2007-08 Reference Document 2007-08

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2007-08 Reference Document 2007-08 Reference Document 2007-08 2007-08 Reference Document 13H00 07H00 22H00 paris new york shanghai www.airfranceklm-finance.com This reference document includes the annual fi nancial report. Key fi gures 2 1. Corporate governance 5 5. Financial report 91 The Board of Directors 6 Investments and fi nancing 92 The Group Executive Committee 19 Property, plant and equipment 94 Stock market and shareholder structure 20 Comments on the fi nancial statements 97 Consolidated fi nancial statements 100 Notes to the consolidated fi nancial statements 108 2. Activity 23 Statutory Auditors’ report on the consolidated Highlights of the 2007-08 fi nancial year 24 fi nancial statements 192 Market and environment 25 Parent company fi nancial statements 193 Strategy 27 Notes 195 Passenger activity 29 Statutory Auditors’ report on the fi nancial statements 205 Cargo activity 35 Document produced by the Air France-KLM fi nancial communication department - 45, rue de Paris - 95747 Roissy-CDG Statutory Auditors’ report on regulated Maintenance activity 39 agreements and commitments 206 Editorial consultant: Doussot Conseil (Patrick Doussot) Other activities 42 Fleet 44 Highlights of the beginning of the 2008-09 Other information 209 fi nancial year 51 6. History 210 General Information 212 Information relating to the share capital 213 Social and environmental data 53 3. Information on trading in the stock 218 Social data 54 Information on the agreements concluded Environmental data 58 in connection with the business combination Note on the methodology for the reporting between Air France and KLM 220 of performance indicators 62 Legislative and regulatory environment One of the Statutory Auditors’ report for the air transport industry 225 on the review of a selection of environmental Glossary 228 This document was printed in France by an Imprim’Vert certifi ed printer on recyclable, and social indicators of Air France-KLM Group biodegradable ECF (Elementary Chlorine Free) paper from environmentally, economically and for the year ended December 31, 2007 64 Information and control 232 socially sustainable forests at ISO 14001/EMAS and PEFC/FSC certifi ed Condat plants. Environmental indicators Fees of the Statutory Auditors 234 for the Air France-KLM Group 66 Table of concordance 235 Social indicators for the Air France-KLM Group 69 4. Risks and risk management 75 Risk factors 76 Market risks and their management 78 Report of the Chairman of the Board of Directors on internal control 83 Design and production: Statutory Auditors’ report 90 Cover: Sequoia. Photo credits: Didier Rebeis/Interlinks Image, DR, Joe Sohm/Getty Images, Louis-Laurent Grandadam/Getty Images. 2007-08 Reference Document ı Air France-KLM This Reference Document is an unoffi cial translation of the French Document de Référence, which was fi led with the French Autorité des Marchés Financiers on June 13, 2008, pursuant to article 212-13 of the AMF General Regulations. This unoffi cial translation has been prepared by Air France-KLM for information purposes only and has not been reviewed or registered with the AMF. 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. 2007-08 Reference Document ı Air France-KLM 1 Key fi gures Revenues Income from current operations In € billion In € billion Revenues increased by 4.5%, after a negative currency effect of Income from current operations reached the record level of 2.3%. €1.41 billion (+13.3%), increasing by 50% in the space of two years. Breakdown of revenues by activity Breakdown of operating income by activity 2007-08 in € billion 2007-08 in € million 1,291 63 39 12 M Passenger M Maintenance M Cargo M Other 2 2007-08 Reference Document ı Air France-KLM Net income, Group share Dividend In € million In € 0.58 0.48 0.30 2005-2006 2006-2007 2007-2008 * Excluding exceptional items (provision linked to the cargo investigation The Group has had a sustained dividend policy since it was fi rst listed and gain on WAM) , net income, Group share would have increased for trading in 1999 . by 10.8%. * Submitted for approval to the General Shareholders’ Meeting of July 10, 2008. Financial structure Investments In € billion In € billion The Group’s balance sheet structure continued to improve, the gearing The Group is pursing its ambitious fl eet investment plan while ratio having been halved in two years . generating free cash fl ow. For the 2007-08 fi nancial year, €2.34 billion was invested in fl ight equipment, amounting to 80% of total investment and free cash fl ow stood at €820 million. 2007-08 Reference Document ı Air France-KLM 3 4 2007-08 Reference Document ı Air France-KLM Corporate governance 1. The Board of Directors 6 The Group Executive Committee 19 Stock market and shareholder structure 20 2007-08 Reference Document ı Air France-KLM 5 Corporate governance 1. The Board of Directors The Board of Directors The bylaws stipulate a maximum of 18 Board directors, with a six- Leo M. van Wijk year term of offi ce. Each director (with the exception of the directors Vice-Chairman of the Board of Directors representing the French State) must own at least ten shares in the company. First appointed: June 24, 2004 Expiration date of current term of offi ce: Shareholders’ Meeting called to approve the fi nancial statements for the year ending Composition of the Board of Directors March 31, 2010. at March 31, 2008 Number of shares held in the company’s stock: 3,565 shares Other directorships At March 31, 2008, the Board of Directors comprised 15 members: Non-French companies ♦ 10 directors appointed by the Shareholders’ Meeting; ♦ Member of the Supervisory Board of Martinair (Netherlands); ♦ 2 representatives of the employee shareholders appointed by the ♦ Member of the Supervisory Board of Aegon N.V. (Netherlands); Shareholders’ Meeting; ♦ Member of the Supervisory Board of Randstad Holding N.V. ♦ 3 representatives of the French State appointed by ministerial order. (Netherlands). Directorships held in the last fi ve years and having expired Directors appointed by the General Shareholders’ Non-French companies Meeting ♦ Member of the Supervisory Board of Kennemer Gasthuis (Netherlands) until December 2007 ; ♦ Jean-Cyril Spinetta Member of the Advisory Board of ABN AMRO Holding (Netherlands) until December 2007 ; Chairman and Chief Executive Offi cer of Air France-KLM ♦ President of the KLM Management Board (Netherlands) until First appointed: September 23, 1997 July 2007 ; ♦ Director of Northwest Airlines (USA) until May 2007 . Expiration date of current term of offi ce: Shareholders’ Meeting called to approve the fi nancial statements for the year ending Born October 18, 1946, Mr van Wijk, a Dutch national, March 31, 2010. holds a Masters degree in Economic Sciences. Number of shares held in the company’s stock: 65,349 shares Patricia Barbizet Other directorships Chief Executive Offi cer and Director of Artémis French companies First appointed: January 3, 2003 ♦ Chairman and Chief Executive Offi cer of Air France; ♦ Director of Saint-Gobain; Expiration date of current term of offi ce: Shareholders’ Meeting ♦ Director of Alcatel-Lucent; called to approve the fi nancial statements for the year ending ♦ Permanent representative of Air France on the Board of Directors March 31, 2010. of Le Monde Entreprises. Number of shares held in the company’s stock: 2,270 shares Others Other directorships ♦ Member of the IATA (International Air Transport Association) Board of Governors (Canada); French companies ♦ ♦ Member of the Board of Paris Europlace. Vice-Chairman of the Board of Directors of Pinault-Printemps- Redoute; Directorships held in the last fi ve years and having expired ♦ Member of the Supervisory Board of Yves Saint-Laurent; ♦ Non-French companies Member of the Supervisory Board and Chief Executive Offi cer ♦ Director of Unilever (United Kingdom) until July 2007 ; of Financière Pinault; ♦ ♦ Director of Alitalia (Italy) until January 2007 . Director of FNAC; ♦ Director of Bouygues; Others ♦ Director of TF1; ♦ Chairman of the IATA Board of Governors (International ♦ Director of the Société nouvelle du théâtre Marigny; Air Transport Association) (Canada) until June 2005. ♦ Artémis Permanent representative on the Boards of Directors Born October 4, 1943, Mr Spinetta is a graduate of the Institut of Sebdo Le Point and L’Agefi ; des Sciences Politiques de Paris and of the École Nationale ♦ Member of the Management Board of Château Latour; ♦ d’Administration. Chairman of the Board of Directors of Piasa. 6 2007-08 Reference Document ı Air France-KLM Corporate governance The Board of Directors 1. Non-French companies Others ♦ Chief Executive Offi cer and D irector of Palazzo Grassi (Italy); ♦ Chairman of ENSAM (École Nationale Supérieure d’Arts et Métiers); ♦ Member of the Supervisory Board of Gucci (Netherlands); ♦ Director of the French National Research Agency; ♦ Chairman and D irector of Christie’s International P lc (United Kingdom); ♦ Chairman of the National Association for Technical Research; ♦ Director of Tawa (United Kingdom) since July 2007 . ♦ Member of the French Foundation for Research into Epilepsy; ♦ Director of the École Nationale Supérieure des Mines de Paris; Directorships held in the last fi ve years and having expired ♦ Vice-Chairman of EFPIA (European Federation of Pharmaceutical French companies Industries and Associations) (Belgium). ♦ Chairman and Chief Executive Offi cer of Piasa until April 2007; Directorships held in the last fi ve years and having expired ♦ Permanent representative of Artémis on the Bouygues Board of Directors until December 2005; French companies ♦ Chairman of the Société Nouvelle du Théâtre Marigny until ♦ Director of Société Financière des Laboratoires de Cosmétologie June 2005 ; Yves Rocher until June 2007; ♦ Chairman and member of the Supervisory Board ♦ Chairman and Chief Executive Offi cer of Sanofi -Aventis until of Yves Saint-Laurent Parfums until February 2004.
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