Earnings call transcript: Air France-KLM sees 6% revenue rise in Q4

Air France-KLM reported a 6% increase in group revenue for the fourth quarter, with operating results improving by €450 million. With a current market capitalization of $3.04 billion and trailing twelve-month revenue of $34.5 billion, InvestingPro analysis suggests the company is slightly undervalued at current levels. The company maintained a net debt to EBITDA ratio within its target range, and its focus on premium services and fleet modernization contributed to strong performance. The airline group is targeting an operating margin of over 8% by 2026-2028.

Key Takeaways

• Group revenue increased by 6% year-over-year.
• Operating results improved by €450 million in Q4.
• The company launched new premium services and modernized its fleet.
• Corporate travel recovered to 80% of pre-COVID levels.
• Air France-KLM aims for an operating margin over 8% by 2026-2028.

Company Performance

Air France-KLM showed strong performance in Q4, with a 6% increase in group revenue compared to the previous year. The company’s operating results improved by €450 million, indicating a successful execution of strategic initiatives. The recovery in corporate travel and increased premium revenue contributed significantly to this growth. The airline’s focus on premium services and fleet modernization has positioned it well against competitors.

Financial Highlights

• Revenue: Increased by 6% year-over-year.
• Operating margin: 5.1% for the full year.
• Adjusted recurring free cash flow: €300 million.
• Net debt to EBITDA ratio: 1.7x.

Outlook & Guidance

Air France-KLM is targeting an operating margin of over 8% by 2026-2028. The company expects capacity to grow by 4-5% in 2025 and projects a low single-digit increase in unit costs. The airline plans to maintain its net debt to EBITDA ratio between 1.5-2.0x, reflecting a stable financial outlook.

Executive Commentary

Group CEO Ben Smith expressed confidence in achieving an operating margin of over 8%, highlighting the company’s strategic priorities. "Our key priorities include maintaining momentum in premium and corporate revenue growth," he stated. Group CFO Stephen Zatt noted that corporate traffic has recovered to around 80% of pre-COVID levels, underscoring the airline’s resilience.

Risks and Challenges

• Potential fluctuations in fuel prices could impact operating costs.
• Economic uncertainties may affect travel demand.
• Geopolitical tensions, such as the potential reopening of Russian airspace, could influence route planning.
• Competition from low-cost carriers may pressure pricing strategies.

Air France-KLM’s strategic initiatives and focus on premium services have driven a strong performance in Q4. With plans to expand capacity and improve operating margins, the airline is poised for continued growth in the coming years. For deeper insights into Air France-KLM’s valuation and growth prospects, InvestingPro subscribers can access exclusive analysis, including detailed Fair Value calculations and over 30 additional financial metrics not covered in this article.

Full transcript - Astoria Financial Corp (AF) Q4 2024:

Conference Operator: Good morning, and welcome to the Air France KLM Full Year twenty twenty four Results Presentation. Today’s conference is being recorded. At this time, I would like to turn the conference over to Ben Smith, CEO and Stephen Zatt, CFO. Please go ahead, sir.

Ben Smith, Group CEO, Air France-KLM: Okay. Thank you, operator. Good morning, everyone, and thank you for joining us today for the presentation of Alphonse KLM’s results for the fourth quarter of twenty twenty four. Today, I’m joined by Steven Zatt, Group CFO Andre Gai, CEO of Air France and Marian Rintel, CEO of KLM. I’ll start with key highlights from this quarter followed by Steven, who will walk you through our financial performance and outlook for the year 2024, and then we’ll wrap it up with closing remarks on our medium term ambitions before opening the floor for your questions.

Moving first to Slide four. Okay, reviewing our key financial indicators for this quarter. The group revenue increased by 6% compared to last year with capacity up 2%. Unit revenue growth accelerated in Q4 plus 4.4% compared to plus 1.4% in Q3, which is adjusted for the impact of the Olympic Games. The opening results stood at EUR 400,000,000.0, a significant improvement from last year’s loss.

This marks the strongest fourth quarter on record, driven by solid unit revenue growth that outpaced unit cost increases as well as lower fuel prices. The strong year end performance helped offset earlier headwinds resulting in a year operating margin of 5.1%. Despite a challenging operational environment, the group generated 300,000,000 in adjusted recurring free cash flow in line with the ambition set out during the twenty twenty three Capital Market Day. The net debt to EBITDA ratio stood at 1.7 times at the end of the fiscal year, well within our target range of 1.5 to two point zero. We made progress on our fleet modernization strategy with new generation aircraft now accounting for 27% of the fleet as of December, an increase of seven points since the end of twenty twenty three.

Now let’s take a moment to highlight some of the major achievements we’ve accomplished together over the last year. Moving on to Slide five, we’re very proud to highlight the significant progress our airlines have made in advancing key strategic priorities this year. We launched a new fully private Air France La Premiere ground experience at YCCDG Airport, elevating luxury travel with Air France to an entirely new level. In 2024, we introduced Air France Conciseuille, which is a range of tailor made premium service available to all customers at Paris Saint Etienne offering an exclusive and seamless experience on departure, transfer or arrival. We also rolled out Air France holidays providing exclusive flight and hotel packages to destinations worldwide.

Lastly, we announced a new free and ultra high speed Wi Fi offer with plans for fleet rollout starting this year. In 2024, we equipped all of KLM seven eighty seven and seven seventy seven aircraft with our new premium comfort cabins, doubling our capacity in this cabin class compared to last year. Meanwhile, both Air France and KLM enhanced the onboard Donnie experience with signature chefs crafting new menus, not only for flights departing from our home markets, but also from key international stations. These efforts were recognized by multiple awards with Air France and KLM receiving accolades for the third and seventh consecutive years, respectively a testament to our commitment to excellence in both product quality and customer experience. In 2024, we spoke extensively about the Paris Olympic Games.

Looking back, we can proudly say that we rose to the challenge with honor. From brand activation to the heart of Paris to the successful execution of operations, this event will remain a defining moment for our employees and leave a lasting positive impact on the entire group. I’d like to take a moment to express my deepest gratitude to everyone who contributed to its success. I’m also very proud to highlight the strong performance of our low cost airline, Transaviam, which successfully launched hand paid luggage this year and joined the Flying Blue loyalty program. These initiatives are part of our ongoing efforts to create a seamless travel experience across the entire group that caters to the diverse needs of all our customers.

Now onto Slide six, Diving deeper into our commitment to sustainability, we continue to make strong progress in fleet renewal. As I mentioned, new generation aircraft now represent 27% of our fleet, seven points over and above last year. In addition, we secured a major agreement with Total NLG for up to 1,500,000 tons of sustainable aviation fuel over the next decade. Another key milestone is the electrification of catering operations at KLM, part of our goal of achieving an emissions free ground handling operation at Schiphol. The group’s progress toward its environmental goals has received strong external recognition from multiple independent organizations.

For instance, Ecovaris, a global provider of sustainability ratings awarded our group a gold medal, placing us in the ninety seventh percentile among 150,000 assessed companies. Additionally, our MSCI ESG rating improved from BBB to BBB and we were recognized by Transport and Environment as the best among our peers for our efforts in incorporating alternative fuels. Moving now to Slide seven. Over the past year, we’ve strengthened our premium positioning at both Alfons and KLM. We successfully stimulated demand for premium travel across our network, particularly on North Atlantic routes, while maintaining our focus on delivering an industry leading customer experience.

Simultaneously, we have made strategic investments in our fleet and product, replacing older aircraft with newer, more premium configured cabins, thereby reinforcing our commitment to high valued customers. Premium revenue grew 12% year over year with premium cabins now contributing 26.9% of total group revenue, an increase in more than one percentage point from last year. Corporate travel continues to rebound with revenue up 4% compared to 2023, driven largely by strong demand for premium cabins as well as strong performance on medium and long haul routes. In particular, premium and premium comfort cabins at KLM and at Alphonse saw a significant 29% revenue increase compared to last year, mainly thanks to additional capacity, including a twofold increase in Premium Comfort capacity at KLM as we completed the retrofit of all the fleet’s seven eighty seven and seven seventy seven aircraft families. This ongoing shift toward a more premium customer mix at both KLM and Alphonse remains a key driver of unit revenue growth and one of the fundamental pillars of our long term profitability.

On to Slide eight, our revenue streams continue to expand beyond ticket sales with ancillary revenue increasing by 20% in 2024. Seat selection revenue saw strong double digit growth for both KLM and Alfas. A key driver of this growth has been the development of personalized options that enhance the customer experience. By leveraging dynamic pricing models, we are optimizing seat selection and baggage service pricing, thereby maximizing value while maintaining competitive offers for passengers. Meanwhile, Transavia’s introduction of Pay to 10 has effectively adapted our product offering, improved operational efficiency and reinforced our financial performance.

On to Slide nine, our cargo business delivered a solid year end performance, driven by strong levels of demand and effective capacity management. Our industry leading online bookings stood at 80%, reflecting our commitment to digitization and operational efficiency. Additionally, we are continuing to invest in our IT capabilities, enhancing our CRM and booking tools to maximize contributions across our network and ensure a seamless experience for all our customers. Engineering and maintenance saw a strong external revenue growth exceeding 20% and significantly outperformed market trends. Our long term contracts now cover all new aircraft types during steady business expansion and substantial order book.

At the same time, we’ve enhanced technical performance and cabin quality across our fleet, while advancing our capabilities with deep engines. Despite ongoing supply chain disruptions, our internal repair solutions have been effective in mitigating these challenges. FlyingBlue is now fully deployed across all group airlines, solidifying its position of one of Europe’s leading airline loyalty programs. This year, we expanded our vision beyond aviation by adding new lifestyle partners such as Revolut and Uber. Non airline revenue grew by 22%, diversifying the program’s income streams.

Additionally, I’m very proud to announce that we have recently renewed our key strategic partnership with American Express, further solidifying our loyalty program as one of the most compelling in Europe and reinforcing our overall value proposition. I’d like now to hand over the presentation to Stephen Zatt, our CFO.

Stephen Zatt, Group CFO, Air France-KLM: Thank you, Ben, and good morning, everybody. Thank you for taking the time to listen to us. As you can imagine, I’m very happy with the results in Q4. It is by far the best quarter we have in our history despite, let’s say, all the breaks we still have well our performance. I know that Bonn Swallow will not make a summer, but it is a very, very strong result for the quarter.

So if you go to Page 10, you see that operating margins ended at 5.8 with an improvement of results of EUR $450,000,000 for sure supported by a much lower fuel price, but we were able to keep our unit revenue up with 4%. Despite the fact that our unit costs also went up and I will make later the link, there is a link between the strong unit revenue performance and what we invest in our products and also the premiumization of our products. So all in all, a EUR $450,000,000 improvement in the fourth quarter, which at the end of the day results that we are slightly below the year 2023. So strongly supported by this fourth quarter. We saw that we had year over year impacts of around EUR 200,000,000 year over year with all kind of root causes.

In Q1, we had a difficult operational climate, which we are improving now in the second quarter. And in the third quarter, we saw the impacts of the Olympics. And now you see that year over year, we are proving strongly our results. And I’m extremely happy that we have a positive recurring adjusted operating free cash flow. We know that we still have to pay back, let’s say, the social wages in France and the wage tax in The Netherlands.

But it’s good to see that the business on itself generates a positive free cash flow despite the headwinds we had in 2024. If you go to Page 11, you see that there was an extreme strong load factor. So we increased our capacity, but we increased significantly our load factor compared to last year. And especially, we increased our capacity on the premium. On the left, you see that we increased the capacity by more than 4%.

With that, the load factor went up with almost 2% and the yield went also up by almost 2%. So very strong development of the premium segment, which shows that our strategy to focus on this premium segment is paying off. If you look at the map on the long haul, you see a very strong demand on North America, capacity of 1.3%, three % up in terms of load factor and another 3% in terms of yield. And this is excluding the currency impact. So if you would take even the dollar into account for what we sell in The U.

S, it’s even much stronger. Then if you go to, let’s say, Africa. Africa, you see that we reduced our capacity. That has also to do with the geopolitical situation, which started a year ago. But still there also we see an increase of our load factor and keeping our yields stable.

And last but not least, we increased in Asia our capacity that even drove up further the load factor that goes sentiment with slightly lower yields. But be aware that this area has very strong cargo revenues. And we saw even that, let’s say, our destinations in China were really in the top tens of our long haul performance. So very strong performance in terms of load factor, still keeping the yields very strong and that drives up the total unit revenue. And last but not least, Transavia, six point nine percent increase in capacity, 2% increase of load factor and a 9% increase of yields strongly supported also by the paid hand luggage.

But it’s good to see and I come back on that later that we have now that Transavia had a positive result. If we go to Slide 12, I think that this is very important one. We already guided that the Q4 would be difficult because of the maintenance costs at the KLM components business. We see also an increase of ground handling costs and we know that the labor costs are driving up our unit costs. But on the right side, I think you should keep in mind that around 2% of the unit cost increase is to support our unit revenues.

There’s a direct relations by the fact that we have a higher load factor. So by definition, that increase the unit cost because that’s the cost per available seat. Then we saw that we grew more our short and medium haul versus the long haul. And last but not least, we have a premiumization of the cabin. So we grew our premium cabin with 4.3% versus 1.2 on the economy.

And our growth in premium economy was even 23% up. And then in the middle, you see the increase of the charges, which we actually don’t cannot fully control, which are the air traffic charges and the airport charges, which has an upward of 0.7%. So the strong unit revenue performance has also to do that we have to make certain costs to deliver that. But all in all, it pays off as you see in over the year over year development of our results. Let’s then go to Page 13.

You can imagine that a CFO with only hearing figures on the slide is very happy. Cargo, just take a number, is up in unit revenue 21%. As I explained, the unit revenue mainly driven by the load factor is up on the passenger list by 2.5%, which drove the full results by close to EUR 400,000,000 improvement year over year on our network business. Then Transavia, I come back on it again, 6.9% increase of capacity, almost 12% increase of unit revenue, which drove up our operating results by million. We know that this is always a difficult quarter because it’s not the best tourist quarter for the year.

So it’s promising what we will see in Q2 and Q3, especially from our Transavia business. And last but not least, on the maintenance, we did a lot of shop visits. The order book is pretty, pretty full. It is almost difficult actually to sell more as we are totally sold out on this engine business. We improved our revenues with 11% and also the results went up with $21,000,000 bringing us closer to the margins, which we saw in 2019.

So all in all, EUR $450,000,000 up in operating result and 5% operating margin and an improvement of 5.8% in margin. Let’s then go to Air France and KLM. So we see a very strong it’s good to see that both carriers are improving the results. So we see an improvement of Air France more than $300,000,000 a very strong unit revenue. Air France, let’s say, developed especially very strong also to The U.

S. On KLM, we saw that we are still holding back a bit on our long haul capacity. So the unit revenue growth was 22%, so not 4.8% at Air France. And we still have the unit cost where we are working on. So we already announced the additional maintenance cost.

And KLM announced in 2025 that they will reduce two fifty non operational goals to reach the productivity target. So good to see that both carriers are improving the results year over year. And last but not least, very stable and strong results of our flying blue business generating now an operating margin of more than 20%, very important for our revenue. 52% of our revenues are generated by the loyalty program. So that is very, very important asset for us, both for the airlines, but also for the third party revenues.

And we are extremely happy, as Ben already said, that we have extended our global cooperation with American Express till September 2033. So quite a long time to secure that we have this strong operational and financial performance from our Flying Blue business. Then quickly on the full year results. So it is, as I already indicated, EUR 100,000,000 lower than last year and strong improvement of Transavia, EUR one hundred million improvement year over year also supported by the implementation of this paid hand luggage. Maintenance improved by EUR 20,000,000.

So it’s gotten closer to, let’s say, the levels what we have seen in 2019. And on the network, as we know, we had our headwinds both in operations, both also in cargo, especially in the first half year and of course the Olympics. So it shows that especially there, there will be, let’s say, room for improvement for the year to come. But I will come back on that later during our outlook. We go to Air France and KLM.

You see KLM, let’s say, in total, let’s say, we are $100,000,000 down. Of course, we have to take into consideration that we moved Flying Blue towards the group. So that brought million. So in general, you see that, let’s say, both airlines deteriorated in results with the reasons already expected, but you have to also take into account the FlyingBlue program. Last but not least for 2024, if you look at the free cash flow, very strong fourth quarter.

We generated $126,000,000 in recurring adjusted free cash flow, which is usually not a very good quarter in terms of cash and much, much stronger than what we did last year. Of course, we had these exceptionals of SEK 1,100,000,000.0, but it’s good to see that the business on itself is generating close to SEK 300,000,000 of adjusted operating free cash flow taking out these exceptionals. And the leverage we stabilized the leverage over the quarter. So at EUR 1,700,000.0, we are still is very strong cash at hand. You see that the lease debt is increasing.

That is partly coming from the fact that we have to extend leases because the fleet deliveries are getting slower in. That is around EUR 500,000,000. And we have especially in the beginning of Transavia and KLM, we have let’s say, we support the introduction of this A320 and A321, especially also with direct leases to make sure that we quickly make the adaptation from the seven thirty seven fleets to our A320 and A321neos. Let’s then go to the outlook, which you can see on let’s first start on Page 20. Let’s go for the, let’s say, shorter term, which is the first quarter.

So if you look at the picture, it looks like that we have a lower load factor that is completely related to the Easter shift. If you look at January, the load factor was up plus 1.3%. In February, the load factor is up 0.2% and we still see very strong yields. In January, it was 5.9% at the passenger business. At cargo, it was 11% and at Transavia, it was 3.8%.

So very strong unit revenue development. Also for February, if you look at the network business, we see a yield of 3.1%. So at the end of the day, despite the fact that we have this Easter shift, we will have for sure a positive unit revenue in the first quarter. On Page 21, you will find our capacity outlook. So it is fully in sync as what we have presented during the Investor Day.

We will grow further our long haul and short and minimal at 3% to 5%. And Transavia, we expect to grow by 10%. So that brings in total a capacity increase of around 4% to 5% versus 2024. And then I hand over to Marianne to explain in detail what we all implemented already, let’s say, for Beckonsec, which brings further end result improvement of EUR $450,000,000 in the year 2025. If you look at the numbers, it will kick in especially in the second half year because it takes time to implement.

And we know that we still have the maintenance cost, especially in the first and the second quarter, which we need to get under control. But I think we are making real progress with these nine actions. But Marianne, please take over.

Marianne Rintel, CEO of KLM, KLM: Thank you, Stephen. So we introduced the Back on Track project last year already to deliver the $450,000,000 in EUR 20 20 5 to reach the margin targets of 8% by EUR 20 6, EUR 20 8. As you can see, it consists of five buckets: increase productivity and save costs, restore operational capacity, increase revenues, consider the business case and reconsider CapEx. And on all five, we made progress so far. So we announced already we will reduce the office jobs with two fifty.

We have other productivity measures in place already without the CLA like more seats in Embraer or handling different airlines at ground handling off peak. But we’re also busy with operational capacity. So first of all, we make a deal with the pilots until next year to secure our operation during summer and winter. We started, as you know, the pilot on paid catering to a couple of destinations and to evaluate the pilot around summertime and then dependent on the pilots take next steps. As well, the reconsider the business impact, we took already the decision to reduce capacity at significant and we reconsidered the real estate portfolio already, but also made a lot of decisions to reduce CapEx and increase the free cash flow.

So a lot has been done already. A lot needs to be done still in the future. So we are still dependent on the outcome of the CLA discussions starting today and will proceed the next few weeks. I think that’s it. Stephen, you want to add some details?

Stephen Zatt, Group CFO, Air France-KLM: No. I think it’s good to see that we make such progress on this very important program for the group. So thanks, Marion. Let’s go to the next slide, which is 24. So if you look at the fuel bill, you see that we are actually 300,000,000 down in terms of dollars compared to last year.

This is the view curve of the do I skip on sorry, I skipped let’s first go to this one because it’s even more important. So if we go to Page 23, let’s look at what were the headwinds in 2024 and what are the headwinds which we will face in 2025. So we explained during the half year results that we had and we saw a lot of operational problems to produce the capacity that had, of course, a big impact on our productivity, but also at very high customer compensation cost. This is at least NOK 300,000,000. It is even much more.

But we expect if you compare it year over year because it will not be fully solved in the year 2025. As we know that the supply chain is still pretty difficult, but we have at least a 300,000,000 headwind if you compare that to, for instance, 2025. Then there was this Olympics, so that cost us EUR 200,000,000 in unit revenue and EUR 50,000,000 in unit cost. So it was another EUR $250,000,000. And we had the difficult Air France cargo implementation of the IT tool, which cost us around EUR 50,000,000.

So there was in total EUR 600,000,000 of headwinds in the year 2024. Then before we started actually the year 2025, we have some headwinds. One was coming from the increase of the French aviation tax. We indicated you it is between EUR 90,000,000 and EUR 170,000,000. It is now just implemented.

And it has also cost because it was has been implemented rather quickly. So that has also an impact that we cannot fully charge our customers, but we will still be in this range. On the Schiphol tariff, you see that the impact is 110,000,000, but we will also claw back things to our revenue. So we indicate that it will be between 65,000,000 and EUR 110,000,000, which brings at the end that we let’s say, the headwinds for 2025 are expected, let’s say, lower than the EUR 300,000,000. So we should at least improve our EBIT with EUR 300,000,000 excluding all the improvements which we have in place to improve our unit revenues and also to control our unit cost.

Then on Page 24, you will see the fuel bill. So a fuel bill of $7,300,000,000 excluding sustainable aviation fuel in 2024. It will come down with 300,000,000 in 2025. But at the same time, we see an increase of 160,000,000 of soft premium costs. The mandate is going up in France from 1% to 2% and everywhere in Europe it is now 2%.

So that has an impact of the soft volumes we had already more soft than any other carriers in the last year. So the impact is relatively smaller for us than for other carriers. Let’s then go to Page 25. So we will indicate that there is a low single digit unit cost increase. Take into account that we first have impacts which are also driving up our unit revenues.

So the increase of the airport charges, which we see everywhere, but also at Cripple, the increase of the ATC charges, which all the carriers will have, will drive up our unit revenues, but will also drive up our unit cost. Then we continue the premiumization, especially for Air France, the business cost and the first class. And also we introduced further our premium economy at KLM and also grow this capacity at Air France. So that will increase the unit revenues, but of course also increase the unit cost. Then there is inflation.

We know it is good to see that Air France already negotiated a CLA at 1%, which will start us from the June 2025. And we keep on working on productivity. So it’s back on track on KLM. We continue the transformation of Air France and that will reduce the impact, let’s say, of the net inflation for the year. So we guide low single digit unit cost increase for the year 2025.

So to summarize, on Page 26, group capacity will go up in 2025 by 4% to 5%. We expect a low single digit increase in the unit cost and CapEx and mainly driven by our fleet will be between 3.23.4%. And we stick to our near tipped EBITDA guidance of being between 1.52. With that, I hand over to our Group CEO, Ben Smith.

Ben Smith, Group CEO, Air France-KLM: Okay. Thanks, Stephen. So on Slide 28, just to go over the last few points. As we close out 2024, we remain fully committed to the medium term financial targets we set during 2023. And looking ahead to the 2026 to 2028 period, we reaffirm the following goals.

So we are fully confident in our ability to achieve an operating margin of over 8%, supported by five key pillars that will drive a EUR 2,000,000,000 improvement in EBIT compared to 2023. These include implementing across our airlines and businesses a focus on improving unit revenue costs and productivity, fleet renewal, revenue growth, operational and business optimization and organic expansion. As a result of these improvements to our operating margin, we expect to generate significantly positive adjusted operating free cash flow. We also expect reduced unit costs as a result of our ongoing transformation efforts, which include efficiency and productivity improvements, fleet modernization and much smarter operations. And we are committed to maintaining a leverage ratio within the 1.5 times to two times range, which will further strengthen our balance sheet, allowing us to attain investment grade ratings from both agencies.

Turning now to the final Slide 29. Before we open up the floor to Q and A, I’d like to reflect on what has been a resilient year for the Afros KLM Group. Despite external challenges, we’ve achieved steady revenue growth, expanded our premium and ancillary offerings and strengthened global partnerships. Our financial discipline has generated positive free cash flow, supporting continued investment in our long term strategic initiatives, while maintaining a strong balance sheet. Looking ahead, we remain confident in our ability to execute our strategic roadmap.

Our key priorities include maintaining momentum in premium and corporate revenue growth, reinforcing our leadership in this segment, continuing our fleet renewal and sustainability efforts, thereby ensuring we remain at the forefront of responsible aviation and accelerating KLM’s transformation under the Back on Track initiative and targeting profitability improvements With a clear path to at least a $300,000,000 EBIT improvement in 2025, as well as our reaffirmed medium term ambitions, we are well positioned to deliver sustainable growth and create long term value for our customers, employees and shareholders. Thank you for your time and attention. And we now are available to take your questions.

Conference Operator: Thank you. And our first question is from Jared Cassell from UBS. Please go ahead.

Jared Cassell, Analyst, UBS: Thank you and good morning, gentlemen, and good results and outlook, I guess. Maybe some kind of next twelve months more strategic questions as well. I mean, just a question. I mean, how important do you think it is to the group to get a third hub, just given some of the challenges you’ve faced over the last years, I guess? And when you look at Lufthansa, they’ve got six hubs, IAG, let’s call it three hubs.

And I guess from your side, just how important potentially securing a third hub, for instance, at Lisbon would be relative to competitors, etcetera. Then just in terms of kind of payments relating to hybrids or social charges, Can you give any color for 2025? Just what you’re thinking in terms of those payments? And then really strong growth in accelerates and loyalty and just wanted to get some more color on on how we should think about the growth for 2025 and initiatives? Thanks.

Ben Smith, Group CEO, Air France-KLM: Okay. Thanks, Jared. So the importance of the third hub and before I get into that, as part of our current transformation and focus, we’ve been putting an enormous effort into transforming the Orly Airport operation here in Paris, which for decades was money losing and the ongoing massive transformation of changing that from a Alphonse operation to Transavia having a low cost platform with the same cost structure as for instance, EDjet with the benefits of flying blue and now a direct train line or metro line into Central Paris and us enjoying 50% of the slots. This for us is a major, major organic growth of a focus airport, not necessarily a hub. It’s something that is a unique opportunity within Europe.

I don’t think there’s any other opportunity in all our competitive markets where there’s something like this that can significantly improve the results of an airline group. So that’s a big focus of internal. We don’t need to buy anywhere line to do that. We’re just converting what we already have. Amsterdam, as you know, we’ve been through a lot of challenges over the last three years.

So without buying a new hub, getting Amsterdam, as we call it, back on track is a big effort and I think it’s doable. This again, not buying a new hub. At CDG, we’re transforming CDG, focus more on premium traffic and to become less dependent on transfer traffic and because of the attractiveness of the Paris market, size of the Paris and France market, that’s something very unique for us as well. And then the importance of an additional global hub transfer, whatever you like to call it, say perhaps it being Lisbon or Madrid. Yes, strategically, it’s I think it would be very nice to have if we could acquire one of the two on favorable terms.

As we’ve said in the past, we’re not looking to to buy or merge for the sake of size. But if there’s a risk on being marginalized in a certain market, then for sure, we’ll put significant effort into ensuring that we succeed in integrating one of the opportunities. As you know, we have a 19% stake. We closed last year with SAS. And as that airline is moving toward a much more competitive hub in Copenhagen that does give us indirectly as of today an additional hub with the exclusive right to grow our position.

The majority stake and take control of that airline, that’s another opportunity for us. So I think for the financial situation, which we’re in, is not as strong as we will be in, in a few years. We are well balancing out what our opportunities are in a responsible way.

Stephen Zatt, Group CFO, Air France-KLM: Hi, Jared. And then coming back on your second question. So on the social charges and the wage tax in The Netherlands, there’s still an impact of 1,200,000,000.0 to go. But it’s EUR 500,000,000 in 2025 and EUR 500,000,000 in 2026 and then a lost part in 2027 of EUR 200,000,000. Coming back on your hybrids, so we know that there is EUR 800,000,000 of coupon increase, let’s say, starting dates.

First one is the one with Apollo in July. It’s $500,000,000 There is the hybrid convertible of $300,000,000 We for sure will refinance those hybrids. And we, of course, take the opportunity also to reduce the hybrid stock in our capital. We see that our equity is growing. So the growth of our equity by delivering net results will also make us able to reduce further our hybrid stock.

Conference Operator: Thank you.

Jared Cassell, Analyst, UBS: Great. And axillaries, any comments around loyalty and axillaries for 2025 and growth there?

Ben Smith, Group CEO, Air France-KLM: Thanks. Sorry, Jared. On that, we’re really we just closed our partnership with American Express, the exclusive partnership that we have with them. So we have a lot of focus on that. I think it positions us quite well.

In Europe, our partner Delta Airlines has got a great track record and is helping us out to maximize that partnership. So I think that will be the main focus for Flying Blue in 2025 is how to position the great brand of American Express with our strong brands to gain a better position on the loyalty front in Europe.

Jared Cassell, Analyst, UBS: Okay, great. Thank you.

Conference Operator: The next question is from Alex Irvin from Bernstein. Please go ahead.

Antoine, Analyst, Bernstein: Hi, it’s Antoine from Bernstein. Just a question for me. Maybe can you talk us through the main upside potential from adopting an order management system, Navio? And what impact on RASK and Casca you aiming for? And second, on Transavia, are you planning to expand or take over more French domestic foods?

And can you give us some indication of how profitability will improve in the coming years?

Stephen Zatt, Group CFO, Air France-KLM: No, I think, let’s say, if you look at the deal which we have with Amadeus, it gives us a lot of opportunity to modernize actually our distribution

Ben Smith, Group CEO, Air France-KLM: systems and also how

Stephen Zatt, Group CFO, Air France-KLM: we implement, for instance, ancillary instance, ancillary system. It will make us much more agile and quicker for the future. So instead of all having all kinds of fixes in your old distribution system and all the other systems, it is it will be a major step that we let’s say if you look at the IRR, it looks pretty good. So we have a full trust in that that this project will enhance our capability on the ancillary side and also to make it easier for our customers in terms of bookings.

Ben Smith, Group CEO, Air France-KLM: And on the on our plans and strategies for the French domestic market, first off, this market was heavily loss making in 2019 and the decades before. So we have shifted quite a bit of traffic to feed our CDG hub. So many of the destinations in secondary France do have incremental capacity into Paris. So local customers can use that, premium customers are using it, but it’s helping us acquire customers that were connecting via other competitive hubs to long haul destinations to now fly on us. So that’s one of the aspects of the strategic overhaul of the French domestic markets.

And as you know, we’re removing Air France from our orally operation to the French domestic markets. And with the change in habits that we’re seeing with many of our customers, we’re rightsizing the market. So where there’s still good demand, so we’re usually where there’s no good train option, You’re seeing a solid replacement of Transavia with very attractive fares, an attractive offer, which is what the customers are looking for. And you’re seeing that on routes like today, Montpellier, Biarritz, etcetera. And we’ll be putting that on Nice and Marseille and Toulouse amongst other routes in domestic France over the coming twelve to eighteen months.

So an overhaul, a reduction in point to point flying from Orly on the routes where there are viable train options and then an increase in service to feed our hub at YCCDG.

Antoine, Analyst, Bernstein: And maybe just on the profit stability, how do you see the improvement next year and ongoing?

Ben Smith, Group CEO, Air France-KLM: You’re talking about France domestic in particular?

Antoine, Analyst, Bernstein: No, for Transavia.

Ben Smith, Group CEO, Air France-KLM: For Transavia, no going as planned. It’s a look, it’s a very big transition to take over slots at Ali, to take over significant number of slots at Ali to transfer that activity or a big portion of that activity to medium haul, having to create a brand and a presence in the medium haul and then bringing a whole new fleet of aircrafts, so replacing 737NGs with A320neos is a big, big transformation. So we are in a transition period for the next two years. But medium term, we think we’ve got a real winning opportunity there and we have high expectations of good profits for Transavia. It’s this initial transition to build a good platform to get there.

But I think from a strategic perspective, the fact that we have this opportunity, I think we’re very fortunate to have that and we’re taking full advantage of it. We wish we could go faster.

Antoine, Analyst, Bernstein: Okay. Thank you.

Conference Operator: Our next question is from James Hollins from BNP Paribas and Exxon. Please go ahead.

James Hollins, Analyst, BNP Paribas: Thanks very much. A couple for me. Just on Paris this summer, I mean, clearly expectations, you have a big rebound. I was wondering if you could sort of chat through even qualitatively any sort of evidence empirical or otherwise that Paris is going to prove A, extremely attractive this summer and or B, that it might even be better than usual because you haven’t watched the Olympics last year or whatever it might be. Just let us know how you’re thinking about it.

And then the second one maybe from my end is on KLM. I think I saw a headline and apologies if I missed this earlier around potentially trying to freeze wages in KLM. I was wondering if A, that was true and B, whether that might even be possible without strikes. And then obviously, we need to talk about skip or flight cuts. Has a 4% cut been confirmed this year?

I can’t remember if that’s happened or not. Thanks a lot.

Ben Smith, Group CEO, Air France-KLM: Okay. So for the attractiveness of Paris, I think the evidence and the result of Q4, the results in Q4 twenty twenty four show that the impact, the negative impact we experienced of local higher yield traffic for the summer was a one time headwind. So we are quite optimistic for Q2, Q3, even Q1, the attractiveness of Paris as a premium leisure market. If you study the rest of the hospitality business and market in France, it’s very, very strong. The Olympics was a great free advertising campaign for us.

There are a few American television shows, which make Paris look extremely attractive. The U. S. Dollar is very strong. So from a revenue perspective, we’re optimistic that Paris is probably the most attractive destination in all of Europe.

So we’re positioning our cabins and our flight schedules and capacity to take advantage of that. Now we have a well diversified network. So if we see any weakness in that, we have resilient African network. We’ve got an emerging South American network. We don’t know what’s going to happen with Russian overflight.

That would be a bonus if demand increases out of Asia. And then we’re seeing quite a healthy Mediterranean market, so Northern Africa. And now with the reopening of Israel and Lebanon, that’s something that we were worried about in the past. Obviously, it’s still a risk going forward, but those are potential upsides. Over at KLM, I’ll have Marianne perhaps answer that question.

I’ll just start the question out. The European Union did release their result with their decision and recommendations under this balanced approach. System that they have in place to give their strong recommendations on how an airport can reduce capacity. And of course, as you may know, it’s a desire of the Dutch state to reduce noise emissions by 20%, twenty five %. And then there’s been a big debate as to how that can be calculated.

Can new airplanes form part of that reduction? So we’re reasonably pleased with the views of the European Commission. The what it would appear is going to come out of this as a reduction in capacity from a slot perspective of 500,000 movements to 478,000 movements. So you can divide that three sixty five days divided by two, we have 50% of the capacity. So the impact on us based on what we’re operating today is manageable.

Our big focus at KLM is getting the capacity back to long haul capacity back to where it was in 2019. We do have the aircraft. And with that, I think the result of KLM, that’s a major part of the improvement that we’re looking for at KLM should come about. So it’s not there’s not learning new things, not buying new airplanes. It’s really readjusting and adapting to the new environment or the permanent environment that we hope will have visibility on going forward.

In terms of negotiations with staff, Brian can give you some color on that and any other perhaps details on our back on track transformation program that’s going on at KLM to get the margins back to where we believe they can get to?

Marianne Rintel, CEO of KLM, KLM: Yes. So referring to your question, first of all, we closed the deal with the V and V, the pilot unions. So we secured our summer schedule, our year schedule and therefore also the budget which is included in the €450,000,000 Today, we are starting the CLAs, of course, throughout the company and our objective, of course, is to work together with unions to build a financial healthy and stable situation for KLM. We all know that the salaries in The Netherlands and also for KLM increased a lot the last couple of years. So what we said so far is our goal is zero increase in salaries and that’s what we need today referring to our current financial situation.

And adding to Ben on the European Commission, well, nearly two point five years ago, we said we know how to reach 20% reduction with our plan cleaner and more efficient. And what we heard yesterday from the European Commission that everything in our plan like you need to take fleet renewal into account and you need to take into account different ways of operational measures. So you need to start at the source. It’s confirmed by the European Union. And so we will wait for a reaction of the Minister of Infrastructure.

James Hollins, Analyst, BNP Paribas: Okay. Thanks very much.

Conference Operator: Thank you. Our next question is from Harry Gowers from JPMorgan. Please go ahead.

Harry Gowers, Analyst, JPMorgan: Yes. Good morning, everyone. I have two questions, if I can. First one for Ben, I think I saw you had some comments on I think it was Bloomberg TV this morning, but the beginning of the year has been very, very strong, especially for U. S.

Demand. So maybe you could give us some more color, any sense of how strong pricing has been on transatlantic in the first few months? And is that the main driver behind the Jan Feb yield comments that Stephen mentioned earlier? And then second one is on the premium side of things. I mean, what capacity growth are you expecting the premium capacity in 2025?

And I mean, do you think you can continue to do a similar level of premium unit revenue growth versus capacity growth going forward? Because in Q4, again, it looked like premium capacity was plus 4% and premium unit revenues were also plus 4%. So, yes, any thoughts there? Thanks.

Ben Smith, Group CEO, Air France-KLM: Okay. So, as you saw Q4 twenty twenty four was very strong. We’re ahead of consensus. At the end of the year, we were ahead of our own internal forecast. So that was a pleasant surprise and a big part of that was driven by point of sale U.

S. Bookings over the network, both in Amsterdam and in Paris and the point to point into Paris. So we see that going forward. Q1 is not the strongest quarter into Europe. As you know, historically with the seasonality, we are seeing strength.

So the attractiveness of Paris in the winter, I don’t think there’s been a structural shift, but in terms of year over year or historical trends of the attractiveness of Paris of Europe is good. It’s I think if we go a little bit too far to say it’s outstanding, excellent. The whole market is completely transforming. That’s a little that’s going a little bit too far because that’s not the case. But it is stronger than last year and it’s following the same trends that we saw in Q4.

From a premium cabin perspective, as I mentioned at KLM, we have finished the rollout of premium comfort. So premium economy as it’s called in some markets, the industry name for it. So the entire KLM fleet, the bulk of the fleet is going to remain. So the 777s and 787s, the entire fleet is now equipped with that product and we’re seeing amazing demand for it and the pricing is good. So in terms of profitability, it’s from a square meter perspective, it’s the best on the KLM fleet.

So we’re happy with that. And then premium capacity, I think that the way to look at it is we are increasing capacity across the network, but on a relative basis, the cabins have larger premium cabins. So we’re shedding economy seats that we’re maintaining the size of the business cabin and in some cases we’re actually increasing. So I think the exact percentage number, Stephen can share that with us. But no, overall for 2025, look, it’s very early in the year.

And based on last year, anything things can come up. Our industry is always the case. But when we look at the headwinds that we have versus last year, barring any surprises as of today, we’re cautiously optimistic this will be a very good year for Alfons Kaelin.

Stephen Zatt, Group CFO, Air France-KLM: Yes. If you look at the premium capacity, which we will add, and it’s not even including Economy Comfort, It will be around 6%, so higher than the 3% to 5%, which we guide for the network capacity increase.

Ben Smith, Group CEO, Air France-KLM: Great. Thank you, Edel.

Conference Operator: Thank you. And our next question is from Ruxandra Hardau Dozer from HSBC. Please go ahead.

Ruxandra Hardau Dozer, Analyst, HSBC: Yes, good morning. Thank you for taking my questions. First, the new EU Commission has been in office for a few months. What are the signals you receive and what are your expectations and the main priorities of the new commission for the aviation sector over the next years? You highlighted the benefit from the paid luggage at Transavia.

There was some debate at the end of the last legislative period about addressing luggage fees and ancillary revenues of airlines. Do you expect this to be a topic for the new commission? Second, could you please talk about corporate traffic? Do you still see it recovering? Or do you think corporate traffic has achieved a new post COVID normal?

Third, could you please give us an update on the EU cargo cartel case? How shall we think about cash outflow this year? And finally, you probably have now good visibility on Q2 bookings. What load factor and yield trends do you see in your current Q2 bookings? Thanks.

Ben Smith, Group CEO, Air France-KLM: Okay. Hi, Rexandra. I think that’s five questions. You said three, but anyway, okay. Okay.

All right. So where to start? The new European Commission team at the European Union. Well, I think with what we’re seeing in The United States and the new approach to markets as being more protectionist and inward focusing, we’re hoping that we don’t lose competitiveness and that a level playing field keeps going in the right direction, does not take a reverse. That’s what’s most important.

And it’s not just for the aviation industry, it’s for all industries in Europe. And I think the language we’re hearing coming out of the European Union is indicating that the support for European industries will be stronger than in the past to ensure that Europe does remain competitive. So we’re cautiously optimistic that will roll down to airlines, but Europe is a European Union is a big organization with many, many countries and it can get bureaucratic. So we’re lobbying as best we can with some of our competitors who we’re aligned with in Europe to try to ensure that we remain competitive globally. But it is a big challenge and we’re hoping that the European Union European Commission can align with us because we truly believe that strong aviation airlines, strong airlines in Europe is net net positive for the continent.

And then on the paid hand luggage, I mean, look, this is a it’s a frustration on our part. Yes, there’s a yes, there may be some consumer push, but this is consumer choice. It gives consumers more choices. We have a very big range of products. We didn’t invent this.

It’s in It’s in The U. S, it’s in Europe. Customers want the option of, in some cases, the lowest possible fare and they don’t need a paid hand luggage. And those that are, they do want that. There are options to pay, pay not, board early, not to board early, buy food on board, not to buy food on board.

And this a la carte type offering for all the different products and services that we have is the standard around the world for the low cost market. So it would be a real shame if Europe takes on a position where it would like to dictate what our product offerings are. This is not what the customer or the bulk of the customers are looking for. I think where we can continue to try to improve is ensuring that customers have a strong visibility of what their choices are and do not get any surprises when they arrive at the airport because they weren’t properly informed on what their choices were at time of booking. So this year, I think we can always improve and we are spending time on it, but to have an overall ban on charging paid hand language, I think would be wrong.

Stephen Zatt, Group CFO, Air France-KLM: Yes. And then on the cargo claim, let’s say, we expect that it is coming to an end. So let’s say that we expect that we will have that payout in 2025. So I think we will have that this year. But I suppose it’s coming now finally to an end.

Then on the Q2 bookings, we see still very strong bookings. We see also possibilities to further increase the RASKFELTS as a game of booking and yields, of course, but we are quite optimistic about the unit revenues in the second quarter.

Ruxandra Hardau Dozer, Analyst, HSBC: Thank you. Maybe also on corporate traffic. What are you currently seeing?

Stephen Zatt, Group CFO, Air France-KLM: I think the corporate traffic is now around 80% as what it has been pre COVID. So it goes hand in hand a bit with the capacity growth. So it is not accelerating anymore. I think we are now a new normal. And every time we add capacity, we see that the corporate traffic on itself is growing.

But we are still, let’s say, at 80% if you take into account also the fact that we, let’s say, if you also look what is the capacity growth.

Ruxandra Hardau Dozer, Analyst, HSBC: Great. Thank you very much. Thanks.

Conference Operator: The next question is from Stephen Furlong from Davy. Please go ahead.

Stephen Furlong, Analyst, Davy: Hi there. Well done on the results by the way. Just want to ask about the medium term plans, operating margin still maintained above 8%, which is kind of a different paradigm than people would have seen before from the group. Where do you see in the obviously everywhere is going to have to improve and a lot of heavy lifting has already happened. Where do you see then the leaders and laggards in that achievement of that in the different divisions?

And then one other question, for the summer, it sounds like the market where you think is going to be the strongest is going to be the Transatlantic or one would hope it would. What’s your view on the summer, peak summer in particular for intra Europe or short haul? Do you think that that at this point in time still looks favorable. Maybe for example that we have, let’s hope a little bit less ATC issues this year, particularly if something happens on the Ukraine front. Thank you.

Ben Smith, Group CEO, Air France-KLM: Okay. Thanks, Stephen. And thanks always for your support of our stock. It’s much appreciated for the studies that you do on our company. You’re very good reports.

We like reading them. Okay. So on the 8% target, yes, we’re still holding strong to it because what we’ve seen, I mean, as you watched it at Alphonse going from under 2% in 2019 up to the level that we saw in 2023. And if you pull out the one offs in 2024, which would have been 2023 was record, 2024 without the one offs would have been record. As you saw, Q4 was a record performance.

We see that continuing through 2025, so that the path toward 8%, we believe is still doable. Of course, operating in France is always a challenge, always unknowns. Managing labor stability is not easy for the taxation situation in France. We had a big, big challenge this year with the passenger the increase in passenger taxes, which I think we’ll be able to manage. And as you mentioned, air traffic control still has an impact.

But at Air France, I think we have a good path, and we’re still holding to the same strategy we put in place in 2019. At KLM, hopefully the all of the unknowns lack of visibility around the number of slots that started two point five years ago that Marianne and her team had to deal with. No one else in Europe has had to deal with it. So we’re really impressed and we can’t believe the resilience they have in dealing with this environment. Hopefully, that’s coming to an end.

So we’ll get a good sense of the capacity we can offer based on the number of slots. I think we definitely bottomed out in terms of the challenges and difficulties in flying the full fleet KLM as Marianne answered, we terminated a very, very difficult agreement with our pilots to fly incremental capacity in Q3 to take full advantage of the fleet that we have. And the KLM model was quite solid in 2019. It’s caused me to do a complete overhaul and reworking and redesign of the model where the KLM base model is solid and has been solid for decades. So we just got to get it back to what it was doing.

The cost structure has changed because of the big inflation we’ve had in The Netherlands. However, we have new aircraft coming in. The big increases in that we offered in wage rates over the last few years, I think are now going to be tempered. And the aircraft that are coming in not just on the long haul side, but with so that’s with the A350s, the 320neos as well as the Embraer 195E2s. You look at the unit cost improvement on all three of those aircrafts, I think, you know, should help us.

And then with a closed airport at Skippal, the bright side of having a reduction in capacity is we expect the pressure on pricing will go up. So from a KLM perspective, I think it’s we have a clear path, it’s execution on that front and that’s relatively straightforward for us. As you said, heavy lifting, not easy. And then the other part that I haven’t mentioned, of course, are the other businesses, cargo and engineering maintenance, which we’re seeing strong turnaround improvements on those two fronts as well. And so you mentioned our outlook for the short haul, medium haul.

So the I just mentioned the Embraer one hundred and ninety five and 320neo. So the 320neo is taking over the Orly operation with Transavia. And the Airbus A220, which I’ve not talked about today, which is taking over the bulk of the Air France medium haul operation at CDG is proving to be a big, big part of the transformation in the intra Europe market that we need to feed long haul. So So it’s very challenging for us as you know with CTG being an open market. The airport is not saturated, so we are exposed to all the competition.

But despite that with the strong hub and strong brand and good position in the corporate market with this much lower cost tool, we’re seeing good improvements. The impact of the Pratt Whitney GTF on our fleet when you look at our competitors, I think we’re in a better position. Of course, with the A220s, the E195s, we are experiencing the negative impacts of the Pratt Whitney GTF. However, I think we’ve bottomed out in terms of number of airplanes that have to be grounded. We are able to backfill because we have quite a number of A320s that are unencumbered.

Of course, we are being compensated by Pratt for the engines not performing as planned and the numbers have to come off way. So Europe flying, we see it continuing to improve.

Stephen Furlong, Analyst, Davy: Very good. Thanks, Ben. Thanks for the comments.

Conference Operator: The next question is from Othmane Bria from Bank of America. Please go ahead.

Ben Smith, Group CEO, Air France-KLM0: Good morning and thank you for taking my questions. I have two. First one on Russian airspace. What are your expectations for the potential reopening of the airspace? And what are your thoughts on capacity restoration into Asia?

And then my second question is on your CASK guidance. Can you give a bit more color on the phasing by quarter? Thank you.

Ben Smith, Group CEO, Air France-KLM: Okay. First one. Okay. Well, first off, we’re not sure how we can switch your sell to a buy. I don’t know what it’s going to take to get you guys to change your view.

But anyway, on the Russian overflight, as I’ve already answered to somebody else asked that question, it would be a nice surprise. We’re not counting on that. It will be, I’d say, a bonus if we could see that happen. We’ve reduced our capacity and thanks to our diversified network, we’re able to do that. And the routes that we’re operating that are avoiding Russia are performing okay.

We’re not losing significant amount of money. Most of them are breakeven or profitable. And we see that our corporate customers are sticking with us and many of them are not comfortable overflying Russia. So there is the demand and the demand for capacity out of China is not nearly where it was in 2019. So we’re not missing out on streams that were there in 2019 and we have not put capacity levels back there.

And I think if it were there, it would be simply better for us. So lifting Russian over overflight vans, I think would be not something that is causing us much concern. We don’t like the fact that it’s not on the playing field. This is extremely worrisome to us that things do change and we can’t fly over when the demand does go up, that we could be in a position where the level playing field is not there. That’s for us, it’s not viable and it’s not should not be there.

But in today’s environment with demand that’s in there, we’re doing our best to manage demand with capacity.

Stephen Zatt, Group CFO, Air France-KLM: And if you look at the pattern of the unit cost development, I think if you look at the range, I think we will be at the higher range in the first and the second quarter. It takes time to implement first back on track. So to get full this full results in, this will be more at the second half of the year. Second also is the fact that our second quarter was pretty strong in unit costs. So for sure, let’s say, the year over year impact will be, let’s say, especially coming in the second half year.

So it takes time to implement back on track. We also have still maintenance costs, which are impacting us in the first quarter and the second quarter. And then in the second half year, you will see that we’re getting to the lower end of the range.

Ben Smith, Group CEO, Air France-KLM0: Thank you very much.

Conference Operator: Thank you. It appears there are currently no further questions. This gentleman, I’ll give the floor back to you for conclusion.

Ben Smith, Group CEO, Air France-KLM: Okay. Well, thank you everyone for taking the time to listen to our call and for your questions. And we look forward to talking to you when we release our Q1 results in three months’ time. Thank you.

Conference Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation.

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