Air France reports profit

[Tan]

Air France reports profit

For my own personal interest how come AF can post a profit when the majority of the worlds majors cannot? What do they do or know that the rest of us don't know or do? Is their route structure better insulated from the realities of the world then other carriers?

I realize that AF is one of the strongest carriers in Europe but still, with all the bad news out there it's rather nice to hear some good news ...

[FougaMagister]

AF has been consistently turning out profits for the past 6 years or so - in fact they were turned around in the mid-90's by then CEO Christian Blanc, who managed to save the Company by introducing a whole host of cust-cotting measures the equivalent of which is yet to be seen at BA or KLM for instance. Basically, personnel agreed to work more for the same pay (i.e. to be paid less by the working hour), or to work the same but be paid less (like the hostesses and stewards, who accepted a near-20% pay cut).

The Company has been soundly managed ever since, but as you noted, their route structure is much more evenly spread than, say, BA's. AF is nowhere near as dependant on North Atlantic routes or Asian routes (see SARS) than most other European carriers. The French state still has a (slight) majority of capital in its hands, but that is due to cease later this year when the Company will go public. The shares have been doing all right since they were first introduced on the stockmarket a few years ago - too bad their recruitment procedures are so rigid...

Cheers

[Tan]

FougaMagister

Thanks very much for your interesting informative reply. I wish AF luck in maintaining their winning streak..

[Robert Vesco]

Obviously striking and offering poor customer service can also be profitable ! :D ;) :)

[starone]

yes striking pays as does the fact the gov. own a majority, slight or otherwise, a majority is still a majority be it 51% or 99%, has the civil service ever turned out a loss? No. also helps that internal a/c procedures have been changed, allegedly, in the past.....6 years!!! what a coincidence, or so i'm informed.
It would also be great if other airlines were paid to provide services to the Overseas departments.....ahh now hang on, sure, don't AF get that also. Must be awful bitter to turn a profit in those circs, bravo air france!!! clap yourselves on the back there and vote in another strike day....long live marx..eh?
Can't wait to see their 'profits' once they become a proper grown up airline?But will it ever cut the apron strings to Papa France and Maman, Jacques.

But myself and F. M. have had this discussion elsewhere!!!!!

[yggorf]

Mind you, as a humble passenger, I prefer to entrust my life to overpaid marxist pilots rather than armed underpaid American pilots .
And let's not forget that US airlines are heavily subsidised since 9/11...

[starone]

yggorf- have to agree, although personally i don't count the majority of US airlines as grownup either. Imagine combining the two- an armed marxist underpaid french pilot-that would make interesting industrial action!!!

[HZ123]

It seems some of us are not to keen on our European cousins. It is good to see that thay have made a profit but one wonders if there has been a little creative accounting here.

Despite all said if the AF staff have come around so much, they must be at odds with the rest of the working populace and I have not heard of them being mentioned in glowing terms. Mais qui ?

[theblipdriver]

so, that's the reason why swisspilots are trying to copy the "french way of success"? :E striking in order to become profitable?

cheers

[Tan]

Folks regardless of your personnel feelings about AF they still managed to post a profit, a feat that the rest of us have failed to do. I'll settle for any profit for my employer.:D

[mr.777]

As Tan says,ath the end of the day they must be doing something right.
I'm an ex-employee and my shares are doing nicely thank you very much....maybe the likes of starone would like to buy some BA shares and we can compare?

[donder10]

1 key difference:BA are a private company with competitors ,AF aren't and don't.

[mr.777]

AF don't have any competitors???
That's news to me.Are we talking international or domestic?

[Ludo]

Numbers speak by itself.



Roissy, 13 May 2003

Financial year April 2002-March 03: Air France illustrates once again its ability to adapt to a crisis situation

· Turnover up by 1.3% to 12.69 billion euros
· Operating income before aircraft disposals: 162 million euros
· Net income: 120 million euros
· A dividend of 6 cents per share

The Air France Board of Directors met on 13 May 2003, under the chairmanship of
Jean-Cyril Spinetta, to finalize the accounts for the financial year 2002- 03.

On this occasion, the Chairman made the following declaration: In this particularly difficult economic context, Air France, as in the aftermath of the 11 September 2001 attacks, has once again shown its ability to resist. This fourth quarter has indeed seen a crisis equivalent to that of September 2001. However, thanks to the good results obtained over the first nine months in a context disrupted by internal and external labour disputes, the Group posted operating income of 162 million euros for fiscal 2002-03, slightly higher than last year. After negative exceptionals partly due to the 59 million euro provision excluding taxes linked to the suspension of Concorde, the Group posted net income of 120 million euros for the twelve months to 31 March 2003, up for the sixth year running.
In addition to the delayed forecast economic upturn, the consequences of the SARS crisis in Asia is weighing heavily on our results of the first few months of the current financial year. The Group immediately took a series of measures both in terms of capacity and spending to deal with this crisis in the best possible conditions. Over the past few weeks, an upturn in the number of advance bookings can be noted for all networks, excluding Asian routes. If this continues, Air France aims to post a slightly positive operating income before aircraft disposals for the year. Given these annual results and the outlook for the coming year, and to show our confidence in the Group's future, shareholders will be offered a dividend of 6 euro cents per share excluding tax credit.

Fourth Quarter 2002-03

Fourth quarter operations were marked by a difficult economic context, the war in Iraq and the SARS epidemic in Asia.

Passenger Operations


Traffic rose 1.6% for a 4.3% increase in capacity. The load factor was down 2 points at 74.5%. The appreciation of the euro against other currencies had a significant impact on turnover.

Unit revenue per available seat-km (RASK) was down 2.4% excluding currency effects and network mix effects. Unit revenue per revenue passenger-km (RPK) rose 0.3% including currency and network mix effects.

The performance per network illustrates the improvement in the domestic network and the decline in the international medium-haul network.



Cargo operations

Cargo operations were satisfactory, with a rise in traffic of 4.1% for a 1.9% increase in capacity. The load factor improved by 1.5 points to 66.8%. Unit revenue per available tonne-km RTKO dropped by 2.4%. Excluding currency effects, it improved by 4.8%.

Results

Following the new rule 2002-10 from the Committee Governing Accounting Procedures concerning the amortization and depreciation of assets, Air France applied on March 31 2003 the approach by component for the recognition of maintenance operations on airframe and engines (IAS 16 -SIC 23). The applications of these new accounting standards has had a limited positive impact on quarterly and yearly results: 20 million euro for operating income and 13 million for net income.


Consolidated turnover stood at 3 billion euros, down 1.3%. Before aircraft disposals and after provisioning 59 million euros for Concorde's withdrawal, operating income showed a loss of 133 million euros (158 million euros using comparable accounting methods) for a balanced fourth quarter result for fiscal 2001-02 taking into account 53 million euros in aid from the French State in the aftermath of 9/11.
Following aircraft disposals, operating income posted a loss of 123 million euros (143 million euros using comparable accounting methods).
After a deferred tax credit of 71 million euros, net loss stood at 98 million euros (111 million euros using comparable accounting methods).



Fiscal 2002-03: Air France once again illustrates its ability to ride out the crisis

Passenger operations

For this fiscal year, Air France held up well with traffic expressed as Revenue Passenger km (RPK) up by 2.9% for a 2.7% increase in capacity expressed as Available Seat km (ASK). Load factor stood at 76.2% (up 0.2 points) thanks to long-haul traffic which remained buoyant (up 4.4%) with a high 80.4% load factor. The Group carried 42.9 million passengers, down 1.1%. With a 17.6% market share compared with 16.9% last year, Air France now ranks first among European airlines (AEA figures).


Unit revenue per ASK increased by 1% excluding currency effects and excluding network mix effects. Taking into account these effects, yield per RPK rose by 0.9%.

The breakdown of the networks' performances is as follows:
The long-haul network held up well. The satisfactory performance of the international medium-haul network in the first half-year offset the deteriorating results recorded during the second half. The domestic market, on the other hand, recovered during the second half-year.



Cargo operations




Cargo operations had a good year with a 2.1% rise in turnover, curtailed by negative currency effects. Capacity expressed as Available Tonne-km rose 5.3% while traffic expressed as Revenue Tonne km increased by 6.4%. The load factor was up from 64.6% on 31 March 2002 to 65.3% on 31 March 2003. Unit revenue per available tonne km dropped by 0.7% but rose by 4.3% excluding currency effects. Yield per revenue tonne km decreased slightly by 1.7% and rose by 3.3% excluding currency effects.

Other activities

Other activities generated a total turnover of 681 million euros (down 3%): a resilient 540 million euros for maintenance operations (down 1.5%) excluding currency effects and 141 million euros (down 8.4%) for ancillary activities, mainly due to the suspension of Aéropostale operations.

Results: 120 million euros Group net income


The new standards have led to substantial fluctuations in the gross operating result as some costs are now stated as fixed assets and accordingly depreciated, making it difficult to compare with last year. The gross operating result increased by 254 million euros while depreciation rose by 209 million euros and operating provisions by 20 million. Aircraft disposals saw a loss of 5 million euros.

For fiscal 2002-03, turnover increased by 1.3% to 12.69 billion euros. Passenger operations (10.53 billion euros) accounted for 83% of turnover while cargo operations accounted for 12% (1.48 billion euros).
Operating costs rose to 12.53 billion euros (up 1.2% up 0.8% excluding provisions for Concorde). Using former accounting methods, costs would have risen by 1.5%. The main reductions in costs stem from fuel expenses (down 5.1%), chartering operations (down 35.1%) and commissions (down 7.1%). Labour costs increased by 3.2%. Using former accounting methods, these costs rose by 4.8% for a 2% rise in staff numbers (up 1.2% on a like-for-like basis).

Unit costs using comparable accounting methods but excluding provisions for Concorde, calculated in equivalent available seat km dropped by 1.1%. Based on like-for-like currency (2.8%) and fuel cost (0.5%) effects, unit costs rose by 1.2%. This increase was partly due to the hike in insurance premiums (up 50 million euros for the parent).

EBITDAR increased by 20.7% (1.99 billion euros) using new accounting standards and by 5.3% (1.73 billion euros) with no change in accounting rules.

Following 59 million euros of exceptional provisions for Concorde, operating income before aircraft disposals rose by 3.2% to 162 million euros (down 12.7% to 137 million euros on a like-for-like basis). After 30 million euros of aircraft disposals compared with 78 million in the previous fiscal year, operating income stood at 192 million euros compared with 235 million on 31 March 2002. The three main sectors of activity contributed positively to operating income, as follows:
- passenger operations: 101 million euros compared with 128 million euros on 31 March 2002
- cargo operations: 48 million euros compared with 5 million euros the previous year
- maintenance operations: 67 million euros compared with 26 million euros on 31 March 2002
- others: -24 million euros mainly due to provisions for Concorde, compared with a positive result of 76 million in the year to 31 March 2002.

Financial results are improving with costs falling from 112 million as at 31 March 2002 to 85 million euros.

After taking into account 29 million euros from equity affiliates and 16 million euros from the amortization of the goodwill, Group net income stood at 120 million euros (107 million using former accounting standards).

Financial situation: stable debt despite a two-year crisis

In November 2002, given the international and economic context the Group decided to limit for the fiscal year 2002-03 investments to 1.2 billion euros instead of the scheduled 1.6 billion. The delivery of eight aircraft including two regional aircraft has therefore been postponed for a year. This limited investments over the year (excluding the change in accounting standards) to 1.16 billion euros financed by a cash flow of 865 million euros and product disposals of 357 million. The debt/equity ratio improved from 0.73 on 31 March 2002 to 0.71. Group shareholders' equity totalled 4.03 billion euros and net debt stood at 2.85 billion euros. In the year to 31 March 2003, the Group had cash flow of 1 billion euros plus a fully-available credit line of 1 billion euros.

[starone]

I already have ba shares, even though i don't work there and i'm very happy with them thank you, considering i bought at 97p...quids in!!!

As for AF competition...where?? That sentance is what is called an oxymoron...af....competition, the mind boggles. When you have allegedly imaginative accountants and any serious slots are given to you by the 'independent' cohors, you don't need competition, you just to need to have the good 'ol civil service mentality....service with a grimace.

As I've said they'll join the grown ups some day, then we'll have a comparison.

[wallabie]

Starone mate, I am sure there must be a good woman able to bring a smile on your face in your neck of the wood.
I was hoping that all the hard work we put in every day to be one of the very few keeping their head above the water would be met with a tad more than bitter mood.
Well, no such luck !!
Let me make something clear :

THE FRENCH ARE DOING SOMETHING RIGHT

I know I am only pouring acid on your ulcer, but it's just what's happening and I'll give you a bit of my very busy day to explain, although I know I am only wasting my time but there is Don Quichotte in me.

Air France has been playing the Brussel's rules since 1993 when it was on the verge of bankrupcy. I grant you that had it not been governement owned then I would probably not have the luxury to waste my time typing this message as I would need to make a living. But fate was good to me.
Air France was then given a 20 Billion Franc check to straighten up after not having received a penny from its main shareholder for more than 10 years.
On the subject I would like to remind you that BA just before being privatized, saw its debts taken care of by her Majesty's government allowing BA to look like a Virgin on the Stock Exchange ( BA........Virgin !! Get it ?? Cracking joke don't you think ??? ) Under normal capitalistic rules, BA was worth no more than the paper I use to wrap my fish and chips, so much for moralistic speech on economic affairs.

Second, people got the fright of their lives when they realized that going belly up was a lot more than a remote possiblity and did what they had to do, which is basically work I guess but more so with a chairman, Christian Blanc who had both balls like a bull and a vision he imposed on the government. In short, me or chaos. It's been done before in french history and it seems to do wonders !!

We now have a very balanced network, we are leaders in West Africa where a lot of oil compagnies seems to prefer flying with us rather than Angolan ( no offence ).
We have a good safety record ( do not test my good maners by bringing up Concorde ) and the service we provide, maybe lousy in your eyes, seems to please the travelling public.
The flleet has been rationalized and your allegations of us making any money flying to the french West Indies would make a wooden horse fart of laughter. Have you ever travelled to the french West Indies ???? I guess not, to imagine that there is money to be made there but we have to because of this philosophy called " territorial continuity " which basically means that wherever you live under the " tricolors " you must be able to move at a reasonable price !!! I know this is silly but this will still be going on long after you have started eating the dafodills by the root.

I think the hard thing for you to get used to is : well yes, the french get it right, those plodering arrogant migets who should stick to " talking to zeeeee girls " and discover the virtues of a bar of soap ! I think this is just what it comes to mate and I am so ever sorry that there is nothing I can do for you.
By the way, did I tell you about our raise ??? I'll save it for later, this may be a tad hard on you.

[starone]

wouldn't dare bring up the concorde issue, because that wouldn't be fair. It's generally only used by people who have a grudge.
well done af for bringing in the bacon.


but....................

you're still owned by the govornment and news like this is a nothingness really, which is my point....you're not a proper player...i'll consider them a serious airline once they're on the stock market... again..i'll ask does the civil service ever turn a loss???
Please reply...it's the whole point of my argument? A toute a l'heur mon pettit!!!

I won't bring myself to the lowest common civil service denominator of guesssing whether you get your thrills from man, woman or goat. I'll leave that to the likes of you, who has many a civil service chip on their shoulder.

See you on the stockmarket...........if you make it!!!!


i'd also like to say that I actually really like France and their politics, and i'm looking forward to retiring there in a few years. I just CANNOt abide jumped up flag carriers who publish their 'RESULTS', why the hell bother, it's never true and the real aviation world never ever give a damn about them, they just DO NOT rate on the radar 'MATE'. So climb back into your defensive box and give us a shout when you've caught up with humanity and a word of advice...NEVER judge people on a forum, unless you ACTUALLY know them.. it sadly reflects on you and not on your target.

[Ludo]

starone,
to answer your question, Alitalia is 60something% state owned (while AF is 56%) and has been reporting loss for ages. So did Sabena.
The big difference I see in AF with private companies, is that while now one of AF's program points is "etre rentable pour financer l'avenir" (=finance the future), it is very unlikely that they would be allowed to do so once privatised, as it happened to other companies before...the company would be sucked dry of any profit and left in poor shape for times of crisis, as it is happening to most who have no reserve to face the downturn.
"MATE", swallow the bitter pill: AF is a healthy company and thanks to its boss has been doing the right things for a while. Bringing up old legends only demonstrates you are not up to date.

[wallabie]

Starone dearest.

Now, we do sound a tad upset do we not ???
Let me fix you up with one of Wallabie's famous cordials

1) One request. What am I saying. I am getting on my knees and begging :
DO NOT COME AND RETIRE IN FRANCE ONCE YOU HAVE FINISHED CHORING AROUND IN WESTMEATH.
We have all the ill informed twitts we need starting with the entire cabinet and most newspapers editors. Do not join the ranks. I'm sure that Westmeath can find you something usefull to do like running the weekly Bingo evenings. You'll do splendid.

2) Should you have the feverish and burning desire to lay your hands on a french newspaper, let's say Le Figaro. Flip it to the stock market page. Done ??? It's at the end ! Right here you are.
Look under Groupe Air France. Good. What do you see ??
Cracky me !!!!! Yes !!!! It's listed on the Paris stock exchange where in case you didn't know, not only farm products and machinery are traded. Chip 10 Euros in and you'll get a share to hang over your bed. So much for civil servants and soviet blabla economy.
I was at work yesterday and I found myself thinking about you ( see, we're already bonding ) while reading the latest in house strategy plan for the next 3 years. I could tell you but you know the drill.........;I'd have to shoot you.
There is enough in there to dig a mamoth hole into your stomach.
We are going to bring in piggie loads of bacon mate !!! What a feast !!


I am much more wicked than you think. I do not get my " fun " with men or goats ( got bored with the repetition of it very quickly) but by spanking fools like you on the nuts when they deserve it.
Got to dash. See ya...............hopefully not ???

Ps : Could you pay more attention to your typing. English is a beautifull language that deserves better than the bullish work you do.

[starone]

****sigh**** followed by bored and still very unconvinced ****yawn***. I'm not upset at all but bemused. Carry on dear fools...carry on.

"Half a league, half a league, half a league onward, into the valley of death..........................................."

Says it all.

[wallabie]

Starone poor thing, you are a lost case.

I suggest you lock yourself in a padded cell, stick your head into your you know what and swallow the key. Who knows, if you crack a match you might find last Financial Times issue there. I told you it was reading material. Shall you ever listen ??