Air France-KLM has confirmed that the company has bounced back from two years of massive losses as a result of the Covid-19 pandemic, returning to profit. The company confirms Strong Group capacity ramp up at 85% compared to 2019 with load factor at 84% Group revenues at €26.4bn, with highest fourth quarter revenues in history. Additionally, operating result at €1.2bn with operating margin at 4.5% above 2019 level (4.2%), despite surging fuel price.
Air France-KLM confirms a positive net income at €0.7bn supporting the Group’s equity restoration. Positive Adjusted operating free cash flow at €1.9bn and solid cash at hand at €10.6bn Net debt down by €1.9bn euros, compared to end of 2021.
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.”
Mr. Smith continues “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.”
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 Available Seat Kilometre (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 labour 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 2023, Air France-KLM will continue to strengthen its balance sheet and will be fully released from current States support
In the course of March 2023, the Group will fully redeem the “PGE” (2.5 billion euros outstanding) by using the 1.0 billion euros proceeds of the Sustainability-Linked Bonds issued in January 2023 and by using an additional 1.5 billion euros of cash.
In April 2023, Air France & Air France-KLM combined and KLM intends to implement two new Sustainability-linked Revolving Credit Facilities.
Aside of net profit generation, Air France-KLM intends to restore its balance sheet by means of non-dilutive initiatives such as quasi-equity financing instruments2 (similarly to the one raised by Air France on a pool of spare engines in July 2022), supported by Loyalty Program and/or MRO assets, and/or straight hybrid bonds.
The remaining €1.2bn French State Recapitalization Aid, granted under EU State Aid Covid Temporary Framework, is currently composed by:
€600m French State perpetual hybrids instruments.
€600m shares, acquired by the French State as part of the May 2021 right issue.
As of April 19th, 20233, Air France-KLM intends to fully exit this current €1.2bn French State recapitalization Aid and its related bans.
Following the approval on February 16th, 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:
March 2023: Air France-KLM will redeem and refinance €300m of French State perpetual bonds into French State perpetual hybrid instruments without bans attached, enabling to cross the 75% redemption threshold of the Recapitalization French State Aid.
As of April 19th, 2023: The rest of the c.€300m French State perpetual hybrid instruments and the remuneration associated to the State aid will be redeemed and refinanced similarly. The Group will settle all final obligations related to the exit of the remaining Recapitalization Aid without change needed of the capital structure.
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.
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