Air France-KLM S.A.

Good morning, everyone. First of all, thank you for your patience.

We've had a technical issue here with our systems. I'm hoping it works right now.

We are just going to do a quick little test. Okay, so I'm here with Steven Zaat who, as you may know, took over for Frederic Gagey on July 1st as Group CFO.

We are at the [Indiscernible] in Central Paris. I'd like to welcome you to the Air France-KLM's Q2 2021 Results Call.

Unfortunately, we are continuing to deal with the ongoing impacts from the COVID-19 crisis, with travel restrictions still enforced in many of our markets. However, we are seeing strong demand from our customers to travel when and where it is possible to fly.

We are, therefore, optimistic when looking at the months ahead, and we expect a steady recovery when travel restrictions to and from our key markets are lifted. We are keenly waiting for the U.S.

government to lift border restrictions on foreigners in a reciprocal manner to what the European Commission did back in June so that we can fully resume service across the Atlantic, which is our largest market. Turning to Page 3 of the presentation.

The metrics on the right side all show a strong improvement of the group's performance in Q2 2021 compared to Q2 2020, a period in which this unprecedented crisis first hit. In Q2 2021, our network passenger capacity is still approximately half of our Q2 2019 capacity, but we carried 477% more passengers than in Q2 2020.

In addition, our cargo activity is healthy and continues to show strong signs of resilience. The outcome is a sharp increase of 133% in our overall group revenues for this quarter compared to the same period last year.

Our EBITDA loss was reduced to minus €248 million, better than the group's previous guidance, and our operating result stands at minus €800 million, improving by €800 million compared to last year. In addition, our adjusted operating free cash flow is positive at €210 million, thanks to strong ticket sales.

We have a strong level of cash on hand at approximately €9.4 billion at the end of June, and we continue to strengthen our balance sheet. We successfully increased the group's capital by €1 billion, converted our direct French State loan of €3 billion into perpetual hybrid instruments and successfully issued a senior bond of €800 million for which the cash will be received in Q3, resulting in a material net debt improvement.

Net debt is down by approximately 25% from €11.05 billion on December 31, 2020 to €8.34 billion on June 30, 2021. Steven will provide you with further details during his portion of the presentation.

Okay, moving on now to Page 4. The group outlined its transformation and simplification plan during our Capital Markets Day in November 2019 with the goal of significantly improving the group's individual airlines brand equity and overall financial results.

This plan still stands, and we are moving to get back on track as quickly as possible. It is based on the following 6 pillars: one, optimize our operating model with our 3 main brands; grow profitable passenger revenues; maximize group businesses and synergies; maintain trust and transparency with our employees; modernize our fleet; and lead the way in sustainable aviation.

Our plan was showing positive results before the crisis hit, and the group is fully engaged in adjusting to our new reality, accelerating our efforts to achieve the goal of our base plan. Turning now to Page 5, we are working full steam ahead on our transformation plan to solidify the future of Air France-KLM.

We launched hundreds of projects to make our group more efficient and effective, such as the further rationalization of our fleet, the restructuring of the French Domestic network, a massive renegotiation of contracts, and the streamlining of our organization while ensuring a stable social climate and a strong alignment with our labor partners, which remains an absolute priority. Our restructuring programs are showing improved results with an expected structural savings compared to 2019 of €2.1 billion which is €800 million of KLM and €1.3 billion at Air France, and this is all by the end of 2022.

This comes through via voluntary departure schemes and with no forced leave, and we are also succeeding in streamlining our organization and driving efficiencies through a total reduction of 14,000 full-time equivalents. That's minus 5.5 and -- 5,500 at KLM and minus 8,500 at Air France.

Moving now to Page 6. In order for the Air France-KLM Group to affirm its leadership role in the sustainable transition of the airline industry, we have strong successive and specific phased commitments.

By 2024 in the French Domestic market, a reduction of 50% of our absolute CO2 emissions compared to 2019 levels. By 2030, carbon neutrality for our ground operations and an overall reduction of 50% of our CO2 emissions per passenger per kilometer compared to 2005 levels.

And by 2050, the group committed to net zero emissions. These commitments are fully aligned with our current legislative context and with commitments made to the French and Dutch states as part of the conditions for financial support.

To reach these milestones, we have identified a variety of levers that will successively activate, and that will be in the short term. These levers are mainly the renewal of our fleet, the use of carbon offsets and a reduction of emissions through operational improvements.

In the medium term, it is primarily the adoption of sustainable aviation fuel. In the long run, we anticipate technological breakthroughs and the use of new sources of energy.

Our sustainability trajectory highly depends on the use of sustainable aviation fuels for which we fully support the development of a sustainable European industrial sector. So just -- we've got in the room with me here, we have Steven Zaat, who is the Group CFO; we have Pieter Elbers, who is the CEO of KLM; Anne Rigail, CEO of Air France; and we also have the 2 CFOs of Air France and KLM.

We have Erik Swelheim, who is the CFO of KLM; and we have Alexandre Baclet, who is our new CFO at Air France. And all of them will be happy to take specific questions if there is something that has to be specifically answered by a one of these colleagues of mine.

So Steven, please go ahead.

Good morning, everybody. Let me start by saying that I'm thrilled to be here this morning as the new CFO of Air France-KLM.

It will not easy to succeed an aviation legend as Frederic Gagey. I have very big shoes to fill, which you can count on my commitment.

If you have any specific requests, do not hesitate to contact my Investor Relations team. But let's talk about the results of our beautiful company.

So if you go to Page 8, you see that the recovery is really visible since June. You see that the booking load factor is increasing and while we are at the same time increasing our capacity.

There are 2 things. There's a big travel appetite, where people can travel, they will travel.

But of course, we are still far away from the 2019 levels. So if you look at the graph on the top of the left, you see that we have increased capacity for May from, let's say, levels below 50% to 53% in June and over 60% in July, and that goes hand-in-hand with the load factor increase.

So in May, we were still around 40% in load factor. In June, we are above 50%, and in July, we are even at 67%.

And actually, it is in all our markets the case. If you look at the long-haul, you see that since the opening of the EU, for the U.S., for vaccinated Americans, you see that we can increase our capacity steeply, while we, at the same time, fill our planes with more passengers.

And it's very important because we have at this side, we have cargo revenues supporting this operation. And if you look at the total picture, 80% of our flight contribution is coming from the long-haul operation.

In regard to the medium-haul in Europe, you see that we are steeping up our capacity in the summer. So for July, we are close to 80%.

And at the same time, we are able to fill it with even more passengers as a load factor than we did in the previous months. So really strong result over there.

On the French Domestic, the storyline is a bit different because we never going to go back -- we're not going to go back to the 2019 levels. So you see that we are increasing capacity to 60% because this is only the network part.

It doesn't include Transavia. And at the same time, you see we are closing the gap to the booking load factors, which we are used to.

So good to see that we see some recovery in the market, and of course, still far away from the 2019 levels. If you go to Page 9, then you see that, of course, this increase of capacity and at the same time this increase of load factor supports the growth of our revenues.

So we have €0.5 billion more revenues in than we had in the last quarter. And that has a significant impact on our EBITDA.

As you know, we guided the EBITDA at approximately €600 million loss, and we beat actually this level to minus €248 million. And it's driven partly -- that's driven mainly by the fact that we are able to gain variability on our cost.

We are now at 80% variability of our cost side, which is very strong. So after the real hard lockdown in the COVID crisis, we were at levels of [€400 million] to [€600 million], let's say, per quarter.

And we are now reducing -- getting closer to breakeven at the moment. If we then go to the scoresheet, Ben already explained the explosion in revenues.

In the fuel expenses, there are -- actually, there's 1 main element, which is capacity. So out of the €300 million, there's €200 million coming from capacity.

Of course, the oil price increased significantly over the period. In Q2, we had a very strange fuel price as we can still remember with even some days with a negative fuel price.

The average was around $33 per barrel. In the second quarter this year, we are at [69].

But we had in Q2 2020 still negative hedges of around €50 million. And we see now that our hedge policy becomes effective.

So we had a €50 million contribution on positive hedges, which reduced the price impact, let's say, to only €100 million over the 2 quarters despite this spike in oil price. On EBITDA, as I already said, we are at minus €248 million on the road to get to a breakeven EBITDA.

And then on the operating result, we are slashing it, let's say, with around 50% compared to, of course, the very low level we had in the Q2 2020. If we then go to net income, you see still that we have a significant net income.

It's very important to understand that it is mainly an accounting effect. The accounting impact is coming from the derecognition of the KLM Ground pension fund, which is very good news because at the end, it will decrease our [indiscernible] on the balance sheet with billions.

So -- and I will explain later what is exactly happening. But the impact before tax was €938 million.

And if you take all the positive tax impacts in the quarter, you get to €700 million impact below [indiscernible]. But I will get further to that later in the presentation.

If you look at the different businesses, now as already explained, of course, on the passenger side, with the growth in ASKs, you see that our revenues are growing. What is very positive news is still we are able to have a unit revenue, which is at the same level as the second quarter of 2020.

You know that in the second quarter of 2020, there was very limited capacity in the market due to all the hard lockdowns. What is very good to see is that we can keep this very high level of unit revenue, and at the same time, increasing our capacity on the cargo with 66%.

So that brings a very significant contribution to our profit and loss. But still, we are at minus €654 million, which is still, of course, not at the levels of 2019.

Because in the second quarter, we should make profit in our business. Transavia slightly recovering compared to the second quarter, still very much hampered by the difficult travel restrictions, which are in place.

And then there's also good news from our Maintenance business. There is €300 million improvement.

There's €200 million coming from incidentals. So that is -- let's say, we cleaned the balance sheet last year related to outstanding customers and to inventory.

So if I could take that out, we have actually an improvement of €100 million, which comes from the strong cost reductions over there and the benefit, of course, that the operator Air France-KLM are growing, plus the third-party growth. So good to see that our Maintenance business is at least at breakeven's level, which is very hopeful for the coming period.

Then we go to the results of our airlines. As you can see, Air France grew more than KLM.

The main reason for that is KLM reduced less capacity in Q2 2020 than Air France. So now we are getting more back into business also on the Air France level.

So you see that the revenue grew 200%, where in KLM, it's only grown by 72%. If you look at the change in operating results, you see also, of course, a bigger impact on Air France also due to the size.

So it's 500 versus 300. There is still a gap.

We see Air France is at the loss of €566 million, whereas KLM is at €185 million. There are actually 2 reasons.

One is that KLM growth got faster in the labor reduction. They have more higher and temporary staff, and the implementation of labor restructuring grew faster in the Netherlands than in France, where we have to take step by step by step.

But we see now that at the end of this year, Air France will be at minus 30% in staff compared to KLM who is already at the target close to minus 16%. And we have just signed an agreement on the [PDV] [indiscernible] as a restructuring at HOP!, which we can also implement in the coming quarters.

And the second reason is that the NOW scheme is richer than, let's say, the [Activity Partial] where he has to put people really at furlough. Under the NOW scheme, people can still work.

If we go then to the free cash flow, this is actually the very good news. Both carriers are cash positive, so that is very good news.

Of course, we start with our operation with a minus €500 million in cash flow, but we had a significant improvement of working capital of €1.2 billion, which is mainly driven by the Air France ticket sales, so 70% of that amount is coming from the Air France ticket sales in which, by the way, is included a €500 million refund. So if you would -- that even deducted, let's say, from that amount.

Then we had a very limited investment. We are still very strict in our investment policy and then you get to an operating free cash flow of €427 million.

And if you then take the payment of the lease debt, it's €217 million off. So it gets to above €200 million.

So very good news for the first time since the crisis. We have an operating free cash flow, which is positive, which is, I think, a hopeful sign for the future.

Let's then talk about the net debt development. On the left side, you see the free cash flow evaluation of the first half year.

So we started the year with €11 billion of net debt. If you take then the adjusted free cash flow which we lost, we will increase the net debt by €1.1 billion.

And then due to the capital strengthening, which we did in April, €3 billion by converting the French State loan into a hybrid and €1 billion getting it off new equity end from the market and from the current shareholders, the French state. In China Eastern, you see that we have -- in net, we reduced our net debt with €3 billion.

So going to the road actually to our target where we want to -- we target at a net debt of EBITDA before any restructuring of our equity of 3, net debt-to-EBITDA of a level of around 3. So we are on the road.

I think we did some major exercises this quarter. We put an €800 million bond in the market.

We did the recapitalization. So we are on the right track to reduce our net debt to more sustainable levels.

If we then go to Page 15, this is the picture of the derecognition of the KLM Ground pension fund. As already said, there's very good news by derisking the balance sheet.

So congratulations to the team who negotiated it. We started with a net asset of €211 million.

We made a deal with the unions to pay, let's say, €50 million. So that's the only cash out actually, which we have.

And then unfortunately, you could say you saw that during the period, the net asset grew, and that is 50% coming on the asset side, which is growth due to the strong capital markets and 50% on the liability side. This is just accounting.

There's no cash over it. It's also, let's say, a net asset, which we do not, cannot touch due to the obligations, which there are at the Dutch pension regulation.

So actually, what we have to do is take this OCI impact plus the opening net pension asset. We have to watch that through the P&L to take it out of our equity.

But I think it's a very good step we made to derisk further our balance sheet. So then on the recapitalization.

As we all know, we did some significant steps in the second quarter. We increased our share capital with existing shareholders.

We did a €3 billion of conversion of the French State loan into quasi-equity. So this step is actually done.

And now we are preparing actually for the next step. So the first thing where we're working on is to reduce the debt roll which we had in 2023.

We have €4 billion of the PGE, which is a bank loan, which is guaranteed by the French state for 90%. We had to pay that back in -- we have to pay them back in 2023.

What we are currently discussing with the French state and with the banks, and the discussions are very, very in a positive atmosphere, is actually to split this in 3 amortized tranches of €1.3 billion per year. But what we will do, we will also take €500 million of, let's say, the €800 million, which we put in the bond market.

We will use that to redeem already a part of this state guaranteed loan. So that will reduce our redemption profile in 2023 with €500 million.

So you get to €800 million in 2023, and €1.3 billion in '24 and '25. At the same time, we signed an EMTN program.

So we can, with the EMTN program, easily and go fairly fast to the debt market to support our financing strategy and also at the aim actually to -- at the end, gradually repaying all the state aid. And then we are currently selecting an ESG rating office to make sure that we have an ESG rating that gives us access actually to green money, which will also support our financing strategy.

Then on the equity side, I think there are 2 things important to mention. We are preparing actually for all the tools, which can be used under the different, let's say, circumstances.

Currently, the Dutch state is pursuing discussions with the EU on the recapitalization measures of KLM, which is very good news. And at the same time, as you know, we have up to €3.5 billion on which we can, as an allowance from the AGM, to use it in equity-linked instruments.

So we will -- we are currently working on several instruments. For sure, you are going to ask the timing.

I cannot say anything on that one, but be aware that we are working on several tools to execute in the coming periods. And the target is at the end from our business, we have, let's say, a net debt-to-EBITDA level of 3 in 2023.

And that will be reduced then to 2.0, which is actually the level which we had before the crisis and which also our peers have before the crisis. So this is the target for 2023 with all these instruments taken into place.

On Page 18, you see then actually the debt profile. So debt is after, let's say, the restructuring of the PGE.

So we had a debt roll of €4.5 billion in 2023. And you see now that we reduce it with this exercise to €1.3 billion if we also pay €500 million already of this PGE.

And then you see that we, of course, increased the debt profile in the years after. In those years, let's say, we expect that the business is back to the 2019 levels, and we will generate cash to pay off these loans or to renegotiate the loans.

So having said the, let's say, the first sign of recovery, which we saw in the second quarter, we still see also for July and August, a very positive market dynamic. We have -- we guide you to 60% to 70% of the capacity compared to 2019.

So we will ramp that further the capacity. And if you look at the right, you see that at the French Domestic for the summer period, we are, let's say, at levels between 58% and 65% with already decent booking load factors in for July.

Of course, the pattern of booking is very late. So of course, the numbers you see for August and September will increase over the period.

And then we will go back to lower levels in September because there's still uncertainty in the market, and we have to adjust and be agile, and that's something we learned over this crisis to be very agile on our network if we see demand is not coming back after the summer. On the long-haul, we expect actually to keep the current levels end of July.

So we will be at around 2/3 of the capacity. And you see now in July decent load factors.

And don't forget, this is also all supported with significant cargo revenues. So with these levels of load factor, we are able to generate a sufficient contribution to our profitability.

And then on the medium-haul,you see around 80% in for July and August, and then we scale back to 72% in September, and also on the medium-haul, you see that on July and also that the bookings are late, but the weather conditions of the last days in Paris and Amsterdam helps, of course, so we expect still there good load factors in for our medium-haul European business. Then on Page 21, you will see the cash.

So still very good cash level, €9.4 billion, including the capital increase of €1 billion. There is €800 million not yet in.

We released 2 senior bonds to the market. Those were done in June but we received the money just on the 1st of July.

So let's say, if you count those in, you are above €10 billion at €10.2 billion. So what do we expect for the coming period?

I think we will expect a positive EBITDA in Q3 for both carriers, both Air France and KLM. We still have a risk on the cash refunds, but we are getting now more or less to a normal level of €500 million.

You should not forget that in normal circumstances, we also pay, of course, back tickets from, let's say, Las Vegas, which are not flied by the customer. So if you look at this €1 billion, at the end of March, we were at €1.2 billion.

We had then €640 million in vouchers where we have currently €500 million of vouchers. So we reduced it by over €100 million.

It's still going quite slow. And if you look at the tickets with a past fly date, we moved from €530 million to €440 million, so €100 million.

But if you look at these tickets with the past fly date, it is getting close, actually what it is normally. That is in the normal date, it was around 20%.

And if you take out the vouchers, we are at around 15%. And this €1 billion, you should compare that to an outstanding level of €2.9 billion.

So it's only 34%, where it was in March, it was over 54%. So all in all, we're getting to a more normal situation, and we hope that the vouchers will be used by our customers quickly.

On Page 21, the other guidance. On the CapEx, we still expect to be below €2 billion, which is mainly especially for the coming period related to the fleet.

There's still 787s, [100] to come in. We have the A220 coming in.

The additional A350s and there are E-195s coming in and that's actually more at the second half of the year than we had that on the first half year. And on the restructuring cash out, we estimate that it is below €500 million.

We still have the same number of people in. We are very -- and it is especially related to Air France.

You see that we are aimed at getting the FTEs in as we expected when we released this PDV even a little bit above our expectations. But it is a little bit lower due to the fact that there's more people close to pension than people younger who should get a higher package.

So also there, we expect a little bit more positive news. Then on the medium term, we reconfirm our guidance.

So we plan that we get back to the capacity of 2019 in 2024. If you look at, let's say, the capacity for 2022, be aware that we already reduced 7% of the aircrafts compared to 2019 and seats is even bigger because we downgrade actually the fleet, especially by the phase out of the A380.

We reconfirm the unit costs down 8% to 10% when capacity is back to level, including the fuel and the currency. And we expect an operating free cash flow adjusted to be positive in 2023.

So we reconfirm that number based on our current strategy. And then on the net debt to EBITDA.

Before any financial transactions, that will be around the level of 3x, and after all the recapitalization steps, it will be close to 2x. And we still aim at an operating margin of 7% to 8%, which should be reachable with all these restructuring on costs on both airlines in our plans.

So I hand over for the conclusion now to our Group CEO, Ben Smith.

Thank you, Steven. As you heard, there are some encouraging steps in the road map to recovery.

The team has done a great job of preserving cash levels and strengthening the balance sheet as we said, following the successful completion of the first phase of the recapitalization. And -- but we still have many challenges ahead, rapid rollout of wide-scale vaccination remains very key to our recovery and the reinforcement of trust and demand with the launch of vaccine passports, but caution does still prevail.

So I'd like to now hand it back to the operator so we can take your questions. Thank you.

Under the temporary EU framework, could you remind us by when you need to repay which of the government's aid elements and especially the quasi-equity, the €3 billion from the French state and how that kind of relates to your leverage target of 2x? And secondly, on the CapEx, what is the total approximate size of your order book right now?

I saw a tender for 160 jets at Transavia. And will you increase CapEx again after the timeframe kind of -- even if that puts leverage back upwards, or is the leverage target kind of the dogma and everything else has to follow from that?

And just a short one, I noticed that your capacity for cargo seems to be down sequentially from Q1. Could you just elaborate and help us how to think about your cargo capacities for the rest of the year?

So on the state aid. So let's -- if you take the current state aid from the French state, that is actually now a hybrid.

So actually, you could say there is no real time frame. But there's, of course, the time frame for the European Union.

The current, let's say, increase in shareholders' percentage should go back to the original level. So that is more in the range to 2024 and 2025.

But it's still equity. So we could use it however we want to use it, of course, in conjunction with the French state.

Also when we increase, let's say, our capital to the markets. So that is the first one.

And then on the KLM side, I think we already put it in Slide 18. So you have the numbers over there.

Then the increase in CapEx. So we have, of course, a very ambitious fleet renewal program to support our sustainability target and also to support our unit cost target, but we are not aiming to get back to the levels at the moment of 2019, if that is your expectation.

We are very careful with our CapEx, both on the Air France and the KLM side, and we do it together at certain areas. On the group side, we are very restrictive in any CapEx expenditure.

The question on the cargo, there are 2 things. If you look at the cargo, we have all the full freighters operating as much as possible.

Those are, let's say, moneymaking machines at the moment. Of course, the other cargo is related to the belly, where we reduced some capacity, and I know especially on the French side because I was close to it in my previous job.

We reduced some cargo-only flights with passenger aircraft because the oil price increased. So then in terms of flight contribution, you don't make the flight contribution you want, and then we stopped these flights.

But that's more related by the fact that the fuel price increased but we are still with our freighters and our normal belly operation. We're still adding more capacity than before.

Great, thanks. If I may, I'll follow up on that second comment on the CapEx and the leverage.

Is that leverage target at 2x something you foresee for the, let's say, foreseeable future at Air France-KLM or is that something you'll be willing to review as we go into the start of this new cycle?

Do you mean the leverage target of 3?

I'm -- was I mistaken? [indiscernible]

So we have a leverage target of [3] without any operations and of 2 with all the financial operations.

And when that's increased...

Our ambitions on the CapEx. So the fleet renewal programs are in, and we are very strict, as I already said, on ground CapEx, on maintenance CapEx, et cetera, to keep that at a minimum.

Just coming back to the potential equity raise. Where is the shareholders' deficit in Air France?

I think it was minus €4.6 billion year-end 2020 and then you've done €4 billion of hybrid and equity. And then you've obviously had losses in the first half, which you don't disclose the net income loss in Air France, but certainly €1.5 billion.

So are we talking about something over €2 billion now despite the issuance? Then just secondly, looking at your operating margin target, I mean, this still remains in line with what you produced in the [CMD] in 2019.

But you've obviously undertaken a very aggressive cost-cutting program. So why is it not at least towards the top end of the 7% to 8% or indeed even higher when you're kind of looking ahead?

And then just lastly, just in terms of operating cash flow, are we now in a positive position for the second half of the year?

Let's start on the equity question. KLM was, at the beginning of the year, let's say, around 0.

Of course, with this derecognition of the pension funds of the Ground, they are at closer, let's say, to minus €1 billion. And indeed, for Air France, we still have a significant target to improve our equity.

That is for sure. If we -- and we are working on that.

So that's actually all we are working on in the current period. We know it is around levels of -- at Q1, it was at minus €6.5 billion.

But with this transaction, it is reducing to minus [€2.5 billion] in the IFRS. So we are working on that to get that closer to 0 with all the recapitalization actions.

The second remark on your operating margin is a very good one. We put in our trajectory, I think, maybe a modest improvement of our unit revenues.

I think we should be very prudent on that level. But of course, if the market conditions are better and maybe the market conditions are better because all airlines are actually reducing capacity at the moment.

There is a lot of fleet out. There are a lot of bankruptcy.

So it could be that we are positively surprised by it. But our mid-cycle target is 7% to 8% because, as we know, I don't know if it's actually the peak period.

So when, of course, we will see that the market will be very, very strong, then there will also be new capacity coming in, et cetera, et cetera. So it's for us a mixed target.

I saw Lufthansa aiming at a specific number in 2024. For us, it's a mid-target.

So it can be up, it can be down, but this is a little bit the average over the period.

And operating cash flow in terms of second half of the year, should we now expect something positive? Or how are you thinking about that?

Now I give you all the numbers where you can do your own math. So the EBITDA, it will be positive in the third quarter.

We don't say anything on the fourth quarter because the business circumstances are still very difficult to predict. And then we gave you the CapEx.

So you can do your own math. If you have your own assumptions for the Q4 for EBITDA, you see what you can do on operating free cash flow.

And of course, the working capital will not be as positive as we had this quarter. But we can't give any further guidance on that number for the moment.

Welcome, Steven, I hope you're having fun. Three for me, please.

Just I think I may have missed it, but the 60% to 70% capacity for Q3, I was wondering if you could split that for Air France versus KLM. And also maybe note where you're planning capacity for Transavia, which I don't think is in that numbers.

I saw some headlines from the Transavia CEO saying bookings were very, very strong. I was wondering if you could maybe comment on that as well.

Secondly, because I'm lazy and I haven't looked it up, can you remind us where we are on furlough updates? I think Netherlands' furloughs was due to the end of Q2, but maybe save me looking at that.

Remind me where we are from Netherlands and France. The final one, again, I may have missed something, but it looks like for Air France, restructuring benefits relative to the full year presentation, that's gone up from €1.2 billion to €1.3 billion.

Maybe a question for Anne just sort of run us through why that's increased. Apologies if I've missed something very obvious.

It looks like KLM [indiscernible] €750 million to €800 million on lower staff reductions. Maybe Pieter wants to comment on the KLM restructuring and where the benefits are coming if it's not from staff.

I will take the first 3 questions, and Anne will take the last 1 on the restructuring with Alex. On the capacity side, if you look at the 60% to 70%, let's say, there is a difference of 10% between the 2 operators, okay.

That's still 10% capacity in. It's, of course, also related to the network and also to the cargo markets, which are a bit different between the two.

And as I explained also, let's say, the furlough scheme, where in the Netherlands, you can still use the people, where Air France, we only can get any furlough payment if we really put people at home. So there's a 10% difference between the two.

It is 64% for Air France and 74% for KLM. Your question on the bookings of Transavia, we saw a very steep increase in July in the bookings.

Then, of course, it went down with all the -- a bit down with all the COVID issues, which were in Portugal, in Ibiza, in Mallorca and started in Greece. But with the weather now, and we hope it continues to rain in the coming week in the Netherlands and in France.

We see also the bookings are really coming back. So as I said, the appetite to travel is really, really big.

If you can travel and there are no COVID restrictions, people immediately try to take the plane. Then on the furlough update, it is actually on slide -- let me get back in the presentation.

Present Slide 5. So KLM is already there.

They are already at 5,700 FTEs currently. So they have done the full restructuring and they will even need to hire some temporary staff probably in the coming period.

For Air France, we are currently at 5,300. That will move to 6,400 at the end of December.

So then there is still only 2,000 FTEs to go. But at the moment, we still see every time that we are actually beating our own forecast in terms of restructuring.

And that was also one -- it's not a big contribution in the second quarter but it was part of the contribution of the better results we had in Q2. But maybe Anne can give a little bit more coloring on the total restructuring increase from €1.2 billion to €1.3 billion.

Yes, of course. So our current transformation plan is regularly reviewed to be able to increase with a lot of new initiatives.

You know that we have more than 200 initiatives. At the moment, we expect it to bring €800 million by the end of this year.

The current global transformation plan is sized at €1.6 billion by 2023. And it was reevaluated by €100 million.

I think it was in February with a lot of legal initiatives on procurement, on digitization. We are on FTE decrease reviewed.

As Steven said, voluntary departure plan was better than expected. So we rechallenged and we are not replacing everyone without rechallenging the organization.

So it's an ongoing process, and we will go on putting some pressure on the transformation initiatives.

Could I ask what are the politics and what's the timing or potential timing on the reopening of the North Atlantic, Clearly, it's an imperative for European airlines and perhaps less so for U.S., but it's still important. Could I ask for a bit more color or description on what happened in Holland with regards to the negotiations between the Dutch government and the EU, and perhaps following the French in changing the structure of the aid, particularly in the context that I don't think -- I may have this one, I don't think we currently have a Dutch government.

So how does that move forward? And then if I can just follow up on James' question.

I think we'd be curious to learn about the development of the furlough structures, not in terms of getting people out of the business, but the furlough structures in terms of the state providing support for people away from work, and when did those programs roll off in France and Holland?

So regarding your question, whether we can provide more color on the reopening or the rest [indiscernible] that we're hoping the U.S. government will introduce for travel into the U.S.

by foreign citizens. Look, we don't have, obviously, as you know, a fixed date.

We're hopeful that somewhere between the end of Q3 should be -- we should see some new [indiscernible] opening. That is when we talk to our colleagues at some of our partner airlines and some of our competitor airlines.

That is the date that we're looking at. Obviously, we have no confirmation of that.

We follow very closely what all of our contacts in the United States are telling us. There is a lot of pressure by many groups on the U.S.

state, U.S. government.

You can -- a lot of tourism industries, a lot of businesses that are based in the U.S. that are putting pressure on the U.S.

government for this to open. There are countries in Europe where the delta variant is peaking, and we are hearing that once that takes place in the U.S., that could be a point where there could be a change.

But as I said, this is -- we have no confirmation. I don't know probably what you have, but we are hoping that sometime at the latest in September, we could see a change.

Just passing over to Steven for the other questions. I'll just skip to your -- the question about the new government, next steps for government in the Netherlands and perhaps any further actions in France.

Obviously, we don't speak on behalf of either state. We do know that there are ongoing talks between the Dutch state and the European Commission in terms of timing and when there could be a move on the part of the Dutch state.

We don't have anything to share with you today.

Okay, and then on the furlough scheme, you can find it also on Page 5. So for KLM, it will end at the end of Q3 in 2021.

And for Air France or in French situation, we have a long-term activity per share until the end of 2022.

Two, hopefully, fairly simple questions. Ben, if we were to assume by 1st of January 2022 that by then the U.S.

is open to Europe, what sort of capacity index do you think is sensible for the group next year versus 2019? Perhaps you could at least provide a range, please?

And Steven, welcome. Looking at Slide 13 on the operating free cash flow in the quarter, there's a part of the working capital inflow that wasn't related to the advanced ticket sales.

Could you give us any color on the main moving parts there that led the underlying working cap to be positive ex advanced ticket sales?

Okay, so if we assume that Europe either stays status quo or gets better, if the -- if our African markets remain resilient, if the French overseas markets remain strong, if Canada moves forward as we're seeing, and if Asia and South America, we see no major improvement by the beginning of next year, but if the U.S. market does open in both directions, then I guess we could assume perhaps between 75%, 79% capacity levels.

Yes, and on the -- if you look at the additional working capital contribution, it's coming from one fact, which is the suppliers because we grow capacity. And then, of course, we have a later payment of it, especially show the growth in June.

So that is, of course, beneficial for our working capital. And we have some fixed payments which are still delayed.

That is mainly coming from the suppliers on top of it.

I have 2 questions. Firstly, could you explain the €200 million one-offs in the Maintenance business a bit in more detail.

I think you mentioned that it has to do with a balance sheet cleanup in the Maintenance business, but some more details would be appreciated. And actually, why was that included in the underlying operating income for the group?

Shouldn't this number be reported below the line because it distorts the picture quite a bit? And then secondly, Aéroports de Paris and Schiphol, they have terminated their collaboration and they'll also unwind the cross-shareholding.

Just wondering if you think that impacts you in any way.

So first, coming back on your question on Schiphol and ADP, we don't see any impact on our group. And so we have no comments to make over there.

Coming back on your question of the Maintenance business that was in the second quarter last year. There are 2 things.

First of all, it was related to customers who went bankrupt so -- and also some customers who had difficult response to pay actually because of the very, very negative impact on the industry. So that is one big part.

We never take that in incidental results. We always take that in our operating results.

And the second one is related by the fact that due to the fact that we see less business coming in, then our inventory level is a little bit -- it's a technical thing. The inventory levels are actually too big for the business.

And then we need to take a hit. So that's not a cash impact, but that is the revaluation of your inventory levels in the engineering and Maintenance business.

It is very complicated. I worked there, and I needed every time to spend at least 2 hours to exactly understand how it works, but it is an accounting impact also.

I have 2 follow-up questions. One on the furloughs, if you could quantify what has been the benefit of both schemes in the third quarter results.

And also on once you go back to 2019 capacity given the comments that you may even need to hire temporary staff at KLM, what is the net level of FTE that you could operate? I'm assuming it's lower than 2019.

Let me first comment on the furlough schemes. So if you look at the Air France side, you talk about, let's say, €230 million.

And on the Dutch side, you talk about also, let's say, in the same order of magnitude. That is the furlough contribution in this quarter.

And the second question, I pass to the CEOs.

Regarding the employee numbers within the group for -- when we get back to 2019 levels, we're assuming the same base number of full-time equivalents. And when it comes to temporary staff, we'll adjust where needed.

Obviously, the pilots and cabin crew will be a reflection of the number of flights, but the same ratios or as the productivity improves, we'll adjust versus that. But the structural costs that we're bringing out of the company, that will -- those will not return once we get back to 2019 numbers.

Okay, no, thank you for participating today. And again, apologies for the technical error this morning and the slight delay.

And please have a good day and a good weekend. Thank you.