPLE

Complementary NETWORKS

Our Unique Competitive Advantages

France: #1 Inbound Destination

Schiphol: Best-In-Class

Joint Commercial Teams

in the World

European Hub

and Revenue Production

25

Our Value Creation Model

To be a European Champion

OUR RESOURCES

OUR BUSINESS MODEL

OUR VALUE CREATION

2019 PERFORMANCE

PEOPLE

85,000 engaged and professional employees and a diverse culture

BRANDS

Portfolio of attractive, strong brands and a common frequent flyer program "Flying Blue"

FLEET & NETWORK

An extensive network operated with an optimized fleet

PARTNERSHIP

A powerful network

of suppliers and partnerships

FINANCIAL

A stable shareholding structure with the French and Dutch states, Delta Air Lines and China Eastern

ENVIRONMENTAL

An experienced and knowledgeable player in the industry committed to contributing to a positive change

26

EMPLOYEES

Be the best place to work

CUSTOMERS

Exceed customer

expectations

SHOWCASING THE

STRONG

MAKING

BEST

INNOVATIVE

LOW COST

OF FRANCE AROUND

GLOBAL BRAND

FEEL GOOD

THE WORLD

SHAREHOLDERS

Reach top financial

performance

PLANET & SOCIETY

Contributing to UN sustainability goals

EPS

40

HOURS OF TRAINING PER EMPLOYEE

NPS

104M

CUSTOMERS

1.5X

NET DEBT/ EBITDA RATIO

4.2% OPERATING MARGIN

N° 1

IN DJSI

79,9 G / PAX / KM CO2

Our Employees, #1 asset of the Group

EMPLOYEES

Be the best place to work

1

are proud to work

Inclusive talent management, a company culture

for the Group

which fosters diversity and equality

2

are professional and

Strong increase in the Employee Promoter Score

engaged

+15% in 2019(1)

and are pushing our

3contribution to sustainability

  • Social partnerships with 5,000+ employees involved in volunteer work, skill-sharing and donation projects

27 (1) Percentage change in the Employee Promoter Score (EPS) measured among Air France and KLM employees July to December 2019 period compared to last year

Our customers at the forefront of everything we do

Record levels of customer satisfaction in 2019

Best in class Customer Products

Striving for excellence

CUSTOMERS

Exceed customer expectations

Brands' sustainability commitments

  • Installation of Air France full flat beds in Business Class to end in 2021, KLM entire fleet done
  • Wi-Ficonnect will be available on 93% of fleet in 2020, 100% in 2021
  • Lounge refurbishments, including KLM Crown lounge, Paris-Orly and Terminal 2F
  • On Time Performance ranking Air France as 7th airline world-wide in 2019
  • Record high customer satisfaction in 2019 for Air France with NPS score of
    27 and KLM steady-state with NPS score of 41
  • KLM as world's first airline introducing 'Fly responsibly' concept
  • Replace single-use plastics on board Air France flights
  • CO2 compensation for all French Domestic flights

28

Becoming a European champion reaching top financial performance

SHAREHOLDERS

Reach top financial performance

2020

2021

2022

2023

2024

Commitment to Global Environmental Sustainability

Optimize our Operating Model

Grow Profitable Passenger Revenue

Leverage European Consolidation

Develop Customer Data, Flying Blue, Cargo and Engineering & Maintenance

29

Air France-KLM the leading airline group in 2019 on Sustainability

European airline groups' Sustainability

rankings by leading rating agencies

100

score

Good

80

60

40

Poor

score

20

0

PLANET & SOCIETY

Contributing to UN sustainability goals

Sustainalytics

No. 1 position in the DJSI

RobecoSam

Bloomberg ESG Disclosure

Top ranking for 15 years

ISS Quality

CDP Climate

Bloomberg Environmental

Bloomberg Social

Leader in the « Airline » sector

Bloomberg Governance

Governance: best score

Environment: best score

Social: Europe best score

32

Source: Bloomberg 10 February 2020

(1) ISS Quality and CDP Climate scores have been normalised for ease of comparison

A I R F R A N C E - K L M G R O U P

New Financial Strategic Framework 2020 - 2024

31

Mid-Cycle Operating Margin Reaching 7-8%

Air France-KLM operating profit evolution (€m)

Target Mid-Cycle

Operating Margin: 7-8%

Operating Margin:

4%

+€100m

+€100m

€2,500m

+€250m

+€900m

+€1,141m

2019 Operating Result

Additional Group

2024 Target

Synergies and

Operating Result

other businesses

1. Company sourced consensus as per 21 October 2019 for full year 2019 as published on https://www.airfranceklm.com/en/finance/financial-information/consensus

2. Modelling assumptions:

Excluding Fuel Price, Currency FX and Industry yield development effects

Objectives per airline are net amounts (including offsets against base-case price inflation and capacity growth).

32

Inflation assumption of 1.5% per annum, as per Eurozone Consumer price index 2020-2024. Source: Oxford Economics, updated August 2019

Air France-KLM Group Available Seat Kilometer (ASK) growth assumption mid-point of guidance range +2 to +3% per annum from 2020-2024

CAPEX 2020-2024 Underpinning Objective

to Rejuvenate Fleet & Improve Ownership Ratio

Capex investment 2020-2024

Before leases

In € bn

Guidance 2020:

Average ~4.0

€3.6bn after

operating leases

3.3

Capex 2020-24:

Profitability uplift

Improved fleet age & ownership ratio

20192020-24

Net Fleet

Capitalized Maintenance

Spare Parts incl. third-party growth

Aircraft Modifications

Ground & IT innovation

33

Fleet rejuvenation

Air France-KLM group fleet projection of average years of age

12

11

10

9

2019

2022

2024

Improvement ownership ratio and lease debt reduction

In € bn

Leased ratio

66%

8.0

6.0

Long-term objective

4.0

33%

2.0

0.0

0%

2019

2022

2024

Lease debt

Leased aircraft ratio

(1) Air France-KLM Group portion of fleet under operational lease versus the total fleet

Financial Structure Robustness

Leverage Ratio to Remain ~1.5x

Adjusted Operating Free Cash Flow

Net Debt/EBITDA projection ~1.5x

positive medium-termmid-cycle

2020-2024

1.5 Investment grade like 1.5x

8,000

1.0

0

6,000

0.5

(2)

2020

2022

2024

0.0

4,000

(1)

2020

2022

2024

Adjusted Operating Free Cash Flow

Operating Free Cash Flow

Net debt / EBITDA

Net debt

EBITDA

Increasing cash generation by execution of strategic plans

Positive Operating Free Cash Flow foreseen throughout 2020-24

Net debt evolution positively impacted by reduced portion of

Adjusted Operating Free Cash Flow turns positive as foreseen

lease debt and increased profitability

progressive profitability uplift materializes

Progressive profitability uplift by execution of strategic plans

CAPEX investment requirements 2020-24

Lease debt repayments

New generation fleet and phase-out A380

Progressive improvement foreseen in Debt to Equity ratio

Transformation plans

(1) Adjusted operating free cash flow = Operating free cash flow with deduction of repayment of lease debt

(2) Including foreseen near-term incidentals

34

- Cargo claim (negative) (2020)

- Sale of Amadeus and Servair stakes (positive) (2020)

Group Capacity Evolution

Capacity evolution 2020-24

Passenger Network & Transavia In Available Seat Kilometers

+2 to +3% p.a.

Long-haul capacity evolution

2019-2022

6pt

4pt

2pt

111

-6pt

105

100

2019

Fleet size

Maintenance

Aircraft

2022 Block-hour

Gauge

2022 Capacity

impact

utilization

Long-haul capacity evolution(1)

2019-2022

3pt

110

107

4pt

1pt

1pt

2019

2020

2022

2024

100

2019

Fleet size

Maintenance

Aircraft utilization

2022 Block-hour

Gauge

2022 Capacity

impact

35

(1) KLM Actual growth will depend on slot growth opportunities in the Netherlands

Strict Cost Control

Turn-Around Plans to Deliver Unit Cost Reduction in Average of -1% per Annum

Net cost break-down

Net cost RTM 2019(1)

Unit cost objective 2020-24

Unit cost at constant fuel and currency

100%

80%

60%

40%

20%

0%

-20%

Other revenues

Operating cost

Depreciation

Salary cost

Fuel efficiency

Wage inflation

Productivity

Price inflation

Transformation projects

Commercial cost

Other cost

Maintenance cost

Fuel

Cost control targeted to exceed inflationary pressure

Average -1% p.a.

2019

2020

2022

2024

Despite an upward inflationary trend

Inflation(2) 3%

2%

1%

0%

2016

2017

2018

2019

2020

2021

France

The Netherlands

(1)

Rolling Twelve Months 2019, from 1 October 2018 till 30 September 2019

36

(2)

Inflation as per Eurozone Consumer price index 2020-2024.Source: Oxford Economics, updated August 2019

Group Objectives and Guidance

Objectives medium-term (2024)

Operating margin mid-cycle at 7-8%

Adjusted Operating Free Cash Flow positive

Operating margin mid-cycle at 7-7.5%

Operating margin mid-cycle at 9-10%

Guidance elements (period 2020 till 2024)

Capacity growth +2 to +3% p.a.

Unit cost average -1% p.a.

Capex average ~€4.0bn p.a.

Net debt/EBITDA ~1.5x

37

38

A I R F R A N C E - K L M

G R O U P

Appendix

Creating Win-Win Partnerships with Employees

Air France Signed a New Pilot Agreement Permitting Increased Flexibility in Commercial and Fleet Strategy

A New, More Flexible Agreement Has Been Signed Between Air France and SNPL Pilots

Previously, an agreement was in place with Air France pilots

While Block Hours and number of aircraft directly affect pilot

ASK metric is replaced by a

new KPI based on Maximum

regulating the growth of Air France in relation to KLM, based

employment, the ASK metric has no direct link with pilot activity

Seating Capacity of aircraft

Air France is now able to make

optimal fleet and product

on three metrics:

Restrictions regarding

decisions, to extract maximum value and profit

  • Capacity (ASK)
  • Block Hours
  • Number of Long Haul Aircraft

This KPI forced Air France to

make financially punitive fleet & product decisions

maximum number of aircraft

at Transavia France (TO) have been lifted

Example: Paris/Amsterdam - Singapore

  • Same aircraft: Boeing 777-300ER
  • Same block time: 12 hours 30 minutes
  • +35% ASK for KLM due to cabin configuration (Air France: 296 seats | KLM: 408 seats)

39

Summary of Key Initiatives Currently Underway

And Estimated Operating Result Impact

Commitment to Global Environmental Sustainability

Optimize our

Grow Profitable

Leverage European

Develop Data, Flying Blue

Operating Model

Passenger Revenue

Consolidation

Cargo, E&M

Increase

Clarify Brand and

~€25-50m

Pragmatically Evaluate

Flying Blue:

Commercial &

Pre-requesite

Product Portfolio

Consolidation

Leading Loyalty

€50-100m

Fleet Flexibility

Opportunities

Platform

Revenue Growth

~€200m

Optimize Internal

on Strongest

E&M: Remain

€400-475m

~€50m

Airline Processes

Segments

Industry Leader

Simplify and

€400-450m

Grow Transavia

€75-100m

Cargo: Maximize

Positive

Renew Fleet

Contribution

Contribution

Implement

Leverage Group

€300-350m

Personalized Travel

~€50m

Synergies

(accounted in

Journeys

airline P&L)

34

Air France Turn-Around - Priorities

Optimize our Operating Model

Grow Profitable Passenger Revenue

Operating result +€900M

Simplification focus

Fleet renewal

+€m+€m

Operations transformation

A380 replacement

Transversal (Organization, External spend, IT)

A220 phase-in

A350/787 phase-in

French domestic restructuring

Revenue mix optimization

+€m

CDG hub consolidation (incl. cabin LOPA

improvement)

Revenue enhancement (including CRD, Ancillary), Brand & product portfolio

41

Focus on Simplification

Ambitious action plan has already started…

2020 Accelerate implementation of transformation projects: some highlights

  • And will deliver steadily until 2024

Net impact

of transformation projects €400m+

TRANSVERSAL

External spend

  • Implement "Control tower" on spends and contracts
  • Enforce speed savings: review of contracts
  • Optimize marketing, training, catering, outstations, maintenance costs
  • Accelerate channel shift

Organization simplification

IT

  • Improve prioritization and standardization
  • Develop further agility in innovation projects for efficiency and time to market delivery

(after inflation)

€350m

€260m

€165m

€80m

  • Simplify processes and break silos, with specific focus on overheads and support functions (delayering, mutualization)

Improve operational

performance

OPERATIONS

Optimize fuel consumption

Optimize full flight simulators usage

42

  • Launch successfully the Supply Chain program
  • Digitize processes to enhance customer experience and reduce costs

2020

2021

2022

2023

2024

Transversal streams

Operations Transformation

AIR FRANCE - KLM INVESTOR DAY - NOVEMBER 2019

Air France Turn-Around-Timeline

Timeline

+€900m

% completion

100%

100%

80%

60%

40%

20%

0%

2020

2022

2024

Simplification focus

Revenue mix optimization

Fleet renewal

Medium-term objectives

Deliver sufficient operating

margin to ensure profitable growth

Operating margin objective

mid-cycle

at 7-7.5%

43

KLM Strengthening of the Success Model - Priorities

Optimize our Operating Model

Grow Profitable Passenger Revenue

Focus on cost and operational excellence

+€m

Operational excellence

External spend management

Margin improvement initiatives

Operating result +€250M

Fleet renewal

Revenue mix optimization

+€m+€m

E195 phase in

Revenue management

B737 replacement

Long Haul fuel efficiency

Revenue enhancement (including Customer

Long Haul optimization

Reach and Distribution, Ancillary)

44

AIR FRANCE - KLM INVESTOR DAY - NOVEMBER 2019

KLM Strengthening of the Success Model - Timeline

Timeline

% completion

+€250m

100

100%

80

60

40

20

0

2020

2022

2024

Focus on cost and operational excellence

Revenue mix optimization

Fleet renewal

Objective medium term

Further grow KLM's successful model,

including continuous focus on cost

Operating margin objective mid-cycle

at 9-10%

45

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Air France-KLM SA published this content on 04 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2020 19:57:05 UTC