Press Release: transavia.com profitable, despite a difficult market

28 May 2009

In the financial year ending 31 March 2009, transavia.com was profitable for the 31st year in succession, and in doing so has once again made a positive contribution to the result of the Air France–KLM Group. Due to the disappointing market situation and cost increases the result is significantly lower than in the previous year. Turnover at transavia.com increased by 11.6% to €697.6 million, while operating expenses rose by 14.3% to €682.2 million. The result, before the contribution to corporate income tax, fell from €18.1 million to €11.1 million.

transavia.com continued to develop its international growth strategy over the past financial year, by starting charter and scheduled services from Denmark and flying scheduled flights from Innsbruck and Salzburg to various European cities during the winter season.

The total number of scheduled service routes from the Netherlands in the summer of 2008 was 22, and transavia.com flew to 73 charter destinations, of which on 31 also directly could be booked (seat only) by customers. In total, transavia.com carried 5.5 million passengers during the year covered by the report, an increase of 1.5% over the previous year.

transavia.com felt the impact of the drastically increased fuel prices, in the peak season in particular, as well as the rapid decline in the market due to the economic crisis in the second half year and finally the Flight Tax, which was introduced on 1 July 2008. The result was a decrease in demand, in particular for scheduled services. The company responded to these developments – in consultation with tour operators where necessary – with adjustments to the route network and a programme of cost savings.

New activities outside the Netherlands
Thanks to its decisive organisation and available aircraft- and crew capacity, transavia.com was in a position to rapidly take advantage of the bankruptcy of a Danish airline at the end of 2008, who operated flights mainly to Mediterranean destinations. transavia.com accordingly operated a considerable number of charter flights from Billund Airport during the winter season. Since December, the company has also been flying scheduled services from Copenhagen. At the start of 2009, transavia.com set up the company Transavia Denmark ApS, to support its operations in Denmark.

transavia.com also enhanced its position in the winter sports market. Last winter, Innsbruck and Salzburg became direct destinations from Berlin, Brussels, Copenhagen and Hamburg, and flight frequencies from the Netherlands to these two cities were increased. Over the winter, transavia.com was the second most active airline, after Austrian Airlines, at Innsbruck Airport.

Transavia France
Despite the difficult market situation, Transavia France continued with the plans to expand its fleet from four to seven aircraft in 2008. Increasing numbers of French customers and tour operators are choosing to use this 40% subsidiary of transavia.com (Air France holds 60% of the shares). This has resulted in increased load factors and production at Transavia France. The results after tax were still negative (minus €8.1 million) but amounted to a substantial improvement compared to the previous, first financial year (minus €19.3 million).

Synergy study within the Group
During the first quarter of 2009, on the initiative of KLM, a study was initiated into the possibilities for generating greater synergy between transavia.com, KLM and Martinair. A project organisation has been set up for this. The underlying principle is that the three companies will each retain their own identities including branding, AOCs (Airline Operating Certificate), Collective Labour Agreements, that the companies remain responsible for their own financial results en cash flows, and that the synergy advantages will benefit all three companies. It is meant to be a ‘fair and balanced’ collaboration.

Outlook 2009/2010
The financial and economic crisis means that the aviation industry will have an extremely difficult year in 2009. Of course, this has consequences for transavia.com. At the same time, attractive opportunities can still present themselves, as they did last year in Denmark and in the winter sports market, for continuing with internationalisation in the European market, if there are adequate prospects of profitable growth. Demand in the Dutch charter market will diminish in the summer, and transavia.com has adjusted the size of the fleet accordingly. For scheduled services from the Netherlands, we are taking into account the fact that turnover is not likely to increase much, if at all, in the coming financial year. The company will retain a sharp focus on opportunities for optimising the network of scheduled services. Transavia Denmark will be active in the Danish market over the summer, with three aircraft.

Operating expenses will increase again, partly due to the Collective Labour Agreements. The consequences will be managed, as far as possible, through cost efficiency measures. The marked fluctuations in fuel prices and the euro-dollar exchange rate also mean that there is considerable uncertainty about levels of expenditure, and this necessitates focus on an adequate cash management. The benefits of more intensive collaboration within the Group – arising from the synergy study – should also become clear during the coming financial year.

Because of the uncertain circumstances we are not able to give an reliable outlook for the development of turnover and result in 2009/2010.