UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008...
Transcript of UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008...
![Page 1: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/1.jpg)
UBS Transport ConferenceSeptember 15th 2008
Jean-Cyril Spinetta
![Page 2: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/2.jpg)
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
![Page 3: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/3.jpg)
3www.airfranceklm-finance.com
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
![Page 4: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/4.jpg)
4www.airfranceklm-finance.com
� 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
![Page 5: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/5.jpg)
5www.airfranceklm-finance.com
� 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
![Page 6: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/6.jpg)
6www.airfranceklm-finance.com
� 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
![Page 7: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/7.jpg)
7www.airfranceklm-finance.com
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
![Page 8: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/8.jpg)
8www.airfranceklm-finance.com
…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)
![Page 9: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/9.jpg)
9www.airfranceklm-finance.com
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%
![Page 10: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/10.jpg)
10www.airfranceklm-finance.com
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
![Page 11: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/11.jpg)
11www.airfranceklm-finance.com
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
![Page 12: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/12.jpg)
12www.airfranceklm-finance.com
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
![Page 13: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/13.jpg)
13www.airfranceklm-finance.com
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%
![Page 14: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/14.jpg)
14www.airfranceklm-finance.com
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
![Page 15: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/15.jpg)
15www.airfranceklm-finance.com
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
![Page 16: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/16.jpg)
16www.airfranceklm-finance.com
‘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
![Page 17: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/17.jpg)
17www.airfranceklm-finance.com
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
![Page 18: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/18.jpg)
18www.airfranceklm-finance.com
*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
![Page 19: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/19.jpg)
19www.airfranceklm-finance.com
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
![Page 20: UBS Transport Conference - Air France KLM · UBS Transport Conference September 15th 2008 Jean-Cyril Spinetta. 2 Air France-KLM key operating data ... • Synergy and cost-saving](https://reader034.fdocument.pub/reader034/viewer/2022042210/5eaea43d02eef828ba0b73fc/html5/thumbnails/20.jpg)
20www.airfranceklm-finance.com
� 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