At the meeting, the Chairman made the following comments on the year`s operations: “The air transport industry has just experienced the worst crisis it has ever known. The economic slowdown was compounded by the dramatic effects of the September 11th attacks. We have, however, proved that the strategy we have adopted over the last few years has been the right one. It has enabled us to weather the crisis thanks to the responsiveness and backing of our entire staff. While almost every carrier is announcing losses, we have shown a profit this financial year. Excluding exceptionals, it has been one of the best fourth quarters we have ever had. The current financial year is marked by continuing uncertainties with regard to the economic rebound and fuel prices. We also have to cope with additional costs for insurance, security and airport and navigation fees. Our aim this year is nevertheless to post an operating income which is higher than that of financial 2001-02. As proof of our confidence in the Group`s future, we shall propose a dividend of 10 euro cents to the Annual General Meeting.”
Good Performance in 4th Quarter (January - March 2002) with Net Income at Breakeven -
The rebound in traffic during this quarter both in terms of passenger and cargo operations resulted in unit revenue holding up well and a 1.5% increase in turnover to 3.04 billion euros.
During this quarter, 28.6 million euros were recorded in “other income and charges” for the compensation paid by the French Government covering losses subsequent to the closure of US airspace. In addition, 24 million euros were deducted from security charges for the partial refund of the costs of implementing new security measures following the attacks.
Operating expenses increased by 2.6% following a 20% drop in fuel costs and a 26-million euro rise in insurance premiums. EBITDAR grew 31.6% to 400 million euros.
Depreciation showed a slight rise of 244 million euros. Net depreciation expenses amounted to 27 million euros, as against a net writeback of 81 million last year due to legal decisions in favour of Air France. After factoring in aircraft disposals, operating income came to 22 million euros compared with 48 million in the same year-earlier period.
Financial income improved due to currency gains. Overall, Group net income broke even, compared with a loss of 40 million euros at 31 March 2001.
Financial 2001-02: Air France Weathers the Crisis -
During the full financial year, capacity in available seat-km (ASK) increased by 3.5% while traffic measured in revenue passenger-km (RPK) gained 1.6%. As a result, the load factor dropped 1.5 points to 76.6%. Air France continued to gain market share among AEA (Association of European Airlines) member airlines, up from 15.4% to 16.9% this year. Partly as a result of this, Air France now ranks second in Europe in terms of traffic.
Despite the plunging traffic and load factor in the wake of September 11th, unit revenue per available seat-km (RASK) withstood the crisis with a limited decline of 2.5%. Adjusted for neutral currency and mixed network effects of 0.2%, it declined 2.3%. Yield per revenue passenger-km (RRPK) dropped 0.6% or 0.4% after factoring in the currency and mixed network effects, thus proving that this good commercial performance did not detract from profitability.
Cargo traffic suffered from the economic slowdown early in the year as well as from the consequences of the September 11th attacks. Capacity in available tonne-km (ATK) decreased by 2.2% and traffic in revenue tonne-km (RTK) by 5.0%. Cargo unit revenues (RATK) resisted well, however, showing an increase of 0.5%.
The regional sector, made up of subsidiaries Régional, Brit Air and CityJet, now all Air France franchisees, posted growth compared to the year-earlier period. Together, these airlines carried over 4.7 million passengers, and contributed 727.6 million euros to turnover. Despite the impact of the crisis on regional traffic, Brit Air and CityJet showed profits and Régional reduced its operating losses of 61.9 million euros to 45.6 million euros.
Results: The Group posts a net profit of 153 million euros - At 12.53 billion euros, turnover increased by 2%. Passenger activity accounts for 82.8% of turnover and cargo for 11.6%. Operating costs rose 12.37 billion euros, an increase of 3.7% or 1.9% on a like-for-like basis. The significant reductions posted concerned fuel costs (down 11.2%), aircraft leasing (down 13.8%) sales and distribution costs (down 5.5%). On the other hand, insurance costs more than doubled, to 86 million euros. Employee expenses increased 5.2% on a like-for-like basis (up 8.8% on the current basis) for a staff increase of 5.4% like-for-like and 8.4% on the current basis. Economic measures implemented in the second half, in addition to the Performance 2003 cost-cutting programme, resulted in a 0.4% drop in unit costs per EASK (equivalent available seat-km). On a like-for-like basis and after factoring in the currency effect, the drop in oil prices and jump in insurance premiums, the increase was limited to 1%. EBITDAR increased by 2.5%, i.e. slightly more than turnover, to 1.65 billion euros. Operating income stood at 235 million euros, and 157 million before aircraft disposals (78 million euros against 88 million the previous year).
The breakdown in operating income (235 million euros) per sector is as follows: Passenger activity generated operating income of 128 million euros, (355 million at 31 March 2001);
Cargo activity posted operating income of 5 million euros (34 million euros in the year-earlier period);
Maintenance generated operating income of 26 million euros (19 million euros at 31 March 2001);
The balance, i.e. 76 million euros, mainly covers proceeds from aircraft sales and from other Group activities, (35 million euros at 31 March 2001). Financial income improved, down from a loss of 137 million euros at 31 March 2001 to a loss of 112 million euros. Income from exceptionals fell to 24 million euros (sale of shares in Equant), down from 96 million a year earlier. After factoring in 31 million euros in income from equity affiliates, and 16 million euros for amortization of goodwill, Group net profit stood at 153 million euros, as against 421 million at 31 March 2001. Net earnings per share rose to 0.69 euros compared to 1.91 euros at 31 March 2001, for a total of 219,780,887 shares.
Financial Situation - Reducing investments and reorganizing financing after the September 11th attacks enabled the Air France Group to safeguard its cash position and gearing. Investments amounted to 1.47 billion euros. These were financed by the operating cash flow of 1.02 billion euros and by aircraft disposals of 454 million euros. Gearing remained at 0.73 (0.74 at 31 March 2001) for equity of nearly 4 billion euros and a stable net debt of 2.9 billion euros AND Outlook for the current financial year - For the current financial year, Air France has planned on a 4.2% increase in capacity, with unit revenues at the same level as in the financial year before last (2000-01) and oil prices averaging 23 dollars per barrel after hedging. After taking all these items into account, the Air France Group aims to generate operating income, excluding aircraft disposals, higher than that of the previous year.