Air France reports first profit since 1989.

NEW YORK--(BUSINESS WIRE)--May 30, 1997--Air France headquarters in Paris yesterday reported a net profit for airline operations of 211 million French francs in the fiscal year ending March 31.

This result compares with a loss of FF 2.87 billion for the year-earlier period, which included a substantial provision for restructuring purposes.

The Air France Group, including the airline and subsidiaries, reported a net profit of FF 394 million. (The French franc traded yesterday at the rate of 5.73 to the U.S. dollar.)

In announcing the results, the company said it had met its target for recovery, as outlined in a three-year corporate project adopted in 1994: a return to profitability by the 1996-97 fiscal year. It was the airline's first full-year net profit since 1989.

Gross operating revenue amounted to FF 42.7 billion, up 8.3% from last year's FF 39.4 billion. The increase was due mainly to sustained growth in passenger and baggage revenue, up 10.5% to FF 2.7 billion.

-- Passenger results

Revenue passenger-kilometers (RPKs) posted a 13.3% increase, to 58.6 billion, against an increase of only 8.8% in available seat-kilometers (ASKs), to 77.4 billion. Yield per ASK rose 1.4%. Yield per RPK improved dramatically during the second half of the fiscal year after a significant drop in the first six months, winding up at only 2.6% below the year earlier. The load factor reached a record level of 75.8%, up 3.1 points, due mainly to the effect of the now fully operational Air France hub at Paris-Charles de Gaulle Airport.

-- Cargo results

Traffic for Air France Cargo showed a 5.5% increase, to 4.9 billion revenue ton kilometers (RTKs), on a capacity increase of only 4.4%, despite an unfavorable economic climate. Yield per available ton-kilometer (ATK) dropped 2.6%; per RTK, the drop was 3.6%.

-- Commentary and French accounting items

The net profit of FF 211 million includes extraordinary income of FF 82 million. Operating expenses, adversely affected by a significant increase in fuel costs, rose by 12.9% overall (8.8% excluding fuel). Labor costs remained stable, and the average weighted staff count dropped from 36,484 to 36,173 during the fiscal year. The pre-tax profit of FF 129 million represented an improvement of over FF 1 billion compared with the previous year, due both to traffic growth and to interest costs lowered by a reduction in debt. The gross profit increased by FF 400 million to FF 4.45 billion. With a 10% decrease in depreciation and reserves, the operating profit stood at FF 1.17 billion, up FF 758 million from the previous fiscal year.

Net financial debt, including quasi-equity, dropped FF 5.2 billion, to less than FF 14 billion at March 31, 1997, mainly because the cash flow of FF 3 billion covered nearly all the year's investments. These included down payments on new aircraft made at the end of the fiscal year.

-- Consolidated results of the Air France Group (airline and subsidiaries)

Since Air France generates over 90% of the Group operations -- which do not yet include those of Air France Europe, the French domestic airline formerly known as Air Inter - the consolidated results closely follow those of the airline alone. The Air France Group posted an operating profit of FF 1.14 billion, compared with FF 0.42 billion in the previous year. Pre-tax profit stood at FF 39 million against a loss of FF 858 million in 1995-96. After incorporating extraordinary profits and the share of income from companies accounted for by the equity method, the Group net profit stood at FF 394 million.

CONTACT: Air France, New York 

Bruce Haxthausen, 212/830-4482 (Media Only)