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AIR FRANCE-KLM 2010-11 Annual Report _ 61
AND YET THE FUEL BILL HAD A SIGNIFICANT IMPACT…
PC: It effectively increased by €1 billion relative to the previous
year: a 21% rise! Between January 2010 and January 2011,
the oil price soared from $80 to $111. To this price rise,
which had a $1.1 billion negative impact in our accounts,
was added a second factor: the appreciation in the dollar
relative to the euro which increased our bill by €300 million.
FG: On the other hand, the impact of the losses on hedging
(€164 million) was much lower than in the previous year.
The former hedges are gradually disappearing and those
that remain have turned positive. We are again entering
a period when hedging becomes favorable. The counterparty
to this is, of course, that the oil price is a good deal higher.
WHAT IS THE LONG-TERM TRACK RECORD
OF YOUR FUEL HEDGING STRATEGY?
PC: Very positive. Since the creation of the Air France-KLM
group, our fuel hedging strategy has brought in €2.5 billion,
even if its impact was negative to the tune of €800 million over
the last two financial years. It should again be positive this year
at some €500 million if the oil price remains at the current
level, i.e. around $115.
YOU ALSO PLAN TO IMPROVE THE GROUP’S FINANCIAL
STRUCTURE…
PC: Our initial objective had been to stabilise the Group’s net
debt in 2010-11. This objective was exceeded. The Group
generated operating cash flow of €1.35 billion. Furthermore,
the Amadeus stock market flotation generated cash
proceeds of some €200 million and net investment was
maintained at around €1.1 billion. Overall, the Group closed
the financial year with free cash flow of €400 million after
investments, strengthening the Group’s balance sheet.
Net debt was reduced by €300 million, moving from
€6.2 billion to €5.9 billion. Our gearing ratio (net debt
to stockholders’ equity) was thus significantly reduced,
from 115% at March 31, 2010 to 85% at March 31, 2011.
FG: The Group’s financial situation is healthy. Furthermore,
we are also protected against a rise in interest rates since
71% of our debt is contracted at fixed rates and the rest
is covered by our cash. Elsewhere, we are not exposed
to dollar fluctuation since 90% of our debt is denominated
in euros.
F I N A N C E
PHILIPPE CALAVIA
Executive Vice
President, Finance,
Air France-KLM
and Chief Financial
Officer, Air France
(left)
FRÉDÉRIC GAGEY
Chief Financial
Officer, KLM
(right)