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Air France-Klm/FI · 6-K · For 11/24/06

Filed On 11/24/06 10:18am ET   ·   SEC File 1-32139   ·   Accession Number 1193125-6-241399

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  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

11/24/06  Air France-Klm/FI                 6-K        11/24/06    1:125                                    RR Donnelley/FA

Report of a Foreign Private Issuer   ·   Form 6-K
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  Form 6-K  

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

Form 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

For the month of November, 2006

 


 

AIR FRANCE–KLM

(translation of registrant’s name into English)

 

45, rue de Paris, 95747 Roissy-CDG Cedex. France

(Address of principal executive offices)

 


 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:
Form 20-F  x    Form 40-F  
¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):    ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):    ¨

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.    Yes  ¨    No  x

 



Picture -- LOGO

23rd November 2006

FINANCIAL YEAR 2006-07

AN EXCELLENT PERFORMANCE IN THE FIRST HALF

Ø   Operating income up 30.5% to 979 million Euros

Ø   Adjusted operating margin1 of 9.1%, up 1.2 points

Ø   Free cash flow of 0.5 billion Euros

VERY GOOD RESULTS IN Q2

Ø   Operating income up 7.8% to 568 million Euros

Ø   Adjusted operating margin1 of over 10%

OBJECTIVE FOR FULL YEAR 2006-07 MAINTAINED

 

 

The board of Directors of Air France-KLM, at a meeting on 22nd November 2006 chaired by Jean-Cyril Spinetta, examined the accounts for the First Half of Financial Year 2006-07.

Jean-Cyril Spinetta made the following comment on the results: “Thanks to the merger Air France-KLM is a market leader and benefits from a unique competitive position, which is contributing to the continued improvement in our results. During the First Half, we have further improved our profitability while continuing to strengthen our financial position. Based on current positive trends, I am confident that we will achieve our target for the full year of a significant rise in operating income relative to last year.”

Consolidated figures

 

Financial year 2006-07

(in millions)

 

   Three months
to 30th September

 

  Six months
to 30th September

 

  

 

2006  

 

   2005    Change     2006      2005    Change

Turnover

 

   6,131    5,636    +8.8%   11,933    10,822    +10.3%

Operating income

 

   568    527    +7.8%   979    750    +30.5%

Pre- tax income of fully integrated companies

 

   520    1,014(1)    ns   830    1,163(1)    ns

Net profit, Group share

 

   374    717(2)    ns   618    829(2)    ns

Net profit, Group share excl. Amadeus capital gain

 

   374    298    +25.5%   618    410    +50.7%

Net earnings per share (in )

 

   1.41    2.73    ns   2.33    3.16    ns

Net diluted earnings per share (in )

 

   1.30    2.52    ns   2.16    2.97    ns

(1) Includes gross capital gain in respect of Amadeus of 504 million Euros

(2) Includes net capital gain in respect of Amadeus of 419 million Euros

 

 

 

 

 

 

 

1 Operating income adjusted for the portion of operating leases corresponding to financial charges (34%).

 

 

 

Internet site: www.airfranceklm-finance.com

Investor contact: Dominique Barbarin – +33 (0)1 41 56 88 60 – dobarbarin@airfrance.fr

Analyst contact: Fabrice Andriveau – +33 (0)1 41 56 72 59 – faandriveau@airfrance.fr

 

1/12


Second quarter to 30th September 2006: operating income up 7.8% to 568 million euros, with an adjusted operating margin1 of 10.1%

Passenger transport for Air France-KLM remained extremely dynamic during the second quarter, in line with the trend since the beginning of the year. The Cargo activity developed in an increasingly competitive environment which resulted in pressure on unit revenues.

Group turnover rose 8.8% to 6.13 billion Euros, for production measured in equivalent available seat kilometres (EASK) up by 4.7%. Unit revenue per EASK was up 3.6% and by 4.5% excluding the currency impact. Operating costs rose by 8.9% to 5.56 billion Euros. Excluding fuel, the rise would have been 4.6%. Unit costs per EASK were up 3.9% but declined 1.1% on a constant currency and fuel price basis.

The main changes in operating costs were as follows:

 

Ø

A 29% rise in the fuel charge to 1.17 billion Euros versus 908 million Euros for the three months to 30th September 2005, reflecting a rise in volumes of 3%, a rise in jet fuel prices after hedging of 30%, and a positive currency impact of 4%.

Ø

Commercial and distribution costs down 6.9% to 299 million Euros.

Ø

A 6.7% rise in employee costs to 1.64 billion Euros, mainly due to a 10.7% increase in social security costs linked to the contribution of Air France to the general unemployment insurance scheme. Payroll costs were up just 2.1%.

Operating income for the quarter rose 7.8% to 568 million Euros, from 527 million Euros at 30th September 2005. The adjusted operating margin1 stood at 10.1% versus 10.3% a year earlier.

Income from operating activities stood at 566 million Euros versus 1.06 billion Euros at 30th September 2005; the latter included the 504 million Euro capital gain generated by the disposal of Amadeus shares.

Pre-tax income of fully integrated companies amounted to 520 million Euros versus 1.01 billion Euros at 30th September 2005. The tax charge was 151 million Euros (240 million Euros at 30th September 2005). The contribution from associates was 15 million Euros (versus a negative contribution of 47 million Euros at 30th September 2005, which was negatively impacted by an asset impairment test in respect of Martinair). Net income, Group share, amounted to 374 million Euros, compared with 717 million Euros at 30th September 2005. Excluding the net capital gain on the Amadeus operation, net income rose by 25.5%.

Information by business

Passenger

For the three months to 30th September 2006, both traffic and capacity rose by 5.2%, giving a stable load factor at the very high level of 84.2%. The group carried a total of 19.6 million passengers, a rise of 4.9%.

Total passenger turnover was up 8.7% to 4.87 billion Euros. Operating income amounted to 505 million Euros, a rise of 18.8%.

 

 

 

 

 

 

 

1 Operating income adjusted for the portion of operating leases corresponding to financial charges (34%).

 

2/12


     Three months to 30th September
         2006    

 

       2005    

 

       Change      

 

Total passenger business turnover (in m)

 

   4,873    4,483    + 8.7%

Turnover from regular passenger business (in m)

 

   4,625    4,229    + 9.3%

Unit revenue per RPK (in cts)

 

   8.63    8.30    +4.0%

Unit revenue per ASK (in cts)

 

   7.26    6.98    +4.0%

Unit cost per ASK (in cts)

 

   6.40    6.21    +3.1%

Operating income (in m)

 

   505    425    +18.8%

Yield (RRPK) and unit revenue per available seat kilometer (RASK) both rose 4.7% on a constant currency basis. Unit costs per available seat kilometer were down 1.1% on a constant currency and fuel price basis.

Cargo

In an environment which remains highly competitive, Cargo traffic rose by 3.2%, on capacity up by 2.2%. The load factor remained at a modest level of 63.5%. The rise in unit revenue slowed during the quarter under the impact of competition, notably in the Asian region. In addition, high fuel prices are weighing on this business, which operates, on average, an older fleet.

Turnover amounted to 724 million Euros, up 3.7%, while operating income was a negative 6 million Euros compared with a profit of 34 million Euros at 30th September 2005.

 

     Three months to 30th September
         2006    

 

       2005    

 

       Change      

 

Total cargo business turnover (in m)

 

   724    698    + 3.7%

Turnover from transportation of cargo (in m)

 

   669    645    +3.7%

Unit revenues per RTK (in cts)

 

   24.76    24.64    +0.5%

Unit revenues per ATK (in cts)

 

   15.73    15.50    +1.5%

Unit costs in ATK (in cts)

 

   15.75    14.55    +8.2%

Operating income (in m)

 

   (6)    34    ns

On a constant currency basis, unit revenue per revenue tonne kilometre (RRTK) was up 2.5%, and unit revenue per available tonne kilometre (RATK) rose by 3.6%. Unit costs rose by 0.8% on a constant currency and fuel price basis.

Maintenance

Third-party turnover at the Maintenance business stood at 249 million Euros versus 198 million Euros a year earlier. Operating income was 11 million Euros against 26 million Euros at 30th September 2005. It was strongly ahead during the First Quarter of this Financial Year.

Other activities

Turnover of the Group’s other activities amounted to 285 million Euros, up 10.9%, while operating income stood at 58 million Euros, compared with 42 million Euros a year earlier.

Six months to 30th September 2006: operating income of 979 million Euros, adjusted operating margin1 of 9.1%

Turnover rose 10.3% to 11.93 billion Euros, for production measured in EASK up 4.7%. Unit revenues per EASK rose 5.4% (5.1% on a constant currency basis). Operating charges were up 8.8% to 10.95 billion Euros over the same period. Excluding the fuel charge, they rose by 5.0%.

 

1 Operating income adjusted for the portion of operating leases corresponding to financial charges (34%).

 

3/12


Unit costs per EASK rose by 3.9%, but were down 0.8% on a constant currency and exchange rate basis.

The main change in operating costs was the rise in the fuel bill (+27%) to 2.18 billion Euros, reflecting the combination of a volume effect of 3% and a price impact after hedging of 24%. Commercial and distribution costs fell 2.5% to 620 million Euros and employee costs were up 5.4% to 3.30 billion Euros. The latter was due in part to a rise of 10.6% in social security charges linked to Air France’s contribution to the general unemployment insurance scheme. This limited the reduction in unit costs per EASK by 0.7percentage points. Headcount remained almost stable at 103,347 employees.

Operating income amounted to 979 million Euros up 30.5%, versus 750 million Euros a year earlier. The adjusted operating margin1 progressed strongly, from 7.9% at 30th September 2005 to 9.1% at 30th September 2006.

Income from operating activities amounted to 954 million Euros against 1.29 billion Euros at 30th September 2005. Pre-tax income of fully integrated companies was 830 million Euros, compared with 1.16 billion Euros a year earlier. Results at 30th September 2005 included the capital gain of 504 million Euros in respect of the Amadeus operation.

After a tax charge of 238 million Euros (against 292 million Euros at 30th September 2005) and a positive contribution from associates of 15 million Euros (compared with a negative contribution of 30 million Euros a year earlier), net income, Group share amounted to 618 million Euros, compared with 829 million Euros at 30th September 2005, which had included a net capital gain of 419 million Euros in respect of the Amadeus operation. Excluding this, net income rose by 50.7%.

Net diluted earnings per share stood at 2.16 Euros compared with 2.97 Euros at 30th September 2005.

Information by business

Passenger

Passenger activity in the first half was up 6.4% on capacity up by 5.1% leading to a 0.9 point improvement in the load factor to 82.8%. The Group carried a total of 38.7 million passengers during the period, a rise of 5.5%.

Total passenger turnover rose by 10.3% to 9.49 billion Euros. Operating income was strongly ahead, rising 44.4% to 868 million Euros at 30th September 2006.

 

     Six months to 30th September

 

       2006            2005            Change    

 

Total passenger business turnover (in m)

 

   9,486    8,600    + 10.3%

Turnover from regular passenger business (in m)

 

   8,970    8,088    + 10.9%

Unit revenue per RPK (in cts)

 

   8.69    8.34    + 4.3%

Unit revenue per ASK (in cts)

 

   7.20    6.83    +5.5%

Unit cost per ASK (in cts)

 

   6.43    6.24    +3.0%

Operating income (in m)

 

   868    601    +44.4%

The yield (RRPK) was up 3.9%, and revenue per available seat kilometer (RASK) rose 5.1% on a constant currency basis. Unit costs per available seat kilometer were down 1.0% on a constant currency and fuel price basis.

 

 

1 Operating income adjusted for the portion of operating leases corresponding to financial charges (34%).

 

4/12


Cargo

For the six months to 30th September 2006, Cargo traffic rose by 3.5% on capacity growth of 2.4%, leading to a 0.7 point rise in the load factor to 64.8%, a level which nonetheless remains too low in an environment of stiff competition and high fuel prices.

Total revenues amounted to 1.45 billion Euros against 1.36 billion Euros a year earlier, up 7.0%. Operating income amounted to 22 million Euros, versus 45 million Euros a year earlier.

 

     Six months to 30th September

 

 

         2006            2005            Change    

Total cargo turnover (in m)

 

   1,453    1,358    +7.0%

Turnover from transportation of cargo (in m)

 

   1,343    1,255    +6.9%

Unit revenues per RTK (in cts)

 

   24.72    23.90    +3.4%

Unit revenues per ATK (in cts)

 

   16.03    15.34    +4.5%

Unit costs per ATK (in cts)

 

   15.60    14.62    +6.7%

Operating income (in m)

 

   22    45    -51.0%

On a constant currency basis, the yield (RRTK) rose 3.3%, and unit revenues per available tonne kilometre (RATK) by 4.2%. On a constant currency and fuel price basis, unit costs were stable.

Maintenance

The Maintenance activity in the First Half was affected by contract postponements and logistics problems. Third-party revenues amounted to 480 million Euros, up 16.8% compared with 411 million Euros a year earlier. Operating income amounted to 14 million Euros versus 40 million Euros at 30th September 2005.

Other activities

Other activities are mainly composed of the catering business and the charter activity of KLM, operated by its subsidiary, transavia.com. Revenues from the other activities amounted to 514 million Euros, up 13.5% year-on-year. Of these, the catering activity accounted for 95 million Euros, and the charter activity for 375 million Euros (+22.1%). Operating income of the division was 75 million Euros, up 17.2%.

Financial structure: a 24% rise in operating cash flow and a further reduction in net debt

Capital expenditure amounted to 1.11 billion Euros during the six months to 30th September 2006, down from 1.37 billion Euros during the same period last year. It was financed by operating cash flow of 1.63 billion Euros (up 24% on last year) and proceeds from asset disposals of 60 million Euros (147 million Euros at 30th September 2005). The Group’s cash position stood at 4.6 billion Euros, an increase of 0.9 billion Euros, after the successful bond issue of 550 million Euros launched at the beginning of September. In addition, available credit facilities remain at 1.7 billion Euros.

The balance sheet structure was further strengthened, with net debt of 3.85 billion Euros, down 530 million Euros versus 31st March 2006. Shareholders’ Equity stood at 8.01 billion Euros, versus 7.85 billion Euros at 31st March 2006. The change in the value of hedging instruments was a negative 420 million Euros compared to 31st March 2006.

The gearing ratio was thus reduced from 0.56 at 31st March 2006 to 0.48 at 30th September 2006.

 

5/12


Objective for full year 2006-07 maintained

On the basis of current robust traffic levels and forward bookings for the coming months, Air France-KLM maintains its objective for the Full Year to generate a significant increase in operating income compared to 2005-06.

 

 

 

 

 

 

Agenda

Thursday 23rd November:

Presentation of the First Half results at 3.00 (CET) at the Westin Hotel

3, avenue de Castiglione – 75001 Paris, France

 

Ø

audio-web conference at 3.00 (CET)

    

to connect, dial

    

UK 00 44 207 162 0125 (password: AKH)

    

US 1 334 323 6203 (password: AKH)

to view the presentation connect to the following internet address:

http://airfranceklm.viewontv.com (password: AKHH1)

 

Ø

To listen to a recording, dial:

    

UK 00 44 207 031 4064 (code: 822486)

    

US 1 954 334 0342 (code: 822486)

 

6/12


Forward-looking statements

The information herein contains forward-looking statements about Air France-KLM and its business. These forward looking statements. which include. but are not limited to. statements concerning the financial condition. results of operations and business of Air France KLM are based on management’s current expectations and estimates.

These forward-looking statements involve known and unknown risks. uncertainties and other factors. many of which are outside of Air France-KLM’s control and are difficult to predict. that may cause actual results to differ materially from any future results expressed or implied from the forward-looking statements. These statements are not guarantees of future performance and involve risks and uncertainties including. among others: the expected synergies and cost savings between Air France and KLM may not be achieved; unanticipated expenditures; changing relationships with customers. suppliers and strategic partners; increases in aircraft fuel prices; and other economic. business. competitive and/or regulatory factors affecting the businesses of Air France and KLM generally. Additional information regarding the factors and events that could cause differences between forward-looking statements and actual results in the future is contained in Air France-KLM’s Securities and Exchange Commission filings. including its Annual Reports on Form 20-F for the year ended March 31, 2006. Air France-KLM undertakes no obligation to update or revise any forward-looking statement. whether as a result of new information. future events or otherwise.

THIS FORM 6-K REPORT IS HEREBY INCORPORATED BY REFERENCE INTO THE PROSPECTUS CONTAINED IN AIR FRANCE KLM'S REGISTRATION STATEMENT ON FORM F-3 (REGISTRATION STATEMENT NO. 333-114188). AND SHALL BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED. TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.

 

7/12


FLEET AS OF 30 SEPTEMBER 2006

   Picture -- LOGO

 

AIR FRANCE FLEET

 

Aircraft

 

   Owned

 

   Finance lease

 

   Operating lease

 

   TOTAL

 

 

   In operation

 

 

     3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06

B747-400

   8    8    1    1    7    7    16    16    16    16

B747-300/200

   6    6                        6    6    4     

B777-200/300

   19    23    4    4    15    15    38    42    37    42

A340-300

   10    10    3    3    7    7    20    20    20    20

A330-200

   6    6    1    1    9    9    16    16    16    16

Long-haul fleet

   49    53    9    9    38    38    96    100    93    94

B747-400

   2    2              3    3    5    5    5    5

B747-200

   5    5    1    1    1    1    7    7    7    7

Cargo

   7    7    1    1    4    4    12    12    12    12

A321

   11    11              2    2    13    13    13    13

A320

   49    52    3         16    15    68    67    66    67

A319

   20    19    4    4    21    22    45    45    44    45

A318

   12    13                        12    13    12    13

B737-500

   3    3              9    6    12    9    11    9

Medium-haul fleet

   95    98    7    4    48    45    150    147    146    147

Total Air France fleet

   151    158    17    14    90    87    258    259    251    253

REGIONAL FLEET

                                                 

BRIT AIR

                                                 

Aircraft

 

   Owned

 

   Finance lease

 

   Operating lease

 

   TOTAL

 

 

   In operation

 

 

     3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06

Canadair Jet 100

   2    2    11    11    6    6    19    19    19    18

Canadair Jet 700

   2    3    10    9              12    12    12    12

F100-100

   5    5              8    8    13    13    13    13

Total

   9    10    21    20    14    14    44    44    44    43

CITY JET

                                                 

Aircraft

 

   Owned

 

   Finance lease

 

   Operating lease

 

   TOTAL

 

 

   In operation

 

 

     3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06

BAE146-200/300*

   5    5    1    1    13    14    19    20    19    20

AVRO RJ 85

        7                             7          

Total

   5    12    1    1    13    14    19    27    19    20

sub-leased by KLM

                                                 

REGIONAL

                                                 

Aircraft

 

   Owned

 

   Finance lease

 

   Operating lease

 

   TOTAL

 

 

   In operation

 

 

     3/31/06    6/30/06    3/31/06    6/30/06    3/31/06    6/30/06    3/31/06    6/30/06    3/31/06    6/30/06

BEECH 1900

   3    3    1    1    1    1    5    5          

EMB145-EP/MP

   2    2    17    17    9    9    28    28    28    28

EMB135-ER

   2    2    3    3    4    4    9    9    9    8

EMB120-ER

   8    8    1    1    2    1    11    10    9    9

F100-100

   1    3    1    1    7    6    9    10    9    10

F70-70

             5    5              5    5    5    5

SAAB 2000

                       5    4    5    4    5    4

Total

   16    18    28    28    28    25    72    71    65    64
                                                   

Total Regional fleet

   30    40    50    49    55    53    135    142    128    127
                                                   

TOTAL

Air France Group

   181    198    67    63    145    140    393    401    379    380

 

8/12


FLEET AS OF 30 SEPTEMBER 2006

    
     Picture -- LOGO

KLM AND TRANSAVIA FLEET

    

 

Aircraft

 

   Owned

 

   Finance lease

 

   Operating lease

 

   TOTAL

 

 

   In operation

 

 

     3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06

B747-400

   6    9    16    13              22    22    22    22

B777-200

             5    6    6    7    11    13    11    13

MD11

             8    8    2    2    10    10    10    10

A330-200

             3    5              3    5    3    5

B767-300

                       8    5    8    5    8    5

Long-haul fleet

   6    9    32    32    16    14    54    55    54    55

B747-400

             3    3              3    3    3    3

Cargo

             3    3              3    3    3    3

B737-900

             2    2    3    3    5    5    5    5

B737-800

   3    6    23    20    4    5    30    31    30    31

B737-700

             5    5    5    5    10    10    10    10

B737-400

   6    6              7    7    13    13    13    13

B737-300

   6    6    1    1    7    7    14    14    14    14

Medium-haul fleet

   15    18    31    28    26    27    72    73    72    73

Total KLM fleet

   21    27    66    63    42    41    129    131    129    131

REGIONAL FLEET

                                                 

KLM Cityhopper

                                                 

Aircraft

 

   Owned

 

   Finance lease

 

   Operating lease

 

   TOTAL

 

 

   In operation

 

 

     3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06

F70

   18    18    3    3              21    21    21    21

F50

   2    6    4         2    2    8    8    8    8

Total KLM Cityhopper fleet

   20    24    7    3    2    2    29    29    29    29

KLM Cityhopper UK

                                                 

Aircraft

 

   Owned

 

   Finance lease

 

   Operating lease

 

   TOTAL

 

 

   In operation

 

 

     3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06

F100

   7    7    11    11              18    18    18    18

F50

                       6    6    6    6    6    6

Total KLM Cityhopper UK fleet

   7    7    11    11    6    6    24    24    24    24
                          

Total Regional fleet

   27    31    18    14    8    8    53    53    53    53
                          

TOTAL KLM Group

   48    58    84    77    50    49    182    184    182    184
                          
     Owned

 

   Finance lease

 

   Operating lease

 

   TOTAL

 

 

   In operation

 

 

     3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06    3/31/06    9/30/06

TOTAL

                                                 

Air France-KLM

   229    256    151    140    195    189    575    585    561    564

Group

                                                 

 

9/12


AIR FRANCE KLM GROUP

INCOME STATEMENT

 

 

in millions of euros

 

   2 nd quarter (July to September)        1st half (April to September)
       2006-07    

 

       2005-06    

 

       variation    

 

           2006-07    

 

       2005-06    

 

       variation    

 

SALES

   6,131      5,636      8.8%          11,933      10,822      10.3%

Other revenues

   3      6      na          3      6      na

EXTERNAL EXPENSES

   (3,390)      (3,028)      12.0%          (6,632)      (5,927)      11.9%

Aircraft fuel

   (1,171)      (908)      29.0%          (2,181)      (1,717)      27.0%

Chartering costs

   (164)      (151)      8.6%          (330)      (289)      14.2%

Aircraft operating lease costs

   (149)      (154)      -3.2%          (305)      (309)      -1.3%

Landing fees and en route charges

   (448)      (417)      7.4%          (881)      (820)      7.4%

Catering

   (112)      (105)      6.7%          (215)      (206)      4.4%

Handling charges and other

operating costs

   (316)      (305)      3.6%          (635)      (597)      6.4%

Aircraft maintenance costs

   (233)      (162)      43.8%          (434)      (344)      26.2%

Commercial and distribution costs

   (299)      (321)      -6.9%          (620)      (636)      -2.5%

Other external expenses

   (498)      (505)      -1.4%          (1,031)      (1,009)      2.2%

Salaries & related costs

   (1,644)      (1,541)      6.7%          (3,305)      (3,135)      5.4%

Taxes other than income tax

   (65)      (54)      20.4%          (129)      (112)      15.2%

Charge to

depreciation/amortization, net

   (446)      (418)      6.7%          (870)      (809)      7.5%

Charge to operating provisions, net

   (17)      (41)      -58.5%          (23)      (61)      -62.3%

Other income and charges, net

   (4)      (33)      na          2      (34)      na

OPERATING INCOME

   568      527      7.8%          979      750      30.5%

Gain on disposal of flight

equipment, net

   (1)      -      na          5           na

Amortization of negative goodwill

   -      3      na               5      na

Other non-current income and

expenses, net

   (1)      531      na          (30)      534      na

INCOME FROM OPERATING

ACTIVITIES

   566      1,061      na          954      1,289      na

Gross cost of financial debt

   (96)      (101)      -5.0%          (193)      (188)      2.7%

Income from cash & cash equivalent

   57      47      21.3%          108      74      45.9%

Net cost of financial debt

   (39)      (54)      -27.8%          (85)      (114)      -25.4%
             

Other financial income and

expenses

 

   (7)  

 

   7  

 

   na  

 

       (39)  

 

   (12)  

 

   na

 

PRE-TAX INCOME OF

CONSOLIDATED

COMPANIES

   520      1,014      -48.7%          830      1,163      -28.6%

Income tax

   (151)      (240)      -37.1%          (238)      (292)      -18.5%

NET INCOME OF

CONSOLIDATED

COMPANIES

   369      774      -52.3%          592      871      -32.0%
             

Share of profits (losses) of

associates

 

   15  

 

   (47)  

 

   na  

 

       15  

 

   (30)  

 

   na

 

NET INCOME FROM

CONTINUING OPERATIONS

 

   384  

 

   727  

 

   -47.2%  

 

       607  

 

   841  

 

   -27.8%

 

Net income from discontinued

operations

   -      -               -      -       

INCOME BEFORE MINORITY

INTERESTS

   384      727      -47.2%          607      841      -27.8%
             

Minority interests

 

   (10)  

 

   (10)  

 

   na  

 

       11  

 

   (12)  

 

   na

 

NET INCOME - GROUP

SHARE

   374      717      -47.8%          618      829      -25.5%

 

10/12


CONSOLIDATED BALANCE SHEET

in millions of euros

ASSETS

   30 September
2006
 
 
  31 March
2006
 
 

Goodwill

   204     208  

Intangible assets

   424     428  

Flight equipment

   11,230     11,017  

Other property, plant and equipment

   1,982     1,955  

Investments in equity associates

   217     204  

Pension assets

   2,019     1,903  

Other financial assets

   1,101     1,182  

Deferred tax assets

   2     7  

Other non current assets

   791     1,082  

Total non-current assets

   17,970     17,986  

Other short term financial assets

   1,132     932  

Inventories

   356     340  

Account receivables

   2,724     2,518  

Income tax receivables

   1     1  

Other current assets

   1,370     1,756  

Cash and cash equivalents

   3,984     2,946  

Total current assets

   9,567     8,493  
              

Total assets

   27,537     26,479  
              

LIABILITIES AND EQUITY

   30 September
2006
 
 
  31 March
2006
 
 

Issued Capital

   2,290     2,290  

Additional paid-in capital

   430     430  

Treasury shares

   (49 )   (58 )

Reserves and retained earnings

   5,229     5,072  

Equity attributable to equity holders of Air France KLM SA

   7,900     7,734  

Minority interests

   110     119  

Total Equity

   8,010     7,853  

Provisions and retirement benefits

   1,412     1,453  

Long-term debt

   8,196     7,826  

Deferred tax

   934     839  

Other non-current liabilities

   475     417  

Total non-current liabilities

   11,017     10,535  

Provisions

   227     192  

Short term portion of long-term debt

   1,178     1,260  

Trade payables

   2,133     2,039  

Deferred revenue on ticket sales

   1,992     2,062  

Current tax liabilities

   7     167  

Other current liabilities

   2,654     2,269  

Bank overdrafts

   319     102  

Total current liabilities

   8,510     8,091  
              

Total liabilities and equity

   27,537     26,479  

 

11/12


STATEMENT OF CONSOLIDATED CASH FLOW

 

in millions of euros

Period from April 1 to September 30,

 

   2006     2005  

Income for the period

   607     841  

Amortization, depreciation and operating provisions

   893     870  

Financial provisions

   18     -  

Gain on disposals of tangible and intangible assets

   (7 )   (45 )

Gain on disposals of subsidiaries and associates

   (1 )   1  

Gain on Amadeus GTD transaction

   -     (504 )

Derivatives

   18     (7 )

Unrealized foreign exchange gains and losses, net

   (9 )   19  

Negative goodwill

   -     (5 )

Share of profits (losses) of associates

   (15 )   33  

Deferred taxes

   255     128  

Other non-monetary items

   (62 )   (30 )

Subtotal

   1,697     1,301  

(Increase) / decrease in inventories

   (20 )   (45 )

(Increase) / decrease in trade receivables

   (272 )   (420 )

Increase / (decrease) in trade payables

   161     195  

Change in other receivables and payables

   61     280  

Net cash flow from operating activities

   1,627     1,311  

Acquisitions of subsidiaries and investments in associates, net of cash acquired

   (27 )   (30 )

Purchase of property plant and equipment and intangible assets

   (1,114 )   (1,373 )

Proceeds on disposal of subsidiaries and investments in associates

   15     10  

Proceeds on Amadeus GTD transaction

   -     817  

Proceeds on disposal of property plant and equipment and intangible assets

   60     147  

Dividends received

   2     -  

Decrease (increase) in investments, net between 3 months and 1 year

   (93 )   51  

Net cash flow from investing activities

   (1,157 )   (378 )

Issuance of long-term debt

   942     1,090  

Repayments on long term debt

   (223 )   (344 )

Payment of debt resulting from finance lease liabilities

   (282 )   (276 )

Increase in loans

   (27 )   (94 )

Decrease in loans

   24     66  

Dividends paid

   (82 )   (41 )

Net cash flow from financing activities

   352     401  

Effect of exchange rate on cash and cash equivalents

   (1 )   2  

Change in cash and cash equivalents

   821     1,336  
              

Cash and cash equivalents at beginning of period

   2,844     2,238  

Cash and cash equivalents at end of period

   3,665     3,574  

 

12/12


Air France – KLM Group

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS

April 1, 2006September 30, 2006

 

- 1 -


Groupe Air France – KLM

CONSOLIDATED INCOME STATEMENTS (unaudited)

 

  In millions

          2006      2005
     Notes              

  Period from April 1 to September 30,

                  
                    

  Sales

   4      11 933      10 822

  Other revenues

          3      6
                    

  Revenues

          11 936      10 828
                    

  External expenses

   5      (6 632)      (5 927)

  Salaries and related costs

   6      (3 305)      (3 135)

  Taxes other than income taxes

          (129)      (112)

  Amortization and depreciation

   7      (870)      (809)

  Provisions

   7      (23)      (61)

  Other income and expenses

   8      2      (34)
                    

  Income from current operations

          979      750
                    

  Sales of aircraft equipment

   9      5      -

  Negative goodwill

          -      5

  Other non-current income and expenses

   9      (30)      534
                    

  Income from operating activities

          954      1 289
                    

  Cost of financial debt

   10      (193)      (188)

  Income from cash and cash equivalents

   10      108      74

  Net cost of financial debt

          (85)      (114)

  Other financial income and expenses

   10      (39)      (12)
                    

  Income before tax

          830      1 163
                    

  Income taxes

   12      (238)      (292)
                    

  Net income of consolidated companies

          592      871
                    

  Share of profits (losses) of associates

   11      15      (30)
                    

  Net income from continuing operations

          607      841
                    

  Net income from discontinued operations

          -      -
                    

  Income for the period

          607      841

- Group

          618      829

- Minority interest

          (11)      12
                    

  Earnings per share – Group

                  

- basic

   13      2.33      3.16

- diluted

   13      2.16      2.97

 

- 2 -


Groupe Air France – KLM

CONSOLIDATED BALANCE SHEETS (unaudited)

 

  Assets

  In millions

   Notes    September 30,
2006
   March 31,
2006
                
                

  Goodwill

        204    208

  Intangible assets

        424    428

  Flight equipment

   14    11 230    11 017

  Other property, plant and equipment

   14    1 982    1 955

  Investments in equity associates

        217    204

  Pension assets

        2 019    1 903

  Other financial assets

        1 101    1 182

  Deferred tax assets

        2    7

  Other non current assets

        791    1 082
                

  Total non current assets

 

        17 970

 

   17 986

 

                

  Other short term financial assets

        1 132    932

  Inventories

        356    340

  Account receivables

        2 724    2 518

  Income tax receivables

        1    1

  Other current assets

        1 370    1 756

  Cash and cash equivalents

        3 984    2 946
                

  Total current assets

 

        9 567

 

   8 493

 

                

  Total assets

 

        27 537

 

   26 479

 

 

- 3 -


Groupe Air France – KLM

 

  Liabilities and equity

  In millions

 

   Notes    September 30,
2006
    March 31,
2006
 
                   

  Issued capital

        2 290     2 290  

  Additional paid-in capital

        430     430  

  Treasury shares

        (49 )   (58 )

  Reserves and retained earnings

        5 229     5 072  
                   

  Equity attributable to equity holders of Air France-KLM SA

 

   15

 

   7 900

 

 

  7 734

 

 

                   

  Minority interests

        110     119  
                   

  Total Equity

 

        8 010

 

 

  7 853

 

 

                   

  Provisions and retirement benefits

   17    1 412     1 453  

  Long-term debt

   18    8 196     7 826  

  Deferred tax

        934     839  

  Other non-current liabilities

        475     417  
                   

  Total non-current liabilities

 

        11 017

 

 

  10 535

 

 

                   

  Provisions

   17    227     192  

  Short term portion of long-term debt

   18    1 178     1 260  

  Trade payables

        2 133     2 039  

  Deferred revenue on ticket sales

        1 992     2 062  

  Current tax liabilities

        7     167  

  Other current liabilities

        2 654     2 269  

  Bank overdrafts

        319     102  
                   

  Total current liabilities

 

        8 510

 

 

  8 091

 

 

  Total liabilities

 

        19 527

 

 

  18 626

 

 

                   

  Total liabilities and equity

 

        27 537

 

 

  26 479

 

 

 

- 4 -


Air France – KLM Group

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)

In millions

 

     Number of
shares
   Issued
capital
  

Additional
paid-in

capital

   Treasury
shares
                                 Equity
attributable
to holders
of Air
France-
KLM SA
   Minority
interests
   Total equity
                         Retained
earnings
   Derivatives
reserve
  

Available for

sale securities
reserve

   Currency
translation
adjustment
   Other
reserves
   Total               

  March 31, 2005

   269 383 518    2 290    384    (19)    3 260    -    -    (6)    -    3 254    5 909    111    6 020

  Gain / (loss) on revaluation of

  fixed assets reclassified as

  available for sale assets

   -    -    -    -    -    -    (3)    -    -    (3)    (3)    -    (3)

  Gain / (loss) on cash flow hedges

   -    -    -    -    -    1 329    -    -    -    1 329    1 329    7    1 336

  Currency translation adjustment

   -    -    -    -    -    -    -    7    -    7    7    4    11

  Income for the period

   -    -    -    -    829    -    -    -    -    829    829    12    841

  Total of gains / (losses)

  recorded

   -    -    -    -    829    1 329    (3)    7    -    2 162    2 162    23    2 185

  Stock based compensation

  (ESA)

   -    -    -    -    (96)    -    -    -    -    (96)    (96)    -    (96)

  Stock component of convertible

  bonds (OCEANE)

   -    -    46    -    -    -    -    -    -    -    46    -    46

  Dividends paid

   -    -    -    -    (39)    -    -    -    -    (39)    (39)    -    (39)

  Treasury shares

   -    -    -    (72)    -    -    -    -    -    -    (72)    -    (72)

  Change in consolidation

   -    -    -    -    -    -    -    -    -    -    -    (6)    (6)

  September 30, 2005 (*)

   269 383 518    2 290    430    (91)    3 954    1 329    (3)    1    -    5 281    7 910    128    8 038
                                                                  

  March 31, 2006

   269 383 518    2 290    430    (58)    4 023    1 055    (4)    (2)    -    5 072    7 734    119    7 853

  Gain / (loss) on revaluation of

  fixed assets reclassified as

  available for sale assets

   -    -    -    -    -    -    (3)    -    -    (3)    (3)    -    (3)

  Gain / (loss) on cash flow hedges

   -    -    -    -    -    (392)    -    -    -    (392)    (392)    -    (392)

  Currency translation adjustment

   -    -    -    -    -    -    -    (2)    -    (2)    (2)    (2)    (4)

  Income for the period

   -    -    -    -    618    -    -    -    -    618    618    (11)    607

  Total of gains / (losses)

  recorded

   -    -    -    -    618    (392)    (3)    (2)    -    221    221    (13)    208

  Stock based compensation

  (ESA)

   -    -    -    -    17    -    -    -    -    17    17    -    17

  Dividends paid

   -    -    -    -    (81)    -    -    -    -    (81)    (81)    (1)    (82)

  Treasury shares

   -    -    -    9    -    -    -    -    -    -    9    -    9

  Other

   -    -    -    -    19    (21)    9    (7)    -    -    -    5    5

  September 30, 2006

   269 383 518    2 290    430    (49)    4 596    642    2    (11)    -    5 229    7 900    110    8 010

 

- 5 -


Groupe Air France - KLM

 

(*) Based on the fair valuation of KLM’s assets and liabilities at the acquisition date, KLM’s first consolidation resulted in the share acquired of the net fair value of KLM’s identifiable assets, liabilities and contingent liabilities exceeding the acquisition cost, including the recognition of the net pension asset related to the pilot retirement plan.

The negative goodwill was immediately reversed to operating profit in the income statement. However, pending clarification from the IFRIC, the Group decided not to recognize the benefit of the pension asset in its preliminary IFRS transition financial statements as of and for the year ended March 31, 2005 previously published. Hence the opening equity attributable to holders of Air-France KLM in the previously filed unaudited interim condensed consolidated financial statements for the six-month period ended September 30, 2005 did not reflect the benefit of the pension asset. Based on various publications issued by the IFRIC, and particularly the “IFRIC Update” dated September 2005, the Group revisited this accounting and recognized the full benefit of the pension asset in the income statement for the year ended March 31, 2005 included in its annual report for the year ended March 31, 2006. This resulted in an adjustment to the equity attributable to holders of Air-France KLM as of March 31, 2005, as compared to amounts presented in its preliminary IFRS transition financial statements previously published, and as compared to amounts reflected in the opening equity attributable to holders of Air-France KLM in the previously filed unaudited interim condensed consolidated financial statements for the six-month period ended September 30, 2005.

A reconciliation of the equity attributable to holders of Air France KLM as of September 30, 2005 as presented in the accompanying financial statements with previously filed unaudited interim consolidated financial statements as of September 30, 2005 is as follows:

 

In millions

  

Equity attributable to holders
of Air France-KLM as of

September 30, 2005

      
    

As previously filed

   6 910
    

Recognition of negative goodwill relating to the KLM pension surplus previously deferred

   622

Recognition of additional negative goodwill relating to the KLM pension surplus based on the current status of the related discussions of IFRIC

   306

Change in the fair value of the pension surplus between the acquisition date and March 31, 2005

   72
      
    

In current filling

   7 910
    

 

- 6 -


Groupe Air France – KLM

 

CONSOLIDATED STATEMENT OF TOTAL OF GAINS / (LOSSES) RECORDED

(unaudited)

 

  In millions

   September 30,
2006
 
 
  September 30,
2005
 
 

  Impact of the first application of IAS 32 and IAS 39 :

            

Derivatives

   -     1 148  

Investments available-for-sale

   -     (3 )

Deferred tax

   -     (391 )
              

  Impact for the period :

            

Derivatives

   (592 )   926  

Investments available-for-sale

   (3 )   -  

Deferred tax

   200     (354 )
              

  Currency translation adjustment

   (2 )   7  
              

  Gains / (losses) directly recorded in equity

   (397 )   1 333  
              

  Income for the period

   618     829  
              

  Total of gains / (losses) recorded for the period

   221     2 162  

 

- 7 -


Air France-KLM Group

 

STATEMENTS OF CONSOLIDATED CASH FLOWS (unaudited)

 

  In millions

  Period from April 1 to September 30,

 

  

Notes

 

  

2006

 

    

2005

 

 

  Income for the period

        607      841  

  Amortization, depreciation and operating provisions

        893      870  

    Financial provisions

        18      -  

  Gain on disposals of tangible and intangible assets

        (7 )    (45 )

  Loss / (gain) on disposals of subsidiaries and associates

        (1 )    1  

  Gain on Amadeus GTD transaction

   9    -      (504 )

  Derivatives

        18      (7 )

  Unrealized foreign exchange gains and losses, net

        (9 )    19  

  Negative goodwill

        -      (5 )

  Non monetary share of (profits) losses of associates

        (15 )    33  

  Deferred taxes

        255      128  

  Other non-monetary items

        (62 )    (30 )
         

  Subtotal

        1 697      1 301  
                    

  (Increase) / decrease in inventories

        (20 )    (45 )

  (Increase) / decrease in trade receivables

        (272 )    (420 )

  Increase / (decrease) in trade payables

        161      195  

  Change in other receivables and payables

        61      280  

  Net cash flow from operating activities

 

        1 627

 

 

   1 311

 

 

                    

  Acquisitions of subsidiaries and investments in associates, net of cash acquired

        (27 )    (30 )

  Purchase of property, plant and equipment and intangible assets

        (1 114 )    (1 373 )

  Proceeds on disposal of subsidiaries and investments in associates

        15      10  

  Proceeds on Amadeus GTD transaction

        -      817  

  Proceeds on disposal of property, plant and equipment and intangible assets

        60      147  

  Dividends received

        2      -  

  Decrease (increase) in investments, net between 3 months and 1 year

        (93 )    51  

  Net cash used in investing activities

        (1 157 )    (378 )
                    

  Issuance of long-term debt

        942      1 090  

  Repayments on long-term debt

        (223 )    (344 )

  Payment of debt resulting from finance lease liabilities

        (282 )    (276 )

  New loans

        (27 )    (94 )

  Repayments on loans

        24      66  

  Dividends paid

        (82 )    (41 )

  Net cash flow from financing activities

 

        352      401  
                    

  Effect of exchange rate on cash and cash equivalents

 

        (1 )    2  
                    

  Change in cash and cash equivalents

 

        821

 

 

   1 336

 

 

                    

  Cash and cash equivalents at beginning of period

        2 844      2 238  

  Cash and cash equivalents at end of period

        3 665      3 574  

  Income tax paid (flow included in operating activities)

        (268 )    2  

  Interest paid (flow included in financing activities)

        (216 )    (172 )

  Interest received (flow included in financing activities)

        112      67  

 

- 8 -


Air France-KLM Group

 

 

NOTES TO THE UNAUDITED INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

April 1, 2006September 30, 2006

 

- 9 -


Air France-KLM Group

 

 

1.

BUSINESS DESCRIPTION

As used herein, the term “Air France–KLM” refers to Air France – KLM, a limited liability company organized under French law, without its consolidated subsidiaries. The terms the “Group” refer to Air France – KLM together with its consolidated subsidiaries.

The Company is headquartered in France and is one of the largest airlines in the world. The Company’s core business is passenger transportation. The Company’s activities also include cargo, industrial maintenance and other air-transport related activities, including principally catering and charter services.

The company Air France – KLM domiciled 2 rue Robert Esnault-Pelterie 75007 Paris – France, is the parent company of the Air France – KLM group.

The Group’s functional currency is the euro.

 

 

2.

SIGNIFICANT EVENTS OF THE PERIOD

On September 11, 2006, the company Air France, subsidiary of the Group Air France-KLM issued  550 million bonds maturing on January 22, 2014. Characteristics of these bonds are described in Note 18.

 

 

3.

ACCOUNTING POLICIES

        3.1. Accounting principles

Accounting principles used for the interim condensed consolidated financial statements as of September 30, 2006 are the same as those used as of March 31, 2006 and described in the consolidated financial statements of the year ended March 31, 2006.

Concerning employee benefits, although the IFRIC has yet to deliver its final conclusions, the Group defined its accounting position based on various publications, and particularly the “IFRIC Update” dated September 2005 and the “IFRIC D19” whose comment period ended on October 30, 2006.

According to these, the KLM pension fund surplus must be fully recognized in the balance sheet.

The interim condensed consolidated financial statements as of September 30, 2006 are prepared in accordance with IAS 34 “Interim financial reporting”; and must be read in connection with the annual consolidated financial statements as of March 31, 2006. They have been prepared in accordance with those IFRS as of November 22, 2006, date on which the accounts have been approved by the Board of Directors.

        3.2. Preparation of unaudited interim condensed consolidated financial statements

Revenues and income from current operations are characterized by their seasonal nature related to a high level of activity during the first half of the fiscal year. This phenomenon varies in magnitude depending on the year. In accordance with IFRS, revenues and the related expenses are recognized over the period in which they are realized and incurred respectively.

For the interim statements, the tax charge (current and deferred) is calculated by applying to the book income for the period the estimated annual average tax rate for the current year for each entity or tax group.

 

- 10 -


Air France-KLM Group

 

        3.3. Use of estimates

The preparation of the interim condensed consolidated financial statements in conformity with current accounting policies requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses. The main items are:

 

 

 

Revenue recognition related to deferred revenue on ticket sales,

 

 

Tangible and intangible assets,

 

 

Financial assets,

 

 

Deferred tax assets

 

 

Provisions

The Group’s management makes these estimates and assessments continuously on the basis of its past experience and various other factors considered to be reasonable.

Actual results could differ from these estimates depending on changes in the assumptions used or different conditions.

 

- 11 -


Air France-KLM Group

 

 

4.

INFORMATION BY ACTIVITY AND GEOGRAPHICAL AREA

The Air France-KLM group’s primary reporting format is business segmentation.

Business segments’ results are those that are either directly attributable or that can be allocated on a reasonable basis to these business segments. Amounts allocated to business segments mainly correspond as far as the income statement is concerned, to the current operating income and the share of results of associates. Other elements of the income statement and of the balance sheet are presented in the “not allocated” column.

Inter-segment transactions are evaluated based on normal market conditions.

The Air France-KLM Group’s secondary reporting format is geographical segmentation, based on origin of sales.

Only passenger and cargo traffic revenues are allocated by geographical area of destination.

Business segments

Passenger: Passenger operating revenues primarily come from passenger transport services on scheduled flights with one of the Companies’ airline code, including flights operated by other airlines under code-sharing agreements. They also include commissions paid by SkyTeam alliance partners, revenues from excess baggage and airport services supplied by the Group to third party airlines and services linked to IT systems.

Cargo: Cargo operating revenues come from freight transport on flights under the Companies’ codes, including flights operated by other partner airlines under code-sharing agreements. Other cargo revenues are derived principally from sales of cargo capacity to third parties.

Maintenance: Maintenance operating revenues are generated through maintenance services provided to other airlines and customers globally.

Other: The revenues from this segment come primarily from catering supplied by the group to third-party airlines and to charter flights operated primarily by Transavia.

Geographical segments

Group activities are broken down into five geographical regions :

- Europe and North Africa

- Caribbean, French Guiana and Indian Ocean

- Africa, Middle East

- Americas, Polynesia

- Asia and New Caledonia

 

- 12 -


Air France-KLM Group

 

  4.1    Information by business segment

 

 

 

Six month period ended September 30, 2006

 

In millions

   Passenger     Cargo     Maintenance     Other     Non
allocated
 
 
  Total  

Total sales

   9 874     1 466     1 394     819     -     13 553  

Intersegment sales

   (388 )   (13 )   (914 ))   (305 )   -     (1620 )

External sales

   9 486     1 453     480     514     -     11 933  

Income from current operations

   868     22     14     75     -     979  

Income from operating activities

   868     22     14     75     (25 )   954  

Share of profits (losses) of associates

   -     -     -     15     -     15  

Net cost of financial debt and other financial income and expenses

   -     -     -     -     (124 )   (124 )

Income taxes

   -     -     -     -     (238 )   (238 )

Net income from continuing operations

   868     22     14     90     (387 )   607  

 

 

 

Six month period ended September 30, 2005

 

In millions

   Passenger     Cargo     Maintenance     Other     Non
allocated
 
 
  Total  

Total sales

   8 939     1 370     1 313     763     -     12 385  

Intersegment sales

   (339 )   (12 )   (902 )   (310 )   -     (1 563 )

External sales

   8 600     1 358     411     453     -     10 822  

Income from current operations

   601     45     40     64     -     750  

Income from operating activities

   601     45     40     64     539     1 289  

Share of profits (losses) of associates

   -     -     3     (33 )   -     (30 )

Net cost of financial debt and other financial income and expenses

   -     -     -     -     (126 )   (126 )

Income taxes

   -     -     -     -     (292 )   (292 )

Net income from continuing operations

   601     45     43     31     121     841  

 

- 13 -


Air France-KLM Group

 

4.2 Information by geographical area

Sales by geographical area

 

 

 

Six month period ended September 30, 2006

 

In millions

   Europe
North Africa
   Caribbean,
French
Guiana
Indian Ocean
   Africa,
Middle East
   Americas,
Polynesia
   Asia
New
Caledonia
   Total  

Scheduled passenger

   5 773    213    615    1 605    764    8 970

Other passenger sales

   367    28    20    41    60    516

Total passenger

   6 140    241    635    1 646    824    9 486

Scheduled cargo

   589    18    91    172    473    1 343

Other cargo sales

   76    2    4    11    17    110

Total cargo

   665    20    95    183    490    1 453

Maintenance

   475    -    -    -    5    480

Others

   501    9    4    -    -    514

Total

   7 781    270    734    1 829    1 319    11 933

 

•      Six month period ended September 30, 2005

 

In millions

   Europe
North Africa
   Caribbean,
French
Guiana
Indian Ocean
   Africa,
Middle East
   Americas,
Polynesia
   Asia
New
Caledonia
   Total  

Scheduled passenger

   5 289    213    581    1 328    677    8 088

Other passenger sales

   386    28    18    28    52    512

Total passenger

   5 675    241    599    1 356    729    8 600

Scheduled cargo

   565    17    77    154    442    1 255

Other cargo sales

   69    2    4    12    16    103

Total cargo

   634    19    81    166    458    1 358

Maintenance

   407    -    -    -    4    411

Others

   445    5    3    -    -    453

Total

   7 161    265    683    1 522    1 191    10 822

 

- 14 -


Air France-KLM Group

 

Traffic sales by geographical area of destination

 

 

 

Six month period ended September 30, 2006

 

In millions

   Europe
North Africa
   Caribbean,
French
Guiana
Indian Ocean
   Africa,
Middle East
   Americas,
Polynesia
  

Asia

New
Caledonia

   Total  

Scheduled passenger

   3 673    576    1 190    2 174    1 357    8 970

Scheduled cargo

   34    94    175    420    620    1 343

Total

   3 707    670    1 365    2 594    1 977    10 313

 

 

 

Six month period ended September 30, 2005

 

In millions

   Europe
North Africa
   Caribbean,
French
Guiana
Indian Ocean
   Africa,
Middle East
   Americas,
Polynesia
  

Asia

New
Caledonia

   Total  

Scheduled passenger

   3 433    555    1 085    1 828    1 187    8 088

Scheduled cargo

   38    87    151    394    585    1 255

Total

   3 471    642    1 236    2 222    1 772    9 343

 

 

5.

EXTERNAL EXPENSES

 

In millions

Six month period ended September 30,

   2006    2005

Aircraft fuel

   2 181    1 717

Chartering costs

   330    289

Aircraft operating lease costs

   305    309

Landing fees and en route charges

   881    820

Catering

   215    206

Handling charges and other operating costs

   635