Turismo
AF-KLM Full Year 2022 Results
FULL YEAR 2022 RESULTS
Commenting on the results, Mr. Benjamin Smith, Group CEO , said:
“ Throughout 2022, Air France-KLM once again demonstrated its resilience and agility in a context of unprecedented crises.
In spite of the Omicron strain, the war in Ukraine, the inflationary situation and the operational disruptions at major international airports last summer, our Group and its airlines were able to successfully capture a strong demand for travel.
On the financial side, we successfully undertook major operations to both restore our equity and consolidate our balance sheet while continuing to pay back the State aids we received. We secured landmark deals, including a strategic commercial partnership with CMA CGM Group which became our largest private shareholder.
All the while, we moved forward with our transformation efforts at every level of our Group to emerge stronger and more efficient from the pandemic as a leader of sustainable aviation. Our fleet renewal efforts and our investments in SAF fully demonstrate our determination to play an active role in the decarbonization, not just of our own operations, but of the
industry as a whole .
We close out the year with a positive net income, having turned the page on Covid, and look to the future with confidence in our ability to address the challenges ahead.
I would like to thank all the customers who chose to fly our airlines this year as well as all our employees, who made this year a success through their hard work and commitment to excellence. ”
Highest Q4 revenue in history and Full Year operating margin at 4.5%
In Q4 2022, revenues were up 47.3% compared to Q4 2021, a record level in the Group's history, despite a difficult context. Full Year 2022 revenues were up 84.4% up compared to last. This improvement was driven by an increase in capacity, load factor and passenger yield. The Air France-KLM Group posted a positive operating result of 1,193 million euros, up by 2,839 million euros at a constant currency compared to last year. Full Year 2022 operating margin is 0.3 points higher than 2019 (4.2%).
Net income amounted to 728 million euros in Full Year 2022, an increase of 4,020 million euros compared to last year.
In 2022, Air France-KLM welcomed 83.3 million passengers which is 86.5% above previous year. As capacity increased by 44.2% and traffic grew by 104.6%, the load factor increased by 24.8 points compared to last year.
Group passenger unit revenue per ASK increased by 51.6% against a constant currency compared to last year. This increase was driven by both load factor and yield.
Group unit cost per ASK at constant fuel and constant currency is down 4.5% versus last year thanks to an increase in capacity and the Group's ongoing transformation efforts.
The full year unit cost is up 1.9% at a constant fuel price and constant currency (USD & related currencies only) versus 2019, with a capacity down by 15%. The ongoing transformation programs enable Air France-KLM to limit the impact of increasing costs such as airport and ATC charges, and the increase of labor cost.
Compared to December 2019, the number of Full Time Equivalents (FTE's) decreased by 16% at Air France (excluding Transavia France) and by 9% at KLM.
In 2022 staff costs decreased by 10% compared to the same quarter in 2019 mainly thanks to FTE reduction and government support on wages, mainly received in the first quarter.
In 2021 and 2022, Air France-KLM continued redeeming liquidity support while maintaining a solid cash position
Altogether, by December 2022, Air France-KLM redeemed €4.9 billion liquidity support, thus rebalancing the Group's debt profile.
In 2023, Air France-KLM will continue to strengthen its balance sheet …
… a nd will be fully released from current State s support
The remaining €1.2bn French State Recapitalization Aid, granted under EU State Aid Covid Temporary Framework, is currently composed by:
As of April 19 , 2023 , Air France-KLM intends to fully exit this current €1.2bn French State recapitalization Aid and its related bans.
Following the approval on February 16 , 2023, by the EU Commission of a French State Compensation Aid without any bans, the Group will achieve this exit of the French Recapitalization Aid through the following steps:
In April 2023 KLM intends to exit the current Dutch State framework with banks & State loans being replaced by a Sustainability Linked Revolving Credit Facility.
OUTLOOK
Capacity
Air France-KLM is confident that the recovery will continue and therefore, the Group expects the capacity in Available Seat Kilometers for Air France-KLM Group including Transavia at an index of:
Transavia will contribute to this growth and expects to be at circa 135% for the Full Year 2023.
All indices compared to the respective period of 2019.
Other
Medium Term Outlook :
The Group continues its swift transformation initiatives and confirms its medium-term financial ambition with the long-term focus of achieving increased competitiveness. To do this, the Group remains agile in optimizing fleet, workforce, network, costs and continues its sustainability efforts. The Group expects capacity in Available Seat Kilometers back to 2019 levels as from 2024.
The transformation efforts of the Group, including FTE reduction, fleet renewal and spend optimization, will compensate the inflationary pressure on cost. Therefore, the Group expects to decrease its unit cost by -1% to -4% against a constant fuel price, constant currency and excluding Emission Trading Scheme costs (ETS) compared to 2022.
The Adjusted Operating Free Cash Flow excluding exceptionals is expected to remain positive. Exceptionals include the payment of the air-freight litigation and the deferrals of social charges and wage taxes accumulated during the Covid 19 period.
The Net debt/EBITDA target ratio is expected to remain between 1.5x and 2.0x.
The Group's medium-term financial ambition is to reach an Operating Margin of 7% to 8%.
BUSINESS REVIEW
Network: Significant improvement in revenues and operating result
Compared to 2021, Full year 2022 total revenues increased by 80.5% at constant currency to 22,758 million euros. The operating result amounted to 1,131 million euros, which represents an 2,732 million euros increase at constant currency compared to last year.
Strong yields on our diversified network
FY 2022 capacity in Available Seat Kilometers (ASK) was 39.4% higher than last year and at 85% of 2019 Fourth quarter level, which is at the same level as the Group's guidance provided during the Third quarter 2022 results presentation.
In response to the rise in fuel prices and other external costs, the Group proceeded to several fare increases during 2022 across all flights. The amount of the increase varied according to destination and class of travel, and applied to flights operated by Air France and KLM. Additionally, in line with the strong summer demand, the strong performance in Premium cabins and the solid corporate traffic recovery have all led to a yield above 2019 for the full year.
During Q4 we observed per area the following trends:
Over the course of 2022, the Group continued to introduce new generation aircraft to its fleet and phased out old generation aircraft which resulted in a reduction of 15 aircraft. The long haul fleet was expanded by 1 aircraft, while the medium haul fleet has been reduced by 7 aircraft and the regional fleet decreased by 9 aircraft.
In 2023 and beyond the Group will continue to invest in new generation aircraft in order to improve its economic and environmental performance. In 2023, the first Airbus A320neo/A321neo will be delivered.
Cargo: decrease in traffic compensated by strong yield resulting in a broadly stable revenue in 2022
2022 was a dynamic year, a very strong first half-year was followed by a more softening second part. Due to the resumption of passenger travel, belly capacity improved and resulted in an increase in Available Ton Kilometers of 15.6% versus Full Year 2021. The slower growth of global trade and the partial rebound of sea freight led to decreasing demand for air cargo from the second quarter onwards. Traffic decreased with 14.5% and the unit revenue per ATK decreased by 16.7% due to a decline in yield as well, although the yield remained still above 2021 level. Total Cargo revenues were 2.4% below Full Year 2021.
Compared to the pre-COVID year 2019, cargo capacity in the Full Year was 9% below. However, due to strong yield performance, total revenues in 2022 were 63% higher compared to 2019.
In 2022, Air France-KLM laid a strong foundation for the coming years to remain a credible and prominent air cargo player with the signing of a ten-year cooperation agreement with the CMA-CGM Group. Moreover, as part of Air France-KLM program to replace its aging Full Freighters and to strengthen Cargo's financials and sustainability, the Group firmed an order for four Airbus A350F freighters destined to Air France in March 2022 (further to an LOI announced in December 2021) and early 2023 an additional order for four A350F freighters (to replace current fleet) to be operated by Martinair on behalf of KLM Cargo was announced.
Investments in Transavia's growth capacity continues
During 2022, the demand recovery in leisure traffic in Europe and North Africa continued. Compared to last year, the capacity increased by 85.9%, traffic increased by 112.1%, and the number of passengers increased by 108.3% resulting in a load factor 10.5 points above 2021.
The operating result stood at -100 million euros and improved by 50 million euros compared to Full Year 2021.
Compared to 2019, Full Year 2022 showed activity levels at index 114 and a load factor below 2019 levels. The average unit revenue per ASK increased by 14% compared to 2019, mainly driven by a strong yield increase of 23%. The average unit cost per ASK increased by 28% versus 2019, mainly driven by the high fuelprice and higher disruption cost.
The fleet of Transavia reached 99 aircraft by the end of the year.
Maintenance business : S olid performance during 2022
Full Year operating result stood at 163 million euros, which represents an increase of 81 million euros at constant currency compared to Full Year 2021 and is due to a higher activity and an operational improvement.
Total revenues increased by 28% in 2022 while third party revenues increased by 33.7% at constant currency, showing a strong recovery.
The operating margin stood at 4.5%, which is 1.4 point higher than the operating margin in 2021. Compared to Full Year 2019 the margin is still one point lower.
Adjusted operating free cash flow positive leading to a Net debt/EBITDA ratio at 1.8 x
* S um 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 an adjusted operating free cash flow in 2022 of 1.9 billion euros, which is 2.5 billion euros higher than last year.
Significant increase in Full Year revenues resulting in positive and improved operating result for both airlines
The audit procedures have been completed. The audit report is in the process of being issued.
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The results presentation is available at www.airfranceklm.com on from 7:00 am CET.
A conference call hosted by Mr. Smith (CEO) and Mr. Zaat (CFO) will be held on at 08.15 am CET.
To connect to the conference call, please dial:
France: Local +33 (0)1 76 77 22 88
Netherlands: Local +31 (0) 20 703 8211
UK: Local +44 (0)330 165 3656
US: Local +1 323-994-2093
Confirmation code: 8967838
Income Statement
* Restated figures include the change in accounting principles for pensions (interpretation of IAS19)
Consolidated Balance Sheet
Statement of Consolidated Cash Flows from 1 January until 3 1 December 2022
* Restated figures include the change in accounting principles for pensions (interpretation of IAS19)
Return on capital employed (ROCE)
* Restated figures include the change in accounting principles for pensions (interpretation of IAS19)
Net debt
Adjusted operating free cash flow
Bridge from EBITDA to Financial capacity
* Restated figures include the change in accounting principles for pensions (interpretation of IAS19)
Unit cost: net cost per ASK
* Restated figures include the change in accounting principles for pensions (interpretation of IAS19)
(1) 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).
Group results
Air France Group
KLM Group
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 3 1 December 202 2
FOURTH QUARTER 2022 TRAF F IC
Passenger network activity*
* Air France and KLM
Transavia activity
Total group passenger activity**
** Air France, KLM and Transavia
Cargo activity
Air France activity
KLM activity
1 Change versus 31 Dec 2021
2 Subject to compliance with EU State Aid Temporary Framework, if applicable
3 2-years anniversary date of the granting of the French State recapitalization aid
4 Refers to 2024-2026 period
Attachment
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