1. No category

Credit update
December 2014
Highlights of the Third Quarter





Operating environment
Economic environment remains
weak
Further currency volatility affecting
revenues and results
Slightly lower fuel price
Summer season impacted by
industry overcapacity on certain
long-haul routes, notably North
America and Asia







Air France-KLM
Large impact of pilot strike on
results
High volatility of passenger
revenues
Unit cost reduced by 1.2%*, the
10th quarter of significant
reduction in a row
Operating result down €18m
excluding currency and strike
Launch of new strategic plan,
Perform 2020
€339m cash-in from Amadeus
transaction
* Like-for-like: at constant currency, pension and excluding strike impact
Credit update – December 2014
2
Key data of the Third Quarter
In € millions
Revenues
Q3 2014
Q3 2013(1)
Change
6,695
7,175
-6.7%

+0.2%

-397m

-21m

-394m

-18m

Change like-for-like(3)
EBITDA(2)
682
1,079
Change like-for-like(3)
Operating result
247
641
Change like-for-like(3)
9m 2014
9m 2013(1)
Change
18,700
19,397
-3.6%

+0.4%

-200m

+222m

-153m

+267m

1,273
40
1,473
193
Net result, group share
100
148
-48m

-514
-651
+137m

Adjusted net result(2)
111
372
-261m

-231
-314
+83m

-158
-66
-92m

-75
496
-571m

5,273
5,348(4)
-75m

Operating free cash flow(2)
Net debt at end of period(2)
(1)2013 restated for IFRIC 21, CityJet reclassified as discontinued operation
(2)See definition in press release
(3)Like-for-Like: at constant currency, eliminated for strike impact
(4)Net debt at 31st December 2013
Credit update – December 2014
3
Operating free cash flow in 9 months 2014
Analysis of change in net debt through 9 months 2014, in million euros
Operating free cash flow*: -75
(9m 2013: +496)
5,348
Gross
Investments
-1,106
(9m 2013: -897)
Cash flow
before VDP,
and change
In WCR
(9m 2013**: 1,071)
+888
Sale &
Lease-Back
+33
Voluntary
Departure
Plans
(9m 2013: -106)
-162
+151
5,273
Other
Change
in WCR
(9m 2013: +317)
Net
investments
-1,073
including
provision
on cash held
in Venezuela and
Amadeus
transaction
+272
Net debt at
31 December 2013
* Net cash flow from operating activities less net capex on tangibles and intangibles.
All amounts excluding discontinued operations. See definition in press release
Credit
** 2013 restated for IFRIC 21, CityJet reclassified as discontinued operation
Net debt at
30 September 2014
update – December 2014
4
Debt reimbursement profile
Convertible bonds
Plain vanilla bonds
2009 4.97% convertible
bond (€661m)
Maturity: April 2015
Conv. price: €11.80
October 2016: Air France-KLM 6.75% (€606m)
January 2018: Air France-KLM 6.25% (€500m)
June 2021: Air France-KLM 3.875% (€600m)
2013 2.03% convertible
bond (€550m)
Maturity: Feb. 2023
Put: Feb. 2019
Conv. price: €10.30
2005 2.75% convertible
bond (€420m)
Maturity: April 2020
2nd put: April 2016
Conv. price: €20.50
Other long-term debt - mainly assetbacked (net of deposits )
500
606
600
770
900
880
690
560
560
460
370
370
180
H2 2014
2015
2016
2017
2018
2019
* Picture at 30 June 2014, in € millions, net of deposits on financial leases and
excluding KLM perpetual debt (€570m)
2020
2021
2022
Beyond
Credit update – December 2014
5
Structure of financial debt
30 September 2014
In € millions
Market debt
Perpetual subordinated loan in Yen and Swiss francs
4.97% convertible bond due April 2015
€661m, o/w recorded under financial debt:
2.75% convertible bond due April 2020, 2nd put: 2016
€420m, o/w recorded under financial debt:
2.03% convertible bond due Feb 2023, put: 2019
€550m, o/w recorded under financial debt:
6.75% plain vanilla bond due October 2016
6.25% plain vanilla bond due January 2018
3,875% plain vanilla bond due June 2021
3,789
567
Other debt
(majority is made of debt secured by assets, mainly aeronautical)
6,144
Total financial debt
o/w non current financial debt
o/w current financial debt
9,933
8,001
1,932
Market debt as percentage of gross financial debt
650
399
467
606
500
600
38%
Credit update – December 2014
6
Liquidity position
Comment
In € millions
31 Dec. 2013
30 Sept. 2014
3,798
3,349
825
596
968
585
Cash
AT HAND
CASH
RESTRICTE
D
+
Cash Equivalents
+
Marketable Securities
+
Deposits (Triple A bonds)
-
Bank overdraft
+
Pledged
Cargo claim
+
Restricted
OCEANE Swap
+
Amadeus Fair Value
Shares
+
Committed
EuroCredit Lines
RCF
=
GROSS LIQUIDITY
7,391
6,330
-
Short Term debt
1,993
1,814
=
NET LIQUIDITY
5,398
4,516
1,800
Fixed rate
1,800
Credit update – December 2014
7
Credit lines


Undrawn credit lines of €1.8bn

Air France: €1.06bn until 2016

KLM: €540m until 2016

Air France-KLM: €200m until 2017
EBITDAR / adjusted** net interest costs
Air France-KLM
4.2x
3.3x
3.5x
31/12/2011
31/12/2012*
3.7x
Covenants


EBITDAR to adjusted** net interest costs

Air France and KLM: 2.5x

Air France-KLM: 1.5x
Non-current assets in the balance sheet,
not pledged as collateral > unsecured
net debt
30/09/2014
Excluding strike impact on EBITDAR
* Restated for IAS 19 revised, CityJet reclassified as discontinued
operation
** Adjusted by the portion of financial costs within operating
leases (34%)
Credit update – December 2014
8
Financial ratios at 30 September 2014, trailing 12 months
EBITDAR / adjusted net
interest costs(1)
3.5x
3.8x
3.9x
Adjusted net debt(2) / EBITDAR
5.4x
4.2x(3)
4.4x
4.2x
3.7x
31/12/2012*
30/09/2013** 31/12/2013**
30/09/2014
4.4x
4.0x(3)
31/12/2012*
EBITDA / net interest costs
5.2x(3)
4.6x
4.6x
4.0x
4.3x
30/09/2013** 31/12/2013**
30/09/2014
Net debt / EBITDA
4.3x
3.1x
2.9x
3.2x
2.7x(3)
31/12/2012*
30/09/2013** 31/12/2013**
30/09/2014
31/12/2012*
30/09/2013** 31/12/2013**
30/09/2014
Excluding strike impact on EBITDA and EBITDAR
* IAS19 Restated
** Restated for IFRIC 21, CityJet reclassified as discontinued operation
(1)Adjusted by the portion of financial costs within operating leases (34%)
(2)Adjusted for the capitalization of operating leases (7x yearly expense)
(3) Excluding strike impact on EBITDA(R) (net debt unchanged)
Credit update – December 2014
9
Debt by currency and interest rate at 30 September 2014
Average cost of debt (after swap): 3.32%
Gross debt by currency
(after derivative instruments)
Net debt by type
(after swap)
floating rate
12%
fixed rate 88%
Credit update – December 2014
10
Active debt and liquidity management

Active debt refinancing program


€600 million bond issue launched in June 2014
Bonds representing €94 million repurchased in framework of tender offer

€350 million raised through Amadeus transaction in September

19.7m Amadeus shares remaining


Current market value of more than €600 million
Half of stake hedged in November using a collar
Credit update – December 2014
11
Secondary spreads
Credit update – December 2014
12
Net debt calculation
31 Dec. 2013
30 June 2014
10,733
(626)
(393)
8
(144)
9,578
10,173
(575)
(176)
3
(86)
9,319
Cash and cash equivalents
Marketable securities
Cash pledges
Deposits (Triple A bonds)
Bank overdrafts
= Net cash (B)
3,684
126
432
154
(166)
4,230
3,298
97
442
154
(77)
3,905
Net debt (A - B)
5,348
5,414
EBITDA (sliding 12 months)
1,855
2,052
2.9x
2.6x
In € millions
Current and non-current financial debt
Deposits linked to financial debt
Financial assets pledged (OCEANE swap)
Currency hedge on financial debt
Accrued interest
= Financial debt (A)
Net debt / EBITDA ratio
Credit update – December 2014
13
Appendix
Update on fuel bill
Fuel bill after hedging, in billion dollars
9.2
8.9**
Q4: 2.2
8.8*
8.2*
Q4: 2.1*
$107/bbl
9.2
$98/bbl
8.6
$89/bbl
8.2
$80/bbl
7.9
$71/bbl
7.5
Q1-Q3:
6.7*
Market price - Brent ($ per bbl)*
Market price - Jet fuel ($ per metric ton)*
2013
2014
2015
109
102
89
990
925
826
Q4: 70%
55%
% of consumption already hedged
* Based on forward curve at 17 October 2014
** Excluding strike impact
Credit update – December 2014
15
Passenger capacity and unit revenue per quarter
2012
Q1 2013
Q2 2013
+2,7%
+0,6%
Capacity
Q3 2013
Q4 2013
+1,6%
+1,8%
+0,3%
+3,2%
Q1 2014
Q2 2014
+1,3%
+1,0%
Q3 2014*
+1,6%
+2,7%
+1,3%
+1,3%
+0,0%
RASK
ex-currency
-1,3%
* Excluding pilot strike impact
-0,7%
~-1,8%
Credit update – December 2014
16
Cargo capacity and unit revenue per quarter
2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
-0,9%
-0,9%
Q2 2014
Q3 2014*
Capacity
-1,5%
-3,5%
-4,1%
-0,5%
-2,0%
-4,2%
+1,1%
RATK
ex-currency
-1,0%
-3,8%
* Excluding pilot strike impact
-1,0%
-4,8%
-5,2%
~-2,1%
-5,7%
Credit update – December 2014
17
Passenger unit revenue by network in Third Quarter – excluding strike
impact
Medium-haul point-to-point
North America
-14.2%
-12.3%
7.3%
ASK
RPK
RASK
Total medium-haul
Medium-haul hubs
-0.8%
ASK
4.1%
2.4%
-1.3%
3.7%
5.0%
-1.7%
ASK
RPK
RASK
ASK
RPK
RASK
Latin America
Africa and Middle East
1.1%
RPK
0.4%
RASK
Asia
7.1%
6.3%
-10.4%
-0.3%
0.9%
2.0%
2.0%
4.0%
-2.3%
ASK
RPK
RASK
ASK
RPK
RASK
ASK
RPK
RASK
Total long-haul
Caribbean & Indian Ocean
Total
2.3%
3.0%
-1.3%
-2.7%
1.0%
1.3%
1.7%
2.6%
-1.8%
ASK
RPK
RASK
ASK
RPK
RASK
ASK
RPK
RASK
Credit update – December 2014
18
Outlook for Full Year 2014

Positive effects of Transform 2015

Launch of several key Perform 2020 initiatives




Stable passenger capacity in Winter season, including a
significant further reduction of point-to-point capacity
4 full-freighter aircraft leaving the fleet by March 2015
Negotiation with pilots on Transavia development in France
Impact of pilot strike and challenging operating
environment: around €500m on 2014 EBITDA
Credit update – December 2014
19