Air France Adapts to Crisis

13th May 2003

he Air France Board of Directors met on 13 May 2003, under the chairmanship of
Jean-Cyril Spinetta, to finalize the accounts for the financial year 2002- 03.

On this occasion, the Chairman made the following declaration: In this particularly difficult economic context, Air France, as in the aftermath of the 11 September 2001 attacks, has once again shown its ability to resist. This fourth quarter has indeed seen a crisis equivalent to that of September 2001. However, thanks to the good results obtained over the first nine months in a context disrupted by internal and external labour disputes, the Group posted operating income of 162 million euros for fiscal 2002-03, slightly higher than last year. After negative exceptionals partly due to the 59 million euro provision excluding taxes linked to the suspension of Concorde, the Group posted net income of 120 million euros for the twelve months to 31 March 2003, up for the sixth year running.

In addition to the delayed forecast economic upturn, the consequences of the SARS crisis in Asia is weighing heavily on our results of the first few months of the current financial year. The Group immediately took a series of measures both in terms of capacity and spending to deal with this crisis in the best possible conditions. Over the past few weeks, an upturn in the number of advance bookings can be noted for all networks, excluding Asian routes. If this continues, Air France aims to post a slightly positive operating income before aircraft disposals for the year. Given these annual results and the outlook for the coming year, and to show our confidence in the Group`s future, shareholders will be offered a dividend of 6 euro cents per share excluding tax credit.

Fourth quarter operations were marked by a difficult economic context, the war in Iraq and the SARS epidemic in Asia. Traffic rose 1.6% for a 4.3% increase in capacity. The load factor was down 2 points at 74.5%. The appreciation of the euro against other currencies had a significant impact on turnover.Unit revenue per available seat-km (RASK) was down 2.4% excluding currency effects and network mix effects. Unit revenue per revenue passenger-km (RPK) rose 0.3% including currency and network mix effects. The performance per network illustrates the improvement in the domestic network and the decline in the international medium-haul network. 

Cargo operations were satisfactory, with a rise in traffic of 4.1% for a 1.9% increase in capacity. The load factor improved by 1.5 points to 66.8%. Unit revenue per available tonne-km RTKO dropped by 2.4%. Excluding currency effects, it improved by 4.8%.


Following the new rule 2002-10 from the Committee Governing Accounting Procedures concerning the amortization and depreciation of assets, Air France applied on March 31 2003 the approach by component for the recognition of maintenance operations on airframe and engines (IAS 16 -SIC 23). The applications of these new accounting standards has had a limited positive impact on quarterly and yearly results: 20 million euro for operating income and 13 million for net income.

Consolidated turnover stood at 3 billion euros, down 1.3%. Before aircraft disposals and after provisioning 59 million euros for Concorde`s withdrawal, operating income showed a loss of 133 million euros (158 million euros using comparable accounting methods) for a balanced fourth quarter result for fiscal 2001-02 taking into account 53 million euros in aid from the French State in the aftermath of 9/11.
Following aircraft disposals, operating income posted a loss of 123 million euros (143 million euros using comparable accounting methods).

After a deferred tax credit of 71 million euros, net loss stood at 98 million euros (111 million euros using comparable accounting methods).

For this fiscal year, Air France held up well with traffic expressed as Revenue Passenger km (RPK) up by 2.9% for a 2.7% increase in capacity expressed as Available Seat km (ASK). Load factor stood at 76.2% (up 0.2 points) thanks to long-haul traffic which remained buoyant (up 4.4%) with a high 80.4% load factor. The Group carried 42.9 million passengers, down 1.1%. With a 17.6% market share compared with 16.9% last year, Air France now ranks first among European airlines (AEA figures).
Unit revenue per ASK increased by 1% excluding currency effects and excluding network mix effects. Taking into account these effects, yield per RPK rose by 0.9%.



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