Key Factors in Q1:
* A deterioration in the business climate, aggravated by the conflict in Iraq, the SARS (Severe Acute Respiratory Syndrome) epidemic, and industrial action by air traffic controllers in France
* Higher fuel prices
* A weakening of the dollar and the yen, with a negative impact on turnover but a positive impact on operating costs
* The signing of a long-term agreement with pilots
* The opening of Terminal 2E
Consolidated turnover for the three months to 30 June 2003 totalled 3.01 billion euros, down 306 million euros (down 9.2%), of which almost 160 million euros can be ascribed to negative currency effects. The consolidated figure breaks down into 2.49 billion euros for passenger operations (down 9.5%), 343 million euros for cargo operations (down 8.8%), 134 million euros for maintenance operations (down 10.1%) and 38 million euros for other operations (up 11.8%).
The business climate further deteriorated during the quarter. Operations were also severely affected by the conflict in Iraq, the SARS epidemic and a series of strikes by air traffic controllers. Although the first two months saw substantial falls in traffic, there were definite signs of a recovery from June onwards.
All in all, traffic fell by 5.7% during the first quarter, while capacity was reduced by 3.0%. The seat load factor lost 2.1 points reaching 74.4% (-3.8 points in April, -2.2 points in May and -0.7 points in June).
Total turnover for passenger operations came in at 2.49 billion euros, a drop of 9.5% and of 5.3% excluding currency effects. Scheduled passenger operations turnover totalled 2.3 billion euros (down 9.5%). The loss of revenues as a result of the SARS epidemic is estimated at around 100 million euros, while revenue losses due to strike action are estimated at around 67 million euros.
Revenue per Available Seat-km (RASK) was down only by 2.2% after factoring out negative currency (4.3%) and network mix (0.8%) effects. Yield (RRPK) rose 0.6% discounting exchange rate and network mix effects.
Over the quarter as a whole, cargo operations were down 5.7% compared with the same period last year, in line with the 6.3% reduction in capacity. This was partly a result of the reduction in capacity on passenger flights. The load factor rose 0.4 points to 65.3%. Cargo operations were also hit by the political and health situation, although to a lesser degree than passenger operations.
Total turnover from cargo operations amounted to 343 million euros, down 8.8% on last year. Some 7.6 points of the fall can be ascribed to the impact of negative currency effects. Cargo traffic turnover amounted to 306 million euros, a drop of 8.1%.
For a 9.2% decrease in turnover, operating costs fell 5.1% to 3.02 billion euros thanks notably to effective cost control and capacity reduction measures decided after the outbreak of war in Iraq.
The main changes were as follows:
á Fuel costs were down 6.2% to 331 million euros due to the combined effects of a 19.1% fall in the dollar against the euro, a 5.4% drop in volumes, and a 20.9% increase in the oil price after factoring in hedging measures.
á The 6.8% drop in chartering expenses (96 million euros) is partly due to the development of synergies within the Group, reducing the need for external chartering, and partly to the lower value of the dollar.
á Aircraft maintenance costs (95 million euros) fell by 28%, partly as a result of the lower dollar, a decrease in operations, and the discontinuation of Concorde services.
á Sales, marketing and distribution costs (256 million euros) were down 16.1% as a result of reduced turnover, lower travel agent commissions and reduced advertising spending.
á Personnel costs rose 3.6% to 1.02 billion euros for a workforce increase of 1.7% (1.2% like-for-like).
Units costs per EASK (Equivalent Available Seat-km) fell by 0.8% due to a combination of a favourable currency effect (5.4%) and the unfavourable impact of higher jetfuel prices (2.4%). This situation mainly results from the sharp reduction in capacity compared with the initially planned increase. Industrial action by air traffic controllers also had a 0.6 percentage point impact on the change in unit costs.
EBITDAR came in at 406 million euros compared with 585 million euros last year. The EBITDAR margin stood at 13.5%.
Air France posted an operating loss of 9 million euros after 4 million euros of aircraft disposals, against an operating profit of 145 million euros as of 30 June 2002 following aircraft disposals of 13 million euros. The impact of industrial action by air traffic controllers during the quarter can been estimated at 55 million euros.
The financial result was a positive 10 million euros as against a charge of 4 million euros in the same quarter last year. The difference largely resulted from changes in financial provisions: from a provision of 3 million euros to a writeback of 11 million euros mainly in connection with Air France shares owned by the Company. Net interest charges were virtually unchanged at 29 million euros, (compared with 31 million euros as at 30 June 2003). Foreign exchange gains were also stable at 28 million euros compared with 30 million euros as at 30 June 2003.
Group net income amounted to 4 million euros against 146 million euros in the 1st quarter 2002-03, after application of IAS-16 SIC-23, and 159 million euros published.