20 February 2019
| FULL YEAR 2018 RESULTS Resilient results despite the impact of strikes and fuel bill increase |
FULL YEAR 2018
OUTLOOK 2019
The Board of Directors of Air France-KLM, chaired by Anne-Marie Couderc, met on 19 February 2019 to approve the financial statements for the Full Year 2018.
"With the largest long-haul network operating out of Europe, the Air France-KLM Group has reached an important milestone by carrying more than 100 million passengers in 2018", commented Benjamin Smith, CEO of Air France-KLM. "The strong performance of our front-line teams and continued cost control helped partly offset the impact of strikes at Air France in the first half of the year, as well as significant fuel headwinds. In the past five months, we have made significant progress in reinforcing the trust and dialogue with our employees in both Air France and KLM, allowing for a shared strategic approach to accelerate the Group's profitable development. I am particularly pleased that yesterday we reached the last step in this phase, the majority of Air France pilots having approved the proposed categorical agreement. We have also strengthened our offer by simplifying our brand portfolio and initiating an improvement in our network and fleet management. These first achievements pave the way for our ambition to regain a leading position in Europe and worldwide."
| Air France-KLM Group | Fourth Quarter | Full Year | ||
| 2018 | Change1 | 2018 | Change1 | |
| Passengers (thousands) | 24,462 | +3.4% | 101,447 | +2.8% |
| Unit revenue per ASK[2] (€ cts) | 6.46 | -0.4% | 6.61 | +1.1% |
| Operating result (€m) | 40 | -188 | 1,332 | -591 |
| Net income - Group part (€m) | -218 | +710 | 409 | +246 |
| Adj. operating free cash flow (€m) | -12 | +90 | 115 | -562 |
| Net debt at end of period (€m) | 6,164 | -195 | ||
Full Year 2018 business review
Network: Revenue increase driven by higher unit revenues and operating result impacted by strikes
| Network | Fourth Quarter | Full Year | ||||
| 2018 | Change | Change constant currency | 2018 | Change | Change constant currency | |
| Capacity (EASK m) | 82,325 | +2.9% | 329,199 | +1.8% | ||
| Total revenues (€m) | 5,727 | +3.7% | +4.1% | 22,943 | +1.6% | +4.1% |
| Scheduled revenues (€m) | 5,403 | +2.6% | +3.0% | 21,732 | +0.8% | +3.4% |
| Unit revenue per EASK (€ cts) | 6.56 | -0.3% | +0.1% | 6.60 | -1.0% | +1.5% |
| Unit cost per EASK (€ cts) | 6.52 | +3.0% | +2.3% | 6.30 | +1.8% | +3.6% |
| Operating result (€m) | 34 | -165 | -112 | 994 | -561 | -382 |
Full Year 2018 combined Passenger and Cargo revenues increased by 4.1% at constant currency to 22.9 billion euros driven by capacity growth and positive unit revenues. The operating result amounted to 994 million euros, a 382 million euros decrease at constant currency compared to last year, mostly due to the strikes in the 2018 first half and to the fuel increase.
Passenger: Long-haul and medium-haul hubs contributing to positive unit revenue performance
| Fourth Quarter | Full Year | |||||
| Passenger network | 2018 | Change | Change constant currency | 2018 | Change | Change constant currency |
| Passengers (thousands) | 21,110 | +2.2% | 85,619 | +2.0% | ||
| Capacity (ASK m) | 72,970 | +3.2% | 292,184 | +2.1% | ||
| Traffic (RPK m) | 62,835 | +3.5% | 255,405 | +2.8% | ||
| Load factor | 86.1% | +0.2 pt | 87.4% | +0.6 pt | ||
| Total passenger revenues (€m) | 5,092 | +3.7% | +4.3% | 20,655 | +1.3% | +3.9% |
| Scheduled passenger revenues (€m) | 4,849 | +2.6% | +3.1% | 19,743 | +0.6% | +3.2% |
| Unit revenue per ASK (€ cts) | 6.64 | -0.6% | -0.1% | 6.76 | -1.5% | +1.1% |
Full Year 2018 capacity increased by 2.1%, mainly driven by the South American, North Atlantic and Asian networks with respective growth of 8.6%, 3.0% and 2.1%.
The long-haul network delivered a solid performance with an increased load factor and a unit revenue1 up 1.2%. The additional capacity has been well absorbed by the robustness of demand and thanks to the strong performance of the commercial teams.
The medium-haul network delivered a unit revenue increase of 1.5% for Full Year 2018: the unit revenue was up 2.8% on the medium-haul hub network, and down 2.6% on the point-to-point network mainly due to the competitive pressure from rail.
Cargo: Total revenue growth of 6.4% at constant currency on stable capacity
| Fourth Quarter | Full Year | |||||
| Cargo business | 2018 | Change | Change constant currency | 2018 | Change | Change constant currency |
| Tons (thousands) | 303 | +0.7% | 1,137 | -0.1% | ||
| Capacity (ATK m) | 3,631 | +0.7% | 14,365 | +0.1% | ||
| Traffic (RTK m) | 2,321 | +1.8% | 8,657 | +0.7% | ||
| Load factor | 63.9% | +0.7 pt | 60.3% | +0.4 pt | ||
| Total Cargo revenues (€m) | 635 | +3.4% | +3.1% | 2,288 | +4.1% | +6.4% |
| Scheduled cargo revenues (€m) | 554 | +2.4% | +2.0% | 1,988 | +3.0% | +5.3% |
| Unit revenue per ATK (€ cts ) | 15.25 | +1.6% | +1.3% | 13.84 | +2.9% | +5.2% |
In a context of stable Cargo network capacity, revenues grew by 6.4% at constant currency thanks to a strong unit revenue performance. The trading environment proved better than expected particularly over the summer period, and the Asian and American networks made a strong contribution to the results. Higher yields in both full freighters and bellies resulted in an overall unit revenue increase of 5.2% at constant currency for Full Year 2018.
Transavia: Strong growth and a record high margin
| Fourth Quarter | Full Year | |||
| Transavia | 2018 | Change | 2018 | Change |
| Passengers (thousands) | 3,352 | +11.7% | 15,828 | +7.1% |
| Capacity (ASK m) | 6,817 | +14.4% | 30,850 | +8.4% |
| Traffic (RPK m) | 6,199 | +15.0% | 28,392 | +10.1% |
| Load factor | 90.9% | +0.5 pt | 92.0% | +1.4 pt |
| Total passenger revenues (€m) | 309 | +12.0% | 1,611 | +12.2% |
| Unit revenue per ASK (€ cts) | 4.51 | -0.9% | 5.18 | +3.6% |
| Unit cost per ASK (€ cts) | 5.13 | -0.1% | 4.73 | +3.2% |
| Operating result (€m) | -42 | -7 | 139 | +21 |
Transavia carried 15.8 million passengers in Full Year 2018, an increase of 7.1% compared to last year.
Full year 2018 saw the launch of several new routes and a strong capacity growth of 8.4%, with an acceleration in the fourth quarter to 14.4%. Unit revenues increased by 3.6% compared to last year.
The Full Year 2018 operating result stood at 139 million euros, an improvement of 21 million euros compared to last year and the best result since the launch of the Transavia businesses. The Transavia France performance stood out with capacity growth of more than 20% and an operating margin of 9.1%, a year-on-year improvement of 1.0 point.
Maintenance: Order book increase continuing
| Fourth Quarter | Full Year | |||||
| Maintenance | 2018 | Change | Change constant currency | 2018 | Change | Change constant currency |
| Total revenues (€m) | 1,206 | +10.7% | 4,349 | +4.7% | ||
| Third party revenues (€m) | 490 | +5.4% | +2.9% | 1,920 | +6.6% | +11.0% |
| Operating result (€m) | 46 | -18 | -19 | 195 | -57 | -42 |
| Operating margin (%) | 3.8% | -2.0 pt | -2.1 pt | 4.5% | -1.6 pt | -1.4 pt |
Maintenance revenues increased compared to last year with third-party revenues up by 11.0% at constant currency due to the inflow of new contracts. The Maintenance order book stood at 11.4 billion dollars at the end of the 2018, an increase of 0.6 billion dollars compared to the end of 2017, driven by the signature of several new NextGen Components and Engine contracts.
The operating margin expressed as a percentage of total revenues stood at 4.5%, a decrease of 1.4 points at constant currency compared to last year, partly explained by one-offs and competitive pressure for the component business.
Air France-KLM Group: Full Year revenue growth of +5.0% at constant currency, operating result at 1,332 million euros
| Fourth Quarter | Full Year | ||||||
| 2018 | Change | Change constant currency | 2018 | Change | Change constant currency | ||
| Capacity (EASK m) | 89,142 | +3.7% | 360,049 | +2.4% | |||
| Capacity excl. Cargo (ASK m) | 79,787 | +4.1% | 323,034 | +2.7% | |||
| Traffic excl. Cargo (RPK m) | 69,034 | +4.5% | 283,797 | +3.5% | |||
| Unit revenue per EASK (€ cts) | 6.41 | -0.6% | -0.2% | 6.48 | -0.8% | +1.5% | |
| Revenues (€m) | 6,538 | +4.1% | +4.3% | 26,515 | +2.5% | +5.0% | |
| EBITDA (€m) | 776 | -193 | -147 | 4,217 | -546 | -358 | |
| Operating result (€m) | 40 | -188 | -140 | 1,332 | -591 | -408 | |
| Operating margin (%) | 0.6% | -3.0 pt | -2.3 pt | 5.0% | -2.4 pt | -1.9 pt | |
| Net income - Group part (€m)1 | -218 | +710 | 409 | +246 | |||
In 2018, the Air France-KLM Group posted an operating result of 1,332 million euros, down 591 million euros compared to last year, including a negative impact of 355 million euros from the Air France strikes in the first half.
The rise in the Group's unit revenues contributed positively to the operating result for 353 million euros excluding currency effects, and absorbed more than half of the significantly higher fuel bill compared to last year.
The fuel bill including hedging amounted to 4,958 million euros for Full Year 2018, up 451 million euros and 665 million euros at constant currency, due to the increase in the fuel price. The fuel hedges resulted in a gain of 649 million euros.
Currencies had a negative 623 million euro impact on revenues and a positive 440 million euro effect on costs including currency hedging. The net impact of currencies thus amounted to a negative 183 million euros for Full Year 2018.
Full year unit cost up 0.6%, in line with the target range of 0 to +1%
On a constant currency, fuel price and pension-related expense basis, unit costs were down -0.9% in the fourth quarter 2018, despite a 50 million euro impact from the Air France annual wage agreement, fully booked in the fourth quarter.
For the Full Year 2018, the unit cost was up 0.6%, consistent with the Full Year target range of 0 to +1%, and down -0.2% excluding the impact of the strikes.
Improvement in labor productivity and implementation of annual wage agreements in Air France in the fourth quarter 2018
Productivity measured in EASK per FTE increased by 2.2% in the fourth quarter 2018 while capacity increased by 3.7%.
Full Year 2018 productivity, measured in EASK per FTE, increased by 1.0% while capacity increased by 2.4%. Compared to last year, the average number of FTEs increased by 1,200 including +250 Pilots and +450 Cabin Crew in response to the capacity growth. Ground Staff increased by 500 FTEs, mainly driven by the IT Innovation department, third-party activities in E&M and the Customer Centres.
Net employee costs were up 1.8% in 2018 compared to last year, mainly due to the impact of the wage agreements for Air France and KLM staff.
Positive operating free cash flow and net debt reduction in 2018
| Fourth Quarter | Full Year | |||
| In € million | 2018 | Change | 2018 | Change |
| Cash flow before change in WCR and Voluntary Departure Plans, continuing operations | 568 | -84 | 3,596 | -353 |
| Cash out related to Voluntary Departure Plans | 3 | +44 | -130 | +11 |
| Change in Working Capital Requirement (WCR) | 236 | +136 | 246 | -45 |
| Net cash flow from operating activities | 807 | +96 | 3,712 | -387 |
| Net investments before sale & lease-back* | -583 | -8 | -2,625 | -187 |
| Operating free cash flow | 224 | +88 | 1,087 | -574 |
| Reduction of lease debt | -236 | +2 | -972 | +12 |
| Adjusted operating free cash flow ** | -12 | +90 | 115 | -562 |
* 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" is Operating free cash flow" with deduction of the repayment of lease debt.
Adjusted operating free cash flow: +115 million euros for Full Year 2018
The Group generated positive adjusted operating free cash flow of 115 million euros in 2018, a reduction of 562 million euros compared to 2018. This decrease compared to last year mainly resulted from the strike impact and a net 187 million euro increase in investments.
Net debt reduction driven by adjusted operating free cash flow generation and repayment of lease debt
| In € million | 31 Dec 2018 | 31 Dec 2017 |
| Net debt | 6,164 | 6,359 |
| EBITDA | 4,217 | 4,763 |
| Net debt/EBITDA | 1.5 x | 1.3 x |
The Group reduced its net debt to 6,164 million euros at 31 December 2018 versus 6,359 million euros at 31 December 2017, despite the negative impact of the repurchase of 197 million euros of hybrid notes in September 2018. This 195 million euro reduction was driven by operating free cash flow generation and the repayment of lease debt.
The net debt/EBITDA ratio stood at 1.5x at 31 December 2018, a slight increase of 0.13 pt compared to 31 December 2017 due to the decrease in EBITDA.
Full year 2018: Air France result impacted by strikes, KLM delivers a solid result in line with last year's performance
| Fourth Quarter | Full Year | |||
| 2018 | Change | 2018 | Change | |
| Air France Group | ||||
| Operating result (€m) | -62 | -179 | 266 | -597 |
| Operating margin (%) | -1.5% | -4.6 pt | 1.7% | -3.8 pt |
| KLM Group | ||||
| Operating result (€m) | 112 | +0 | 1,073 | -6 |
| Operating margin (%) | 4.2% | -0.2 pt | 9.8% | -0.6 pt |
Outlook
The global context remains uncertain given the current geopolitical environment and fuel price trends.
In 2019, the Air France-KLM Group plans to selectively grow capacity for the Passenger network by 2% to 3% compared to 2018. Transavia will continue to grow at a sustained pace of 9% to 11%.
The Group will continue to work on yield improvement within the context of an anticipated fuel bill increase. Based on the current data for the Passenger network:
The Group will pursue initiatives to reduce unit costs1, with a targeted reduction for 2019 of between -1% to 0% at constant currency and fuel price.
The Full Year 2019 fuel bill is expected to increase by 650 million euros compared to 2018 to 5.6 billion euros2, based on the forward curve of 15 February 2019.
The Group's capital expenditures are planned at the level of 3.2 billion euros for the year 2019 and the Group is targeting a Net debt/EBITDA ratio below 1.5x.
*****
The audit procedures for the consolidated accounts have taken place. The certification report will be published following the completion of the procedures necessary for the filing of the Registration Document.
The results presentation is available at www.airfranceklm.com on 20 February 2019 from 7:15 am CET.
An Analysts' Meeting hosted by Mr Smith (CEO) and Mr Gagey (CFO) will be held at 08.30 CET on 20 February 2019 at the Pullman Paris Tour Eiffel hotel, 18, avenue de Suffren (75015 Paris).
A live webcast of the Analysts' Meeting will also be available on the website (password AFKL).
To connect to the conference call, please dial:
France: Local +33 (0)1 76 77 22 57
Netherlands: Local +31 (0)20 703 8261
UK: Local +44 (0)330 336 9411
US: Local +1 720-543-0214
Confirmation code: 5711960
To listen to the audio-replay of the conference call, please dial:
Confirmation code: 5711960
Investor Relations Press
Marie-Agnès de Peslouan Wouter van Beek
+33 1 49 89 52 59 +33 1 49 89 52 60 +33 1 41 56 56 00
madepeslouan@airfranceklm.com Wouter-van.Beek@airfranceklm.com
Income Statement
| Fourth Quarter | Full Year | |||||
| In millions euros | 2018 | 2017 | Change | 2018 | 2017 | Change |
| Sales | 6,536 | 6,276 | +4.1% | 26,512 | 25,864 | +2.5% |
| Other revenues | 2 | 2 | -20.8% | 3 | 3 | -15.1% |
| Revenues | 6,538 | 6,278 | +4.1% | 26,515 | 25,867 | +2.5% |
| Aircraft fuel | -1,336 | -1,079 | +23.8% | -4,958 | -4,507 | +10.0% |
| Chartering costs | -143 | -128 | +12.0% | -577 | -515 | +11.9% |
| Landing fees and air route charges | -474 | -460 | +2.9% | -1,893 | -1,905 | -0.7% |
| Catering | -197 | -182 | +7.9% | -783 | -784 | -0.2% |
| Handling charges and other operating costs | -467 | -440 | +6.2% | -1,948 | -1,753 | +11.1% |
| Aircraft maintenance costs | -644 | -548 | +17.4% | -2,413 | -2,327 | +3.7% |
| Commercial and distribution costs | -258 | -235 | +9.7% | -1,034 | -935 | +10.6% |
| Other external expenses | -395 | -404 | -2.2% | -1,618 | -1,462 | +10.8% |
| Salaries and related costs | -2,031 | -1,968 | +3.2% | -7,759 | -7,620 | +1.8% |
| Taxes other than income taxes | -39 | -36 | +8.9% | -166 | -158 | +5.2% |
| Other income and expenses | 222 | 172 | +28.7% | 851 | 862 | -1.3% |
| EBITDA | 776 | 970 | -20.0% | 4,217 | 4,763 | -11.5% |
| Amortization, depreciation and provisions | -736 | -742 | -0.8% | -2,885 | -2,840 | +1.6% |
| Income from current operations | 40 | 228 | -82.4% | 1,332 | 1,923 | -30.7% |
| Sales of aircraft equipment | 5 | -1 | nm | 4 | 18 | -77.5% |
| Other non-current income and expenses | -11 | -1,599 | -99.3% | -16 | -1,925 | -99.2% |
| Income from operating activities | 34 | -1,372 | nm | 1,320 | 16 | +8,152.9% |
| Cost of financial debt | -111 | -127 | -12.4% | -465 | -570 | -18.4% |
| Income from cash and cash equivalent | 10 | 7 | +41.2% | 39 | 34 | +14.7% |
| Net cost of financial debt | -101 | -120 | -15.7% | -426 | -536 | -20.5% |
| Other financial income and expenses | -136 | 111 | nm | -271 | 649 | nm |
| Income before tax | -203 | -1,381 | -85.3% | 623 | 129 | +382.9% |
| Income taxes | -24 | 446 | nm | -227 | 21 | nm |
| Net income of consolidated companies | -227 | -935 | -75.7% | 396 | 150 | +164.0% |
| Share of profits (losses) of associates | 9 | 5 | +85.7% | 15 | 21 | -29.4% |
| Income from continuing operations | -218 | -930 | -76.6% | 411 | 171 | +140.4% |
| Net income from discontinued operations | 0 | 0 | -100.0% | 0 | -8 | -100.0% |
| Net income for the period | -218 | -930 | -76.6% | 411 | 163 | +152.1% |
| Non-controlling interest | 0 | 2 | -100.0% | -2 | 0 | nm |
| Net income for the period - Group part | -218 | -928 | -76.5% | 409 | 163 | +150.9% |
Consolidated Balance Sheet
| Assets | 31 Dec 2018 | 31 Dec 2017 |
| In million euros | ||
| Goodwill | 217 | 216 |
| Intangible assets | 1,194 | 1,122 |
| Flight equipment | 10,167 | 9,636 |
| Other property, plant and equipment | 1,503 | 1,418 |
| Right-of-use assets | 5,243 | 5,724 |
| Investments in equity associates | 311 | 301 |
| Pension assets | 331 | 590 |
| Other financial assets | 1,487 | 1,242 |
| Deferred tax assets | 544 | 417 |
| Other non-current assets | 264 | 239 |
| Total non-current assets | 21,261 | 20,905 |
| Assets held for sale | 0 | 0 |
| Other short-term financial assets | 325 | 421 |
| Inventories | 633 | 557 |
| Trade receivables | 2,191 | 2,164 |
| Other current assets | 1,062 | 1,243 |
| Cash and cash equivalents | 3,585 | 4,673 |
| Total current assets | 7,796 | 9,058 |
| Total assets | 29,057 | 29,963 |
| Liabilities and equity | 31 Dec 2018 | 31 Dec 2017 |
| In million euros | ||
| Issued capital | 429 | 429 |
| Additional paid-in capital | 4,139 | 4,139 |
| Treasury shares | -67 | -67 |
| Perpetual | 403 | 600 |
| Reserves and retained earnings | -3,051 | -2,693 |
| Equity attributable to equity holders of Air France-KLM | 1,853 | 2,408 |
| Non-controlling interests | 12 | 12 |
| Total Equity | 1,865 | 2,420 |
| Pension provisions | 2,098 | 2,202 |
| Return obligation liability and other provisions | 3,035 | 3,055 |
| Financial debt | 5,733 | 5,919 |
| Lease debt | 3,546 | 3,940 |
| Deferred tax liabilities | 4 | 12 |
| Other non-current liabilities | 459 | 361 |
| Total non-current liabilities | 14,875 | 15,489 |
| Return obligation liability and other provisions | 492 | 230 |
| Current portion of financial debt | 826 | 1,378 |
| Current portion of lease debt | 989 | 993 |
| Trade payables | 2,460 | 2,365 |
| Deferred revenues on ticket sales | 3,153 | 3,017 |
| Frequent flyer programs | 844 | 819 |
| Other current liabilities | 3,548 | 3,246 |
| Bank overdrafts | 5 | 6 |
| Total current liabilities | 12,317 | 12,054 |
| Total equity and liabilities | 29,057 | 29,963 |
Consolidated Statement of Cash Flows from 1st January until 31st December 2018
| In million euros | 31 Dec 2018 | 30 Sep 2017 |
| Net income from continuing operations | 411 | 171 |
| Net income from discontinued operations | 0 | -8 |
| Amortization, depreciation and operating provisions | 2,885 | 2,840 |
| Financial provisions | 127 | 129 |
| Loss (gain) on disposals of tangible and intangible assets | -33 | -35 |
| Loss (gain)on disposals of subsidiaries and associates | 0 | -31 |
| Derivatives - non monetary result | -49 | 41 |
| Unrealized foreign exchange gains and losses, net | 190 | -790 |
| Impairment | 0 | 0 |
| Other non-monetary items | -254 | 1,564 |
| Share of (profits) losses of associates | -15 | -21 |
| Deferred taxes | 204 | -52 |
| Financial Capacity | 3,466 | 3,808 |
| Of which discontinued operations | 0 | 0 |
| (Increase) / decrease in inventories | -31 | 5 |
| (Increase) / decrease in trade receivables | -39 | -331 |
| Increase / (decrease) in trade payables | 69 | 68 |
| Change in other receivables and payables | 247 | 549 |
| Change in working capital requirements | 246 | 291 |
| Change in working capital from discontinued operations | 0 | 0 |
| Net cash flow from operating activities | 3,712 | 4,099 |
| Purchase of property, plant and equipment and intangible assets | -2,758 | -2,562 |
| Proceeds on disposal of property, plant and equipment and intangible assets | 133 | 124 |
| Proceeds on disposal of subsidiaries, of shares in non-controlled entities | 6 | 8 |
| Acquisition of subsidiaries, of shares in non-controlled entities | -9 | -9 |
| Dividends received | 6 | 9 |
| Decrease (increase) in net investments, more than 3 months | 4 | -262 |
| Net cash flow used in investing activities of discontinued operations | 0 | 0 |
| Net cash flow used in investing activities | -2,618 | -2,692 |
| Increase of capital | 0 | 747 |
| Perpetual (including premium) | -211 | 0 |
| Issuance of debt | 539 | 741 |
| Repayment on financial debt | -1,400 | -1,023 |
| Payments on leases debt | -972 | -984 |
| Decrease (increase ) in loans, net | -106 | -83 |
| Dividends and coupons on perpetual paid | -38 | -38 |
| Net cash flow used in financing activities of discontinued operations | 0 | 0 |
| Net cash flow from financing activities | -2,188 | -640 |
| Effect of exchange rate on cash and cash equivalents and bank overdrafts | 7 | -33 |
| Effect of exch. rate on cash and cash eq. and bank overdrafts of disc. ops. | 0 | 0 |
| Change in cash and cash equivalents and bank overdrafts | -1,087 | 734 |
| Cash and cash equivalents and bank overdrafts at beginning of period | 4,667 | 3,933 |
| Cash and cash equivalents and bank overdrafts at end of period | 3,580 | 4,667 |
| Change in treasury of discontinued operations | 0 | 0 |
Key Performance Indicators
EBITDA
| Fourth Quarter | Full Year | |||
| In millions euros | 2018 | 2017 | 2018 | 2017 |
| Income from current operations | 40 | 228 | 1,332 | 1,923 |
| Amortization, depreciation and provisions | 736 | 742 | 2,885 | 2,840 |
| EBITDA | 776 | 970 | 4,217 | 4,763 |
Restated net income - Group part
| Fourth Quarter | Full Year | |||
| In million euros | 2018 | 2017 | 2018 | 2017 |
| Net income - Group part | -218 | -928 | 409 | 163 |
| Net income from discontinued operations | 0 | 0 | 0 | 8 |
| Unrealized foreign exchange gains and losses, net | 72 | -115 | 23 | -790 |
| Change in fair value of financial assets and liabilities (derivatives) | 21 | -28 | -53 | -43 |
| Non-current income and expenses | 6 | 1,600 | 12 | 1,907 |
| Depreciation of shares available for sale | -17 | -431 | 18 | -320 |
| De-recognition of deferred tax assets | 0 | 0 | 0 | 0 |
| Restated net income - Group part | -136 | 98 | 409 | 925 |
| Coupons on perpetual | -7 | -7 | -25 | -25 |
| Restated net income - Group part, including coupons on perpetual (used to calculate earnings per share) | -143 | 91 | 384 | 900 |
| Restated net income per share (in €) | -0.33 | 0.22 | 0.90 | 2.43 |
Return on capital employed (ROCE)1
| In million euros | 31 Dec 2018 | 31 Dec 2017 | 31 Dec 2017 | 31 Dec 2016 |
| Goodwill and intangible assets | 1,410 | 1,338 | 1,338 | 1,285 |
| Flight equipment | 10,167 | 9,636 | 9,636 | 8,760 |
| Other property, plant and equipment | 1,503 | 1,418 | 1,418 | 1,400 |
| Right of use assets | 5,243 | 5,724 | 5,724 | 5,558 |
| Investments in equity associates | 311 | 301 | 301 | 292 |
| Financial assets excluding shares available for sale, marketable securities and financial deposits | 133 | 113 | 113 | 107 |
| Provisions, excluding pension, cargo litigation and restructuring | -3,141 | -2,779 | -2,779 | -2,763 |
| WCR, excluding market value of derivatives | -6,124 | -5,899 | -5,899 | -5,582 |
| Capital employed | 9,502 | 9,852 | 9,852 | 9,057 |
| Average capital employed (A) | 9,677 | 9,455 | ||
| Income from current operations | 1,332 | 1,923 | ||
| - Dividends received | -2 | -3 | ||
| - Share of profits (losses) of associates | 15 | 21 | ||
| - Normative income tax | -400 | -577 | ||
| Income from current operations after tax (B) | 945 | 1,364 | ||
| ROCE, trailing 12 months (B/A) | 9.8% | 14.4% | ||
Net debt
| Balance sheet at | ||
| In million euros | 31 Dec 2018 | 31 Dec 2017 |
| Financial debt | 6,216 | 6,955 |
| Lease debt | 4,450 | 4,847 |
| Financial assets pledged (OCEANE swap) | 0 | 0 |
| Currency hedge on financial debt | 7 | 19 |
| Accrued interest | -67 | -76 |
| Gross financial debt (A) | 10,606 | 11,745 |
| Cash and cash equivalents | 3,585 | 4,673 |
| Marketable securities | 74 | 73 |
| Cash pledges | 265 | 269 |
| Deposits (bonds) | 522 | 379 |
| Bank overdrafts | -5 | -6 |
| Other | 1 | -2 |
| Net cash (B) | 4,442 | 5,386 |
| Net debt (A) - (B) | 6,164 | 6,359 |
Adjusted operating free cash flow
| Fourth Quarter | Full Year | |||
| In million euros | 2018 | 2017 | 2018 | 2017 |
| Net cash flow from operating activities, continued operations | 807 | 711 | 3,712 | 4,099 |
| Investment in property, plant, equipment and intangible assets | -620 | -615 | -2,758 | -2,562 |
| Proceeds on disposal of property, plant, equipment and intangible assets | 37 | 40 | 133 | 124 |
| Operating free cash flow | 224 | 136 | 1,087 | 1,661 |
| Payments on lease debt | -236 | -238 | -972 | -984 |
| Adjusted operating free cash flow | -12 | -102 | 115 | 677 |
Unit cost: net cost per EASK
| Fourth Quarter | Full Year | |||
| 2018 | 2017 | 2018 | 2017 | |
| Revenues (in €m) | 6,538 | 6,278 | 26,515 | 25,867 |
| Income/(loss) from current operations (in €m) | -40 | -228 | -1,332 | -1,923 |
| Total operating expense (in €m) | 6,497 | 6,050 | 25,182 | 23,944 |
| Passenger network business - other revenues (in €m) | -243 | -184 | -912 | -764 |
| Cargo business - other revenues (in €m) | -81 | -73 | -300 | -266 |
| Third-party revenues in the maintenance business (in €m) | -490 | -465 | -1,920 | -1,801 |
| Transavia - other revenues (in €m) | -2 | -5 | -13 | -14 |
| Third-party revenues of other businesses (in €m) | -10 | -11 | -38 | -42 |
| Net cost (in €m) | 5,671 | 5,312 | 21,999 | 21,057 |
| Capacity produced, reported in EASK* | 89,142 | 85,951 | 360,049 | 351,695 |
| Net cost per EASK (in € cents per EASK) | 6.36 | 6.18 | 6.11 | 5.99 |
| Gross change | 3.0% | 2.1% | ||
| Currency effect on net costs (in €m) | 27 | -343 | ||
| Change at constant currency | 2.5% | 3.8% | ||
| Fuel price effect (in €m) | 198 | 665 | ||
| Change on a constant currency and fuel price basis | -1.0% | 0.6% | ||
| Change in pension-related expenses (in €m) | -10 | 4 | ||
| Net cost per EASK on a constant currency, fuel price and pension-related expenses basis (in € cents per EASK) | 6.36 | 6.42 | 6.11 | 6.07 |
| Change on a constant currency, fuel price and pension-related expenses basis | -0.9% | +0.6% | ||
* The capacity produced by the transportation activities is combined by adding the capacity of the Passenger network (in ASK) to that of Transavia (in ASK) and the Cargo business (in ATK) converted into EASK based on a separate fixed factor for Air France and for KLM.
Airline results
| Air France Group | Fourth Quarter | Full Year | ||
| 2018 | Change | 2018 | Change | |
| Revenue (in €m) | 4,014 | +3.7% | 16,073 | +1.2% |
| EBITDA (in €m) | 412 | -194 | 2,107 | -597 |
| Operating result (en m€) | -62 | -179 | 266 | -597 |
| Operating margin (%) | -1.5% | -4.6 pt | 1.7% | -3.8 pt |
| Operating cash flow before WCR and restructuring cash out (in €m) | 273 | -186 | 1,792 | -502 |
| Operating cash flow (before WCR and restructuring) margin | 6.8% | -5.1 pt | 11.1% | -3.3 pt |
| KLM Group KLM Group | Fourth Quarter | Full Year | ||
| 2018 | Change | 2018 | Change | |
| Revenue (in €m) | 2,663 | +5.1% | 10,955 | +5.0% |
| EBITDA (in €m) | 371 | +9 | 2,105 | +41 |
| Operating result (en m€) | 112 | +0 | 1,073 | -6 |
| Operating margin (%) | 4.2% | -0.2 pt | 9.8% | -0.6 pt |
| Operating cash flow before WCR and restructuring cash out (in €m) | 302 | +109 | 1,792 | +94 |
| Operating cash flow (before WCR and restructuring) margin | 11.3% | +3.7 pt | 16.4% | +0.1 pt |
NB: Sum of individual airline results does not add up to Air France-KLM total due to intercompany eliminations at Group level
Group fleet at 31 December 2018
| Aircraft type | AF (incl. HOP) | KLM (incl. KLC & MP) | Transavia | Owned | Finance lease | Operating lease | Total | In operation | Change / 31/12/17 |
| B747-400 | 11 | 11 | 11 | 11 | -2 | ||||
| B777-300 | 43 | 14 | 11 | 24 | 22 | 57 | 57 | ||
| B777-200 | 25 | 15 | 24 | 1 | 15 | 40 | 40 | ||
| B787-9 | 7 | 13 | 5 | 3 | 12 | 20 | 20 | 5 | |
| A380-800 | 10 | 1 | 4 | 5 | 10 | 10 | |||
| A340-300 | 6 | 6 | 6 | 6 | -1 | ||||
| A330-300 | 5 | 5 | 5 | 5 | |||||
| A330-200 | 15 | 8 | 11 | 12 | 23 | 23 | |||
| Total Long-Haul | 106 | 66 | 0 | 69 | 32 | 71 | 172 | 172 | 2 |
| B737-900 | 5 | 1 | 1 | 3 | 5 | 5 | |||
| B737-800 | 27 | 67 | 25 | 10 | 59 | 94 | 93 | 6 | |
| B737-700 | 18 | 7 | 4 | 6 | 15 | 25 | 25 | -1 | |
| A321 | 20 | 11 | 9 | 20 | 20 | ||||
| A320 | 43 | 3 | 5 | 35 | 43 | 43 | 1 | ||
| A319 | 34 | 19 | 2 | 13 | 34 | 34 | -4 | ||
| A318 | 18 | 14 | 4 | 18 | 18 | ||||
| Total Medium-Haul | 115 | 50 | 74 | 77 | 28 | 134 | 239 | 238 | 2 |
| ATR72-600 | 6 | 6 | 6 | 6 | |||||
| ATR72-500 | 1 | 1 | 1 | 1 | -2 | ||||
| ATR42-500 | 6 | 2 | 4 | 6 | 5 | -6 | |||
| Canadair Jet 1000 | 14 | 14 | 14 | 14 | |||||
| Canadair Jet 700 | 11 | 11 | 11 | 8 | -3 | ||||
| Embraer 190 | 11 | 32 | 7 | 14 | 22 | 43 | 42 | 2 | |
| Embraer 175 | 17 | 3 | 14 | 17 | 17 | 5 | |||
| Embraer 170 | 15 | 9 | 1 | 5 | 15 | 15 | |||
| Embraer 145 | 18 | 14 | 4 | 18 | 13 | ||||
| Total Regional | 82 | 49 | 0 | 60 | 33 | 38 | 131 | 121 | -4 |
| B747-400ERF | 3 | 3 | 3 | 3 | |||||
| B747-400BCF | 1 | 1 | 1 | 1 | |||||
| B777-F | 2 | 2 | 2 | 2 | |||||
| Total Cargo | 2 | 4 | 0 | 6 | 0 | 0 | 6 | 6 | 0 |
| Total | 305 | 169 | 74 | 212 | 93 | 243 | 548 | 537 | 0 |
[1] Since 1 January 2018, the Air France-KLM Group has applied the new IFRS 9, 15 and 16 accounting standards. For the purposes of comparison, the Group's consolidated financial statements have been restated as of 1 January 2017.
[2] Passenger and Transavia, change at constant currency
1 At constant currency
1 Net income - group part one-off elements:
- Positive effect after tax of €47 million in Q4 2017 and €386 million in FY 2017 resulting from IFRS 16 restatement of lease debt in dollars
- Non current expense impact of €233 after tax in Q3 2017 (Cabin) and €1,195 million after tax in Q4 2017 (Pilot) related to KLM pension plan de-recognition.
Excluding these one-offs, the change of Net income - group part Q4 2018 is €-438 million compared to last year and -€796 million for the Full Year 2018 compared to last year.
1 To align with industry practice, the metric EASK will not be used anymore as of 2019.
New Unit Cost definition will be: Net cost per Available Seat Kilometer at constant fuel and currency
The impact of this change should be approximately -0.1pt for 2019
2 Based on the forward curves of 15 February 2019, 2019 average Brent price of USD 65, average jet fuel price of USD 693 per ton including into plane costs. Assuming exchange rate of EUR/USD of 1.14 in 2019
1 The ROCE definition has been updated within the framework of IFRS 16 implementation. The asset value linked to the aircraft lease contracts now corresponds to the net book value of the right-of-use asset of all the lease contracts. Moreover, the "operating result, adjusted for operating leases" no longer existing having been replaced by "income from current operations" which, thanks to IFRS 16 implementation, no longer includes the financial cost of lease contracts. Finally, the Group now uses a normative income tax rate, calculated according to the tax rates applied in France and in the Netherlands.
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