Air France-KLM Group for the Year Ended Activity AFR 33 December 31, 2012
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Selected fi nancial information 2 Highlights of the 2012 fi nancial year AFR 4 4.6 Note on the methodology for the reporting Corporate governance AFR 5 of the environmental indicators 129 1.1 The Board of Directors 6 4.7 Environmental indicators 132 1.2 The CEO Committee 30 4.8 Statutory Auditor’s Attestation report on the social, environmental and corporate 1 1.3 The Group Executive Committee 30 citizenship information disclosed in the 2012 management report 136 4.9 Statutory Auditor’s Assurance report on a selection of environmental and social indicators of Air France-KLM group for the year ended Activity AFR 33 December 31, 2012. 137 2.1 Market and environment 34 2.2 Strategy 42 2 Activities Financial r eport 139 2.3 Passenger business 45 2.4 Cargo business 53 5.1 Investments and fi nancing 140 2.5 Maintenance business 57 5.2 Property, plant and equipment 143 2.6 Other businesses 62 5 5.3 Comments on the fi nancial statements 146 2.7 Fleet 64 5.4 Key fi nancial indicators 150 2.8 Highlights of the beginning Financial statements AFR of the 2013 fi nancial year 71 5.5 Consolidated fi nancial statements 156 5.6 Notes to the consolidated fi nancial statements 163 5.7 Statutory auditors’ report on the consolidated fi nancial statements 245 Risks and risk 5.8 Statutory fi nancial statements 247 5.9 Five-year results summary 259 management AFR 73 5.10 Statutory Auditor’s report 3.1 Risk management process 74 on the fi nancial statements 260 3 3.2 Risk factors and their management 75 5.11 Statutory Auditors’ special report on regulated agreements and commitments 261 3.3 Market risks and their management 83 3.4 Report of the Chairman of the Board of Directors on corporate governance, internal control and risk management for the 2012 fi nancial year 87 3.5 Statutory auditors’ report prepared in accordance Other information 265 with article L.225-235 of the French Commercial Code (Code de commerce) on the report prepared 6.1 History 266 by the Chairman of the Board of Directors of Air France-KLM S.A. 96 6.2 General information 269 6 6.3 Information relating to the share capital AFR 270 6.4 Information on trading in the stock 276 6.5 Information on the agreements concluded in connection with the business combination Social, corporate between Air France and KLM 280 citizenship 6.6 Information relating to the agreements concluded with Alitalia-Compagnia Aerea Italiana (Alitalia-CAI) 283 and environmental 6.7 Legislative and regulatory environment for the air transport industry 285 4 information AFR 97 6.8 Information and control AFR 289 4.1 Social information 99 4.2 Note on the methodology for the reporting of the social performance indicators 109 Glossaries 290 4.3 Social indicators for the Group 112 Tables of concordance 295 4.4 Corporate citizenship information 116 4.5 Environmental information 122 THE COMPONENTS OF THE ANNUAL FINANCIAL REPORT ARE IDENTIFIED IN THE INDEX BY THE FOLLOWING PICTOGRAM AFR Registration Document 2012 Air France-KLM including the annual fi nancial report This Registration Document is an unoffi cial translation of the French Document de Référence, which was fi led with the French Autorité des Marchés Financiers on Tuesday April 9, 2013, pursuant to article 212-13 of the AMF General Regulations. This unoffi cial Design: translation has been prepared by Air France-KLM for the information and convenience of English-speaking readers and has not been reviewed or registered with the AMF. No assurances are given as to the accuracy or completeness of this translation, nor any responsibility assumed for any misstatement or omission that may be contained therein. The French Document de Référence may be used for the purposes of a fi nancial transaction if supplemented with an offering memorandum approved by the AMF. In the event of any ambiguity or discrepancy between this unoffi cial translation and the French Document de Référence, the French version shall prevail. REGISTRATION DOCUMENT 2012 - Air France-KLM 1 Selected fi nancial information As a result of the change in fi nancial year end from March 31 to December 31, the 2011 fi nancial year spanned only nine months (April-December). To facilitate understanding of the business, the Group had opted to also present pro forma results for 2011 and 2010 (January-December). Pursuant to Article 28 of Regulation (EC) no.809/2004 of April 29, 2004, the review of the fi nancial situation and results for the pro forma fi nancial year ended December 31, 2011 and the 2010 pro forma fi nancial year fi guring on pages 2 and 3 of the 2011 Registration Document are incorporated by reference in this document ( See also Section 5 – Key fi nancial indicators, page 150 ). Revenues Income/(loss) from current operations (in € billion, at December 31) (in € million, at December 31) 2012 25.63 (300) 2012 2011 24.36* (353)* 2011 2010 23.31* 2010 28* * pro forma * pro forma In a diffi cult economic environment, the Group’s revenues increased The fi rst effects of the Transform 2015 plan enabled a reduction in by 5.2 % (+2.5 % excluding currency). the operating loss despite an €890 million rise in the fuel bill. Information by business line 2012 2011 pro forma 2010 pro forma Income/(loss) from Income/(loss) from Income/(loss) from Revenues current operations Revenues current operations Revenues current operations At December 31 (in €bn) (in €m) (in €bn) (in €m) (in €bn) (in €m) Passenger 20.19 (235) 18.83 (375) 17.91 (58) Cargo 3.06 (222) 3.14 (60) 3.06 15 Maintenance 1.10 145 1.04 110 1.03 118 Other 1.29 12 1.35 (28) 1.31 (47) In 2012, the passenger business was driven by long-haul, the medium-haul operations remaining heavily loss-making . The cargo business suffered from the weakness of global trade and a situation of overcapacity. The maintenance business saw strong growth in high-value- added segments (engines and components). The operational improvement in the other businesses was partly due to the reclassifi cation of the Martinair leisure activity in passenger. 2 REGISTRATION DOCUMENT 2012 - Air France-KLM Net income/(loss), Group share (in € billion, at December 31) (1.19) 2012 At December 31, 2012, the Group booked a restructuring provision of €471 million. At December 31, 2010 (12-months pro forma), (0.81)* 2011 the net result had included a €1.03 billion capital gain from the Amadeus IPO on the Madrid stock exchange. 2010 0.29* * pro forma Financial structure Cover ratios (in € billion, at December 31) EBITDAR* / Adjusted net debt * / adjusted interest charges** EBITDAR 5.7x 2012 2011 2010 5.3x Net debt 5.97 6.52 6.07 3.5x 3.3x Consolidated stockholders’equity 4.98 6.09 7.03 Gearing ratio 1.20 1.07 0.86 Net debt was down by €549 million at December 31, 2012 2012 2011 2012 2011 thanks, notably, to the sale of Amadeus shares. Although the gearing ratio deteriorated under the impact of the reduction in * Operating result before amortization, * Net debt plus capitalization depreciation, provisions of operating leases (seven times) stockholders’ equity, the fi nancial cover ratios improved in 2012 and operating leases relative to 2011 ( See also Section 5 – Key Financial Indicators on ** Net interest charges adjusted for the portion of operating leases 151 page ). corresponding to financial charges (34%) Investments and fi nancing (in € billion, at December 31) 1.47 Gross investment in tangible and intangible assets Financing 2012 2.06 Free cash flow 0.40 2.43* At December 31, 2012, investments in tangible and intangible 2011 2.10* assets amounted to €1.47 billion, of which €1.19 billion in fl ight equipment. (0.33)* The free cash fl ow corresponded to net cash fl ow from operating activities (€851 million) less net cash fl ow used in investing activities 2.04* excluding the variation in investments between three months and 2010 2.29* one year (€275 million) and reduced by an amount of €175 million 0.25* corresponding to asset acquisitions not booked as investments pursuant to IFRS. * pro forma REGISTRATION DOCUMENT 2012 - Air France-KLM 3 Highlights of the 2012 fi nancial year Implementation of the Transform 2015 plan ✦ On January 12, 2012, Air France-KLM presented the targets and ✦ In November 2012, a voluntary departure plan for around 3,000 people measures of Transform 2015, its three-year transformation plan aimed was launched at Air France. KLM is also reducing its staff by cutting at a €2 billion reduction in net debt, a downwards revision in investment, temporary employment. strictly limited capacity growth and a 10% unit cost reduction between ✦ The Group also launched a series of action plans, particularly at Air France the end of 2011 and the end of 2014. where the heavily-loss-making short and medium-haul operations ✦ On March 7, at the presentation of its 2011 annual results, the were restructured. In addition to the downsizing of the medium-haul Group provided a status report on the implementation of the plan and regional fl eets and an improvement in staff productivity, the airline and, particularly, the initial cost-saving initiatives, the calendar for the reorganized this activity around three complementary business units renegotiation of the collective agreements and the action plans. with a new pricing strategy. Air France now operates the fl ights feeding ✦ Over the summer, Air France fi nalized new collective agreements with the CDG hub, the routes in France and across Europe with a high ground staff and fl ight deck crew.