AIR FRANCE – KLM
A GLOBAL AIRLINE MARKET
LEADER
Roissy, France and Amstelveen, The Netherlands, May 5 2004
The full press kit can be found on the websites:
www.airfrance.com/corporate
www.klm.com
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
1
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
PERSBERICHT - PERSBERICHT - PERSBERICHT - PERSBERICHT - PERSBERICHT
COMMUNIQUE DE PRESSE - COMMUNIQUE DE PRESSE - COMMUNIQUE DE PRESSE
PRESS RELEASE - PRESS RELEASE - PRESS RELEASE - PRESS RELEASE
5 MAY 2004: AIR FRANCE – KLM, A GLOBAL AIRLINE MARKET LEADER
Jean-Cyril Spinetta, Chairman and CEO of Air France, and Leo van Wijk, President and CEO of
KLM, have expressed their great satisfaction following the success of the recommended public
offer of exchange for KLM ordinary shares.
At a press conference held today at Paris-Charles de Gaulle airport, the two chairmen
announced: “The merger of our two airlines is now a done deal. Today is an important date
for the world airline industry and marks an essential step forward in the process of sector
consolidation in Europe. The new entity, which will be the world’s largest airline group by
turnover (19.2 billion euros) and a world leader in its three core businesses: Passengers,
Cargo and Maintenance, has the potential to develop powerful synergies. The
complementary nature of the two airlines, which will each retain their brands and unique
values, will ensure that the new group is more attractive for passengers, as they will gain
access to an enhanced offering, and will create substantial shareholder value.”
The synergies already identified are scheduled to gain momentum and have a positive impact
on the Group’s consolidated operating profit of some 400 to 500 million euros as of the fifth year.
The synergies are to be achieved through optimized networks, improved deployment of
passenger and cargo activity, and an expanded maintenance offering together with cost savings
in supplies, sales distribution and Information Technology.
Customers will start feeling the benefit of these synergies very rapidly. Jean-Cyril Spinetta and
Leo van Wijk announced that, as of 1 June this year, Air France and KLM passengers will be
able to benefit from coordinated schedules throughout their entire short-, medium- and longhaul networks. Flight schedules between Paris and Amsterdam will be regular and frequent to
increase the possibilities of connecting flights to the entire world via the hubs at Paris-Charles
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
2
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
de Gaulle 2 or Schiphol. KLM flights will be transferred from Terminal 1 to Terminal 2F at Paris Charles de Gaulle to join the Air France flights. In Amsterdam, both airlines’ flights will also leave
from the same boarding area.
Air France and KLM are to step up services between Amsterdam and French regional airports
and between Paris and Dutch regional airports with the launch of three new services:
Amsterdam-Bordeaux, Amsterdam-Marseille and CDG-Rotterdam. Air France and KLM are also
seeking to maximize the complementary nature of their medium -haul networks.
Air France has a strong presence in southern Europe, while KLM has developed an extensive
network in northern Europe. The long-haul routes on which Air France and KLM do not have a
daily flight or do not have a non-stop point-to-point flight are to be rationalized and improved.
The two airlines’ world networks can be combined, forming a vast network organized around the
two major hubs of Amsterdam-Schiphol and Paris-CDG. This initiative will be very attractive for
passengers who need to travel via a hub to reach their final destination. When they organize
their trip to a distant destination served by Air France and KLM, they can benefit from two
different schedules on the same day, on both the outgoing and return legs, and will be able to
combine a trip via Amsterdam with one via Paris.
The Air France-KLM Group will therefore be bringing to bear the tremendous power of its
enhanced combined offering for the benefit of its most demanding passengers. These customers
will be able to organize their trips to suit their schedules, at the most attractive available fares,
based on the addition of two half round-trip tickets.
Members of the Fréquence Plus/Air France and Flying Dutchman/KLM frequent flyer
programmes will be able to earn Miles and claim rewards on all the two airlines’ routes as of 1
June 2004.
And once KLM, Northwest and Continental join SkyTeam, scheduled for mid-September 2004,
customer benefits will be even further increased.
By pooling their strengths in the cargo sector, Air France and KLM will become the biggest nonintegrator operator, with a combined turnover of 2.5 billion euros.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
3
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
In the field of aircraft maintenance , the merger is to give rise to one of the world’s leading
suppliers of maintenance services, with a combined turnover of 2.6 billion euros, 900 million
euros of which are generated by third-party customers.
Jean-Cyril Spinetta and Leo van Wijk concluded: “Air France and KLM have decided to join
their forces and destinies to build a new entity on a par with the great European Single
Market. Today we share a single ambition, which is to be one of the few airlines that are
powerful enough to play a leading role in the future of the global alliances that will
structure the airline industry. In other words, to be big enough to be a key player on the
world stage, in order to improve our profitability, offer the best service possible to our
customers and protect our jobs over the long-term. The people at Air France and KLM who
are going to build the new Group can embark on this new venture with pride in their
hearts.”
The full press kit can be found on the websites:
www.airfrance.com/corporate
www.klm.com
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
4
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
5 MAY 2004 : AIR FRANCE – KLM,
A GLOBAL AIRLINE MARKET LEADER
CONTENTS
•
Press release of 5 May 2004
I. AIR FRANCE AND KLM: MORE DESTINATIONS, MORE FLIGHTS, WIDER
CHOICE FOR PASSENGERS OF BOTH AIRLINES .....................................................P 6
• 5 May: A combined network and more seats at the most attractive available fares
• 1st June: Frequent service between Paris and Amsterdam to link up the Air France and
KLM networks
• 1st June: Enhanced service to French and Dutch regions to link up the Air France and KLM
networks
• 1st June: More attractive frequent flyer programmes for 9.3 million passengers
• Early-June: Air France and KLM launch electronic ticketing on both airlines’ flights
• Special Air France-KLM offer immediately available
II. CLEARLY IDENTIFIED SYNERGIES ..............................................................................P 17
•
•
•
•
•
Sales/distribution/stations
Network management and revenue management
Cargo
Maintenance
Information systems
III. PARIS-CDG AND AMSTERDAM -SCHIPHOL : TWO MAJOR ASSETS
FOR AIR FRANCE AND KLM ...........................................................................................P 22
IV. SKYTEAM, A LEADING ALLIANCE ...............................................................................P 26
V. GOVERNANCE OF THE AIR FRANCE-KLM GROUP .................................................P 27
VI. AIR FRANCE-KLM GROUP STRUCTURE ...................................................................P 29
ANNEXES
•
•
•
Facts and figures
Launch of world's leading airline group in 12 key dates
Biographies of Jean-Cyril Spinetta and Leo van Wijk
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
5
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
I. AIR FRANCE AND KLM:
MORE DESTINATIONS, MORE FLIGHTS, WIDER
CHOICE FOR PASSENGERS OF BOTH AIRLINES
For the first time, the merger of two major national carriers – Air France and KLM – will
offer customers new benefits:
•
a combined network giving access to a wider choice of routes,
•
more seats at the best possible fares available,
•
even more attractive frequent flyer programmes
More destinations
Air France and KLM have combined their networks for the benefit of their customers. This
combined network, organized around the hubs of Paris-CDG and Amsterdam -Schiphol, will
enable the new Group to offer passengers a total of 225 destinations all over the world instead of
200 for Air France alone and 131 for KLM alone. The Air France-KLM network comprises 119
short and medium -haul destinations and 106 long-haul destinations. 47 out of the 106 long-haul
destinations are served by Air France, 23 by KLM, and only 36 by both airlines, which proves the
highly complementary nature of the two networks.
More flights at more attractive fares
For destinations served by both airlines, passengers can combine two fares, giving them the
choice of an outbound flight with KLM via Amsterdam and a return flight with Air France via Paris
or vice versa. The fare is the equivalent of two half roundtrip tickets added together. This way
customers can benefit from connections via either hub, both on the outward and return journey,
at the best available fares.
More choice
The frequent service on the Paris-Amsterdam route, with 15 daily flights in each direction, and
enhanced services to the French and Dutch provinces, will make it easier for passengers to
travel on the vast Air France and KLM network, by multiplying routing possibilities all over the
world via CDG or Schiphol.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
6
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
Still more attractive frequent flyer programmes
Starting 1st June 2004, members of the Air France Fréquence Plus and KLM Flying Dutchman
frequent flyer programmes will be able to earn Miles and claim rewards on all the routes of both
airlines.
A special launch offer
Finally, to celebrate the merger, Air France and KLM are launching a special offer enabling
passengers to travel on either or both networks.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
7
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
5 MAY: A COMBINED NETWORK AND MORE SEATS
AT THE MOST ATTRACTIVE AVAILABLE FARES
Air France and KLM want their customers to reap all the benefits of their complementary
networks by giving them access to the most attractive fares available, while at the same time
providing a wider choice of schedules and routes.
This is why the two airlines decided that almost all their fares could be combined. This facility is
available as of now on all Air France and KLM European markets, and will be gradually phased
in on the other markets.
Practically speaking, this means that a passenger can travel on either network at the best
possible fares of each airline. For example, he or she can travel one-way with Air France and
come back with KLM at the most attractive fares available (calculated by adding half of each of
the two roundtrip fares). This has broadened the choice of flight schedules.
Examples:
Madrid - Hong Kong –Madrid :
Customers can choose their outbound flight from the following schedules:
•
Madrid 12:55 - Hong Kong 09:45 (the next day) via Amsterdam-Schiphol with KLM
•
Madrid 20:20 – Hong Kong 17:00 (the next day) via Paris-CDG2 with Air France
And their return flight at the following times:
•
Hong Kong 11:40 – Madrid 22:15 via Amsterdam-Schiphol with KLM
•
Hong Kong 23:35 – Madrid 09:20 (the next day) via Paris-CDG2 with Air France
Example of KLM roundtrip fare Madrid-Hong Kong-Madrid: €695 exc. tax.
Example of Air France roundtrip fare Madrid-Hong Kong-Madrid: €679 exc. tax.
Fare offered to the customer: (695 + 679) divided by 2 = €687 exc. tax, i.e. €737.12 inc. tax.
(Fare subject to conditions)
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
8
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
Vienna – Johannesburg-Vienna :
Customers can choose their outbound flight from the following schedules:
•
Vienna 06:55 – Johannesburg 20:45 via Amsterdam-Schiphol with KLM
•
Vienna 19:40 – Johannesburg 09:40 via Paris-CDG2 with Air France
And their return flight at the following times:
•
Johannesburg 22:40 – Vienna 15:35 via Amsterdam-Schiphol with KLM
•
Johannesburg 20:00 – Vienna 09:15 via Paris-CDG2 with Air France
Example of KLM roundtrip fare Vienna-Johannesburg-Vienna : €638 exc. tax.
Example of Air France roundtrip fare Vienna-Johannesburg-Vienna: €819 exc. tax.
Fare offered to the customer: (638 + 819) divided by 2 = €729 exc. tax, i.e. €821.84 inc. tax.
(Fare subject to conditions)
Amsterdam – Los Angeles – Amsterdam
Customers can choose to travel with either Air France or KLM depending on whether one of the
flights is full. For example:
Non-stop flight: Amsterdam 11:30 - Los Angeles 13:45 with KLM
Or flight via Paris -CDG 2: Amsterdam 11:20 – Los Angeles 15:50 with Air France
Return flight: Los Angeles 16:10 – Amsterdam 11:40 with KLM
Example of KLM roundtrip fare Amsterdam -Los Angeles-Amsterdam non stop: €612 exc. tax.
Example of Air France roundtrip fare Amsterdam -Los Angeles –Amsterdam via Paris-CDG:
€450 exc. tax.
Fare offered to the customer: (612 + 450) divided by 2 = €531 exc. tax, i.e. €625.56 inc. tax.
For the customer, this wider choice of routes, as can be seen from the above examples,
increases the number of available seats at the best possible fares.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
9
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
This facility is generally only offered by other airlines on full fares.
These “combinable” fares will enable Air France and KLM to respect the principle of “one group,
two airlines”.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
10
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
1ST JUNE: FREQUENT SERVICE BETWEEN PARIS AND AMSTERDAM
TO LINK UP THE AIR FRANCE AND KLM NETWORKS
At regular intervals throughout the day, the two airlines will schedule fifteen code-shared flights
each way between Paris and Amsterdam. Air France and KLM will thus be offering their
customers a very attractive service between the two capitals, with a total capacity of nearly 4,500
seats a day in both directions. This service will also increase the number of available connections
worldwide via Paris-CDG or Amsterdam-Schiphol.
CDG à
Airline
AF
AF
AF
KL
KL
KL
AF
AF
KL
AF
KL
AF
AF
KL
KL
AMS
depart
06:55
07:30
08:10
09:00
09:45
10:30
11:40
12:35
13:35
15:40
16:20
17:50
18:40
19:00
20:45
arrival
08:05
08:40
09:20
10:10
11:00
11:45
12:50
13:45
14:55
16:50
17:35
19:00
20:00
20:10
22:00
AMS à
Airline
KL
KL
KL
AF
AF
AF
KL
AF
KL
AF
KL
AF
KL
AF
AF
CDG
depart.
06:55
07:40
08:10
08:55
09:35
10:35
11:20
13:35
14:15
15:30
16:50
18:05
18:50
20:00
20:45
arrival
08:00
08:55
09:30
10:10
10:50
11:50
12:30
14:50
15:20
16:45
18:00
19:20
19:55
21:15
22:05
Starting on 1 June 2004, KLM flights will operate out of Paris-Charles de Gaulle Terminal 2F, at
the heart of Air France’s hub. Air France flights to Amsterdam, as well as Alitalia flights, will also
be based at Terminal 2F. This terminal is next to Terminal 2E, where the other SkyTeam member
airlines, namely Aeromexico, CSA, Delta and Korean Air, operate from. Also starting 1st June,
KLM’s partner Northwest Airlines will also operate from Terminal 2E. The Air France and KLM
flights at Amsterdam-Schiphol will also leave from the same boarding area at Departure Hall 2.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
11
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
1st JUNE: ENHANCED SERVICES TO FRENCH AND DUTCH REGIONS
TO LINK UP THE AIR FRANCE AND KLM NETWORKS
Air France and KLM will be enhancing their services between Amsterdam and French regional
destinations, and between Paris and Dutch regional destinations, with the launch of three new
routes, starting from 1 June, namely:
•
Amsterdam -Bordeaux: 3 daily Air France flights
•
Amsterdam -Marseille: 2 daily KLM flights (3 daily flights as from 30 August 2004)
•
CDG-Rotterdam: 2 daily KLM flights (3 daily flights as from 30 August 2004)
The “AF” code will be added to KLM’s three daily Eindhoven-Paris CDG flights.
This will be in addition to the following existing services:
•
Amsterdam -Lyon: 6 daily flights with schedules and capacity already coordinated by the
two airlines
•
Amsterdam -Toulouse: 3 daily flights
•
Amsterdam -Nice: 3 daily flights
•
Amsterdam -Clermont-Ferrand: 2 daily flights
•
Connections to/from many other French destinations are offered via Paris-CDG, Lyon and
Clermont-Ferrand.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
12
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
1st JUNE: EVEN MORE ATTRACTIVE FREQUENT FLYER
PROGRAMMES FOR 9.3 MILLION PASSENGERS
During the course of 2005, Air France and KLM will merge their frequent flyer programmes
Fréquence Plus and Flying Dutchman to launch a new, combined Frequent Flyer Programme.
This is the first time that two national airlines merge their FFPs and create a single database
grouping all their members, i.e. 6.5 million members for Air France and 2.8 million for KLM,
making a total of 9.3 million frequent flyers.
However starting 1st June 2004, frequent flyers from both programmes will be able to accrue
miles and obtain reward tickets on the entire networks of Air France and KLM.
To begin with, this advantage will concern:
•
Fréquence Plus members travelling on “AF” and “KL” flights operated by KLM,
•
Flying Dutchman members travelling on “AF” and “KL” flights operated by Air France.
As from 1st of June 2004, all Air France and KLM lounges worldwide will be open to eligible
passengers of both airlines (Fréquence Plus Red cardholders, Flying Dutchman Platinum and
Gold cardholders, KLM Plus cardholders, and passengers travelling in First, Business and
Europe Select classes).
In 2005, the integrated Air France / KLM Frequent Flyer Programme will offer customers one
programme and one card to access a very extensive network and a wide range of commercial
and airline partners, thanks to whom they can earn miles and obtain rewards.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
13
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
EARLY-JUNE: AIR FRANCE AND KLM LAUNCH RECIPROCAL
ELECTRONIC TICKETING
Starting in early June 2004, KLM customers can take advantage of electronic ticketing - a
substitute solution to the traditional paper ticket - on eligible AF flights, whether operated by Air
France or one of its franchised subsidiaries - Brit Air, Régional or City Jet. Conversely, Air France
passengers will have access to electronic ticketing on virtually all KLM flights, operated by KLM,
KLM Cityhopper or KLM Exel.
For instance, a KLM customer can use the same electronic ticket for an Amsterdam/Paris/Lisbon
round trip, with the Paris/Lisbon route operated by Air France, either on an AF/KL code-share or
just on an AF code.
Another example: an Air France customer can use the same electronic ticket for a
Bordeaux/Amsterdam/Oslo round trip, with the Amsterdam/Oslo route operated by KLM,
whatever the code, whoever the operator.
To begin with, Air France passengers having purchased their ticket directly through Air France
(city or airport ticket offices, Air France websites, call centers, etc.) will have access to electronic
ticketing on KLM. This service will be extended to travel agencies in the autumn of 2004.
Already, customers greatly appreciate the benefits of this service: no risk of mislaying or
forgetting their ticket, possibility of purchasing a ticket and modifying a trip (where applicable) in
the comfort of their home. Air France and KLM are already offering their customers this service
on flights with their respective partners, Delta and Northwest.
Today electronic ticketing accounts for one-third of ticket issues for both Air France and KLM.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
14
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
SPECIAL AIR FRANCE-KLM OFFER IMMEDIATELY AVAILABLE
To celebrate their merger, Air France and KLM will launch a special offer enabling
passengers to travel on one or both airlines.
Medium-haul services:
One-way fares on departure from France or the Netherlands starting at
45 euros inc. tax
(sold on a roundtrip basis only).
Examples of one-way fares from Paris including tax (sold on a roundtrip basis only): London
starting at 45 euros, Amsterdam at 60 euros, Madrid at 65 euros.
Examples of one-way fares from the Netherlands including tax are Rotterdam -Paris starting at 45
euros, Amsterdam -Paris at 60 euros and Amsterdam-Zurich starting at 67 euros (sold on a
roundtrip basis only).
This offer is also available on departure from virtually all European countries.
Examples of one-way fares from Geneva including tax: Paris starting at 88 Swiss francs,
Amsterdam starting at 130 Swiss francs.
For sale from 6 to 15 May 2004 in France and the Netherlands, from 10 May to 5 June in the rest
of Europe.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
15
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
Valid for travel :
•
in the Air France Tempo or KLM Economy cabins
•
between 5 July and 28 August 2004 (last return on 30 August).
Possibility of combining an Air France flight with a KLM flight (one-way with one airline and return
with the other) to and from virtually all European countries.
Fares subject to conditions. For information and reservations, call 0 820 820 820 in France or
0 20 4 747 747 in the Netherlands, or Air France and KLM ticket offices or travel agents.
Long-haul services:
Up to
70% discount in Business Class
to 31 Air France and KLM destinations
worldwide on departure from Paris, Amsterdam, the French regions or from almost any European
country (via CDG or Schiphol) : Amman, Bangkok, Beijing, Beirut, Boston, Cairo, Cape Town,
Chicago, Damascus, Douala, Dubai, Guangzhou, Hong Kong, Jakarta, Johannesburg, Lagos,
Los Angeles, Manila, Mexico City, Miami, New Delhi, New York, Philadelphia, Rio de Janeiro,
San Francisco, Sao Paulo, Seoul, Shanghai, Singapore, Teheran, Washington.
For sale from 6 to 15 May 2004 in France and the Netherlands, from 10 May to 5 June in the rest
of Europe. This offer will be renewed in autumn 2004.
Valid for travel :
•
in the Air France l’Espace Affaires or KLM Business Class cabin,
•
between 1 July (Netherlands and Europe) or 5 July (France) and 23 August 2004 (last
return on 30 August).
Possibility of combining an Air France flight with a KLM flight (one-way with one airline and return
with the other), e.g. Lyon-Paris-Johannesburg with Air France, Johannesburg-Amsterdam-Lyon
with KLM.
Fares subject to conditions. For information and reservations, call 0 820 820 820 in France or
0 20 4 747 747 in the Netherlands, or Air France and KLM ticket offices or travel agents.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
16
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
II.
CLEARLY IDENTIFIED SYNERGIES
Air France and KLM have already identified and assessed a certain number of potential
synergies. These synergies should result in a growing, annual improvement of 385-495
million euros on the Group’s consolidated operating income, as early as the fifth year.
These synergies will be achieved through network optimization, improved organization of
passenger and cargo operations, an expanded offering of maintenance services, as well
as cost reductions in purchasing, sales distribution and IT applications. Customers will
also benefit from these synergies through an expanded network, attractive fares and
enhanced service on all the new Group’s flights.
A positive impact on the Group’s consolidated operating income of 385-495 million euros
Main Actions
Identified annual synergies
Year 3
Sales/distribution
Year 5
Harmonizing sales policies
Coordinating sales forces
Reducing sales, catering and
ground handling costs
Network
€40m
€100m
€95m - €130m
€130m - €195m
€35m
€35m
Optimizing networks and schedules
Revenue Management Harmonizing revenue management
Fleet
Optimizing fleet management
Coordinated management
Cargo
Optimizing networks
Coordinating sales policies
Sales cooperation
Maintenance
Purchasing
Insourcing of subcontracted work
Pooling of spares, etc.
€25m
€60m - €65m
IT systems
Gradual converging of IT systems
€20m
€50m - €70m
Other
Joint purchasing
€5m - €10m
€10m - €30m
TOTAL
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
€220m - €260m
17
May 5, 2004
€385m - €495m
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
Sales/distribution/stations
Through coordination of its two sales organizations, the new Group will strengthen its presence
worldwide and will be able to attract more passengers. A joint negotiation position with catering
and ground handling partners could also lead to additional cost reductions.
Commercial synergies will mainly concern:
•
cost reductions: distribution, station handling, catering, etc.
•
harmonization of sales policies,
•
the gradual grouping of sales and operations teams as needed,
•
sharing of airport lounges.
Network management
By fully code-sharing and coordinating flight schedules, the two airlines will be able to offer
passengers more destinations and connecting flights. This will lead to an increase in the number
of passengers as well as in enhanced sales performance.
Air France and KLM will leverage the complementarity of their two medium-haul networks. Air
France has a well developed medium-haul network in southern Europe, while KLM is particularly
strong in northern Europe. The new Group will also be well-positioned to strengthen its network
in Central and Eastern Europe.
Air France services between Paris-CDG and Bristol and Paris and Birmingham-Glasgow 1, as well
as those of KLM between Amsterdam and Casablanca and Amsterdam and Turin, all very
unprofitable routes, are to be suspended as of 1 June 2004. Connecting passengers will however
still be able to take advantage of connections to all of those destinations via the Paris-CDG or
Amsterdam-Schiphol hubs.
1
The non -stop roundtrip service between CDG & BHX will, however, remain unchanged
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
18
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
On the long-haul network, wherever Air France and KLM offer less than 6 or 7 weekly flights or
flights with stopovers, these flights will be rationalized and upgraded in order to offer customers
daily non-stop service. For example:
§
Air France will operate a daily Paris-CDG-Caracas flight, and KLM will add the ‘KL’ code
on these flights, once traffic rights have been obtained via Paris. KLM will suspend its
Amsterdam -Caracas flights as from 1 June 2004.
§
KLM will offer 5 non-stop weekly flight between Amsterdam and Manila. Air France will
add the ‘AF’ code on Paris-CDG-Manila itineraries once traffic rights have been obtained
via Amsterdam, and will suspend its Paris-Manila service with a stopover in Bangkok as
from 31 October 2004.
Furthermore, starting 31 October 2004, Air France and KLM will group, in Singapore, their
passengers travelling to Jakarta, transferring them to one aircraft to avoid operating two
simultaneous services from Singapore to Jakarta.
Cargo
With an integrated decision-making unit, a consistent and complementary freighter network and
a unified sales structure on the markets, Air France Cargo and KLM Cargo will be able to provide
their customers with a global offering, guarantee development to their staff thanks to future
investments, and generate long-term profitability.
Maintenance
Air France Industries and KLM Engineering & Maintenance will implement a joint strategy of
developing synergies.
This strategy will be based on:
•
The redirecting of currently outsourced work to the partner airline at market conditions.
For example, KLM will maintain Air France’s electric power components and GE CF680E1 engines powering its Airbus A330 fleet, and Air France will maintain KLM’s
components and GE90 engines of its Boeing 777 fleet.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
19
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
•
The sharing of maintenance policies wherever possible, which will result in significant
savings in stocks of spare parts.
•
Coordination of production schedules and capacity on common products (major
overhauls, maintenance of Boeing 747 CF6 engines) to better cater to customer demand.
•
A joint purchasing policy with regard to suppliers.
•
Increased turnover from customer airlines by leveraging the commercial assets and
complementarities of each airline, as well as economies of scale gained through
combined facilities.
Information Systems
Converging the IT applications used by both airlines should generate considerable cost savings
in the medium term. These are included in the assessment of synergies.
Other synergies
Optimizing and harmonizing other activities such as simulator utilization and joint purchasing
should deliver further savings.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
20
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
Build-up of Synergies (in million euros)
Long term
385-495
295-370
220-260
110-135
65-75
2004-05
2005-06
2006-07
2007-08
2008-09
Long term
Around 60% of synergies are derived from cost savings and 40% from additional revenue. The
above estimations do not include synergies from marketing cooperation with Air France’s and
KLM’s respective partners.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
21
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
III. PARIS-CHARLES DE GAULLE AND
AMSTERDAM-SCHIPHOL:TWO MAJOR ASSETS FOR
AIR FRANCE AND KLM
Starting 1st June 2004, KLM flights will be handled in Terminal 2F, at the heart of the Air
France hub in Paris-Charles de Gaulle. Air France flights to Amsterdam, together with
those of Alitalia, will be operated out of Terminal 2F. This terminal is located close to the
new Terminal 2E, where flights of other SkyTeam member airlines operate - Aeromexico,
CSA, Delta, Korean Air and, also Northwest, KLM's partner, as from 1 June 2004. The Air
France and KLM flights at Amsterdam-Schiphol will also leave from the same boarding
area at Departure Hall 2. This arrangement will ensure a more seamless service for
passengers of both airlines in Paris and Amsterdam.
Paris-CDG2 and Amsterdam-Schiphol are among Europe’s most efficient hubs and boast
substantial development potential.
With 17,300 medium-haul/long-haul weekly connecting opportunities in under two hours, the Air
France Paris-Charles de Gaulle 2 hub is the most efficient in Europe and attracts passengers
from all over the world. At the end of the year, four airport runways should be operating
simultaneously. Furthermore, the hub has a strong development potential with the gradual
opening of Terminal 2E and its satellites.
KLM’s hub at Schiphol Airport is Europe’s fourth largest hub with 5,600 connecting mediumhaul/long-haul possibilities per week.
Schiphol is Europe’s fourth largest airport in terms of passenger traffic. Over 40 million
passengers transit here each year, along with over 1.2 million tonnes of freight. In 2003, Schiphol
recorded 393,000 flight movements. On 20 February 2003, a fifth runway known as the “Polder
Runway” was brought into service.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
22
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
Capacity
Paris-Charles de Gaulle
Amsterdam-Schiphol
48.4 million passengers (3rd in Europe)
40.7 million passengers (4th in Europe)
4 runways
5 runways
Flight movements: 1st in Europe
Simultaneous use of all four runways
Potential (end 2004)
Flight movements: 4th in Europe
Full use of new fifth runway and airport extension
Terminal 2E and satellites
Map of CDG2 Terminals 2A, 2B, 2C, 2D, 2E and 2F
Terminal 2F1
Terminal 2B
Terminal 2D
Terminal 2A
Terminal 2D
Gare TGV
Alitalia
KLM
Terminal 2F
Terminal 2E
Terminal 2E
Aeromexico
CSA
Delta Air Lines
Korean Air
Northwest
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
23
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
Installation of KLM at Terminal 2F on 1s t June 2004
2 KLM
Ticketing
positions
AF/KL
Check-in
area
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
24
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
Map of Amsterdam-Schiphol. Air France and KLM flights check-in in the same
area in Departure Hall 2
KL/AF
Check-in area
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
25
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
IV. SKYTEAM : A LEADING ALLIANCE
Once KLM, Northwest and Continental join SkyTeam mid-September 2004, it will become
the world’s second largest alliance. As a result, Air France and KLM will be able to offer
their passengers all the benefits of SkyTeam.
Breakdown of market share for the major alliances
after KLM, Northwest and Continental join SkyTeam
SkyTeam
21%
KL-NW-CO
Others
38%
Star Alliance
24 %
oneworld
17%
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
26
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
V. GOVERNANCE OF THE AIR FRANCE-KLM GROUP
Air France Chairman and CEO, Jean-Cyril Spinetta, will be the Chairman and CEO of
Air France-KLM. The President and CEO of KLM, Leo van Wijk, will be Vice Chairman of
the Board of Directors of Air France-KLM.
A Strategic Management Committee will be responsible for overall Group strategy.
The Air France-KLM Board of Directors
After the Air France General Shareholders' Meeting on 24 June 2004, the Board of Directors will
be that of Air France, extended to 26 members to include the President and CEO of KLM, two
independent directors appointed by KLM’s Supervisory Board and one director appointed by the
Dutch State.
In September 2004, after the hive down of the operating assets of both Air France and KLM, the
composition of the Air France-KLM Board of Directors will change. The listed company will then
take the name of Air France-KLM.
Strategic Management Committee
The Strategic Management Committee (or SMC) met informally for the first time in February
2004, and then every 15 days alternately in Paris and Amsterdam. The Strategic Management
Committee is the governing body for the new Group. It has been officially set up since the
closing of the PEO on 3 May 2004. The Committee defines the overall strategy for the Group:
network and hub coordination, budget and mid-term planning, fleet and investment strategy,
alliance strategy. It also decides on the implementation of synergies proposed by the joint
working groups. Chaired by Jean-Cyril Spinetta, Chairman and CEO of Air France–KLM, the
Strategic Management Committee will comprise four Air France representatives and four KLM
representatives. The Chairman of the SMC benefits from a deciding vote on all decisions except
those concerning modifications to the assurances given to KLM, the scope of Group activities
and the conclusion of any intra-Group agreement other than arm’s length.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
27
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
Corporate governance of the two operating airlines
Each operating airline remains responsible for its own commercial and operational management
on a daily basis (human resources, flight and ground operations, safety, etc.) and will be
responsible for the implementation of the recommendations made by the SMC.
KLM Supervisory and Management Boards
During the transitional period of three years after the transaction, the KLM Supervisory Board will
comprise nine members including four appointed by Air France. This Supervisory Board will be
appointed at the KLM General Shareholders Meeting on 23 June 2004. After the transitional
period, Air France will appoint five out of the nine members.
The KLM Management Board will consist of five members including one appointed by
Air France.
Air France Executive Committee
One KLM executive will sit on the Air France Executive Committee.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
28
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
VI. AIR FRANCE-KLM GROUP STRUCTURE
Final Structure
Current Air France
shareholders
Current KLM
shareholders
Air France-KLM
Listed company
100%
100%
Air France
KLM
Operating company
Operating company
After completion of the offer and until September 2004
Current Air France
Current KLM
shareholders
shareholders
Air France
Foundations
Dutch State
Listed company
36.3%
of voting rights
100% of economic rights
and 49% of voting rights
KLM
14.7%
of voting
rights
Dutch State
Option
Operating Airline
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
29
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
Starting September 2004 for 3 years
Current Air France
Current K L M
shareholders
shareholders
Air France-K L M
Foundations
Listed company
100%
100% of economic rights
a n d 49% of voting rights
36.3%
o f voting rights
Air France
KLM
Operating company
Operating c o m p a n y
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
30
May 5, 2004
Dutch
State
14.7%
of voting
rights
Dutch State
Option
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
ANNEXES
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
31
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
FACTS AND FIGURES
Air France-KLM:
1st worldwide in terms of revenue:
19.2 billion euros (2002/03 data)
3rd worldwide in terms of revenue passenger-km
1st worldwide non-consolidator cargo airline in terms of revenue tonne-km
225 destinations served – 106 long-haul and 119 medium-haul
106,000 employees
2002/03 data
Air France
KLM
Air France-KLM
Passengers (million)
42.9
23.4
66.3
Aircraft in operation
360
178
538
2002/03 data
Air France
In million euros
KLM
2003-04 (9 months) 2002-03 2003-04 (9 months) 2002-03
Turnover
9,325
12,687
4,500
6,485
EBITDAR*
1,414
1,738
572
606
149
172
94
(133)
80
107
44
(416)
Operating income
Net income
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
32
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
LAUNCH OF WORLDS’S LEADING AIRLINE GROUP
IN TWELVE KEY DATES
30 September 2003: Jean-Cyril Spinetta and Leo van Wijk announce the proposed merger
between Air France and KLM at two press conferences held in Amsterdam and then in Paris.
16 October 2003: Jean-Cyril Spinetta and Leo van Wijk sign the final transaction agreement
between the two airlines in Amsterdam.
11 February 2004: The European Commission and U.S. Department of Justice clear the
proposed merger.
2 April 2004: Air France announce the launch of the recommended public exchange offer (PEO)
for the ordinary KLM shares on 5 April 2004.
5 April 2004: Launch of the public exchange offer.
19 April 2004: KLM General Shareholders’ Meeting adopt the amendment of the Company’s
Articles of Association enabling the creation of the new Air France-KLM Group.
20 April 2004: Air France General Shareholders’ Meeting vote the capital increase required to
remunerate KLM shareholders.
3 May 2004: Closing of the public exchange offer.
4 May 2004 : Air France announces the successful conclusion of the PEO.
5 May 2004: Jean-Cyril Spinetta and Leo van Wijk announce the birth of the Air France-KLM
Group, the world ‘s leading airline group, at a press conference in Paris.
24 June 2004: Air France General Shareholders’ Meeting to approve the composition of the new
Board of Directors extended to 26 members, until September 2004.
September 2004: Air France General Shareholders’ Meeting to rule on the creation of the Air
France operating company and the change of company name to Air France-KLM.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
33
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
Jean-Cyril SPINETTA
Chairman and C.E.O of Air France
Born in Paris on 4 October 1943, Jean-Cyril Spinetta holds university degrees in public law and
political science. He also graduated from the Ecole Nationale d’Administration.
He entered the French Civil Service as Head of the Investments and Planning Department of the
Ministry of Education in 1972 and was subsequently seconded to the Council of State as auditor
in 1976. Thereafter he held a series of positions including Head of the Information Department for
the Prime Minister (1981), Director at the Ministry of Education (1983) and Chief of Staff for
Michel Delebarre (1984), who was successively Minister of Labour and Vocational Training,
Minister of Social Affairs and Employment and Minister of Planning and Development, Housing
and Transport.
Mr. Spinetta joined Air Inter as Chairman and C.E.O. in 1990, where he remained until 1993. He
subsequently held the post of advisor to the President of France for industrial matters from 1994
to 1995. In January 1996, he joined the staff of the European Commissioner in charge of
science, research and education.
Mr. Spinetta was appointed Chairman and C.E.O. of Air France on 22 September 1997.
Jean-Cyril Spinetta was Chairman of the Association of European Airlines for the year 2001.
Mr. Spinetta is an «Officier de la Légion d’Honneur», “Officier de l’Ordre National du Mérite” and
“Officier des Palmes Académiques”.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
34
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com
LEO M. VAN WIJK
President and Chief Executive Officer
Leo M. van Wijk was born in Amsterdam in 1946.
After completing his secondary education, he studied at Amsterdam University, receiving a
Masters Degree in Econometrics in 1971.
Mr. Van Wijk joined KLM Royal Dutch Airlines on May 1st of that year. During his early
career at KLM he held various positions in Automation Services. In 1977 he moved to
Cargo Division, being appointed Manager Cargo Handling in March 1979. In early 1983,
Mr. Van Wijk was appointed Manager Cargo Marketing and, at the same time, Deputy Vice
President KLM Marketing. His appointment as Vice President KLM Marketing followed on
May 1, 1984.
On May 1, 1987, he moved to a new position as Deputy to the Senior Vice President
Commercial Services. Two years later, Mr. Van Wijk became Senior Vice President
Corporate Development on January 1, 1989.
Mr. Van Wijk joined the Board of Managing Directors on January 1, 1991. Leo van Wijk
became KLM’s President and Chief Executive Officer (CEO) on August 6, 1997.
Leo van Wijk was Chairman of the Association of European Airlines for the year 2002.
Air France Corporate Communications
45, rue de Paris
95747 Roissy Cedex, France
Internet: www.airfrance.com/corporate
35
May 5, 2004
KLM Corporate Communications
P.O. Box 7700
1117 ZL Schiphol Airport, The Netherlands
Internet: www.klm.com