Air France-KLM Group CONSOLIDATED FINANCIAL STATEMENTS Prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Commission for use in the European Union January 1, 2019 – December 31, 2019 - 1 - 19/02/2020 Air France-KLM Group Table of contents CONSOLIDATED INCOME STATEMENT................................................................................................. - 4 - CONSOLIDATED STATEMENT OF RECOGNIZED INCOME AND EXPENSES ............................... - 5 - CONSOLIDATED BALANCE SHEET.......................................................................................................... - 6 - CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY.............................. - 8 - CONSOLIDATED STATEMENT OF CASH FLOWS ................................................................................ - 9 - 1. BUSINESS DESCRIPTION ....................................................................................................................... - 12 - 2. RESTATEMENT OF 2018 FINANCIAL STATEMENTS ..................................................................... - 12 - 3. SIGNIFICANT EVENTS ........................................................................................................................... - 15 - 3.1. Events occurring during the period ................................................................................................... - 15 - 3.2. Subsequent events ............................................................................................................................... - 16 - 4. ACCOUNTING POLICIES ....................................................................................................................... - 16 - 4.1. Accounting principles.......................................................................................................................... - 16 - 4.2. Use of estimates .................................................................................................................................... - 18 - 4.3. Consolidation principles ..................................................................................................................... - 18 - 4.4. Translation of foreign companies’ financial statements and transactions in foreign currencies . - 19 - 4.5. Business combinations ........................................................................................................................ - 20 - 4.6. Sales ...................................................................................................................................................... - 21 - 4.7. Loyalty programs ................................................................................................................................ - 22 - 4.8. Distinction between income from current operations and income from operating activities ....... - 22 - 4.9. Aggregates used within the framework of financial communication .............................................. - 23 - 4.10. Earnings per share ............................................................................................................................ - 23 - 4.11. Financial instruments........................................................................................................................ - 23 - 4.12. Goodwill ............................................................................................................................................. - 25 - 4.13. Intangible assets ................................................................................................................................. - 26 - 4.14. Property, plant and equipment ........................................................................................................ - 26 - 4.15. Lease contracts .................................................................................................................................. - 27 - 4.16. Impairment test ................................................................................................................................. - 30 - 4.17. Inventories.......................................................................................................................................... - 30 - 4.18. Treasury shares ................................................................................................................................. - 30 - 4.19. Employee benefits .............................................................................................................................. - 30 - 4.20. Return obligation liability and provision on leased aircraft .......................................................... - 31 - 4.21. Other provisions ................................................................................................................................ - 31 - 4.22. Emission Trading Scheme ................................................................................................................ - 31 - 4.23. Capital increase costs ........................................................................................................................ - 32 - 4.24. Current and deferred taxes .............................................................................................................. - 32 - 4.25. Non-current assets held for sale and discontinued operations ...................................................... - 32 - 5. CHANGE IN THE CONSOLIDATION SCOPE ..................................................................................... - 33 - 6. INFORMATION BY ACTIVITY AND GEOGRAPHICAL AREA ...................................................... - 33 - 6.1. Information by business segment ....................................................................................................... - 35 - 6.2. Information by geographical area ..................................................................................................... - 37 - 7. EXTERNAL EXPENSES ........................................................................................................................... - 38 - 8. SALARIES AND NUMBER OF EMPLOYEES ...................................................................................... - 39 - 9. AMORTIZATION, DEPRECIATION AND PROVISIONS .................................................................. - 39 - 10. OTHER INCOME AND EXPENSES ..................................................................................................... - 40 - 11. OTHER NON-CURRENT INCOME AND EXPENSES....................................................................... - 40 - 12. NET COST OF FINANCIAL DEBT AND OTHER FINANCIAL INCOME AND EXPENSES ..... - 42 - 13. INCOME TAXES ..................................................................................................................................... - 43 - 13.1. Income tax charge ............................................................................................................................. - 43 - 13.2. Deferred tax recorded in equity (equity holders of Air France-KLM) ......................................... - 44 - 13.3. Effective tax rate ................................................................................................................................ - 44 - 13.4. Variation in deferred tax recorded during the period ................................................................... - 45 - 13.5. Unrecognized deferred tax assets ..................................................................................................... - 46 - 14. EARNINGS PER SHARE ........................................................................................................................ - 47 - 14.1 Income for the period – Equity holders of Air France-KLM per share ........................................ - 47 - 14.2 Non-dilutive instruments ................................................................................................................... - 48 - 14.3 Instruments issued after the closing date ......................................................................................... - 48 - 15. GOODWILL ............................................................................................................................................. - 49 - 15.1 Detail of consolidated goodwill .......................................................................................................... - 49 - 15.2 Movement in net book value of goodwill .......................................................................................... - 49 - 16. INTANGIBLE ASSETS ........................................................................................................................... - 50 - - 2 - 19/02/2020 Air France-KLM Group 17. IMPAIRMENT.......................................................................................................................................... - 51 - 18. TANGIBLE ASSETS ................................................................................................................................ - 52 - 19. CAPITAL EXPENDITURES .................................................................................................................. - 53 - 20. RIGHT-OF-USE ASSETS ........................................................................................................................ - 53 - 21. EQUITY AFFILIATES ...........................................................................................................................