COMBINED ORDINARY AND EXTRAORDINARY SHAREHOLDERS’ MEETING
2017 LEGAL OPENING
PARIS SHAREHOLDERS’ MEETING AGENDA SM
Introduction of strategic operations with Delta Air lines, Inc and China Eastern Airlines
Presentation of the resolutions
Dialogue with the shareholders
Vote on the resolutions
Closing
COMBINED ORDINARY AND EXTRAORDINARY 3 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 INTRODUCTION OF OPERATIONS
LJUBLJANA, SLOVENIA STRENGTHENING AIR FRANCE-KLM ALLIANCES BY CREATING SM A VERY POWERFUL COMMERCIAL AND EQUITY PARTNERSHIP
Building an enlarged North Atlantic partnership reinforced by equity investments > Combination of Air France KLM/Delta and Delta/Virgin Atlantic joint-ventures > Delta to acquire a 10% stake in Air France-KLM CREATING THE > Air France-KLM to acquire 31% of Virgin Atlantic shares MOST POWERFUL PARTNERSHIP Securing and strengthening the access to the Chinese market with China Eastern > Further enhancing commercial cooperation with China Eastern > China Eastern to acquire a 10% stake in Air France-KLM
IMPROVING OUR FINANCIAL €751 million of new equity to reinforce Air France-KLM balance sheet STRUCTURE
COMBINED ORDINARY AND EXTRAORDINARY 5 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 ALLOWING AIR FRANCE-KLM TO BE THE EUROPEAN PILLAR OF SM THE MOST POWERFUL COMMERCIAL AND EQUITY PARTNERSHIP
North America 10%
31% 10% Asia Pacific
Europe 3.6% 49%
Latin America India
(2) Africa (1)
(3)
Existing Agreements New/expanded agreements + equity partnership
COMBINED ORDINARY AND EXTRAORDINARY 6 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 OUR JOINT VENTURE WITH DELTA: SM A VERY INTEGRATED PARTNERSHIP
$12 billion of annual revenues
250 daily transatlantic flights A POWERFUL PARTNERSHIP WITH 500 destinations in Europe and North America DELTA 20% of the total transatlantic capacity
A significant operating margin
Common strategy
A STRONG Network and capacity agreed jointly
GOVERNANCE International revenue management team
Sales delegation
COMBINED ORDINARY AND EXTRAORDINARY 7 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 VIRGIN ATLANTIC: SM A MAJOR PLAYER ON THE NORTH ATLANTIC ROUTES
5.4 million passengers carried to 30 destinations, with a fleet of 39 aircraft LEADING AIRLINE IN THE NORTH More than 9,000 employees ATLANTIC MARKET th 4 largest European player on the North Atlantic routes
STRATEGIC BASE Second airline in London Heathrow airport AT LONDON 26 daily slot pairs at London Heathrow HEATHROW AIRPORT Constrained airport capacity supporting yield premium
Efficient joint-venture between Delta and Virgin Atlantic HIGH LEVEL OF on the North American routes INTEGRATION WITH OUR PARTNER DELTA Joint marketing and sales, coordinated pricing, revenue management network planning and scheduling for UK-US routes
COMBINED ORDINARY AND EXTRAORDINARY 8 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 STRENGTHENING OF OUR NORTH ATLANTIC JOINT-VENTURE SM WITH DELTA AND VIRGIN ATLANTIC
AN EXTENDED NORTH ATLANTIC ALLIANCE COMBINING AIR FRANCE-KLM/DELTA AND DELTA/VIRGIN ATLANTIC JOINT VENTURES*
Unrivalled offer for customers travelling between Continental Europe and the UK, and the United States, Canada and Mexico
Offering more growth potential, three-parties sharing bottom line value as per relative size
A minimal joint venture duration of 15 years
Expected significant synergies: new code shares, sales coordination, cost synergies…
* Subject to shareholders and regulatory approvals
COMBINED ORDINARY AND EXTRAORDINARY 9 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 CONTINUING TO REINFORCE OUR POSITION IN ASIA SM
A STRONG PARTNERSHIP CONNECTING INDIA TO EUROPE AND NORTH AMERICA
Enlarged code-share partnership with Jet Airways over the past two years, connecting India and North America through 3 European hubs
12 daily flights from India to Europe connecting to 81 daily flights to North America through 3 major hubs CDG/AMS/LHR
CODE SHARE AGREEMENT WITH LEADING AIRLINES IN ASIA
Looking for additional opportunities of cooperation to sustain our presence on growing markets
An extended network in the Chinese market
COMBINED ORDINARY AND EXTRAORDINARY 10 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 OUR JOINT-VENTURE WITH CHINA EASTERN: SM ALREADY A SIGNIFICANT PARTNERSHIP
A JOINT-VENTURE BASED ON OUR ROUTES TO SHANGHAI
Joint-venture with Air France-KLM on the routes Amsterdam / Paris / Shanghai
€530 million revenues in 2016, of which €405 millions for Air France-KLM
Skyteam member
Delta holds a 3.2% stake in China Eastern
COMBINED ORDINARY AND EXTRAORDINARY 11 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 STRENGTHENING OUR JOINT VENTURE WITH CHINA EASTERN SM AIRLINES
Securing Air France-KLM European leadership position in Shanghai, largest business market in China
Cooperation enhancement: enlarge joint-contracting, network and price coordination, joint commercial tooling, non commercial synergies
Cement and secure our access in the Chinese market
Consistent with Delta partnership strategy
Preserving the current joint-venture with China Southern
COMBINED ORDINARY AND EXTRAORDINARY 12 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 ESTABLISH EQUITY LINKS TO CEMENT OUR COMMERCIAL SM AGREEMENTS
3,2%
10% 10%
49% 31%
COMBINED ORDINARY AND EXTRAORDINARY 13 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 AN INVESTMENT IN A JOINT-VENTURE PARTNER: SM VIRGIN ATLANTIC
£220m 31%
Price of £220 million Closing in 2018, subject to appropriate Brexit put option together with Delta regulatory approvals Same number of Directors as Delta
COMBINED ORDINARY AND EXTRAORDINARY 14 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 TWO RESERVED CAPITAL INCREASES SM
STAKE AMOUNT RAISED
Subscription price €10
Value accretion of 8%* through 10% €375.5m the partnership between Air France, Delta and Virgin
Pre-tax annual synergies increasing 10% €375.5m from €35m to €95m
TOTAL 20% €751m
Same conditions for Delta and China Eastern 5 year period lock-up and stand-still
* Assuming 37.5m new shares in AF-KLM issued to DL in exchange of a 10% stake (reserved capital increase) - 1.09 USD/EUR exchange rate, 0.86 GBP/EUR exchange rate
COMBINED ORDINARY AND EXTRAORDINARY 15 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 A PREMIUM TO THE HISTORICAL AVERAGE OF AIR FRANCE-KLM SM SHARE PRICE
AF-KLM share price performance over the past 12 months 42% premium relative to the average * (€) 15 share price over the last 12 months 13
11 12.07 €* 10.0 € 9 11% premium relative to the average Average1 year(1) 7 7.0 € share price since the announcement 5 of the 2016 annual results (16th February 2017)* 3 Julyjuil.-16 16 Octoberoct.-16 16 Januaryjanv.-17 17 Aprilavr.-17 17 Julyjuil.-17 17
AF-KLM share price performance over the past 5 years Air France-KLM share price performance since 1st January 2017: +133% (€) 15 13 11 12.07 €* 10.0 € 9 7.3€ 1 7.1€ 4 7.0€ 3 7 2 7.0 € * As at July 26, 2017 5 Average1 year(1) 3 Average 2 yars(2) juil.-12July 12 juil.-13July 13 juil.-14July 14 juil.-15July 15 juil.-16July 16 juil.-17July 17 Average 3 years(3) Average 5 years(4)
COMBINED ORDINARY AND EXTRAORDINARY 16 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 A STEP FURTHER TOWARD DELEVERAGING SM
Net debt pre proceeds Net debt post proceeds (€bn) (€bn)
3.7 3.7
3.0
2.5
2.9X 2.9X 2.7X 2.5X
2016 H1 2017 2016 H1 2017
Adj. net debt/ EBITDAR (1) Adj. net debt/ EBITDAR (1)
(1) Sliding 12 months - Adjusted net debt includes operating leases capitalized at 7x
COMBINED ORDINARY AND EXTRAORDINARY 17 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 IMPACT ON THE SHAREHOLDING STRUCTURE SM
Capital distribution Projected capital as of 31 July 2017 pre-operation distribution post-opération
Employees (FCPE) Delta
5.9% Others Others French State China Eastern 10.0% 17.6% 10.0% Treasury stock Employees 0.4% (FCPE) 4.7% 60.9%
French State 14.1% 0.3%
Treasury stock
COMBINED ORDINARY AND EXTRAORDINARY 18 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 RENFORCING STRATEGIC POSITIONNING AND ATTRACTIVENESS SM TO INVESTORS
Secured access to the rapidly growing OFFERING Reinforcing AF-KLM’s ability to leverage its Chinese market GREATER access to the largest markets in the world, OPPORTUNITIES Europe and North America Further positioning AF-KLM as the FOR PROFITABLE Opportunity to combine strengths airline of choice for customers flying GROWTH with Virgin and Delta in the UK between Europe and China
Improving strategic positioning BOSLTERING THE GROUP’S Accelerating the earnings growth ATTRACTIVENESS Improving the financial structure
COMBINED ORDINARY AND EXTRAORDINARY 19 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 PRESENTATION OF THE RESOLUTIONS
MONTPELLIER ORDINARY BUSINESS (OB) APPOINTMENT OF NEW BOARD DIRECTORS OB (RESOLUTIONS 1 & 2)
The Company’s governance will evolve further to the partnership with Delta and China Eastern and the appointment of two new board directors representing China Eastern Airlines and Delta Air Lines, Inc.
Further to these appointments, and in accordance with the provisions of Article L. 225-27-1 of the French Commercial Code and Article 17-3 of Air France-KLM bylaws, a second board director representing employees shall be appointed by the European Works Council
COMBINED ORDINARY AND EXTRAORDINARY 22 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 APPOINTMENT OF M. BING TANG AS BOARD DIRECTOR OB (RESOLUTION 1)
M. Bing TANG
Born in1967
Chinese citizen
M. TANG began his career in the civil aeronautic sector in 1993 and he progressed in different functions: he served as President of Shanghai Airlines and President of the Beijing branch of China Eastern Airlines Corporation Limited. He is director since June 2012, and vice- President, since February 2010 of China Eastern Airlines Corporation Limited. He is also a member of China Eastern Air Holding Company’s party since May 2011, and vice-President of this same company since December 2016
Expiration of his appointment: Shareholders’ Meeting to be convened in 2021
COMBINED ORDINARY AND EXTRAORDINARY 23 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 APPOINTMENT OF DELTA AIR LINES, INC. AS DIRECTOR OB (RESOLUTION 2)
DELTA AIR LINES, INC
Corporation formed under the laws of the State of Delaware (USA)
Office: 1030 Delta Boulevard, Atlanta, GA USA 30354
Expiration of its appointment: Shareholders’ Meeting to be convened in 2021
COMBINED ORDINARY AND EXTRAORDINARY 24 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 OB
Mr. George N. MATTSON
Born in 1966
American citizen
st Mr. Mattson joined Delta’s Board on October 1 , 2012. He served as a partner and co-head of the Global Industrials Group in Investment Banking at Goldman, Sachs & Co from 2002 through August 2012, where he served in a variety of positions from 1994 to 2002. He has experience in the areas of mergers and acquisitions, corporate finance and capital markets. He has knowledge of the airline industry, transportation and other global industries acquired during his 18 years at Goldman, Sachs, & Co. Since his retirement from Goldman Sachs, Mr. Mattson has been involved in acquiring and growing middle market industrial businesses
COMBINED ORDINARY AND EXTRAORDINARY 25 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 CURRENT COMPOSITION OF THE BOARD OF DIRECTORS OB
Jean-Marc Maryse Karim Leni Isabelle Jean-Dominique Anne-Marie JANAILLAC AULAGNON* BELABBAS BOEREN* BOUILLOT* COMOLLI COUDERC*
Jaap Louis Solenne Isabelle François Hans Patrick Alexander DE HOOP JOBARD LEPAGE PARIZE* ROBARDET N.J. SMITS VIEU R. WYNAENDTS* SCHEFFER*
* Seven independent Board directors within the meaning of the AFEP-MEDEF Code.
COMBINED ORDINARY AND EXTRAORDINARY 26 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 EXTRAORDINARY BUSINESS (EB) DELEGATION OF AUTHORITY GRANTED TO THE BOARD OF DIRECTORS EB FOR THE PURPOSE OF CAPITAL INCREASES (RESOLUTIONS 3 & 4)
Resolutions 3 and 4 delegate to the Board of Directors all powers to proceed with the capital increases reserved to China Eastern and Delta
Each of the twp investors, China Eastern Airlines and Delta Air Lines, Inc. would subscribe 375,274,100 euros worth of shares through a reserved capital increase for a total nominal amount of 37,527,410 ordinary shares with a unitary subscription price of €10
This amount will be deducted from the €150 million aggregate nominal cap amount set under the terms of the 12th resolution of the Shareholders’ Meeting held on 16 May 2017
COMBINED ORDINARY AND EXTRAORDINARY 28 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 CAPITAL INCREASE RESERVED TO THE EMPLOYEES EB (RESOLUTION 5)
In accordance with the provisions of Articles L.225-129-6 and L225-138-1 of the French Commercial Code and of articles L3332-18 et seq of the French Labor Code, a delegation of authority shall be granted to the Board of Directors for the purpose of carrying out capital increases by the Shareholders’ Meeting, to present a draft resolution allowing for a new capital increase reserved for employees
Resolution 5 aims at granting powers to the Board of Directors for the purpose of carrying out capital increases reserved to members of a company or Group savings scheme without shareholders’ preferential subscription rights
This delegation would be granted within the limit of 2% of the share capital
This amount will be deducted from the €150 million aggregate nominal cap amount set under the terms of the 12th resolution of the Shareholders’ Meeting held on 16 May 2017
This resolution would overwrite resolution n°27 with the same purpose approved by the Shareholders’ Meeting held on 16 May 2017
COMBINED ORDINARY AND EXTRAORDINARY 29 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 POWERS TO ACCOMPLISH FORMALITIES (RESOLUTION 6) EB
Resolution 6 aims at fully authorizing the Board of Directors, his President, or any other person to comply ith any legal or administrative requirements required under applicable legislation following the adoption of the previous resolutions
COMBINED ORDINARY AND EXTRAORDINARY 30 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 STATUTORY AUDITORS’ REPORTS
AMSTERDAM STATUTORY AUDITORS’ REPORTS EB
2 reports as regards the Extraordinary Shareholders’ Meeting > On share capital increases reserved for designated beneficiaries with cancellation of preferential subscription rights > On the issuance of new shares or other securities granting rights to the share capital reserved for members of a company savings plan
COMBINED ORDINARY AND EXTRAORDINARY 32 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 REPORTS IN RELATION WITH THE EXTRAORDINARY EB SHAREHOLDERS’ MEETING (1/2)
Purpose On share capital > Delegation of authority for a 6-month period to decide to proceed to the issuance of shares increases reserved in the amount of €37,527,410 each, for a total of €75,054,820, reserved respectively for Eastern Airlines Industry Investment (Luxembourg) Company Limited and Delta Air Lines, for designated Inc. or a Delta group company wholly owned directly or indirectly by Delta Air Lines, Inc. > These two share capital increases will each result in the issue of 37,527,410 ordinary shares, beneficiaries for a nominal value of one (1) euro, coupled with an issue premium of €9, representing with cancellation a subscription price of €375,274,100 > Opinion on the fairness of the quantitative information, on the proposed cancellation of preferential of preferential subscription rights and on other information about this issuance subscription rights (Resolutions 1, 2, 3 et 4) Procedures performed by the Statutory Auditors > Verification of the content of the report of the Board of Directors related to this operation and of methods used to determine the issue price of shares
Conclusion > The purchase price of issuing and its amount result from negotiations between Air France- KLM, China Eastern Airlines and Delta > No opinion on the proposed cancellation of preferential subscription rights, definitive conditions of the share capital increases having not yet been finalized > Additional report, where appropriate, when these delegations are used
COMBINED ORDINARY AND EXTRAORDINARY 33 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 REPORTS IN RELATION WITH THE EXTRAORDINARY EB SHAREHOLDERS’ MEETING (2/2)
Purpose On the issuance > Delegation of authority to proceed with increases in the share capital for a of new shares 12-month period and limited to 2% of the Company’s share capital replacing or other securities delegation of authority granted by the shareholders’ meeting dated 16 May 2017, pursuant to its 27th resolution granting rights > Opinion on the fairness of the quantitative information, on the proposed to the share capital cancellation of preferential subscription rights and on other information
reserved for members Procedures performed by the Statutory Auditors of a company savings > Verification of the content of the Board of Directors’ report related plan to this operation and of methods used to determine the issue price of equity securities (Resolution no.5) Conclusion > Subject to subsequent review of the conditions of each equity issuance, no comments to make on the methods used to determine the issue price of equity securities > No opinion on the price and on the proposed cancellation of preferential subscription rights > Additional report, where appropriate, when this delegation is used
COMBINED ORDINARY AND EXTRAORDINARY 34 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 DIALOGUE WITH SHAREHOLDERS
MAURITIUS VOTE ON THE RESOLUTIONS
NAMIBIA ORDINARY BUSINESS (OB) FIRST RESOLUTION OB
Appointment of M. Bing TANG as member of the Board of Directors for four (4) years
COMBINED ORDINARY AND EXTRAORDINARY 38 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 SECOND RESOLUTION OB
Appointment of Delta Air Lines, Inc. as member of the Board of Directors for four (4) years
COMBINED ORDINARY AND EXTRAORDINARY 39 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 EXTRAORDINARY BUSINESS (EB) THIRD RESOLUTION OB
Delegation of authority granted to the Board of Directors, for the purpose of issuing, without shareholders’ preferential subscription rights, for the benefit of Eastern Airlines Industry Investment (Luxembourg) Company Limited, ordinary shares of the Company for a total nominal amount of 37,527,410 euros > This amount will be deducted from the €150 million aggregate nominal cap amount set under the terms of the 12th resolution of the Shareholders’ Meeting held on 16 May 2017 > Duration of the authorization: 6 months
COMBINED ORDINARY AND EXTRAORDINARY 41 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 FOURTH RESOLUTION OB
Delegation of authority to be granted to the Board of Directors, for the purpose of issuing, without shareholders’ preferential subscription rights, for the benefit of Delta Air Lines, Inc. or a 100% subsidiary of the Delta group, ordinary shares of the Company for a total nominal amount of 37,527,410 euros > This amount will be deducted from the €150 million aggregate nominal cap amount set under the terms of the 12th resolution of the Shareholders’ Meeting held on 16 May 2017 > Duration of the authorization: 6 months
COMBINED ORDINARY AND EXTRAORDINARY 42 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 FIFTH RESOLUTION OB
Delegation of authority granted to the Board of Directors for the purpose of carrying out capital increases reserved to members of a company or Group savings scheme without shareholders’ preferential subscription rights within a limit of 2% of the share capital > This amount will be deducted from the €150 million aggregate nominal cap amount set under the terms of the 12th resolution of the Shareholders’ Meeting held on 16 May 2017 > Duration of the authorization: 12 months > Terminates the previous delegation (Shareholders’ Meeting dated 16 May 2017) with the same purpose
COMBINED ORDINARY AND EXTRAORDINARY 43 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 SIXTH RESOLUTION OB
Powers to accomplish formalities
COMBINED ORDINARY AND EXTRAORDINARY 44 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 SEVENTH RESOLUTION OB
Appointment of Air France-KLM Finance SAS as nineteenth member of the Board of Directors for four (4) years
COMBINED ORDINARY AND EXTRAORDINARY 45 A I R F R A N C E - KLM SHAREHOLDERS’ MEETING 2017 COMBINED ORDINARY AND EXTRAORDINARY SHAREHOLDERS’ MEETING
2017