Filed by Air France
This communication is filed pursuant to Rule 425 under The Securities Act of 1933, as amended,
and deemed filed pursuant to Rule 14d-2 of the Securities Exchange Act of 1934, as amended.
Subject Company: KLM Royal Dutch Airlines
Commission File Number: 001-04059
Date: February 18, 2004
Legal Information
The combination of KLM and Air France will be implemented through an exchange offer made by Air France to all shareholders of KLM common shares. This document is neither an offer to purchase nor a solicitation of an offer to sell shares of KLM. Any offer in the United States will only be made through a prospectus which is part of a registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission (the “SEC”). KLM shareholders who are U.S. persons or are located in the United States are urged to carefully review the registration statement on Form F-4 and the prospectus included therein, the prospectus, the Schedule TO and other documents relating to the offer that will be filed by Air France with the SEC because these documents contain important information relating to the offer. You are also urged to read the related solicitation/recommendation statement on Schedule 14D-9 that will be filed with the SEC by KLM regarding the offer. You may obtain a free copy of these documents after they are filed with the SEC and other documents filed by Air France and KLM with the SEC at the SEC’s web site at www.sec.gov. Once such documents are filed with the SEC, you will also be able to inspect and copy the registration statement on Form F-4, as well as any documents incorporated by reference therein, the Schedule TO and the Schedule 14D-9 at the public reference room maintained by the SEC at 450 Fifth Street, NW, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. These documents may also be obtained free of charge by contacting Air France, Investor Relations, 45, rue de Paris, 95747 Roissy CDG Cedex, France. (tel: +33 1 41 56 88 60), or KLM, Amsterdamsweg 55, 1182 GP Amstelveen, The Netherlands. Attention: Investor Relations (tel: +31 20 64 93099). YOU SHOULD READ THE PROSPECTUS AND THE SCHEDULE 14D-9 CAREFULLY BEFORE MAKING A DECISION CONCERNING THE OFFER.
Forward-Looking Statements
The information herein contains, and the Air France, KLM and their representatives may make, forward-looking statements either orally or in writing, about Air France, KLM and their businesses. These forward-looking statements, which include, but are not limited to, statements concerning the financial condition, results of operations and businesses of Air France and KLM and the benefits expected to result from the contemplated transaction, are based on management’s current expectations and estimates.
These forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside of Air France or KLM’s control and are difficult to predict, that may cause actual results to differ materially from any future results expressed or implied from the forward-looking statements. These statements are not guarantees of future performance and involve risks and uncertainties including, among others: the risk that the conditions relating to the required minimum tender of shares might not be satisfied; failure by Air France and KLM shareholders to approve the planned corporate reorganizations; inability to obtain, or meet the conditions imposed for, regulatory approvals in a timely manner or at all; the risk that the businesses of Air France and KLM will not be integrated successfully and the expected synergies and cost savings will not be achieved; unanticipated expenditures; changing relationships with customers, suppliers and strategic partners; and other economic, business, competitive and/or regulatory factors affecting the businesses of Air France and KLM generally. Air France and KLM caution that the foregoing list of important factors is not exhaustive. Additional information regarding the factors and events that could cause differences between forward-looking statements and actual results in the future is contained in KLM’s Securities and Exchange Commission filings, including KLM’s Annual Report on Form 20-F. Air France and KLM undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
THE FOLLOWING IS A PRESENTATION DISSEMINATED BY AIR FRANCE ON FEBRUARY 18, 2004.
2003-04 3rd Quarter Results
Disclaimer
Warning about Forward-Looking Statements
This presentation contains, and the Air France, KLM and their representatives may make, forward-looking statements either orally or in writing, about Air France, KLM and their businesses. These forward-looking statements, which include, but are not limited to, statements concerning the financial condition, results of operations and businesses of Air France and KLM and the benefits expected to result from the contemplated transaction, are based on management’s current expectations and estimates.
These forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are outside of Air France or KLM’s control and are difficult to predict, that may cause actual results to differ materially from any future results expressed or implied from the forward-looking statements. These statements are not guarantees of future performance and involve risks and uncertainties including, among others: the risk that the conditions relating to the required minimum tender of shares mght not be satisfied; failure by Air France and KLM shareholders to approve the planned corporate reorganizations; inability to obtain, or meet the conditions imposed for, regulatory approvals in a timely manner or at all; the risk that the businesses of Air France and KLM will not be integrated successfully and the expected synergies and cost savings will not be achieved; unanticipated expenditures; changing relationships with customers, suppliers and strategic partners; and other economic, business, competitive and/or regulatory factors affecting the businesses of Air France and KLM generally. Air France and KLM caution that the foregoing list of important factors is not exhaustive. Additional information regarding the factors and events that could cause differences between forward-looking statements and actual results in the future is contained in KLM’s Securities and Exchange Commission filings, including KLM’s Annual Report on Form 20-F.
Where to Find Additional Information about the Transaction
The proposed combination of KLM and Air France will be implemented through an exchange offer made by Air France to all shareholders of KLM common shares. This presentation is neither an offer to purchase nor a solicitation of an offer to sell shares of KLM. Any offer in the United States will only be made through a prospectus, which is part of a registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission (the “SEC”). KLM shareholders who are U.S. persons or are located in the United States are urged to carefully review the registration statement on Form F-4 and the prospectus included therein, the prospectus, the Schedule TO and other documents relating to the offer that will be filed by Air France with the SEC because these documents contain important information relating to the offer. You are also urged to read the related solicitation/recommendation statement on Schedule 14D-9 that will be filed with the SEC by KLM regarding the offer. You may obtain a free copy of these documents after they are filed with the SEC and other documents filed by Air France and KLM with the SEC at the SEC’s web site at www.sec.gov. Once such documents are filed with the SEC, you will also be able to inspect and copy the registration statement on Form F-4, as well as any documents incorporated by reference therein, the Schedule TO and the Schedule 14D-9 at the public reference room maintained by the SEC at 450 Fifth Street, NW, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. These documents may also be obtained free of charge by contacting Air France, Investor Relations, 45, rue de Paris, 95747 Roissy CDG Cedex, France. (tel: +33 1 41 56 88 60), or KLM, Amsterdamsweg 55, 1182 GP Amstelveen, The Netherlands. Attention: Investor Relations (tel: +31 20 64 93099).
YOU SHOULD READ THE PROSPECTUS AND THE SCHEDULE 14D-9 CAREFULLY BEFORE MAKING A DECISION CONCERNING THE OFFER.
This communication does not constitute an offer to buy or the solicitation of an offer to sell any securities.
2
Key Factors in Q3
Context
Flat economic environment
High fuel prices
Dollar continues to fall
Air France
Increased traffic and traffic revenue
Improved operating margin
Air France-KLM
Clearance from competition authorities
3
Activity
Passenger Activity: Good Performance in Q3
3rd Quarter
ASK
+2.7%
Load factor
75.4%
31-Dec-02
+0.5 pt
75.9%
31-Dec-03
RPK
+3.4%
April-December
ASK
+1.4%
Coefficient d’occupation
76.7%
31-Dec-02
-0.5 pt
76.2%
31-Dec-03
RPK
+0.8%
Recovery Over Last 6 Months…
ASK
RPK
Traffic rev. excl. currency effect
FY 2003-04
-3.0%
-5.7%
-5.5%
1st Quarter
4.4%
4.5%
3.1%
2nd Quarter
4.3%
2.7%
3.4%
3rd Quarter
1.4%
0.8%
0.5%
9 months
6
… In a Volatile Environment
Jan Feb Mar
Q4 2002-03
Apr May Jun
Q1 2003-04
Jul Aug Sep*
Q2 2003-04
Oct Nov Dec
Q3 2003-04
Jan
Q4 2003-04
* Adjusted for September 2002 strike effect 7
Long-Haul Network: High Load Factor
3rd Quarter
ASK
+1.4%
Load factor
79.9%
31-Dec-02
+1.0 pt
80.9%
31-Dec-03
RPK
+2.6%
April-December
ASK
+0.8%
Load factor
80.6%
31-Dec-02
- 0.5 pt
80.1%
31-Dec-03
RPK
+0.1%
8
Medium-Haul Network: Resilient Traffic but Yield Under Pressure
3rd Quarter
ASK
+6.6%
Load factor
60.9%
31-Dec-02
+0.1 pt
61.0%
31-Dec-03
RPK
+6.8%
April-December
ASK
+5.4%
Load factor
66,9%
31-Dec-02
- 1.3 pt
65.5%
31-Dec-03
RPK
+3.3%
9
Domestic Network Holds Up Well
3rd Quarter
ASK
+5.6%
Load factor
66.5%
31-Dec-02
-0.5 pt
66.0%
31-Dec-03
RPK
+4.8%
April-December
ASK
-0.5%
Load factor
65.5%
31-Dec-02
+1.7 pt
67.2%
31-Dec-03
RPK
+2.0%
10
Improved Net Unit Revenue
Group R/RPK: 9.43 € cts 3rd Quarter 2003-04
Group R/ASK: 7.15 € cts
Gross R/RPK
-2.4%
3.3%
Currency effect
Net RRPK: +1,0%
0.1%
Network mix effect
0.7%
Load factor effect
+1.7%
Net R/ASK
11
Commercial Performance Per Network
Air France Group 3rd Quarter 2003-04
ASK
Traffic revenues
0.4%
-8.4%
North America
15.8%
25.8%
Latin America
-2.6%
-1.4%
Asia
-1.2%
-1.5%
Africa Middle East
1.9%
-2.5%
Caribbean Indian Ocean
6.6%
-2.3%
Europe
5.6%
11.8%
France
2.7%
1.0%
Total
12
Cargo Activity
3rd Quarter
ATK
+3.5%*
Load factor
66.6%
31-Dec-02
-1.0 pt**
65.6%
31-Dec-03
RTK
+1.9%
* pro forma: +2.4%
** pro forma: -0.3 points
R/ATK: 15.17 € cts
Gross change
-7.3%
Currency effect
6.3%
Net change
-1.0%
13
Financial Results
3rd Quarter Results
In €m
31 Dec 03 31 Dec 02 30 Dec 02
pro forma* published
Turnover 3,132 3,136 3,136
Operating charges (3,071) (3,104) (3,134)
EBITDAR 468 448 378
EBIT** 61 32 2
Net interest charge (25) (29) (29)
Other 5 30 30
Consolidated pre-tax income 41 33 3
Group net income 28 21 2
* According to new accounting standards (IAS16-SIC23)
** Operating income before aircraft disposals
15
Operating Costs Under Control
Pro forma* changes 3rd Quarter 2003-04 (in €m)
Operating charges 3,071
Staff costs 1,023
Fuel costs 317
Depreciation & provisions 308
Selling costs 265
Incl. Travel agent commissions 133
Operating leases 111
Maintenance costs 94
Others 953
* According to new accounting standards (IAS16-SIC23)
EASK
+2.8%
Turnover
-0.1%
-1.1%
+5.5%
-11.0%
+6.9%
-6.7%
-5.7%
-14.6%
-19.7%
-0.6%
16
Unit Costs Contained
Group unit costs per EASK: 6.80 € cts 3rd Quarter 2003-04
Gross change
-3.2%
Currency effect
4.4%
Fuel price effect
0.5%
Net change
+0.7%
17
Total 9 Months
April-December
In €m
31 Dec 03 31 Dec 02 30 Dec 02
pro forma* published
Turnover 9,325 9,687 9,687
Operating charges (9,177) (9,384) (9,392)
EBITDAR 1,414 1,613 1,442
EBIT** 148 303 295
Net interest charge (76) (81) (81)
Other 54 64 64
Consolidated pre-tax income 126 286 278
Group net income 80 223 218
* According to new accounting standards (IAS16-SIC23)
** Operating income before aircraft disposals
18
Operating Income Per Sector Before Aircraft Disposals
April-December In €m
2002-03*
2003-04
215
106
Passage
27
9
Cargo
59
35
Maintenance
2
(2)
Other**
303
148
Total
* Pro forma: according to new accounting standards (IAS16-SIC23)
** Excl. Aircraft disposals 19
Investments Funded by Cash Flow
April-December In €m
Operating cash flow Aircraft disposals
Tangible and intangible investments
1,092
218
874
1,154
1,154
31-Dec-02
pro forma
Impact of IAS16 standard: €170 m
1,062
226
836
892
892
31-Dec-03
Impact of IAS16 standard: €167 m
20
Improved Gearing
In €bn
Net debt Net debt/equity
2.90
0.73
31-Mar-02
2.96
0.71
31-Dec-02
2.86
0.71
31-Mar-03
2.66
0.65
31-Dec-03
21
Outlook
Target for FY 2003-04
In the current volatile environment, the Air France Group is targeting a positive operating income before aircraft disposals and a net profit for the 2003-04 fiscal year
23
Update on the Air France-KLM Combination
Clearance from competition authorities
European Commission
U.S. Department of Justice
Launch of share exchange offer planed for second half of March
24
Annexes
April-December 2003
Commercial Performance Per Network
Air France Group
April-December 2003
ASK
Traffic revenues
0.6%
-12.4%
North America
11.7%
10.4%
Latin America
-8.9%
-18.8%
Asia
-6.0%
-5.8%
Africa Middle East
10.4%
10.6%
Caribbean Indian Ocean
5.4%
-4.5%
Europe
-0.5%
6.9%
France
1.4%
-3.4%
Total
26
Unit Revenue per ASK
Group R/ASK: 7.12 € cts April-December 2003-04
Gross change
-4.8%
3.9%
Currency effect
0.9%
Network mix effect
0.0%
Net change
27
Unit Costs
Group unit costs per EASK: 6.78 € cts April-December 2003-04
Gross change
-2.5%
Currency effect
4.6%
Fuel price effect
1.4%
Net change
+0.7%
28