Air France-KLM results FY 2020

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Air France-KLM reported significant financial challenges in 2020 due to the Covid-19 crisis. Total revenue fell to 11.1 billion euros, a 59% decline from the previous year. The operating result was a loss of 4.5 billion euros, and net income stood at -7.1 billion euros. The Group achieved a 35% reduction in employee costs, attributed to staff cuts and government support. With 11 billion euros in net debt, the outlook for Q1 2021 remains bleak, anticipating continued loss driven by strict travel restrictions.

Positive

Achieved 35% reduction in employee costs through staff reductions and support mechanisms.
Maintained 9.8 billion euros in liquidity and credit lines.
Cargo operations remained resilient and cash positive amid the crisis.

Negative

Total revenue down 59%, significantly impacting financial stability.
Operating result at a loss of 4.5 billion euros, a decline of 5.7 billion euros year-over-year.
Net income loss of -7.1 billion euros influenced by impairments and restructuring provisions.
Net debt increased by 4.9 billion euros to 11 billion euros, raising concerns about financial health.

02/18/2021 - 01:15 AM

18 February 2021

FULL YEAR 2020

Operating Result at -4.5 billion euros
Covid-19 crisis having an unprecedented impact on Air France-KLM

The Covid-19 crisis severely impacted the Full Year 2020 results:

Revenue at 11.1 billion euros, down 59% compared to last year
EBITDA loss at -1.7 billion euros, limited due to cost control
Group net employee cost down 35% in 2020 compared to last year, supported by staff reductions, state support mechanisms and activity related wages. Average number of FTEs (Full Time Equivalent) in December 2020 decreased by 8,700 compared to December 2019
Operating result at –4.5 billion euros, down 5.7 billion euros compared to last year
Net income at -7.1 billion euros, including restructuring provision at -822 million euros, over-hedging at -595 million euros and fleet impairment at -672 million euros
Net debt at 11.0 billion euros, up 4.9 billion compared to end of 2019
At 31 December 2020, the Group has 9.8 billion euros of liquidity and credit lines at disposal

OUTLOOK

After a positive Christmas traffic in Domestic France and to the Caribbean and Indian Ocean, travel restrictions were tightened in France, the Netherlands and worldwide, having a negative impact on the traffic of the Group in the first quarter of 2021.

Due to the lockdown and travel restrictions still in place, the Group anticipates a challenging First quarter 2021, with a lower EBITDA compared to the Fourth Quarter 2020.

There is limited visibility on the demand recovery curve as customer booking behavior is much more short-term oriented and also highly dependent on the imposed travel restrictions, on both the Long Haul and Medium Haul network.

In this context the Group expects capacity in Available Seat kilometers circa index 40 for Air France-KLM in the First quarter 2021 compared to 2019 for the Network passenger activity due to negative environment.
The Group will progressively ramp up capacity towards summer 2021 and expects recovery in the second and third quarter 2021 thanks to the vaccine deployment.

The Air France-KLM Group continues to work on quasi-equity and equity solutions in order to strengthen balance sheet and expects progress in the following weeks. Discussions are continuing with the European Comission within the “Temporary Framework” (TF).

Air France-KLM Group	Fourth quarter		Full Year
Air France-KLM Group	2020	*Change*	2020	*Change¹*
Passengers (thousands)	5,941	-75.9%	34,065	-67.3%
Passenger Unit revenue per ASK¹ (€ cts)	3.06	-52.6%	4.56	-31.2%
Operating result (€m)	-1,134	-1,228	-4,548	-5,689
Net income – Group part (€m)	-1,000	-1,155	-7,078	-7,368
Adj. operating free cash flow (€m)	-2,115	-1,610	-5,661	-5,276
Net debt at end of period (€m)			11,049	4,902

The Board of Directors of Air France-KLM, chaired by Ms. Anne-Marie Couderc, met on 17 February 2021 to approve the financial statements for the Full Year 2020. Group CEO Mr. Benjamin Smith said:

“2020 tested the Air France-KLM Group with the most severe crisis ever experienced by the air transport industry. I would like to thank our employees for their dedication and tremendous flexibility during this period, which has allowed us to remain resilient despite an unprecedented drop in traffic. Since the very beginning of the crisis, we set the highest standards of health and safety for our customers and our employees, all while being able to seize Cargo opportunities and continuously adapting our flight schedules in the face of ever-changing travel restrictions.
Thanks to the French- and Dutch state support and this agile way of working, we were able to drastically reduce our costs, protect our cash, and continue the execution of major transformation plans within our airlines, involving the efforts of all employees. In the coming months, we will continue to strengthen the Group's core, improving its economic and environmental performance, so that Air France-KLM will be in a position to fully leverage all opportunities when the industry starts to recover. We begin 2021 looking forward that this year will see an upturn in traffic as soon as vaccination is deployed on a large scale and borders once again reopen. Our customers look forward to being able to travel again and their attachment to Air France, KLM, and Transavia has grown stronger during this crisis.”

Business review

Network: In this very challenging 2020, Air France and KLM actively managed capacity with most of the flight incrementally cash positive thanks to the Cargo activity

Network	Fourth quarter			Full Year
Network	2020	*Change*	*Change* *constant currency*	2020	*Change*	*Change* *constant currency*
Total revenues (€m)	1,986	-65.5%	-64.9%	9,206	-60.4%	-60.3%
Scheduled revenues (€m)	1,818	-66.9%	-66.2%	8,571	-61.5%	-61.3%
Operating result (€m)	-881	-917	-914	-3,722	-4,471	-4,477

Full Year 2020 revenues decreased by 60.3% at constant currency to 9.2 billion euros. The operating result amounted to -3.7 billion euros, a 4.5 billion euros decrease at constant currency compared to last year. Measures were strengthened to preserve cash, including reduction of investments, cost savings measures, negotiations with supplier on payment terms, staff reductions and wage support measures.

Passenger network: Ensure health safety on board and adapt network to cope with border restrictions

	Fourth quarter			Full Year
Passenger network	2020	*Change*	*Change* *constant currency*	2020	*Change*	*Change* *constant currency*
Passengers (thousands)	5,211	-75.6%		28,883	-67.0%
Capacity (ASK m)	34,900	-53.3%		138,168	-53.9%
Traffic (RPK m)	14,351	-77.9%		81,212	-69.2%
Load factor	41.1%	-45.8 pt		58.8%	-29.2 pt
Total passenger revenues (€m)	1,126	-78.3%	-78.0%	6,638	-68.6%	-68.4%
Scheduled passenger revenues (€m)	1,054	-79.0%	-78.6%	6,325	-69.0%	-68.8%
Unit revenue per ASK (€ cts)	3.02	-55.0%	-54.1%	4.58	-32.8%	-32.4%

The passenger network activity in the fourth quarter was, as anticipated, strongly reduced at 46% of last year’s level. The tightening of travel restrictions, border closures and absence of corporate travel delayed the expected traffic recovery. October and November were weak in term of traffic compared to a stronger December, thanks to Christmas traffic increase in Domestic France and to Caribbean and Indian Ocean.
2020 was an unprecedented year for the airline industry and Air France-KLM with: a good start in January and February; a worldwide lockdown with repatriation flights during the second quarter followed by hopes of a resumption of traffic during summer and a last quarter marked by increased travel restrictions and some traffic during Christmas.

The Full year 2020 capacity was severely impacted by the Covid-19 crisis, at 46% of last year’s level while the traffic decreased by 69%, mainly due to travel restrictions in place.

The Group had an agile capacity management and was able to ramp-up capacity during summer and Christmas periods with resilient performance on low border restrictions routes (French Domestic, Caribbean & Indian Ocean and Africa & Middle East). The balanced network of Air France and KLM spread over the different regions of the world was a strong asset during the Covid-19 crisis, which partly explained why the Group operates more capacity than competitors. The strategy was to operate incremental cash positive flights and several routes were taking advantage of the strong worldwide cargo demand thanks to industry under capacity.

During 2020, the Group accelerated the phase-out of different aircraft to cope with the lower demand in the following years (Airbus 380, Airbus 340, Boeing 747, Canadair Jet and Embraer 145).

Air France-KLM Group continues to implement the highest safety standards for its customers and employees to counter virus transmission risks. Both Air France and KLM achieved 4 stars in the Skytrax “Covid-19 Airline Safety Rating”, one of highest score.

Cargo: Strong steering unit revenue in a context of industry under capacity

Fourth quarter

Full Year

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FAQ

What were the financial results for Air France-KLM in 2020?

Air France-KLM reported a total revenue of 11.1 billion euros, down 59% from the previous year, with an operating loss of 4.5 billion euros and a net income loss of 7.1 billion euros.

How did the Covid-19 pandemic impact Air France-KLM's performance?

The Covid-19 pandemic severely impacted Air France-KLM, leading to a 59% drop in revenue, a 4.5 billion euros operating loss, and increased net debt.

What measures has Air France-KLM taken to reduce costs?

Air France-KLM reduced employee costs by 35% through staff reductions and utilized state support to help mitigate losses.

What is the outlook for Air France-KLM in 2021?

The outlook for Air France-KLM in the first quarter of 2021 remains challenging, with expectations of lower EBITDA and decreased capacity due to ongoing travel restrictions.