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Air France-KLM post operating loss of €143m and revenues of €5.7bn

During the first quarter of 2017, Air France-KLM has posted a loss of €143m and revenues up by 1.9% to €5.7bn. The operating result was impacted by currency effects, which had a negative impact of €72 million. Adjusted for the interest portion of operating leases (1/3 of annual operating lease expenses), the operating margin was -0.8% versus -0.2% at 31 March 2016. EBITDA amounted to €269 million, which was stable compared to the previous year.

The airline group booked a solid traffic performance with passengers carried up 5.2% at 20.9 million and RPKs up 4.2% leading to an improved load factor by 0.7 percentage points for the quarter. Unit revenue per available seat kilometer (RASK) ex-currency was almost stable at -0.5%, while unit cost reduction on track, down 1.7% at constant currency, fuel and pension expenses.

The airline pointed to a high level of uncertainty regarding the geopolitical environment and the fuel price as impacts for its outlook even though it reported a resilient trading start to 2017, confirmed for April.

During the quarter, the third party revenues further increased, strengthening the growth of the maintenance business. Third-party revenues amounted to €460 million, up by 6.7% driven by the contracts gained over the past few years. Over the period, the maintenance order book recorded a 7.0% increase to reach a record of $9.5 billion, securing future growth.

The ramp-up of Transavia is on track, says the airline group, with capacity up by 27% in France and up by 28% in the Netherlands. Transavia carried 2.5 million passengers, up 29%, capturing the growth in the European leisure market. The timing of Easter negatively impacted the unit revenue in March and the operating result. Total passenger revenues were up 23.1% to €197m during the first quarter.

The Group is targeting a growth for the passenger group (Air France, KLM and Transavia) of between 3.0% and 3.5% measured in ASKs for 2017 in order to regain the offensive in long-haul and to improve the performance in medium-haul.

To improve its competitiveness, the Group plans to act on all levels by pursuing and amplifying the initiatives already under way in terms of unit cost reduction. The unit cost reduction target for 2017 is in excess of 1.5% at constant currency, fuel price and pension related expenses.

Based on the forward curve of 21 April 2017, the full year 2017 fuel bill is expected to be slightly down in dollars compared to 2016 and to reach €4.7 billion.

Regarding the balance sheet, the Group is maintaining strict capex discipline, targeting positive free cash flow before disposals. The 2017 investment plan stands at between €1.7 billion and €2.2 billion.

The Group is pursuing a further reduction in net debt, targeting an adjusted net debt to EBITDAR below 2.5x mid cycle by the end of 2020.

Date: May 4, 2017

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