UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008...

UBS Transport ConferenceSeptember 15th 2008

Jean-Cyril Spinetta

2www.airfranceklm-finance.com

Air France-KLM key operating data

� The number one airline worldwide in terms of revenues*

and number one in Europe in terms of passenger and cargo traffic*

� A fleet of 607 aircraft in operation: � 156 long-haul aircraft� 13 full freighters� 231 medium-haul aircraft� 207 regional aircraft

� 258 destinations in 103 countries linked by 2,500 daily flights

� 75 million passengers and 1.5 million tons of cargo in last financial year

Fiscal year 2007-08

* Source: Air Transport News – September 1, 2008


936

1,240

1,405

21,44823,073

24,114

Continuous improvement in profitability since the merger

* Adjusted for the portion of financial costs of operating leases (34%)

5.4%

6.3%

2005-06 2006-07 2005-06 2006-07

RevenuesAdjusted operating margin*

Operating incomex%

2007-08

6.7%

2007-08

€ millions

553

2004-05pro forma

3.8%

19,467

2004-05pro forma


� Deterioration in the economic environment is currentlyimpacting demand

� Rise in fares to compensate for higher fuel costs isaccelerating the slowdown in demand

� Leading to a re-drawing of the airline industry landscapethrough bankruptcies, mergers and acquisitions

� Strongest players reinforced under these conditions

Airline sector: undergoing profound change


� We have already paved the way with the Air France-KLM merger and…

� …we will seize any compelling opportunity to reinforceour position

� We have key competitive advantages allowing us to remain in profit in this difficult environnement…

� …and that will ensure we emerge as a winner from the current downturn

Air France-KLM: Among the strongest of the leadingplayers


� Largest international network linked by the most powerful European hubs

� A four-way joint-venture on North Atlantic

� A balanced network in terms of markets, traffic and customers

� A fuel-efficient and flexible fleet

� Synergy and cost-saving reserves thanks to the merger

� A strong balance sheet and efficient hedging policies

Six key competitive advantages


Of the 181 long-haul destinations* operated from Europe by AEA members

British Airways: 71 destinations i.e 39%Lufthansa + Swiss : 85 destinations i.e 47% Air France: 80 destinations i.e 44%KLM: 62 destinations i.e 34%

AF+KLM = 114 destinations

i.e 63%

The number one network linking Europe to the rest of the world…

* Number of destinations served by operational flights – S2008 program


…with unique competitive advantages

114 destinations71 destinations

85 destinations

42

187

13

4523

4

uniques

uniques

uniques

The highest number of unique destinations

23,694

6,872

14,0117,156

CDG

AMS

FRALHR

MUC4,904

Air France-KLM Lufthansa + Swiss BA

3,749ZRH

The highest number of connectionopportunities

Long-haul/medium-haul connection opportunities in under2 hours (Summer 2008)

Long-haul destinations from Europe (Summer 2008)


A balanced network in terms of markets, traffic and customers

North America: 16%

Latin America: 7%

Caribbean and Indian Ocean: 7%

Asia: 16%

Africa and Middle East: 14%

RevenuesPoint to point traffic: 20%

France: 12%

Europe: 27%

Business: 48% - Leisure: 52%


The North Atlantic: an important source of additionalprofitability

� A ground-breaking organisation around two JVs:� between KLM and Northwest � between Air France and Delta

� ATI granted for a JV between Air France, KLM, Delta and Northwest which would be launched before the end of 2009� Market share: 25%� Turnover: $12 billion*� RASK: + 3 points*

* Estimation


Position in London reinforced

� Direct transatlantic flights fromLondon Heathrow in co-operation with our US partners, Northwest for KLM and Delta for Air France

� Point-to-point offer extended on short and medium-haul fromLondon City Airport with the acquisition of VLM

� Compelling offer on RoW via our two long-haul hubs

SEA

LAX ATL

JFK

MSPDTW


Latin America: +4.2%

Asia:+4.0%Europe and

North Africa:+2.3%

North America: +1.1%

Africa: +4.3%

Middle East:+3.2%

Capacity growth adapted to current conditions

Caribbean & Indian Ocean:

+0.1%

Total Group capacity growth 2009-11: 2.6%� +2.8% on long-haul� +2.3% on medium-haul


Long-haul fleet(number of seats)

Medium-haul fleet(number of seats)

Five year planDownward flexibility

Operating lease policy gives us significant flexibilityto adjust capacity

34 000

38 000

42 000

46 000

50 000

54 000

58 000

62 000

S 2008 S 2009 S 2010 S 2011 S 2012 S2013

+13%+9%+8%

+4%

-11%-11%

+4% +4%

20 000

24 000

28 000

32 000

36 000

40 000

44 000

S 2008 S 2009 S 2010 S 2011 S 2012 S2013

-12%

-6%

1%-5%

+5%+4%+3%+1%

+17%

-12%

+6%

-17%


Ongoing fleet modernization to improve efficiency in terms of fuel consumption

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

(litre

spa

rPA

X/1

00km

s)

3.44

4.23

3.80

3.91

4.07

4.27

Trend in fuel consumption

Air France long-haul fleet

KLM long-haul fleet

-4% of fuel consumption

-9.5% of fuel consumption


2007-08realized

2009-10objective

€ millions

‘Challenge 10’ cost-savings programme revised upwards

� €114m in savings realisedin Q12008-09

� €190 m in further savingsidentified over the next threequarters

Objective for FY 2008-09of €620m versus €430m

2008-09objective

535620

1,600

445


‘Challenge 12’: a new set of structural savings

� In addition to Challenge 10, Air France-KLM is working on a new set of savings, aimed at adapting its cost base to enable it to remain comfortably in profit in an environment of persistently high oil prices, even without the benefit of hedging


Reserves of future synergies thanks to merged structure

� New organisation in place since October 2007 will accelerate the further integration of the Group

� New sources of synergies under review� Development of around 100 IT applications to improve current

processes and develop new projects to generate synergies� Implementation of a new, common central buying organisation


*Brent IPE realized + forward price at 5th September 2008

Total value of hedgesFuel bill before hedging (€bn)

Fuel bill after hedging (€bn)

2008-09 2009-10 2010-11 2010-12

Total: $6.81bn€1=$1.51 €1=$1.40 €1=$1.39 €1=$1.39114.72$/bl 111.48$/bl 112.04$/bl 112.21$/bl

2008-09 2009-10 2010-11 2011-12

2.632.17

1.41

0.60

Among the most efficient fuel hedging policies

7.42

5.71

8.26

6.71

8.538.73

7.51

8.31


Net financial debt(€billion)

Shareholders’ funds(€billion)

2.172.69

3.76

31/03/2007 31/03/2008 30/06/2008

0.45

0.25 8.998.797.85

4.371.82

0.56

31/03/07 31/03/08 30/06/08

10.61

Gearing ratioxNet debt Shareholders’ funds

Derivative instruments

13.36

0.16

A strong balance sheet

8.41

0.48

0.310.24

Gearing ratio ex derivativesx


� Current year: we will remain comfortably in profit withan objective of operating income in the region of €1bn

� Longer term: our competitive advantages will allow us to continue to strengthen our position in this changing landscape

To conclude

UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008...

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