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.