Air France-KLM updates financial targets, to reduce capex plans by EUR600m

Air France-KLM announced (19-Feb-2015) plans for the "reinforced implementation" of its 'Perform 2020" five-year strategic plan, with the company adopting the following measures:

• 2015-2017 cost reduction target revised upward to "an average of 1.5% per year" from "between 1% and 1.5% per year";
• Investment plan revised downward by EUR300 million in 2015 and EUR300 million in 2016;
• 2015 target for unit cost reduction of 1-1.3%, net debt of "around" EUR5 billion by the end of 2015.

Air France-KLM also updated its medium term (2017) financial targets as follows, in order to "to take into account the significant fall in fuel prices, the increased volatility of currencies and unit revenues, and the impact of the pilot strike:

• The target on debt ratio becomes: an adjusted net debt/EBITDAR ratio of around 2.5 in 2017;
• The group maintains its free cash-flow target: base businesses to consistently generate annual positive free cash flow.

Air France-KLM stated: "The global context in early 2015 remains uncertain, with a significant drop in fuel prices, the continuation of the overcapacity situation on several long-haul markets, and a negative currency impact on results. In consequence, the Group believes that almost all of the expected savings on the fuel bill could be offset by unit revenue pressure and negative currency impacts." [more - original PR]