SHAREHOLDERS’ · 2018-05-15 · of share capital increases (12th Resolution) 23 Purpose >...

SHAREHOLDERS’

MEETING

MAY 15, 2018

OPENING

PARIS

PRESENTATION OF

THE RESOLUTIONS

A I R F R A N C E - K L M

RESOLUTIONS SUBMITTED TO THE SHAREHOLDERS’ MEETING -ORDINARY BUSINESS

4

1st resolution: Approval of the statutory financial

statements and transactions for the financial year

ended December 31, 2017

2nd resolution: Approval of the consolidated financial

statements and transactions for the financial year

ended December 31, 2017

3rd resolution: Allocation of the income (or loss)

for the financial year ended December 31, 2017

4th resolution: Ratification of the co-opting

of Ms. Anne-Marie Idrac as a Board director

5th resolution: Re-appointment of Ms. Isabelle Parize

as a Board director for a four-year term

6th resolution: Appointment of Mr. François Robardet

as a Board director representing the employee

shareholders (ground staff and cabin crew employee

shareholders) for a four-year term

7th resolution: Appointment of Mr. Paul Farges

as a Board director representing the employee

shareholders (flight deck crew employee shareholders)

for a four-year term

8th resolution: Vote on the elements of compensation

paid or granted to Mr. Jean-Marc Janaillac in respect

of the 2017 financial year, in his capacity as Chairman

and Chief Executive Officer

9th resolution: Approval of the elements

of the compensation policy for the Chairman

and Chief Executive Officer

10th resolution: Setting of the amount of directors’ fees

11th resolution: Authorization to be granted to the Board

of Directors to carry out transactions involving

the Company’s shares

S H A R E H O L D E R S ’ M E E T I N G – M A Y 1 5 , 2 0 1 8


RESOLUTIONS SUBMITTED TO THE SHAREHOLDERS’ MEETING -EXTRAORDINARY BUSINESS

5

12th resolution: Increase in the total nominal cap

amount foreseen in the 12th resolution of the

Shareholders’ Meeting of May 16, 2017 to set this cap

amount at €214 million (i.e., given the amount already

used, an available cap of around €139 million)

13th resolution: Delegation of authority to be granted

to the Board of Directors for a 14-month period,

to carry out capital increases reserved to members

of a company or Group savings scheme without

shareholders’ preferential subscription rights

within a limit of 2% of the share capital

14th resolution: Powers to accomplish formalities


A I R F R A N C E - K L MDUBROVNIK

2017FINANCIAL RESULTS


2017: STRONG OPERATING RESULT

S H A R E H O L D E R S ’ M E E T I N G – M A Y 1 5 , 2 0 1 8 7

2017 2016

Revenues (€bn) 25.78 24.84

EBITDA (€bn) 3.2 2.7

Operating result (€m) 1,488 1,049

Net result, group share (€m) -274 792

Operating free cash flow (€m) 696 347

Net debt (€bn) 1.66 3.66


STRENGTHENING OF THE FINANCIAL STRUCTURE


€bn

OPERATING

CASH FLOW LEASE ADJUSTED OPERATING

RESULT

DEBT / EBITDAR

€bn

2011

Strike adjusted

-0.1

0.0

0.4

0.6

1.1

1.4

1.9

2012 2013 2014 2015 2016 2017

0.9 0.9

1.5 1.5

1.9

2.2

2.9

2011 2012 2013 2014 2015 2016 2017

5.75.4

4.24.0

3.4

2.9

2.1

dec

2011

dec

2012

dec

2013

dec

2014

dec

2015

dec

2016

dec

2017


IMPROVED OPERATING RESULTDRIVEN BY UNIT REVENUE PERFORMANCE


2017

-119

Currency

impact

1,488

Unit

revenue

1,049

Others2016 Fuel price

ex-currency

In €m

+101+447

+10


DECREASE IN UNIT COST EXCLUDING PROFIT SHARINGAND LOAD FACTOR EFFECTS


UNIT COST EVOLUTION

Reported change Change ex-currency

and fuel price

Load factor effect Profit sharing effect Adjusted change

-1.0%

-0.8%

-0.3%+0.3%

-0.2%


NETWORK: GROWTH IN TRAFFIC AND UNIT REVENUE


UNIT REVENUE EVOLUTIONACTIVITY

83.9 million Passengers in 2017

Employees:

54,000

Aircraft in operation:

471

Revenues: €22.48 bn, up 3.4%

Operating income increasing by €379 m

TotalEconomy ClassPremium Classes

AT CONSTANT CURRENCY

2016 2017

86.8%

+2.6%

+4.3%

85.4%

Load factorTraffic Capacity

2.1%

3.7%

1.5%

-0.5%

1.2%

3.7%

5.1%

-1.7%

5.2%

8.4% 9.0%

2.7%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4


NETWORK: CARGO TURNAROUND CONFIRMATION


1.14 million

ACTIVITY

Full Freighter activity shows improved performance

Traffic and Unit Revenue up

> Market demand growth to and from Asia and Latin America

Tons Cargo in 2017

Employees:

4,300

6 full freighters

in operation2016 2017

59.9%

+0.9%

+1.8%

59.3%



TRANSAVIA ACCELERATED GROWTH


14.8 millionPassengers in 2017

Employees:

2,900

Revenues:

€1.4 bn

Operating result:

€81 m

Unit revenue rise (+6.8%)

More than 100 Transavia destinations

Low cost n°1 in the Netherlands and Paris-Orly

ACTIVITY PASSENGERS

In millions

2016 2017

90.6%

+10.5%

+12.2%

89.2%


6.37.6

8.99.9

10.8

13.814.8

2011 2012 2013 2014 2015 2016 2017

+135%


A WORLD LEADER IN MAINTENANCE


World leader

Employees:

13,600

15 industrial sites

450 engine shop visits per year

1,300 aircraft under component

support contracts

Revenues:

€4.2 bn

Operating result:

€215 m

THIRD PARTY REVENUE

AND OPERATING RESULTORDER BOOK

In €m

Slight margin pressure, due to strong competitive landscape in the Component activity

Further increase in order book

> New Component contracts on new-generation aircraft

> New Engine deals

In $bn

31 Dec 2015 31 Dec 2016 31 Dec 2017

1,0961,225 1,251

1,577

1,834 1,823

2012 2013 2014 2015 2016 2017

145159

174

214238

215

8.4 8.9

10.4

+16.9%

+6.0%


HIGHLIGHTS OF THE FIRST QUARTER 2018


Fairly positive business environmentin line with expectations :

> 22 million passengers carried, up 5.2%

> load factor at 87.1%, improvement

by 1.7pt

First quarter operating income(1)

at -118 million euros, a decrease of 85 million euros compared to last year:

> Air France strike impact

> improvement of KLM and Transavia

performance

(1) Since January 1, 2018, implementation of new accounting standards of IFRS 9, 15 and 16.


AIR FRANCE-KLM SHARE PRICE


Air France-KLM

CAC40

Stoxx Europe 600 Travel & Leisure

+45%

+8%

+14%

2017 2018

14 May 2018BASE 100 AT 1ST of JANUARY 2017


AN ACTIVE COMMUNICATIONTOWARDS INDIVIDUAL SHAREHOLDERS

Shareholders’ letters available on internet

Individual shareholders’ Club and Committe

Shareholders’ meetings in the French regions

A multiple award-winning communication in 2017:


Award of the best

SBF 120 digital

communication

assigned by Le Revenu

magazine

Award of the SBF 80

Grand Prix for the

Annual General

Meeting 2017 assigned

by l’Institut du Capitalisme

Responsable

December 2017 July 2017

CHINESE TAIPEI

TRUST TOGETHERACHIEVEMENTS AND CHALLENGES FOR AF–KLM

AJACCIO

STATUTORYAUDITORSREPORT


STATUTORY AUDITORS’ REPORTS

As regards the Ordinary Shareholders’ Meeting

> Reports on the financial statements

• Consolidated financial statements

• Annual financial statements

> Report on regulated agreements and commitments

As regards the Extraordinary Shareholders’ Meeting

> 2 reports related to capital operations

20S H A R E H O L D E R S ’ M E E T I N G – M A Y 1 5 , 2 0 1 8


REPORTS ON THE FINANCIAL STATEMENTS

Consolidatedfinancial statements(pages 287 to 292of the 2017 Registration Document)

21

Annual financialstatements(pages 307 to 309 of the 2017 Registration Document)

Unqualified opinion on the fair presentation and consistency of the financial statements (consolidated and annual financial statements)

Key audit matters:

> Revenue recognition for issued but unused passenger tickets

> Measurement of retirement and other long-term benefits

> Recognition of deferred tax assets

> Provisions for litigations and contingent liabilities (consolidated and annual financial statements)

> Valuation of equity interests (annual financial statements)

Specific verifications

> No observations on the information given in the management report and consistency of the information



SPECIAL REPORT

On regulated agreements and commitments(page 310 of the 2017 Registration Document)

22

Authorization during the year and since the closing

> No new agreement or commitment authorizedduring the year

Approval in prior years

> No agreement or commitment authorized in prior years that remained in force during the year



REPORTS IN RELATION WITH THE EXTRAORDINARY SHAREHOLDERS’ MEETING (1/2)

On the amendment to the maximum nominal amount of share capital increases (12th Resolution)

23

Purpose

> Proposed amendment to the maximum nominal amount

of share capital increases likely to be carried out,

immediately or in the future, from €150 million

to €214 million, under the delegation of authority voted

by the Combined Shareholders’ Meeting of May 16, 2017

Procedures performed by the Statutory Auditors

> Verification of the content of the Board of Directors’

report related to this operation

Conclusion

> No comments to make on the proposed amendment

to the maximum nominal amount



REPORTS IN RELATION WITH THE EXTRAORDINARY SHAREHOLDERS’ MEETING (2/2)

On the issuance of new shares or other securities granting rights to the share capital reserved for members of a company savings plan(13th Resolution)

24

Purpose> Delegation of authority to proceed with increases in the share capital

for a 14-month period and limited to 2% of the Company’s share capital

> Opinion on the fairness of the quantitative information, on the proposed

cancellation of preferential subscription rights and on other information

Procedures performed by the Statutory Auditors> Verification of the content of the Board of Directors’ report related

to this operation and of methods used to determine the issue price

of equity securities

Conclusion> Subject to subsequent review of the conditions of each equity issuance

decided, no comments to make on the methods used to determine

the issue price of equity securities

> No opinion on the price and on the proposed cancellation

of preferential subscription rights

> Additional report, where appropriate, when this delegation is used


AMSTERDAM

GOVERNANCE


CURRENT COMPOSITION OF THE BOARD OF DIRECTORS

A S S E M B L É E G É N É R A L E – 1 5 M A I 2 0 1 8 26

Jean-Dominique

COMOLLI

Isabelle

BOUILLOT*

* Including 8 independant Board directors as defined by the AFEP-MEDEF Code.

Changes in the composition of the Board

Jean-Marc

JANAILLAC

Maryse

AULAGNON*

Karim

BELABBAS

Leni

BOEREN*

Mathi

BOUTS

Anne-Marie

COUDERC*

DELTA AIR LINES, INC.

Represented by

George MATTSON

Hans N. J.

SMITSIsabelle

PARIZE*

Jaap

DE HOOP

SCHEFFER*

Anne-Marie

IDRAC*

Louis

JOBARD

Solenne

LEPAGE

François

ROBARDET

Bing

TANG

Alexander R.

WYNAENDTS*

Patrick

VIEU

> November 2, 2017 : appointment of a woman independent Board director

> October 3, 2017 : Delta Air Lines and China Eastern Airlines join the Board of Directors

> October 10, 2017 : appointment of a second Board director representing the employees


BALANCES WITHIN THE BOARD

A S S E M B L É E G É N É R A L E – 1 5 M A I 2 0 1 8 27

A Board of Directors composed of 19 Board directors:

53 %

independent

Board directors

4 nationalities:French, Dutch, US, Chinese

41,2 % women

Robust competencies at

the service of the business:

Industry, Service, Transport,

Air Transportation,Tourism,

Finance, General Management,

Governance, International

Shareholders representatives:

L’État français, Delta Air Lines Inc.,

China Eastern Airlines

2 representativesof the employee shareholders and2 representatives of the employees


MAIN MATTERS REVIEWED DURING THE 2017 FINANCIAL YEAR

28

2017 Shareholders’ Meeting

2017 Highlights11 meetings in 2017(attendance rate: 90%)

MAY

Joint-meeting of the Air France – KLM and Delta Air Lines, inc. Board of DirectorsJUNE

Shareholders’ Meeting authorizing the entry of Delta Air Lines and China Eastern Airlines into the share capital

SEPTEMBER

2-day seminar devoted to the Group’s strategyOCTOBER

Since the beginning of 2018

Debate on the conclusions of the evaluation of the BoardMARCH

2018 Shareholders’ MeetingMAY

The Board of Directors focused in particular on the following matters:

> Monitoring of the Trust Together strategic project

> Update on flight safety

> Reinforcement of the partnerships with

(i) and and

(ii)

> Unveiling of the new airline

> Partnership with

S H A R E H O L D E R S ’ M E E T I N G – M A Y 1 5 2 0 1 8


CURRENT COMPOSITION OF THE BOARD’S COMMITTEES


100% of the Committees chaired by independent Board directors

Audit Committee

Maryse AULAGNON

(Chair)

Leni M.T. BOEREN

Solenne LEPAGE

Anne-Marie COUDERC

François ROBARDET

Louis JOBARD

5 meetings in 2017(attendance rate: 93%)

Remuneration Committee

Jaap DE HOOP SCHEFFER (Chair)

Isabelle BOUILLOT

Jean-Dominique COMOLLI

Hans SMITS

Isabelle PARIZE

François ROBARDET


Appointments and governanceCommittee

Anne-Marie COUDERC(Chair)

Jean-Dominique COMOLLI

Alexander R. WYNAENDTS



MR. MATHI BOUTS, BOARD DIRECTOR REPRESENTING THE EMPLOYEES


BOARD DIRECTOR

REPRESENTING THE EMPLOYEES

Senior Purser on KLM long-haul flights

Chair of the Dutch Foundation MNO (stichting MultiNationale

Ondernemingsradenoverleg), a network of works councils

in multinationals

Appointed by Air France-KLM’s European Works Council on October 10,

2017 as a Board director representing the employees


RATIFICATION OF THE CO-OPTING OF MS. ANNE-MARIE IDRACAS A BOARD DIRECTOR (RESOLUTION 4)


INDEPENDENT BOARD DIRECTOR

Member of the Board of Directors of Bouygues*

Member of the Board of Directors of Saint-Gobain*

Member of the Board of Directors of Total*

President of the Aéroport de Toulouse-Blagnac Supervisory Board

(mandate expiring in May 2018)

Company Board director

* Listed company.


RE-APPOINTMENT OF ISABELLE PARIZE AS A BOARD DIRECTOR (RESOLUTION 5)


Member of the Remuneration Committee of Air France-KLM

Member of the Board of Directors of Auchan

Associate of Odys SPRL, Belgium

Counsel to companies, start-ups and private equity funds

INDEPENDENT BOARD DIRECTOR


APPOINTMENT OF MR. FRANÇOIS ROBARDET AS A BOARD DIRECTOR REPRESENTING THE EMPLOYEE SHAREHOLDERS FOR A 4-YEAR TERM (RESOLUTION 6)


BOARD DIRECTOR REPRESENTING THE EMPLOYEE

SHAREHOLDERS (GROUND STAFF AND CABIN CREW

SHAREHOLDER CATEGORY)

Air France executive

Titular member (elected) of the Supervisory Board of the Aeropelican

employee shareholder FCPE

Titular member (elected) of the Supervisory Board of the Horizon-

Épargne Actions diversified savings fund

Manager of SCI Arcole 3


APPOINTMENT OF MR. PAUL FARGES AS A BOARD DIRECTOR REPRESENTING THE EMPLOYEE SHAREHOLDERS FOR A 4-YEAR TERM (RESOLUTION 7)


BOARD DIRECTOR REPRESENTING THE EMPLOYEE

SHAREHOLDERS (FLIGHT DECK CREW SHAREHOLDER

CATEGORY)

Air France airline pilot instructor

A320 Flight Captain from 2007 to 2017

Pilot Officer on the B-737 until 2001, then on the B-747 from 2001 to 2007


ELEMENTS OF THE 2017 COMPENSATION FOR THE CHAIRMANAND CHIEF EXECUTIVE OFFICER (RESOLUTION 8)


2017 VARIABLE

€510,000

Quantitative performance

Qualitative performance

COI(Current Operating Income)

Adjustednet debt

New strategicplan and reduction

in unit costs

Successof the new alliances

Efficiency of governance

Achieved (87%) 48% 10% 11% 10% 8%

Target (80%) 40% 8% 16% 8% 8%

Maximum (100%) 50% 10% 20% 10% 10%

2017 FIXED

€600,000 > Unchanged since 2010

> Mr. Janaillac waived a portion of his variable compensation for 2017

> Performance criteriaaligned with the strategy


Elements composing the compensation of the Chairman and Chief Executive Officer

ELEMENTS OF THE 2018 COMPENSATION POLICY FOR THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER (RESOLUTION 9) (1/3)


2018 FIXED

€600,000

2018 VARIABLEAnnual

Variable

OVERALL 2018

CEILING

€1,200,000

Long-term

Incentive

> Overall ceiling identical to 2017

> Unchanged fixed compensation for the last 8 years

> Pro rata temporis compensation

> No other commitments with respect to the Chairman and Chief Executive Officer, in particular no non-compete clause or severancepayment in the event of departure




2018 VARIABLE

Annual variable (annual)

Quantitative performance

Qualitative performance

COI(Current Operating Income)

Adjusted net

debt

New strategic plan and

reduction in unit costs

Success of the

new alliances

Efficiency of

governance

Target (70%)

35% 7% 12% 6% 10%

Maximum (100%)

50% 10% 17% 9% 14%

> Performance criteria aligned with the strategy

> Target amount: 70% of the fixed compensation

> Maximum amount : 100% of the fixedcompensation




> Granting of phantom sharesis subject to a presencecondition and to performance criteria over a three-yearvesting period

> Maximum amount: 10% of the fixedcompensation, i.e. €60,000

2018 VARIABLE

Long-term incentive

TSR on AFKLM shares vs. the

weighted TSR on the shares of othersector companies(1)

Actual AFKLMROCE vs. Budget(2)

Dow Jones Sustainability Index

Environmentalcommitments and CSR performance

targets(3)

30% 40% 15% 15%

(1) Defined as the performance of the Air France-KLM share price in any financial year relative to the performance of the sector: Lufthansa (40%), IAG (35%), Ryanair (12.5%), Easyjet (12.5%).

(2) Calculation based on absolute ROCE. The same correction for fuel will be applied as stated under the collective short-term incentive target.

(3) The evaluation of the criterion will be over a three-year period based on indicators reviewed annually by the Board of Directors.


Elements composing the compensation of the Chairman and Chief Executive Officer



2018 FIXED

€600,000

2018 VARIABLEAnnual

Variable

OVERALL 2018

CEILING

€1,200,000

Long-term

Incentive

> Overall ceiling identical to 2017

> Unchanged fixed compensation for the last 8 years

> Pro rata temporis compensation

> No other commitments with respect to the Chairman and Chief Executive Officer, in particular no non-compete clause or severancepayment in the event of departure

SHAREHOLDERS’

MEETING

MAY 15, 2018

SHAREHOLDERS’ · 2018-05-15 · of share capital increases (12th Resolution) 23 Purpose >...

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