greater coordination and integration and this is acting as a major driver of

Greater coordination and integration and this is

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greater coordination and integration and this is acting as a major driver of the earnings and margin improvements. While we have assumed rising margins going forward, this does not yet take into account the assumption of synergies higher than EUR1bn by 2010/2011. Table 18: Revenue and synergy targets EURm 04/05 05/06 06/07 07/08e 08/09e 09/10e 10/11e Revenue synergies 60 205 260 305 325 390 445 Cost synergies 55 145 265 360 425 475 555 Total 115 350 525 665 750 865 1,000 Source: Company, Exane BNP Paribas estimates
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41 Air France-KLM Paris-CDG new terminal facilities lower costs Air France-KLM will enjoy an airport capacity expansion at Paris-CDG equivalent to around two thirds of the passenger handling capacity of T5 at Heathrow at the same time as commissioning of T5 (the expansion is Satellite S3, full usage of Terminal 2E and the new regional terminal T2G located east of S3 which will improve connections). There are also substantial efficiency and cost savings associated with the concentration on the linked 2C, 2F, 2E, S3 and T2G terminal complex by mid-2008. Total passenger handling capacity of the combined Air France-KLM/SkyTeam terminal area complex will be more than 38m in 2008, compared to a design capacity of 30m at Heathrow T5 for BA, i.e. a similar dedicated terminal area but constructed around a more dispersed number of gates/satellites designed to accommodate connecting traffic to the main long-haul base at 2E/S3 and thus the maximum number of contact stands. Terminal 2C has a current passenger handling capacity of 4m, 2F 10m passengers, 2E 13m (from 6m currently), S3 is able to handle 8.5m passengers and the regional terminal 2G has a 3m passenger handling capacity. Terminal T4, which is planned to be constructed to the East of Terminal 2E will add a further 25m passenger capacity after 2014 taking the total SkyTeam dedicated area to passenger capacity of 63.5m. Fuel costs: hedging continues to contain costs Air France-KLM is one of the best hedged airlines in Europe and benefits from the decision to replace a large part of the long-haul fleet earlier than its peers. Table 19: Fuel hedging and cost profile Component 07/08e 08/09e 09/10e 10/11e Brent (USD/barrel) 81 88 84 82 Jet fuel new CIF (USD/ton) 791 855 820 801 Consumption (000 m3) 11,573 11,983 12,456 12,813 % of consumption hedged 78 67 51 31 Average hedge price (USD/ton) 61 60 67 68 Final cost (USD/barrel) 66 69 75 78 Cost before hedge (USDbn) 7.5 8.5 8.5 8.6 Cost after hedge (USDbn) 6.4 7.1 7.8 8.2 Note: data are at 9 November 2007 Source: Company, Exane BNP Paribas estimates This will continue going forward, since hedge positions are increased opportunistically when the crude price dips and thus we are looking at dynamic and not static positions. The latest fuel hedge figures show that Air France-KLM is 78% hedged for the current year at an average hedge price of USD61/bbl (final price of USD66/bbl). However, we are at very early days in respect of hedging cover and the company will opportunistically add to the positions on any oil price weakness. We estimate that fuel expenses should rise from USD6.3bn reported in 2006/07 to USD6.4bn (+8%) in 2007/08 and USD7.1bn (+9%) in 2008/09, all at around USD81/bbl Brent crude
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  • Spring '11
  • Steve
  • Business, SkyTeam, Air France-KLM

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