September 11 Events Cause Large Decline In Load Factor

Overall traffic:
Traffic figures for September were severely disrupted by the tragic events in the USA on September 11. Whereas the first 10 days of September showed traffic and load factor performance in line with previous year, as of September 11 traffic dropped significantly. Between September 11 and 15 when US airspace was closed, capacity declined by 24% compared to the same period last year; traffic deteriorated by 33%. The decline was most visible in the route areas North Atlantic and Middle East / South Asia (“MESA”). Approximately 100 flights to those areas were cancelled.

During the second half of September, as KLM resumed its regular flight schedule, traffic dropped by 7% compared to the same period last year and load factor fell by 6.7 percentage points to 76.3%.

For the whole month of September, traffic decreased by 8% while capacity decreased by 2%. Consequently, overall load factor decreased by 4.9 percentage points from 81.6% in September 2000 to 76.7% in September this year. Load factor decreased mainly in the route areas North Atlantic, MESA, Asia/Pacific, and Europe.

Passenger traffic:
Passenger traffic and capacity mirrored the decline of KLM`s overall traffic and capacity (8% and 2% respectively). Consequently, load factor decreased by 5.2 percentage points to 79.6%. Load factor, up to and including September 10, amounted to 85.1%, fractionally higher than last year. Between September 11 and 15 load factor dropped to 73.1%, climbing back up to 77.3% during the last two weeks of September, partly as a result of dealing with the backlog in demand for air travel that was built up during the period immediately after the attacks. Load factors declined mainly in the route areas North Atlantic, MESA and Europe, the latter due to a large decline in feeder traffic. Although business class load factor was already under pressure due to the economic slow-down, the events in the US significantly worsened this trend. As a result, business class load factor over September 2001 decreased by 12.2 percentage points. This comprises a 35% fall in absolute numbers relative to last year`s business class traffic towards the end of September. The load factor of KLM`s economy class declined by 4.3 percentage points.

Cargo traffic:


For the whole month, cargo traffic decreased by 8%, whereas capacity remained the same. Overall cargo load factor decreased by 6.2 percentage points to 68.0%. Already before September 11, due to the economic downturn, cargo load factor had declined to 67.4%, down 5.2 percentage points from last year. By September 15, load factor dropped further, mainly due to the cancellation of flights in the North Atlantic and MESA route areas. Load factor rebounded very quickly to 69.3% during the last two weeks of September. This was due to a positive traffic development in all areas and especially Asia Pacific.

Financial impact of the attacks:
As previously announced, the events in the US will have a considerable impact on the financial results of KLM during this bookyear. The additional earnings impact in the month of September of lost revenues and damages resulting from the attacks is currently estimated at approximately 50 million euro.

KLM currently expects a net cash outflow during its third quarter of approximately euro 400 mln, of which 300 mln from operating and investing activities. KLM, however, has a substantial cash (and cash equivalent) position of more than euro 1.4 billion. Approximately euro 1.1 billion is directly available in cash and marketable securities and at least euro 300 mln is available as AAA bonds and long term deposits, classified under financial fixed assets. Furthermore, KLM has substantial unencumbered tangible fixed assets, mainly relating to aircraft and real estate.