Air France-KLM S.A.

Alexandre de Juniac - CEO Air France-KLM Pierre-Francois Riolacci - CFO Air France-KLM Pieter Elbers - CEO, KLM Frederic Gagey - CEO Air France

Jarrod Castle - UBS Neil Glynn - Credit Suisse Andrew Lobbenberg - HSBC Suzanne Todd - Morgan Stanley Eric Braun - Tradition Securities Johannes Braun - Commerzbank Oliver Sleath - Barclays

Good morning everyone. Thank you for coming.

I suggest that according to the rules of an airline, we start on time. And thank you, thank you for attending this Analyst Conference about our 2014 Results.

So we will first of all elaborate on our 2014 accounts. It will be done by Pierre-Francois Riolacci and I will follow with strategic views on the future of Air France-KLM and Pieter Elbers and Frederic Gagey will join us on stage to answer your questions that will be as usual numerous.

So thank you for your attention, Pierre-Francois you've the floor for the accounts.

Thank you, Alexandre, good morning to all of you. I will start with just showing some highlight of 2014.

No surprise, it was a year of high volatility in the macroeconomic environment including ForEx and oil price. We faced sluggish demand in Europe with strong capacity growth especially form the summer and we’ll elaborate on that.

One of the key events was obviously the two-week strike that we had in September with Air France, which hit EBITDA by about €425 million. This is something now which is very clear.

This should not hide some very significant achievements that were done during this year. The first one is unit cost reduction which in on track; minus 1.3% like for like in unit cost that’s about €300 million of a positive contribution to EBITDA evaluation.

I would like to highlight also the rollout of our product upgrades. We’ve now 29 long-haul aircraft which I quit in latest format and also I highlight the growth in Tanzania, France over 20% of capacity, so it was a tough but it was a year of achievements as well and we clearly had some momentum for Perform 2020.

If you look to the key numbers for Q4 at the left part of the table, you see that the revenues are 6.2 billion up plus 1.5%. We need to correct from ForEx for the strike and also some adjustment in the Q4 which were positive adjustments the prior periods.

And if you correct these amounts, you end up with a change like for like of minus 0.4% -- 0.5%. So revenues are under pressure on Q4 and it was has to do with the unit revenue development that we communicated through the topic.

EBITDA is at €316 million it includes the cost of strike of 95 million for the Q4 -- 95, it’s basically stable like for like due to this unit volume pressure. For the full year amount, if we look at the high part, you see the revenues at 24.9 billion they’re down by 2.4% but here again if you correct the strike, the ForEx, anyone up then you end at plus 0.3% so more or less stable.

So strike it down at €1,589 million, you see the impact of the strike 425 without the strike it will be 2,014 million as at least up by about 8% compared to last year. So net result is negative at close to €200 million the strong improvement compared to last year, but you remember the last year we had huge write-off in the deferred tax, while this year we have other positive one-off including a big profit on the pensions in Netherland.

The operating free is minus 164 including the impact of strike and this is a reason why we have not decreased the debt this year why it was anticipated and this is definitely on the account of the strike. Just we have to mention that we had huge strike volatility, you know that we’re exposed during the first three quarters -- it was detrimental to us due to the strong euro that decreased revenue, okay, it decreased of course and you see the number quarter per quarter, but the decreased further the revenues.

There has been a big shift in Q4 with much stronger dollar and to a certain extent, we carry out and you see however in Q4 in that impact of stronger dollar was higher, so it was also not going to the right direction all in all we have very significant ForEx impact and you see the numbers quarter per quarter. You bear in mind that about 25% of the revenues are denominated in the U.S.

dollar or related currencies, why it’s a bit more than 40% of course that was a case of ’14 given the lower price of the fuel. You would expect that is 40% would come down slightly probably closer to 35% - 37% - 38% something like that.

It will depend on the final crude price that we’ll end up. So that’s for the currency.

I won’t elaborate too much on the business segment because I am going to and to turn more details. You see that the sales are flat with passenger business which is flattish and cargo which is decreasing.

Growth is coming mainly for maintenance and Transavia. The operating result is minus €129 million.

You see here the big impact of the strike and you see the business, that without the strike like for like [carry] we have a strong improvement plus €275 million I will elaborate on this even if cargo is a bit disappointing. In the PAX business you see that the capacity is down by 0.6% excluding strike it would be plus 1% very selectively on our detail.

Clearly the overall capacity in the market is putting pressure on the yield development, you see that the unit revenue is down by minus 0.6% like-for-like and clearly it's because we have achieved a strong unit cost reduction minus 1.7% that we're able to improve the profitability of the passenger business excluding strike. Maybe its worth to mention and we discuss that on a regular basis that we have -- if you don’t without change you remember that we give you some ideas of the long-haul and medium-haul and point-to-point result.

So point-to-point has improved dramatically it was minus 220 last year, it's minus 120 its inside, so it's a very strong improvement. Medium-haul has also improved by about €60 million coming from minus 200, minus 340 and this is [indiscernible] that we have booked a very strong improvement at the back of restructuring.

And the long-haul including the ForEx impact is under pressure due to the need for renewing the ForEx and the operating income is about 700 million during 2014. And this I won't comment much except just to show that if you look at the unit revenue at the half, you see in the last two quarter of the year the underlying trend excluding one-off is definitely negative minus 1.8, minus 1.1, that's what we see in the market and definitely there must be a link also with the fuel price and you see that we're very swift on capacity even in the Q4 we have a slight negative variation of capacity on the back of stronger structuring of point to point, but also very selective growth plus 0.2% in Q4 in capacity under long-haul.

And I will not detail all of this just to show you region by region that the point to point capacity has been sharply decreased minus 12.8% and this allows for a rebound of the unit revenue plus 7.5%. If you look at the medium-haul hubs [indiscernible] you see that we booked some growth 2.6% while maintaining a flat unit revenue which is not too bad of a performance.

On the long-haul side we have achieved a 1.6% growth in capacity for unit revenue which is minus 0.3 and this is quite contrasted depending upon the regions. You see that North America is has a flattish plus 1%; it's not bad, it's quite resilient.

And you see that the pressure is coming from South America and South America you know that we have the Caracas base effect that will obviously fade away but if you remember over the last year we had very strong Caracas contribution up to the beginning of 2014 now it's moving away. But still Latin America is under pressure due to the macro and Brazil, Argentina are still lagging behind schedule.

Asia is slightly negative minus 0.5%, it's due to overcapacity in Southeast Asia and coming from the Middle East as you can imagine. And Africa you see that despite a slight decrease in ASK we ended with plus 1% in unit revenue but with clearly a change during the year and definitely the overall picture is not reflecting what we have seen in the summer season.

And you see that these numbers have been deteriorating in the last quarters of the year. If we move to cargo, there is also a strike impact on cargo so you need to really look at the like for like number; we have been going on restructuring the capacity, minus 7.8% on full freighter.

Despite this restructuring we still face headwinds in the unit revenue which is down by 0.9% despite the restructuring, so heavy pressure on cargo. We managed to decrease the cost despite the capacity decrease by 1.9% unit cost which is quite reasonable however given the pressure unit revenue the improvement year on year is a bit disappointing for about €40 million.

Maintenance had a slow rate in external revenues but has been catching up and you see that we've increased our revenues by 3.4% but what is even much more important is backlog growth which is very increasing plus 28%, we are now more than 54 months of revenues, so that’s very strong, we also have a good dollar exposure definitely because maintenance is selling mainly in U.S dollar, so I think that’s a strong factor of the business with a further improvement in margins, EBIT margin is now above 5% in maintenance which is a good number. Transavia is not yet big business in the group as you know but its going.

We have reached 10 million passengers more than 1 billion of revenues; it’s up by 7.3%. The unit revenue is slightly down, which, given the increasing capacity is actually has a good performance.

The unit cost is slightly up and this has to do with ramp up of our new routes in France. We are making also good progress in implementing the LCC model, not only in France were we are developing, but also in Netherlands where we are shifting the business from B2B and from charters to B2C which is pure low cost model.

So you do not see a lot of growth within Netherlands but there are actually many things going on decreasing B2B, increasing B2C, to give you some numbers B2B is down by 4% but B2C is up by 12% in capacity. So really we’re making good progress in developing Transavia in both France and Netherlands.

If you look at the operating cost, I will not enter into all details, just to draw your attention on the operating cost excluding fuel you see that like for like is come down by 0.5% where our capacity like for like is plus 1.2% so you see definitely it’s improvement in unit cost as P&L. Maybe if you get down on some specific costs, this is a reminder of the percentage of our future fuel purchase in 2015, 2016 so you see that more than 60% of 2015 consumption is actually hedged and close to 30% for 2016 is actually hedged.

So that’s the current framework. You know that we use mainly dollars; this is to reduce the cost of hedge.

So this is the reason why we have all these exposures and hedging back to under P&L. We, the vast majority of our hedging, we go for Brent because the market is Brent and we try to switch to fuel when maturities get closer so that is driven by the market and the availability of hedging.

The cost of fuel was $8.9 billion in 2014, if we take the current assumption that is current spot price plus the current forward we would end up reach the number close to $7.4 billion after hedging so definitely there is a significant decrease of the fuel bill which is expected. You see the sensitivity which are there which shows that hedging portfolio is quite efficient and this is that we can reduce as a volatility surrounding the 7.4 billion that’s based on the hedge which are today in place.

Obviously if you were converting these numbers in euros you would see that a lot of it will unfortunately go away. You remember that the U.S.

dollar was about 135 in 2014 today is 115. So you have a significant impact obviously of the euro/dollar on the final bill that we have in the P&L.

Another breakdown on the employee cost. Just to mention that the average headcount is down by 1500 people 2013 to ’15, you see that the gap between the two years is decreasing this is because most of it were at the end of 2013 beginning of 2013, but you know also that there would be in Air France, many people leaving the company at the end of first quarter 2015 -- 1300 people will leave.

Not mentioning as a new plan that Frederic will elaborate on in few minutes. The good thing also is that we are able to covert the headcount decrease into employee cost reduction by the same amount which means that we have the strong rate on the unit cost per employee with the strong performance obviously of Air France where we have the bulk of the decrease in headcount.

This is a special one for pension because there has many things going on pension and so as to spend two minutes on it. It’s very complex but at the end of the day we have the significant impact on the balance sheet of the pension update in 2014 and the net position was a positive 600 at year end 2013 it’s the negative 700 at the end of ‘14 and remain by that a very simple.

There was a change in law in Netherlands that allow us to recognize a profit of more than €800 million that’s one thing and then we have updated the discount rate assumptions or the actuarial assumptions and then we have a huge impact because there is a huge increase of the liabilities; plus €3.8 billion. On the face of it we have also significant increase of the FX because it’s more of less linked by 1.6, but you see that the mix a negative of 1.3 billion that we have to recognize into balance sheet, most of it being linked to very low euro rates that we have in the long term, we are very familiar to that.

This has some consequences and I think it’s worth to mention because it means that in the future in 2015 you should expect that the charge to P&L on pension would increase due to this lower rates recognize a higher DBO; Defined Benefit Obligation and this will flow in the P&L throughout the year so you should expect an increase in the P&L charge of more than 100 million which is related to this discount rate assumption. This may fade away in the future if rates go up again but this to be factored in.

There is no cash impact in 2015, this is just recognition in the P&L of the increase of service cost but there is no cash impact in '15. There is another topic that you need to bear in mind.

The change in law will decrease the pension cost in 2015 that's for sure, but we expect to negotiate something on the face of it so we do not take the assumption that we'll get as a benefit of that. So, we expect basically stability on cash side and in the P&L but that will help you to model your EBIT and EBITDA forecast and Bertrand and Dirk will help you to go for this complex discussion.

All in all we've decreased in the reported number unit cost by 1.1% and if you take away all the strike, currency, fuel price, one-offs it's a 1.3% unit cost decrease which is bang in line with what we wanted to achieve for this plan of Transform 2015. I think that's definitely a strong achievement.

If you want to look at the bridge and how we went from plus 130 operating income in 2013 to minus 129, you see that there is huge strike impact that hit us. If you take it off then we ended with operating income of close to 300 million and the bridge is very simple, fuel price is a big plus but currencies effect is basically sustained negative amount the face of it so the macro is neutral then we had a negative unit revenue valuation for €180 million that's definitely a big hit, another face of it we've our unit cost reduction of more than €300 million that's a very simple story.

We have some [indiscernible] news for you; we're doing well in the unit cost reduction. The operating cash flow is negative by 160 million it includes 700 million impact of the strike.

The cash flow before restructuring and working cap is in line with EBITDA evaluation, no specific in there. Voluntary departure plans minus 154 it's a bit lower than expected but you may remember that we’ve received a 25 million subsidy from the European union so that decrease the amount that we've to recognize there, we've a good contribution of the working cap plus 130 and this is coming after a very strong contribution last year so we're quite happy with this line, including very good development on E&M which have to be noted.

As a gross investment of 1,560, they're down to 1.4 billion that we mentioned to you so it's in line with our expectation and you note that there is a plus 105 in the others you've a negative on -- which is non-cash earning to ForEx and you have the Venezuela impact on the treasury which is stuck there and you have also some U.S. dollar denominated debt which are revalued at the end of the year and on the face of that you the disposal of Amadeus for €330 million is a net plus 100 and that drives the debt at 5.4 very close to the amount at the beginning of the year.

If you look at our credit ratios, you see that they're all deteriorated by the strike impact. The strike impact we stay there for net debt of course you can't rotate it on the EBITDA and EBITDAR and then you see that if you takes that in account -- sorry I was already under ratio, but this is unusual one which is to show the performance at Air France and KLM.

You see that's here we've big strike impact as well on EBITDA and not in Air France but I think that you see also that there is definitely an improvement in Air France without strike which is quite significant and you see on KLM side the impact of ForEx I mentioned it already, it's very important also the pressure on unit revenue which is there and you see that definitely what is driving the performance as unit cost development and that's why it's so important that move on we step from on this thing. You see also that the operating cash flow at Air France is quite significant which is not a surprise.

On the ratios, just to mention that indeed the strike impact is significant, but if you retreat from this impact on the EBITDA and EBITDAR, then you find out that despite the 400 million that we have to swallow in the net debt due to this strike we managed decreased further the credit ratio which I think show that we're in the right direction in terms of free cash generation and improving operating performance. Just one word on liquidity which is quite strong at the end of the year, we're in line with 20% level of liquidity, 20% of revenues as being the benchmark liquidity both in cash and committed credit lines, we've 3.5 billion of cash at the end of December '14, we have also undrawn credit facilities for 175 billion, they will be maturing for Air France in April 2016, for KLM in July 2016, and we will be in the market in the next few months for the Air France facility and a few months later for KLM’s structure.

You note also that we have now limited exposure to Amadeus. We still have close to 10 million shares but as you know they are hedged through a collar.

That's it for the financing part.

Thank you, Pierre-Francois. I will move to Strategy and dealing with in two parts; first of all I would like to make a quite snapshot on the results and what has done in Transform 2015 and then for focus and an update on the Perform 2020 plan which will run our future in the coming five years.

First of all on the Transform, the three elements of Transform and they have been a success. A very strict capacity disciplined.

As you see, we have grown from 0.9% a year between 2011 and 2014 since we have successfully renegotiated labor agreements for this period, it will have to be again put on the table in both sides in KLM and Air France, when it has been done properly and we have reached an employee cost reduction of €300 million between 2014 and 2011. And we managed on the operational transformation and basically which is very significant if you look at the figures of the right part of the slide, 30% reduction capacity for short and medium haul plus 60% on the opposite for Transavia, minus 23% for the full-freighter activity; and a successful roll out of our new product on the long haul both in KLM Air France.

And now almost 30 aircraft are equipped and the customers’ satisfactions in that are very high, we’ll come on that back in a minute. And In terms of course transform 2015 as delivered and we have demonstrated collectively the 96,000 employees of this group have demonstrated the ability to reduce cost by 8% from 4.98 down to 4.60, it means the reduction in cost of €1 billion in three years.

And as a logical consequence we have a significantly improved our financial ratio knowing that without the strike, it would have been obviously even more significance, so you’ll see the EBITDA has increased by 670 million, the operating cash flow by almost 1 billion always between 2011 to 2014, and we have divided our net bet to EBITDA ratio by almost 2 between December 2011 and December 2014. So in terms of cost reduction and restructuring which was the main focus of Transform, and this plan has worked out pretty well.

Now if we focus on the future Perform 2020, we have to -- I would like to go through that subject in four elements. First of all two decide what are our key growth initiatives then to explain into detail what will be our rules of managements strict capacity and financial discipline and of course it will have a focus on cost reduction at Air France and KLM, because the second part of the plan beside growth is competitiveness -- improve our competitiveness and reducing our costs.

First of all let’s start with the growth part and the investment part for Perform, we have for our growth initiatives three subjects, first of all in the long haul business mainly what we want to do is to invest and continue to invest on the product. So in our investment plan despite the reduction we have done for the next two years we haven’t touched the part devoted to product.

We think that if it’s absolutely mandatory -- you know to, if you want to maintain our unique revenues to offer the best product especially everywhere of course, but especially when we face the strong competition in term of quality coming from the Gulf carriers or the Asian carriers. We will also increase our customer focus.

We invest a lot on social network, on the digital. We are implementing the digital transformation of the company and we leverage our brand portfolio.

You know that we have several brands in the group KLM, Air France, Transavia, HOP. We have also KLM engineering maintenance, Air France-KLM engineering and maintenance, Air France-KLM cargo.

So all these brands that are world-class brand names particularly for Air France or KLM and for Air France KLM brands can be strongly leveraged, and in terms of partnerships I will adjust to focus one second on that. We have to capture the growth where it is and you know that in the world the emerging markets are growing faster.

So we have to be strongly positioned in Asia, the group is already positioned in Asia but in a traditional way. We have started partnerships with Chinese companies, China Southern, China Eastern; we have agreement with Etihad, with JAL.

The point there if you want to reach to ensure our grip on that market a profitable grip, we have to structure strong partnerships with probably three to four partners in Asia considering that Asia goes from North Japan down to South Yemen, so you can imagine the size and the volume of what is at stake and that justifies that we're targeting to structure these partnerships in Asia and we're devoting a lot of time to this absolutely key strategic element. We have here the same grip on the Asian market than we have on North Atlantic that's the idea behind that.

The second point is to accelerate the development of Transavia; it is in very good start especially for the French part which has to grow significantly due to the size of the market. And thirdly as we mentioned for those who have their last September we invest in maintenance to take advantage on this profitable growth that maintenance is now facing especially because we're number two in the world with high recognized capabilities in equipment and engines and with a strong portfolio of customers everywhere in the world in Latin America, North America, Asia, very developing and strong customers.

And just a very quick focus on the product, between 2015 and 2017 the customer experience will be significantly improved. We will invest something which is close to €1 billion and by mainly renewing or retrofitting our long-haul fleet.

You see that the customer satisfaction index for both companies at Air France and KLM has dramatically improved double in KLM, almost double in Air France, so it is really spectacular and for us it's an important part again to maintain the quality and the level of the unit revenue. For those who haven't tested our new business class or our new premier I urge you to do it the sooner the better, especially the premier, but the new business is also very nice.

S o I ask your employer to do so. Just a very quick element, in 2015 more than a third almost 40% of our long-haul fleet will equipped of this new seats.

For Transavia you see that we have also spectacular growth, we will transport in 2017; 16 million passengers, and operate 61 aircraft in 2019 it will be around 80 aircraft and we will approach something like 20 million passengers. So Transavia will be at that time not perhaps giant comparable to some of its competitors but significantly in the arena of low cost particularly in Orly.

Already in 2015 Transavia will be the number one low cost carrier and we have renewed the positioning, we have renewed the image and we have introduced the possibility as I told you last year to earn and now at burn first and we will introduce the possibility to earn miles on Transavia on the Flying Blue program which is an enormous advantage for Transavia. We target medium term operating margins of 5% in 2017, so it's a profitable growth of course that we target.

In maintenance, I mentioned maintenance as a very growing and profitable market, you see on the left part of the slide a increase the very significant increase in the order book from €3.3 billion up to 5.6 it's an increase by 70% of the order book, it's enormous it represents almost five years or four years of revenues. The external revenues are growing of course consequently and the profitability is a significant one, it's the figure you have in the circle, so €196 million in 2014.

After having focused on growth I would like also that we focus on restructuring, cost reduction and financial discipline. As Pierre-Francois mentioned just before we're facing a challenging environment, a challenging environment coming from at least two elements first of all an uncertainty in the economic growth, a very contrasted economic growth between the various regions and secondly over capacity, significant over capacity in some big areas of our network.

So there is strong pressure on unit revenue plus the strong pressure for competitors including Europe with the low cost imposes us to speed up and to emphasize the cost reduction part of platform, if you remember in platform, the overall growth, competitiveness, due to this challenging economic conditions and pressure on unit revenues, we’ve increased significantly our effort on cost reduction and speed up the process. So it starts with maintaining the capacity discipline you see for the group what is that stake.

We have been very wise in terms of capacity discipline especially when you compare to some of our colleagues in the arena. The only exception being of course because it’s a growing market and successfully, Transavia that you see growing at a pace which is around between 8% and 11% and will grow significantly of the same rhythm in the next two years.

But on the classical part of the network we maintain a straight capacity discipline. Of course it will not prevent us from remaining very big player and you see on this chart that we are still the number one in terms of long haul traffic form and to Europe, but that our market share in the various part of the world of the network -- of the intercontinental network is still very high.

We are number one in Africa and the Caribbeans. We are number two in Latin America.

We are among the three main players for North America and we are number one or number two in Asia. Our market share is still very, very large in every part of the intercontinental network, so we maintain our strategic and geographic position and you know that it takes time to gain this geographic position due to traffic rise, due to deploying aircraft.

So it is something that you have to take care very, very carefully. In terms of investment, we have reduced our initial ambitions after three year investment reduction that has been very significant; we cut our investment by almost two during the transform plan period.

We decided that we have to reinvest again to be sure to maintain the productivity and the efficiency of our production tools, of our fleet, of our factor, et cetera; of our IT. So we had planned two in September 2014 for those who attended the conference to spend 1.9 billion next year -- this year 2015 and 2.2 next year, 2.2 in 2017.

We have decided due to the adverse economic conditions to reduce by €600 million, €300 in 2015, and €300 in 2016. This reduction is mainly focused on playing under a new world of the fleet for both company and we have of course protected the investment in safety and maintenance obviously it goes without saying, but also the product.

So, all what we are doing to review and to improve the product is maintained. In terms of unit cost the objective that we have fixed for the group is minimum unit cost reduction of 1.5% a year meaning in terms of euros, reduction of €1 billion in 2015, 2017 period which is split two-thirds for Air France and one-third roughly for KLM.

It represents a very significant effect, I’d like to stress on because it is our manageable cost on which we have the grip, that represent probably less around half of our costs, the other part we have no grip, it’s fuel, it is fees, it is taxes; but it is an achievable there and we’re pretty confident to achieve this cost reduction target, considering what we have done in the past three years with platform, which was exactly in the same range. As you see on that chart.

The schedule we are putting together to implement discussion reduction platform as already started the transform was ending December; platform is the succession of transform but had to prepared in advance. So during September to November we have done many things preparing budget and the plan but also gathering all the information about competition and about the positioning for our two airlines this information being widely spread among our employees especially through the union representatives.

So everyone is aware of his competitive position compared to the main competitors everywhere in the company, sector by sector it has been done and I have to say very seriously and consciously received, there is no controversial issues about this positioning even when there are big gaps with competitors that's interest part, they're interesting, people now are thinking all will be bridge the gap? Second point, between December 2014 and March 2015, we're questioning our employees to collect their remarks, suggestion, proposals to reduce cost and they're impressive in terms of what they have in mind, including for themselves that's very good sense of urgency, of awareness for the situation in both companies of course, Air France and KLM.

The third phase will as already started in KLM due to the duration of the collective labor agreement there are three years in KLM that were ending by December 2014 so Peter has already his negotiation for Air France we have elections in March 2015, 12th of March so it's tomorrow almost and the negotiation will start under the leadership of Frederic Gagey after these elections with the new teams to be able to conclude new long term agreements with Air France unit and we target an implementation of plants of these negotiation in the second half of 2015. For those we followed the implementation of transform we succeeded in negotiating the CLAs agreement in four month so it is something that is consistent with what we did in the past.

The cost reduction and restructuring plan target every part of our operations we of course target operational excellence by renewing the fleets by identifying the aircraft, by more clever processes, by improving our punctuality. Perhaps you're not aware that being on time, as we were this morning for the start of this conference is an enormous cost saver for everyone, just that point it only implies 40 different professions in an enormous program, that you're not aware but it's typically that the other point on which we work as well, operational excellence is the major factor for savings.

We will do restructuring; we've done that in point-to-point in Cargo. But we'll do it when needed in other units, the ground station in the French Province, it is already done and on G&A which is now important also in our company.

There will be also an external cost reduction with lot of effort of procurement everywhere, the target is to be competitive everywhere and to obtain significant cost reduction from all our suppliers including the airport. And for labor cost, it is related to renegotiations as you know of the CLAs.

For Air France and KLM we'll go quickly through the presentation because Frederic and Pieter will join us and we'll comment on the presentation, that is very good news. So Frederic start with Air France followed by Pieter for KLM.

Good morning everybody. Now very quickly on Air France, it's clear that transform plan has been I think something well efficient in terms of evolution of the company with sharp cost reduction over the period of the Transform plan and there is I think now real dynamic in order to pursue what the launch for Transform and the idea following what has been indicated by their extent is of course to take the benefit of this dynamic to organize these new Perform 2020 plan with the idea now not to conduct to the breakeven point what we've done, we have to learn 2014 if we exclude the strike effect as the net result is of course a zero for Air France in 2014 and the operating margin is positive.

So, it is clearly a great achievement when you look at the first period and I think that now we've to take the benefit of this dynamic to continue. For Perform 2020 we have decided jointly with Alexandre and Pieter to open the discussion with what we call the bottom-up approach with the idea that it was probably necessary to make a short pause with employees to listen them to organize in all businesses; some workshop, some meetings to get from the employees their feeling about the situation of the Company, the way they were motivated to continue and their ideas, their approach concerning the improvement of the economic performance of Air France group.

So it is just going on now that with everywhere multiple meetings, multiple workshops with 1000s of people and I have to say that even if we’ve now the next elections for union, the situation is extremely cooperative with a lot of dialogues and with position of unions relatively cautious concerning what is happening now. So the idea of the plan is clearly to improve the result of Air France with as indicated before by Alexandre, the idea to us is contribution of 650 million of cost reduction driven by a unit price reduction of minus 1.5 per year, which is relatively demanding minus 1.5 is not nothing, but we think it’s reachable if you look for example at the performance of unit cost of Air France in ’14 it is minus with 2%, in unit cost excluding the strike effect.

So it just show that this target is reachable of course the most difficult is to be sure that this effect will be which year 1, year 2, year 3, year 4 so it is really the continuity of this effort which is the most difficult to manage. We consider that we have already identified for the period ‘15, ’17 relatively large part of what we can do in terms of savings, we can see there we have almost 65% of the actions beyond this cost reduction target which are now well identified business per business.

There are two challenges. First of course we have to be sure that we will implement all these plans and on top of that we still a residual plans which is not negligible, which is certified cost up which has still to be identified.

The plan is already ongoing for 2015 for two elements. The first is at there is still some impact of Perform on the year 2015.

For example the voluntary departure plan we negotiated some years ago we implemented in 2014, we see the first people leaving the Company right now and we’ll have 1.3 thousand people leaving the Company between January 15 to March 15. On top of that for example, the initiative concerning the reduction of the full cargo fleet in Air France will be achieved at the end of first quarter 2015 with the last 747 leaving the Company and full cargo fleet limited today to only two aircrafts.

And the concerning for example the restructuration of the point to point network, you know the of Air France project it is ongoing with extremely sharp reduction of capacity for the domestic network for example again minus 15% in 2015 following already a minus 15% in 2014. On top of that we have recently added new actions in order to secure the budget 2015.

We have announced to the [indiscernible] some weeks ago the fact that we will extend the general pay fees for the additional year, which is of course I think relatively difficult to accept by unions, but we think it is only reasonable approach concerning the evolution of the negotiation for the wage. We have also announced recently a new voluntary departure plan targeting 800 FTEs, 500 are ground people and 300 are cabin crew, and on top of that in the walking process on the budget we have reinforced the capacity disciplined the first reductions of the budget was long haul growth in the range of 2% and we have decided to be more strict in terms of capacity.

And for 2014, we will allow growth in the long haul network close to 0.8%. And on top of that as indicated by Alexandre, also the reduction in investment plan minus 1,777 in 2016 postpone month of some new long haul air craft in the year 17 and 18.

So this is a lot of initiative, we will prepare for the Perform 2020 plan, all business department of the Company are concerned. We will have of course the voluntary departure plan 2015.

We will have to open discussion with bylaws; we have an obligation to negotiate working rules for cabin crew. As a result cross action of the group from KLM concerning, for example, the G&A.

And we continue to work on the profitability of the point to point network on efficiency of ground station in France mainly. So it is everywhere in the group as this discussion, this is preparation of the plan which would be developed according to following timeline.

In January, we’ve discussed with the Work Council the additional measures for 2015, between carrier February to March. This is a bottom-up approach discussion with employees, workshop, meetings and preparation wise business wise concerning their task setting for the plan period ’15 - ’17.

On the same time we will have also the union addition and in April - May to the Work Council and to employees we presumed what is a target we fixed to Air France for the period 2015 to 2017. And of course after that we will have to open negotiations discussion with union with businesses in order to prepare the implementation of this platform plan which again is continuity of Transformed which is a new step.

Transformed brought back the company at the breakeven level, which was, I think a quite important step and Perform now has to bring the company to reasonable level of profitability.

Moving onward to the KLM illustration you will the find it very consistent with what you heard earlier and after the Transform three years the productivity gains needed to be revitalize and we have developed a plan we're by on the basis of Performed 2020. We have illustrated on the vision customer centric efficiency and innovation onwards to execution.

Since we are secure capital and labor intensive industry, we spend quite a fair amount of time in sharing as Frederic stated the same thing Air France and sharing our challenges with our employees we've been very open and transparent on what is the situation, where do we find financially, what's the benchmark, where do we stand in productivity and what's need to be done. If we look to the initiative when it comes to the cost reductions clearly the revenues are on top of it the one we focused at the cost reduction we with emphasis on five different groups of cost reductions.

Investment clearly have been showed earlier, the last few years have been a mostly belt tightening exercise in reducing cost and also having a relatively low investment. As we show in the presentation going forward there are some investments to be done which have to be lowered, but still investment to be done.

We focus on our suppliers for KLM our cost basis is roughly 1/3 is fuel, 1/3 is labor and 1/3 other suppliers. So and looking for cost savings we need to look at balance between the labor and one hand side and suppliers on the other hand side.

We've put a lot of other initiatives in place which includes closing of some of our hanger, reduce our cargo exposure, and optimize the dense vacation of our fleet, introducing seats -- more seats in the aircraft and so on. On labor and organization I'll come back to that; we have started our CLA negotiation process in order to have a 4% productivity gain for the next few years.

Just to put it in perspective in a three year of perform we have achieved roughly 8% to 9% in terms of productivity per employee. But as we have showed earlier this morning is all about re-introducing our competiveness and therefore productivity gain is the core of the matter.

Few words on the bottom up process as really get facilitated we do exact the same in on some parts we do it together and mobilizing our people in order to come with new ideas, suggestion, how to be more efficient and how do we prove our ways of working and even introduce new technology in terms of efficiency. If we translate this 1.5% you would come to a 700 million for the entire perform period and if we focused on the first three years it's translated into 319 million of cost savings.

Again here the cost savings for the first year will define and basically they're well on track as well. For the next year as part of the negotiations we have with labor with also an ongoing implementation process as I mentioned before of in terms of reducing hangers and having talks with our suppliers in order to reduce our cost.

If we put it on the time frame let me highlight a few elements here this year we'll start with the further cargo restructuring, in the last few years the footprint of KLM cargo or KLM material cargo has been reduce already from 15 full freight of aircraft down to 9 and we will further reduce eventually to three aircraft in operation when it comes to the cargo restructuring in order to reduce our exposure in this very volatile cargo market. Very important part as the Chairman also mentioned the operational excellence especially foreign hub operations 65% from our passengers are connecting on time performance really a crucial element in terms of cost savings and in terms of reducing our cost.

We start with the fleet renewal, we have done some of the fleet renewal in the last few years but for KLM we will introduce the 787s as from October this year we’ll as the first 787 coming in taking over the some of the routes. Then this going forward in 2016 we will start to replace the Fokker 17 and also start gradually phasing out the 747s.

So this fleet renewal with more efficient and fuel friendly fleet consumption is a very important element on that. And I put also here the high performance organization; we have started the program in order to reduce layers and to make our organization more lean and less layers in terms of number of people and managers who are working here.

With respect to the CLA negotiations these have started and as we said earlier it's a very important part of what we're doing. Two clear examples I already addressed the high performance organization is de-layering the organization, optimizing the span of control, we have mapped the entire organization and carefully analyzed how many layers we do have in all the domains.

We optimized and centralized report functions that's a little bit linked to the point Frederic Gagey was making on the G&A project where we do centralize quite a few functions which are done in all kind of places in the organization. And we really have engagement with our staff in order to get the productivity implemented.

I think technology is a very important element to be used for that we have invested a bit in technology in the last few years and we will invest even more. The iPads on board I guess are a good example where we reduce a lot of processes in terms of follow up with papers, all our process and cockpit crew have iPads on board now and that really helps a lot in order to reduce also cost.

So there is where customer simplicity and cost reductions are met. We spend a lot of efforts and time on the social media desk.

We do have 14 different languages now and we commit to our customers to reply within one hour with social media. That is very helpful by the way because by doing so we can reduce some of our cost again of back offices and procedures.

And when it comes to re-booking it really goes much faster than the traditional way of doing. Other point to mention is the self-service kiosk at the airport, I guess the picture in the middle on the top is little bit the airport of the future where everything is being done there in an automated way where we do have self-service check in kiosk, where we do have self-service baggage drop-offs and really fits to what we believe that the customer wants to be in charge of its own destiny and its own choices where to check in and how to check in.

With respect to the CLA process and as was mentioned KLM started in December just before Christmas and that was a follow-up of the earlier discussion we had in outlining where do we stand as a company and what is needed. And we do have separate CLAs for our cockpit, our ground and our cabin crew and we have finalized the framework with a commitment that we move forward.

And the commitment really is for a three year period but as we really need to have the first results in for 2015 we create a clear commitment for the coming months. In parallel we have discussion to address some of the more specific restructuring plan I already mentioned to reduction in the cargo freighters.

We have launched a voluntary departure plan for some of our cargo pilots and we further work on the Air France maintenance organization as well. Thank you.

Thank you, Peter. And just one additional and final slide also for Perform.

You see it is driven by growth, discipline, cost reduction, competitiveness. So the idea is to have a de-risked business in balance sheet that is significantly stronger to deliver a significant also return on capital employed.

In terms of outlook for 2015 and for midterm, our outlook is the following for the full year 2015 first of all we clearly say that the upside expected on the fuel bill could be almost neutralized or offset by the pressure on unit revenues and the impact of currency volatility evolution. On the other hand the further cost reduction will be implemented as we have demonstrated in the past to produce a 250 million to 350 million cost reduction which represents a range of 1% to 1.3% unit cost reduction knowing that the following year will be higher to ensure that the average will be at the minimum at 1.5% cost reduction.

The net debt we continue to the deleveraging of the group and we target something around €5 billion at end of 2015. For the medium term objectives the ratio adjusted net debt to EBITDA should be around 2.5 by the end of 2017, so we maintained this financial discipline and the deleveraging of our company.

To do that we have fixed strict guidelines in terms of investment to be able to generate every year of positive free cash flow. We have -- we do not any longer give you EBITDA gross target for two reasons, the significant fall in fuel price that is as a strong [deteriorating] effect on our accounts and the implication of this reduction in full price on the unit revenue so to be a reasonable we have, we clearly said that we present to stick to a strong cost reduction policy and permanent than to give any EBITDA target.

Thank you for your attention and we are welcoming your questions coming either from the room or from the people on the call.

Good morning gentlemen it’s Jarrod Castle from UBS. Three questions, if I may.

Just coming back to the long -- or the medium-term net debt target of 2.5 times net debt EBITDAR and, obviously, positive free cash flow generation, just in terms of thinking of that target, is the reduction in the current gearing ratio going to be mainly from EBITDAR going up? Or can we expect the EUR5 billion targets for 2015 coming down as well when we look to 2017?

Thanks. Secondly, just in terms of the redundancies, the 800 voluntary redundancies.

I know you're just kicking off with the process, but in principle would you have wanted to maybe do more if you could? Or do you think that's enough?

And then in terms of expectations by when these employees would leave the Group, any views there? And then just lastly, there's been a lot of comments in the Dutch press about the management teams, the Air France management team, the KLM management team, in terms of the views of the merger, et cetera.

Is that just the Dutch press? Is there any kind of tension between the management teams at the OpCos?

Thanks.

I'll go for the first one, which is the target on the adjusted net debt to EBITDAR ratio. We expect to converge on this 2017 target using both, actually, improvements in EBITDA and further decreasing net debt.

Indeed, we have explained that we want to generate free cash on our base business; that is before divestments. So, indeed, we will have a booster which will come from some divestments that we plan to achieve this number.

You immediately think about Amadeus. If we are comfortable to give you this 5 billion target for 2015 because, as you know, we have already disposed of more than 300 million and that will help on the top of the free cash that we'll generate on the full-year basis.

So we expect to generate free cash every year and decrease the debt. And, on the top of it, obviously we expect that the 1.5% unit cost reduction that we have every year from here to 2017 will also contribute to improve EBITDAR.

It's not because we cannot commit on targets, which are stable fuel but with moving unit revenue that we do not plan to increase our earnings through the unit cost reduction. So definitely we factor in an improvement on the back of the unit cost reduction and that's both that will help us to reach the 2.5 target in 2017.

In terms of redundancies we have as you know gone through significant program of redundancy which Transform with Perform there will be probably additional redundancy, but we will be able to figure it out after the negotiation of the CLA, the measurement of the productivity increase and because when we talk of redundancy we talk about people. I do not give any figure before being absolutely show of the figure and on the plan and on the measures that we will be able to implement to deal with redundancies.

There will be probably additional redundancies. On your third question, as you know Air France KLM is integrated in many areas sales, revenue management, network, engineering maintenance cargo and we have to plan a few weeks ago to integrate more of the cash management, it has triggered some reactions.

So the plan is withdrawn and the situation will remain as it was. So it’s not the question of tension in the team at all as you seen on this stage, we're living together I've to say smoothly and quietly and with our colleagues from Air France and KLM and we focus the other point was to focus on the implementation of Perform, than to follow everyday non-totally undergrounded and malicious and I have to say forcefulness about potential disagreement, we've no time for this agreement by the way.

And as you see with my two colleagues Pieter and Frederic they're heavily committed to implement performance, it's a big chunk on their plate. Any other questions?

[Indiscernible]. Two questions, first one, on the debt side you have no target into medium term for the net debt that, do you mean that we've expect any form cash injection to reduce this net debt if you can’t clear as of coming years?

This is my first question and second one, we're going to strike or paid out in 2014, as you highlighted the strike as an exceptional item in the slideshow, what is your probability to have no strike -- no significant strike in 2015?

I will take this question immediately as opposed to my colleagues. If you can guarantee that there is no strike when you do anything in an airline I hire you immediately that would be very nice.

But more seriously, we've gone through a difficult time in the Transform plan with big redundancy plan, improvement in productivity and renegotiation of CLAs and we've done it without a day of strike. So, even in Air France on which the tradition was slightly more say consent for three years, except the pilot strike it has been totally no strike period and in the KLM this is the condition, the social dialog are different and there has been no strike for 15-18 years or something like that.

The good way to avoid this type of event is what we've done now for four years, it too have a very deep developed and serious social dialog with the unions. Interestingly after the stroke of the pilot of Transavia, we've conclude an agreement with the same team on both sides by negotiation.

I think that as a new management we have to continue as the dialog and that’s to be sure that we will implement softly and in a soft approach what we want to do with Perform 2020, but I think that the strike is not a normal way to negotiate of course so it is not the target of the management and I hope not the target of unions to systematically use the strike as a way to negotiate and we've to do it in the best way available.

On the net debt target indeed we have net debt target for '15 but not after this date and then what we want to do is to manage the company base and adjusting the debt to EBITDA ratio which is 2.5, you knew that we're not a [rated] company so it's very important that we have a credit ratio that really is a cornerstone of a credit policy and that's where we want to be, we've also announced that we want to be free cash positive in only one year and then the level of that for it to reach will depend also on cash generation, which means that we've to apply this very basic management rule that Alexandre remind us about capital discipline that is if you don't spend more money than you earn, so basically we'll be managing also a net debt depending up on cash and operating cash flow actually and EBITDA. So as we've some uncertainty out there we need to be able to be flexible, so free cash generation and the level of free cash generation will be commensurate to a credit target and that's the way we expect to manage the company.

We do not bet on the cash injection in the near future to manage that it's really based on our own efforts with cost reduction and capital discipline.

Yes, it does if you think about the voluntary departure plan for 800 we expect the further departure before the end of 2014, probably large part in the last quarter. Is there any question coming from the people on the phone?

If I could ask a couple on KLM as well as then a follow on. On KLM's performance in 2014 can you give us some color as to how its unit costs ex-fuel and how its unit revenue performance was relative to Air France?

Then the second question on KLM. Its EBIT margin obviously fell with its operating income in 2014 and the performance does seem a little bit stuck, But when I look back to pre-crisis time, you consistently did high single digit operating margin, I am just interested in what in your view what is the new normal margin level for the this business is which clearly heavily transferred traffic oriented and is very exposed to a competitive track that obviously is more like to intensify the moderate?

And then the final one was there we’ve clearly had a recent announcement of Alitalia's new strategy with Etihad's help, does this deprive your hubs of any transferring passengers, is that a big risk and what are you own next steps for Etihad? Thank you.

On the KLM stuff under the control of Pieter but I don't want too many numbers to be out without control, so he knows too much about it. And I would say that in indeed in 2014, there was pressure on unit revenue with KLM, which was, excluding HOPS, quite close to the one that we had on the same on the long-haul with Air France, there is no UG France.

Definitely KLM was hit on the Asian part probably more and also on the eastern part of Africa, but there were also some good things, so unit revenue development is not dramatically different from Air France; however, it’s true that on the unit cost indeed there was an increase unit cost with KLM. We had also some pension impact that were not -- were very good in 2013 and we which were not there in 2014.

And also bear in mind that the strikes back was higher -- negative impact was there in 2014, which means that also KLM is probably in a better position to take advantage of further weakening in euro against some currencies, given the strong exposure, for example in the northern country in Europe. So really it has to do with different momentum in unit cost of a trend which I think was very extent by both Pieter and Frederic.

So we’re closely witnessing the investment of Etihad in Alitalia, up to now we have been given a lot of commitments to maintain the agreement that we have with Alitalia namely the two JVs -- the two bilateral JVs we have between KLM and Air France and one had Alitalia in Europe which are working very well for both of us for KLM and Alitalia. And secondly, the agreement we have on the North Atlantic JV, to which Alitalia is a part.

So we expect the Alitalia to stick its commitment on North Atlantic and on bilateral JVs and up to now it has been the case. So we do not expect too much traffic changes between let’s say Italian market and the two hubs of Schiphol and Charles de Gaulle.

Could I ask, with regard to the cost plans for Air France, I think Frederic laid out that 65% of the proposed savings were identified and I don't think we got a percentage from Pieter for KLM, but it didn't look very dissimilar. But of that 65% identified, is that including any benefit from the proposed CLA negotiations which are not yet finalized but are hoped for?

Or is that all on top? And can I ask if you are able to be any more precise, what are your aspirations for productivity improvement over the coming years by company?

And then just finally on the CapEx, I think you just ordered a bunch of 737s for Transavia. Where does that fit into the CapEx reduction plans?

Thank you.

Concerning the identified cost savings, we have included already what we have announced to the to the Workers Council in February concerning the freeze of the of wage increase of the first year of course because it is I am seeing that which identified and now we have to implement after the normal negotiations. There are aspirations of productivity improvement by company it depends from where the aspirations are coming.

We have strong aspirations of productivity improvement, but the accuracy of the questions is the following interestingly the -- we have as I told you distributed employees -- the complete benchmark of their competitive position and nobody denies and everyone now is in the process of putting together their ideas to fill the gap. So there is a strong awareness and sense of urgency that we have to do something and something which in some areas of the company are more than significant and it is through everyone in KLM and Air France people know they have to do something significant.

So the aspiration for positivity is clearly shares among the employees. For Transavia CapEx it's something that five aircraft per year for now to 2018 included.

Was there a question about the product our new product or did I catch wrongly? No coming from Andrew?

Savings and CapEx. No it's CapEx, productivity and labor cost.

Okay.

Thank you. Suzanne Todd, Morgan Stanley.

Just about the to feel those of '15 due any currency hedges relation South bill or should be a senior dollar exposures is naturally hedged?

No, we have some currency hedging as well on U.S dollar for about 30% to 35% of our U.S. dollar has been hedge along the same timing that we do for the fuel.

So we have some protection against the U.S. dollar.

Do you mind of saving of what the effective rate is flat U.S dollar for about 35% hedge roughly?

No I cannot give you neither for the fuel nor for the dollar, it’s a bit difficult because it's [indiscernible].

Eric Braun, Tradition Securities. Just I would like to ask some question about it was a nice part of your company today it's the maintenance business.

Is it I am little bit surprise by the increasing in the order book if you can give us some explanation is it due to third party is it possible.

It is exclusively due to third party.

And on the time of the contract mainly?

It's very variable it can go from a two three years up to 15 year contract. So you have a lot of different for engines it is longer than for components.

And is it possible to imagine the maintenance business to have its own life either to finance a group or to give us some financial capacity towards this business. Because it seems to be a high growth business.

And as we have probably notice it is one of our top priorities in terms of growth and investment.

To introduce to third part to increase to give some financial potential for this business or too much including your own?

Financial potential for sure, looking for partnership certainly, in the objective to grow it, but to own it 100% because first of all it's a very good business for us it's a strategic business for us. Because it guarantee the availability of the fleet at the end of the day for the airline.

So it is something which is key and in addition to that we fuel as much as we can the growth on external part. If we fund partners we would happy to see them coming in the business and brining the activity or some believe we have no problem with that and of course.

We have customers everywhere on the planet China everywhere is in Canada, South East Asia everywhere.

Regarding the fuel edging you said that you're using cars because it was cheaper. Can you saw what are the disadvantages of using that technique and what can you use -- should you be able to afford better technique.

You have bond coming to marginal return April do, you intend to refinance it? Do you intend to use the liquidity position to repay it?

And last question is regarding price pressure in the business does it feel the same, but guys putting pressure on price i.e. local carriers and the gulf carriers, are there new players being more investment price?

On current our bigger advantage is that when the price off, you'll hit by a low range of [indiscernible]. So that’s the reason why and you should look at the balance sheet that you will see that we have an adjustment fair value which is quite significant of the fuel hedging and we think that Suzanne will be able to look at the positive fair value on the currency is that it will give a hint of where we are.

So we indeed when the price drops you have a big negative impact on the hedge. You will remember that we were hurt during Q4 by this impact and you do not benefit from the full decrease of the price no secrete and that’s the reason why, when you look at the numbers you see that they -- if you compare to market prices you see that about 50% to 60% of the upside has faded away from the hedging, so that’s the biggest advantage of collars.

If we had plenty of money we would buy calls, but calls are very expensive because the volatility today in the market is very high, so if you buy calls it costs a lot of money and this I think we can't afford. It is the same basically for most of our competitors and most of our competitors they go in swaps or they go in collars and just one point that I want to mention is that if you look at our competitors -- low cost competitor you know that they are very highly hedged and they are hedged with fixed instruments and so that's the reason why the pressure on that side and the fuel price is not that big it's because they are [indiscernible] into hedging transaction more or less in the same line but maybe a bit more than us and that gives us some cushion against this pressure.

On loans, yes we have convert which is falling due in April, it’s €660 million as we naturally have finance already the last year. You remember that we issued a 600 million loan we have undertaken a bit stronger fair on liquidity.

So I don't mean that we will not go in the market later during the year but it could be before, it could be after and the 650 is already refinanced, now it's entering to the big cash position of the group and we will manage most efficiently depending upon market condition possible new issues but yes I know there are some guys from the existing company we may lead the market obviously in 2015 given that we have significant repayment.

For the price pressure on prices, the two categories of competitors we have mentioned effectively put pressure on pricing. But we have also the pressure coming from the economic outlook for instance South America we have a small pressure on prices due to the very bad economic situation there.

We have sometimes some crisis in some part of the world, Middle East or the Ebola area also is not very favorable sometimes, now it is calming down, but it hasn't been favorable. And in some part of the world especially in Europe we see the market shifting progressively towards leisure like market so with low price.

Jarrod Castle again from UBS. Just two additional questions.

One is South America. Can you just quantify the Venezuelan cash?

Is that in the net debt number? And would you be able to get it out of the country if you wanted to?

And then secondly, you just mentioned procurement and also airport fees. And obviously in December ADP came out with the first ERA.

I think it was CPI plus 1.75% plus 3 billion of CapEx. Just, I know you probably don't want to talk too much about it, but just some general views in terms of airport fees.

Thanks.

I start with just the question on Venezuela. You remember that last year we had the equivalent of $290 million outstanding out there at the historical rate.

At the historical rate today we have about $200 million which means that first we have been using some bolivar locally and, as we are not selling any more in bolivar, the treasury position is reducing. And two, we have been paid also by Venezuela some amounts at historical rates.

So it has decreased, indeed, our exposure. We have on the top of it cover in the accounts with a provision for the risk that we may not recover the full of it at the historical rates, and I'm a bit embarrassed to give you the number, but I know it is speculating somewhere for some reason.

So let's say that the visible exposure on the Venezuela is about half of the amount at the historical rates.

Concerning ADP, we can clearly not be positive when you see a company which is local monopoly proposing an increase of the airport fees by 2.4% something 2015 and proposing for the four years period what we call the [CRE3] target of 1.75 plus inflation. I don’t know any company in the world which can be totally secured and worked in a framework which is a guarantee -- a guarantee to have an increase of its price to customers increasing by 1.75 plus inflation.

So on deposit question company's regulation of this local monopoly, we have also the parameters of comparisons with others and I take the opportunity to revisit Pieter Elbers, to tell you that at Schiphol airport, the proposal made by the airport airlines for 2015 Pieter is a decrease by 7% -- 6% of the fees. If you now look at what is happening in Spain where there is a possibility discussed or proposed by the government to privatize some airports, what is put in the global economic framework versus privatization process is the stability.

So stability of the airport fees and we are somewhat and we have some other many examples where the target of airports somewhere in various places in Europe is to decrease the airport fees. On top of that there was real question we have concerning ADP which is the separation between the commercial -- what it’s called the commercial books which is activity developed in the shops at airport; shops whose clients of course are our clients by definition the clients first of the airlines and after that of the shops.

And you know that is a plan proposed by ADP for the current fleet. So it was a total split between super profit made on the shops and what is addition box.

So this is model which is guaranteeing the ROCE on the addition books and which is isolating the profit from the commercial activity. And again if I look at Schiphol when I was in KLM, I worked a lot with Pieter concerning this is the separation with commercial and addition and in the new regulation as proposed there is a possibility that part of the profit of the commercial can be also be booked to the aviation in order to reduce the increase of the airport fees, so you have an opinion?

Last the questions on the call, perhaps we should terminate by these questions.

Yes, hi. Just one on the CapEx.

Obviously you’re reducing your CapEx budget by 600 million over two years but, at the same time; you’re not cutting back product investments, also not maintenance investments. The question would be where are you cutting back?

So where are the areas of CapEx that you are cutting back?

We are cutting CapEx in the fleet renewal, now we are postponing some aircraft deliveries on short mid-haul and long-haul; it’s mainly focus on that. And there is second question from Barclays?

Hello, yes, good morning everybody. Three questions from me, please.

Firstly, looking at your growth plans for 2015 and especially your long-haul growth of 1.5%, I think you previously said that you were looking at reviewing the growth in certain long-haul regions, given the overcapacity challenges. So I’m just interested if you can give a breakout for how that 1.5% splits out by region and, in particular, have you revised down growth at all to Asia or Latin America and/or accelerated on the North Atlantic?

That’s my first question. Second question is you said you’d expect this year fuel savings to be almost fully offset by pricing and currency pressures.

I’m just wondering if you could go into a little bit more detail on the pricing and revenue part of that, I know it’s very early in the year but, given that you did minus 1.1% RASK in Q4 of 2014, are you expecting the same kind of rate through 2015? Or do you think it could get worse?

That’s the second question. And the final question, just on Transavia.

I wonder if you have any more targets you could share with us for Transavia for this year. For example, do you think it could break even or at least be able to see its unit costs fall?

Or would you rather stick with the more medium-term 5% operating margin? Thank you.

On Transavia, we expect, as before, to break even in 2017, that's our plan and we stick to that plan. It's clear that we do not face exactly the same market with Transavia that we see as the rest of the market, which means that today, some -- maybe on this special part of Transavia we could retain part of the fuel, given that our competitors, I you know, are widely hedged and so this gives us less pressure on that part.

So Transavia is on track with this plan and no downside whatsoever. On the pricing pressure, it's fair to say that we lack visibility definitely for 2015.

We do believe that there will be a further impact compared to the second half of 2014 on the back of the fuel price decrease, for sure. That's what we see.

We expect that on cargo, it will be especially tough. You know that in cargo you have fuel surcharges and, definitely on that part, you can expect that we will decrease and we have already decreased and our competitors are decreasing the fuel surcharge.

So you should expect that the pressure on [indiscernible] cargo will be stronger in 2015. So definitely, it will lead compared to passengers.

Now we have not identified in the forward booking a huge decrease in yields, that's true, but we definitely like visibility, especially for the summer season, and that's why we are very cautious and we factor in, indeed, the further deterioration compared to what we have seen in the second half. We do not give usually the break out of our contemplated growth in the long haul, but there is no secret.

They are part of the market where you can hardly expect that we will go that is where we face the Middle East carriers, especially on Asia, especially on the plum parts of Africa. And, therefore, you can imagine that the growth will be selective and would be in the areas of the world where we can, through our partnerships and our footprint, find the best [accounts].

Have you made any changes at all for your Latin America growth plans?

No major changes except the opening of Amsterdam-Bogota-Cali route that will happen by the end of March.

Thank you very much.

Thank you. Last one.

One short question [indiscernible]. Can you give guidance on the reduction of losses on the medium haul network?

Point to point CGA we've a loss of 110 -- excluding strike -- 120 sorry and when we look at Perform 2020, based on the all the existing business plan of course that still to be implemented, we expect to be breakeven in 2017. And it is point to point and concerning the feeding at Charles de Gaulle and I'm speaking about KLM as a target still to be implemented will be to be was a loss limited to 150 million again in 2017 and as we built is 150 loss it is at we won’t see activity where it is non-profitable which is mainly in winter at least we've a loss less than its contribution to the long haul and it's underway we've defined the target of 150 loss for the medium haul feeding to Charles de Gaulle which has to be compared to result in 2014 excluding strike of minus 260 mark.

You remember that this loss is could be considered as the investment long haul put on the table to feed the long haul network if you remember. For KLM the --.

For KLM has a loss at this moment as well on the hub feeding of Amsterdam, we target to be around breakeven in 2017 when it comes to the hub feeding network and clearly there is no point to point from other places than Amsterdam.

Thank you very much for your attention, thank you everyone on the phone.