AIR FRANCE-KLM July 30, 2021
SECOND QUARTER 2021
Operating result at -752 million euros, EBITDA at -248 million euros
Adjusted operating free cash flow positive at 210 million euros
thanks to strong ticket sales
The Group's results improved compared to last year; although still impacted by travel restrictions:
- Revenue at 2,750 million euros, up 1,568 million compared to last year
- Operating result at -752 million euros, up 801 million euros compared to last year
- EBITDA loss reduced to -248 million euros
- Net income at -1,489 million euros, including negative impact of the derecognition of the KLM ground pension fund
- Restructuring programs showing improved results and structural benefits increased to 2.1 billion euros
- The group increased its capital by 1 billion euros, converted the direct French State loan of 3 billion euros into perpetual hybrid instruments and issued a Senior bond of 800 million euros of which the cash will be received in the Third quarter
- Net debt at 8.3 billion euros, down by 2.7 billion euros compared to end of 2020 thanks to the first set of capital strengthening measures
OUTLOOK
Since June, first signs of recovery are visible in the booking trend thanks to waived or eased travel restrictions in Europe due to the rise of vaccination rate across all countries. The reopening of the North Atlantic for americans citizens to visit Europe also resulted in an improved booking trend.
In this context, the Group expects capacity in Available Seat Kilometers for Air France-KLM Network passenger activity at index in the range of 60% to 70% in the Third quarter 2021 compared to 2019.
Due to the uncertainty of the reopening of the North Atlantic for European citizens and uncertainty concerning travel restrictions waiving, no capacity guidance will be provided for the Fourth quarter 2021.
The Air France-KLM Group continues to focus on its transformation projects in order to reduce its costs and on cash and equity. During the Annual General Meeting in May 2021, extraordinary resolutions were approved by the shareholders, providing the Board of Directors large flexibility to restore equity. These resolutions could include instruments such as rights issuance, vanilla quasi- equity and equity-linked instruments in order to restore balance sheet and re-profile debt redemptions.
Early July, Air France-KLM signed and executed an EMTN Program for a total issuance size of 4.5 billion euros.
Air France-KLM Group | Second quarter | Half year | ||
2021 | Change1 | 2021 | Change | |
Passengers (thousands) | 7,028 | +477.1% | 11,847 | -38.7% |
Passenger Unit revenue per ASK2 (€ cts) | 3.83 | +0.8% | 3.39 | -37.6% |
Operating result (€m) | -752 | +801 | -1,931 | +437 |
Net income - Group part (€m) | -1,489 | +1,123 | -2,970 | +1,443 |
Adj. operating free cash flow (€m) | 210 | +1,711 | -1,134 | +1,193 |
Net debt at end of period3 (€m) | 8,344 | -2,705 |
- The second quarter 2020 was highly impacted by worldwide lockdown
- Passenger unit revenue is the aggregate of Passenger network and Transavia unit revenues, change at constant currency
- See appendix for the calculation of the net debt
1
The Board of Directors of Air France-KLM, chaired by Anne-Marie Couderc, met on July 29, 2021 to approve the financial statements for the First Half 2021. Group CEO Mr. Benjamin Smith said: "Thanks to the easing of travel restrictions in several key regions, the Second quarter of 2021 saw the first signs of the long-awaitedrecovery. Travelers were able to take the skies again and Air France- KLM's voluntarist approach in terms of capacities - combined with the Group's balanced network and efficient hubs - proved conclusive. Reciprocity of borders reopening and the acceleration of the vaccination roll-outworldwide, especially in the context of the rise of the Delta variant, will play a key role in maintaining this momentum." said Benjamin Smith, CEO of Air France-KLM."To make the most of the recovery and prepare for the future, Air France-KLMcontinued its transformation across all businesses and notably reinforced its sustainability efforts to lead the way to sustainable aviation."
Business review
Network: Recovery visible only in June while Cargo continued to perform strongly
Second quarter | Half year | |||||
Network | 2021 | Change | Change | 2021 | Change | Change |
constant | constant | |||||
currency | currency | |||||
Total revenues (€m) | 2,363 | +151.8% | +158.3% | 4,221 | -19.1% | -17.1% |
Scheduled revenues (€m) | 2,187 | +164.5% | +171.6% | 3,899 | -20.4% | -18.2% |
Operating result (€m) | -654 | +469 | +477 | -1,715 | +137 | +127 |
Second quarter 2021 revenues increased by 158.3% at constant currency to 2.363 million euros. The operating result amounted to -654 million euros, a 477 million euros increase at constant currency compared to last year.
Passenger network: Caribbean & Indian Ocean, Africa & Middle East, Europe and French Domestic as the most resilient areas
Second quarter | Half year | |||||
2021 | Change | Change | 2021 | Change | Change | |
Passenger network | constant | constant | ||||
currency | currency | |||||
Passengers (thousands) | 5,853 | +418.9% | 10,321 | -38.9% | ||
Capacity (ASK m) | 36,417 | +315.5% | 70,003 | -1.6% | ||
Traffic (RPK m) | 15,930 | +388.5% | 29,363 | -44.7% | ||
Load factor | 43.7% | +6.5 pt | 41.9% | -32.7 pt | ||
Total passenger revenues (€m) | 1,468 | +294.5% | +301.7% | 2,487 | -40.5% | -39.3% |
Scheduled passenger revenues (€m) | 1,392 | +315.2% | +324.3% | 2,356 | -41.2% | -39.7% |
Unit revenue per ASK (€ cts) | 3.82 | -0.1% | +2.1% | 3.37 | -40.2% | -38.7% |
Last year Second quarter, the passenger network activity was heavily impacted by the Covid-19 crisis and came almost to a standstill. This year, the capacity in Available Seat Kilometers in the Second quarter was 315.5% higher than last year, however at 48% of 2019 Second quarter levels. Thanks to the Group's balanced network and strong Cargo performance, the passenger network was in line with the Group's guidance provided during First quarter 2021 results presentation.
Antilles, Greece and French domestic were amongst the best performing routes. Again, this quarter the Group operated more capacity than its main European competitors did.
During the Second quarter, Air France added three Airbus 350-900 to the fleet and KLM Cityhopper welcomed two Embraer 195 E2 into its fleet. With these investments, the Group continues to build an efficient fleet and shows its sustainable commitment.
2
Continuation of strong performance by Cargo
Second quarter | Half year | |||||
Cargo business | 2021 | Change | Change | 2021 | Change | Change |
constant | constant | |||||
currency | currency | |||||
Tons (thousands) | 273 | +83.4% | 541 | +38.2% | ||
Capacity (ATK m) | 2,623 | +66.0% | 5,311 | +11.3% | ||
Traffic (RTK m) | 2,092 | +77.5% | 4,166 | +38.4% | ||
Load factor | 79.8% | +5.2 pt | 78.4% | +15.3 pt | ||
Total Cargo revenues (€m) | 894 | +58.1% | +63.0% | 1,733 | +67.9% | +74.0% |
Scheduled cargo revenues (€m) | 795 | +62.0% | +66.9% | 1,543 | +73.4% | +79.5% |
Unit revenue per ATK (€ cts ) | 30.31 | -2.4% | +0.5% | 29.06 | +55.8% | +61.3% |
Compared to the Second quarter in 2020, capacity increased by 66% in Available Ton Kilometers. Despite this increase in capacity, the Load factor gained 5.2 points and the unit revenue per ATK at constant currency improved by 0.5%. Compared to 2019, a still limited cargo capacity is available while the demand remains high resulting in high Revenue Ton Kilometers and Revenues.
At the moment, the Group transports more than 100 shipments of Covid-19 vaccines per month. The distribution of vaccines continues to gradually increase and the Group expects further growth in the Third quarter, notably to Africa and South America.
During the First half year of 2021, the Sustainable Aviation Fuel (SAF) Cargo program welcomed 22 partners, showing the sustainable commitment of Air France-KLM Cargo and its partners.
Transavia operating loss in the Second quarter 2021 at -98 million euros
Second quarter | Half year | |||
Transavia | 2021 | Change | 2021 | Change |
Passengers (thousands) | 1,175 | +1,208.9% | 1,527 | -37.4% |
Capacity (ASK m) | 3,240 | +1,069.2% | 4,251 | -17.8% |
Traffic (RPK m) | 1,939 | +972.0% | 2,522 | -45.6% |
Load factor | 59.9% | -5.4 pt | 59.3% | -30.4 pt |
Total passenger revenues (€m) | 126 | +655.4% | 163 | -37.1% |
Unit revenue per ASK (€ cts) | 3.88 | -29.0% | 3.83 | -19.1% |
Unit cost per ASK (€ cts) | 6.90 | -84.8% | 8.96 | +5.9% |
Operating result (€m) | -98 | +13 | -218 | -25 |
The Second quarter operating result ended at an operational loss of -98 million euros, because of the ongoing travel restrictions in Europe and North Africa. As the production levels in the Second quarter of last year were close to zero due to an almost full production freeze, the activity level in the Second quarter 2021 was around ten times higher than last year. On this increased capacity, the load factor lost 5.4 point compared to last year at a level of 59.9%.
In the first half of 2021, the number of aircraft of Transavia increased by nine as part of the growth strategy for Transavia France. Transavia is well positioned to capture the leisure traffic recovery, seen since June, being a major opportunity for the Group's competitiveness gain.
3
Maintenance business operating result for Second quarter 2021 around breakeven
Second quarter | Half year | |||||
Maintenance | 2021 | Change | Change | 2021 | Change | Change |
constant | constant | |||||
currency | currency | |||||
Total revenues (€m) | 679 | +35.5% | 1,302 | -20.6% | ||
Third-party revenues (€m) | 255 | +14.9% | +31.0% | 514 | -28.3% | -18.5% |
Operating result (€m) | -3 | 315 | 319 | -10 | 311 | 329 |
Operating margin (%) | -0.4% | +63.0 pt | +68.0 pt | -0.8% | +18.8 pt | +21.1 pt |
The Second quarter operating result stood at -3 million euros, an increase of 319 million euros against a constant currency versus the Second quarter 2020.
In the Second quarter of 2020, the maintenance business recorded one offs linked to the Covid-19 crisis amounting to 203 million euros; excluding one offs effect, the operating result increase in the Second quarter this year is mainly explained by operational improvement and cost savings.
Total revenues increased by 35.5% in the Second quarter while third party revenues rose by 14.9% and internal revenues increased by 51.9%. This increase in internal revenues is mainly related to an increase in flight hours compared to the very low flight hours during the Second quarter 2020. The rise in external revenues is mainly driven by the components business.
Air France-KLM Group: EBITDA loss reduced to -0.2 billion euros
Second quarter | Half year | |||||
2021 | Change | Change | 2021 | Change | Change | |
constant | constant | |||||
currency | currency | |||||
Capacity (ASK m) | 39,657 | +338.6% | 74,254 | -2.7% | ||
Traffic (RPK m) | 17,869 | +419.2% | 31,884 | -44.8% | ||
Passenger unit revenue per ASK | 3.83 | -1.2% | +0.8% | 3.39 | -39.1% | -37.6% |
(€ cts) | ||||||
Group unit revenue per ASK (€ | 5.83 | -37.4% | -35.7% | 5.47 | -18.8% | -16.7% |
cts) | ||||||
Group unit cost per ASK (€ cts) at | 7.73 | -70.8% | -70.8% | 8.07 | -17.9% | -14.2% |
constant fuel | ||||||
Revenues (€m) | 2,750 | +132.7% | +143.1% | 4,910 | -20.8% | -18.0% |
EBITDA (€m) | -248 | +532 | +539 | -874 | -34 | -26 |
Operating result (€m) | -752 | +801 | +808 | -1,931 | +437 | +442 |
Operating margin (%) | -27.3% | +104.0 pt | +109.4 pt | -39.3% | -1.1 pt | +0.1 pt |
Net income - Group part (€m) | -1,489 | +1,123 | -2,970 | +1,443 | ||
In the Second quarter 2021, the Air France-KLM Group posted an operating result of -752 million euros, up by 801 million euros compared to last year.
Net income amounted to -1,489 million euros in the Second quarter 2021, an increase of 1,123 million euros compared to last year. Last year Second quarter was heavily impacted by the recording of exceptional accounting items due to Covid-19 (impairment for acceleration phase-out Airbus 380s and Airbus 340s, fuel "over hedge" and a restructuring costs provision for the Air France and KLM voluntary departure plans).
Following the conversion of KLM defined benefit pension schemes into collective defined contribution schemes for Cockpit and Cabin staff in 2017, now also the KLM ground staff pension fund moved to a defined contribution scheme. This lead to more predictable annual contributions and less volatility on the Group's Balance Sheet. Mainly due to the derecognition of the KLM ground staff pension fund the other non-current income and expenses showed in Q2 a negative amount of 849 million euros.
4
The Second quarter 2021 unit cost decreased by 71%, primarily caused by an increase of capacity
On a constant currency and fuel price basis, unit costs were down 71% in the Second quarter 2021.
All cost items, except other external expenses, increased in the Second quarter 2021 compared to last year due to an increase in capacity of 338.6%.
Group net employee cost were up 21.8% mainly due to less government support. The FTE reduction did not compensate fully this gap as indicated during the fourth quarter 2020 results presentation.
Second quarter: Adjusted Operating Free cash flow positive. Change in Working Capital Requirement driven by improved advanced ticket sales
Second quarter | Half year | |||
In € million | 2021 | Change | 2021 | Change |
Cash flow before change in WCR and Voluntary Departure | -417 | +744 | -1,162 | +169 |
Plans, continuing operations (€m) | ||||
Cash out related to Voluntary Departure Plans (€m) | -80 | -74 | -125 | -110 |
Change in Working Capital Requirement (WCR) (€m) | 1,211 | +1,129 | 1,120 | +577 |
Net cash flow from operating activities (€m) | 714 | +1,799 | -167 | +636 |
Net investments* (€m) | -287 | -33 | -534 | +578 |
Operating free cash flow (€m) | 427 | +1,766 | -701 | +1,214 |
Repayment of lease debt | -217 | -55 | -433 | -21 |
Adjusted operating free cash flow** | 210 | +1,711 | -1,134 | +1,193 |
- 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 Second quarter 2021 of 210 million euros, an increase of 1,711 million euros compared to last year, mainly driven by improved advanced tickets sales.
In € million | 30 Jun 2021 | 31 Dec 2020 |
Net debt | 8,344 | 11,049 |
EBITDA trailing 12 months | -1,723 | -1,689 |
Net debt/EBITDA trailing 12 months | na | na |
Q2: Performance improved versus last year although still negatively impacted by travel restrictions
Second quarter | Half year | |||
2021 | Change | 2021 | Change | |
Air France Group Operating result (€m) | -566 | +492 | -1,406 | +188 |
Operating margin (%) | -34.4% | +155.1 pt | -47.1% | -2.5 pt |
KLM Group Operating result (€m) | -185 | +308 | -522 | +246 |
Operating margin (%) | -15.3% | +55.0 pt | -24.4% | +2.6 pt |
5
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original document
- Permalink
Disclaimer
Air France-KLM SA published this content on 30 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 July 2021 05:18:03 UTC.
