Structure your answers as a typical case analysis.

1. Problem/Opportunity.
2. Alternatives.
3. Recommendations:
   1. Pros and Cons
4. Implementation.

• Use one of the strategic tools to conduct the analysis (Chapter 13) (Swot, Porters Five or Etc)
• Use financial ratios to support your case.
• Do have an executive summary that spells/layouts the above in less than one page.
• As well, it's important to highlight or bold your key messages in your executive summary and throughout your analysis.

@Ivey 1 Publishing W25116 AIR FRANCEKLM: A STRATEGY FOR THE EUROPEAN SKIES' Gwyneth Edwards and Paul Marchand wrote this case study solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact lvey Publishing, lvey Business School, Western University, London, Ontario, Canada, NEG 0N1; (t) 519. 661.3208; (6) cases@ivey.ca; wwwiveycasescom. Our goal is to publish materials of the highest quality; submit any errata to publishcases@ivey. ca. Copyright 2021, lvey Business School Foundation Version: 2021-0920 Benjamin Smith was appointed chief executive ofcer (CEO) of French air transport group Air France KLM SA (Air FranceKLM) in September 2018, after Jean-Marc Janaillac, the incumbent CEO, resigned. The group needed to end its losses, and in January 2019, work began to develop the rm's new vision, to be presented at the forthcoming board of director's meeting.2 Faced with several challenges, such as low protability, falling prices, and increasing competition, Air FranceKLM had gone from leading the European market in 2004 to fourth position, as local low-cost airlines and high-end emerging economy airlines joined the competition.3 Air FranceKLM had created several businesses to challenge the new competition but had yet to improve its nancial results or increase its market share.4 In this changing competitive context, what could Smith do to reassess the strategic role of the group's business units? What strategy could he propose to return the group to its leadership position? THE AIR TRANSPORT INDUSTRY IN EUROPE Airline passengers were divided into two categories: leisure and business.5 The former was typically price sensitive, while the latter valued ight schedules and service quality. Consumers sought cheap fares using Internet ight comparators such as Google Flights and Expedia. Through loyalty programs, airlines rewarded repeat business with benets such as lounge access, upgrades, free ights, and reduced fares. Although business travellers represented only 12 per cent of the market, they accounted for up to 75 per cent of prots on certain routes.6 By 2018, 802 million people travelled within the European Union (EU) annually.7 Core airline costs included fuel, aircraft, and wages (see Exhibit 1), with Jel costs varying substantially over time (e.g., lel costs increased 54 per cent from 2017 to 2018).8 Protability in the wider airline industry varied, with airlines themselves being the least profitable.9 In Europe, airlines earned an average of US$6.65 (5.64)10 per passenger, generating a margin of 3.37 per cent.\" Air transport was regulated by the EU. In 1997, the EU liberalized its air space,12 giving carriers the right to y anywhere and encouraging countries to negotiate bilateral agreements on the management of landing and take-off slots and airport capacity.13 Deregulation had three consequences. First, legacy carriersl4 formed hub-and-spoke networks to increase the number of destinations they served, ll their planes, and reduce operating costs.15 Second, the creation of airline alliances made it possible for individual carriers to Authorized for use only in the course BUSN 450 (C003) & (CCO4) Strategic Management at MacEwan University taught by Frank Saccucci from 1/4/2023 to 4/20/2023. Use outside these parameters is a copyright violation. Page 3 W25116 International Consolidated Airlines Group International Consolidated Airlines Group SA (IAG) was based in Madrid, Spain, and was formed through the 2010 merger of British Airways (UK) and Iberia, Lineas Aereas de Espana, SA Operadora, Sociedad Unipersonal (Iberia) (Spain). IAG accounted for 9.2 per cent of the European market (see Exhibit 2) and was part of the Oneworld alliance, which accounted for 15.6 per cent of world air traffic. " IAG subsidiaries included British Airways, Iberia, Aer Lingus, and two low-cost companies, Vueling Airlines SA and OpenSkies SASU (operating as LEVEL). IAG provided its subsidiaries with several commercial services, such as IAG GBS [global business services], which delivered digital and information technology (IT) services; the Avios loyalty program, which had 8.7 million members; IAG MRO [maintenance, repair, and overhaul] and Fleet, which provided maintenance services; and IAG Cargo, which transported goods. Its main hubs were in London, Madrid, Rome, and Barcelona. The firm's key activities were passenger transport (88 per cent), commercial services (6.8 per cent), and freight transport (4.8 per cent). In 2018, IAG's objective was to become the top company in the world by maximizing the creation of value for its shareholders and customers (see Exhibit 3)." It sought to extend its dominant position in its main markets (London, Madrid, Barcelona, Dublin, and Rome) by offering new routes and establishing new markets with the launch of LEVEL long haul in Paris and LEVEL medium haul' in Vienna. After the merger, Iberia cut 3,800 jobs, reduced the size of its fleet, and renegotiated supplier contracts, allowing it to compete with low-cost airlines in Spain and capture market share in the premium long-haul segment.* British Airways renegotiated employment contracts, reduced its workforce, and froze wages for four years. It also continued to target higher-end segments with an investment of 67.4 billion.42 Ryanair Ryanair DAC (Ryanair) was launched in 1984 in Dublin, Ireland, with the goal of creating the cheapest airline in Europe. Between 1997 and 2019, Ryanair operated 2,100 routes across Europe. In 2018, the firm's average ticket price was 637 (down 6 per cent from 2017), and it accounted for 8.7 per cent of the European market." It operated three low-cost subsidiaries: Buzz (Poland), Malta Air (Malta), and Lauda Luftfahrt GmbH (Austria). 45 Like other low-cost airlines, initially Ryanair offered only one class of travel to all its passengers, with limited services (e.g., checked luggage cost extra). The company also stood out from its competitors by operating out of secondary airports" and regions that experienced lower air traffic, allowing passengers to disembark and board quickly and increasing overall capacity.* However, although Ryanair claimed it was the most punctual airline in Europe and experienced the lowest percentage of lost baggage and flight cancellations, in 2014 it was ranked the second-worst brand in the world."In response, in 2014, the firm launched its "Always Getting Better" plan, which focused on additional services for business passengers, such as free checked luggage, priority boarding, flexible booking, and better seats." The firm also allowed for a second piece of cabin baggage, reduced the price of printing a boarding pass at the airport, and enabled seat reservations."Page 2 W251 16 offer more destinations without increasing costs; by 2018, the three global alliances, Star Alliance, Oneworld, and Sky Team, had captured 53.5 per cent of the total market share." Third, low-cost airlines" competed with traditional airlines, capturing an increasing percentage of the market. Price wars became commonplace; for example, from 1992 to 2017, the cost of a round-trip Paris-Rome airfare decreased from (400 to E25." European airports reacted to industry changes by moving toward privatization; by 2018, 59 per cent were public (down from 78 per cent in 2010 ), 25 per cent were private- public partnerships, and 16 per cent were private. Consequently, airport charges at major European airports doubled." By 2018, many European airports were on the verge of saturation; the EU estimated that there would be an overcapacity of 1.9 million flights by 2035 if congestion issues were not resolved. Other industry events also increased competition between air and other forms of travel. Given that planes were the most polluting mode of transport, "approximately one in five travellers claimed to have reduced their air travel out of concern for the environment." The EU's 2009 Shift2Rail initiative, which aimed to increase rail travel significantly," drove the development of Europe's high-speed rail network, leading to a fall in air ridership as train travel times decreased"-in some cases, by as much as 80 per cent." Within the EU, airline companies were exposed to tax systems, social systems, and regulations that varied between countries. The taxation of airline activities, for example, led to decreases in passenger demand, flights, and industry jobs."In 2017 and 2018, the industry experienced a wave of low-cost carrier bankruptcies, while active carriers continued to experience significant financial difficulties.29 COMPETITION Deutsche Lufthansa Founded in 1953 and based in Cologne, Germany, Deutsche Lufthansa AG (Lufthansa) had the largest number of seats in the European market, at 12.5 per cent at the start of 2019 (see Exhibit 2). It was also a member of the Star Alliance, which represented 21.7 per cent of the world's air traffic."The firm owned six companies: Lufthansa, Swiss International Airlines AG, and Austrian Airlines AG made up the high- end network segment, while Brussels Airlines, Germanwings GmbH, and Eurowings GmbH (Eurowings) formed the low-cost (point-to-point) segment." Lufthansa also operated three aeronautical service subsidiaries: Lufthansa Cargo AG, Lufthansa Technik AG, and the LSG Sky Chefs. In 2018, the turnover breakdown was as follows (see Exhibit 3): high-end business (63 per cent), low-cost segment (12 per cent). maintenance services (1 1 per cent), logistics services (7 per cent), LSG Sky Chefs (7 per cent), and other services (2 per cent). 32 The company's goal was to remain the first choice for shareholders, customers, and employees, based on quality of service and strict cost control." In 2012, Lufthansa introduced its "Synergy, Cost, Organization, Revenue, Execution" (SCORE) restructuring plan. As part of the plan, Lufthansa transferred all point-to- point flights from Lufthansa to Eurowings and renegotiated its employee contracts. It reduced hierarchical levels, promoted communication between subsidiaries, and reduced headcount. By 2014, it posted an additional revenue of E2.3 billion and focused on upgrading its high-end businesses. $4 From 2017 onward, Lufthansa was one of the few companies worldwide-and the only European firm-to be certified with five stars by the agency Skytrax. 35Page 5 W251 16 from air passenger and freight transport and 7 per cent from maintenance activities, with a total revenue of 265 billion (see Exhibit 7). The increase in the price of oil and strikes occurring in 2018 negatively impacted the group's revenue.66 Air F ranceKLM focused on three activities: passenger and freight transport, low-co st passenger transport, and aircraft maintenance. The group's head ofce managed several departments common to the two divisions, including finance, sales and alliances, commercial strategy, engineering and maintenance, cargo, IT, and the general secretariat. The group managed pricing, sales, and commercial alliances for all its airlines. It also managed the tiered loyalty program, Flying Blue, which had 15 million members.67 The program allowed members travelling with the group to accumulate points, which were exchangeable for tickets, upgrades, or in-ight options. Platinum status benets included priority boarding and access to private airport lounges.68 In 2018, Air FranceKLM carried 101.8 million passengers,69 of which 60 per cent travelled for leisure and 40 per cent for business; 55 per cent were Flying Blue members.70 Air France was a founding member of the SkyTeam alliance, which accounted for 16.1 per cent of world air traffic,71 allowing the group to increase its network to 1,150 destinations in 177 countries.72 Air F rance KLM alone had the largest long-haul network in Europe.73 The alliance also allowed member airlines to co-coordinate ights, sales, ground operations, and loyalty programs.74 The group also formed ventures with GOL Linhas Areas Inteligentes SA (GOL) (Brazil), Etihad (United Arab Emirates), and China Eastern Airlines Corporation Limited (China). Their largest joint ventures included Delta Air Lines Inc. (USA), AlitaliaSocieta Aerea Italiana SpA (Italy), and Virgin Atlantic Airlines Ltd. (UK), which dominated the transatlantic market.75 The Air FranceKLM Group's ambition was to become the European aviation leader and one of the world' s leading airlines through social and environmental responsibility.76 The group was recognized for making its planes more energy efficient and for using biofuels. For 10 straight years, the group held the top spot in the Dow Jones Sustainability Index Airlines category.77 Following the eurozone crisis (20092011), Air FranceKLM experienced an intensication of competition, facing price pressure from both low-cost competitors and traditional competitors such as British Airways and Lufthansa. Emerging economy organizations (e.g., Turkish Airlines, Singapore Airlines, and the Gulf-based companies) also exerted pressure on longhaul ights through their premium services. In this increasingly complex market, new strategies were required for each of the group's subsidiaries.78 THE AIR FRANCE DIVISION Air France Until 2013, Air France operated under one brand, targeting the business and high-end leisure traveller. It had the largest long-haul network in Europe. In response to the changing industry landscape, Alexandre de Juniac, CEO of Air France from 2012 to 2016, launched two strategic plans: \"Transform 2015\" and \"Perform 2020.\"79 In 2014, Perform 2020 was launched to target a greater share of the business and premium economy markets by increasing the number of seats in business and premium economy classes, which were respectively 1.5 and 3.0 times more profitable than economy class. The intent of \"Transform 2015\" was to enable the group's companies, particularly Air France, to become competitive again in the European market. The group cut 2,800 Air France jobs and increased the subcontracting of operations in French airports, a practice usually done by low cost companies.80 Air France regional ights were transferred to a new business, HOP! In 2014, Perform 2020 was launched to target a greater share of the business and premium economy markets by increasing the number of seats in the business and premium economy classes, respectively 1.5 and 3.0 times more protable than economy class.81 Page 4 W251 16 EasyJet EasyJet PLC (easyJet) was founded in the United Kingdom in 1995 by Stelios Haji-Ioannou, a Greek-Cypriot businessperson, and represented 6.3 per cent of the European market (see Exhibit 2).32 Unlike its rival Ryanair, easyJet operated from major airports in major cities and competed head on with traditional airlines. In 2008, it launched its annual easyJet Plus subscription, which allowed members to board first and benefit from in-flight services." In 2018, it introduced a plan to improve customer experience and retention by optimizing flight schedules for its business class passengers."* The company also focused on providing passengers with effortless trips and the "the warmest welcome in the sky."> It was the first low-cost airline to offer a loyalty program. " Gulf-Based Companies In the long-haul flight segment, Europe faced competition from Emirates, Qatar Airways Company QCSC, and Etihad Airways, Persian Gulf-based carriers that provided a luxury experience for the same price as flights with European-based companies. From 2004 to 2014, the number of routes between Europe and the Gulf countries increased from 23 to 69." Between Europe and Asia, first-class travel on these three airlines grew 67 per cent, while business class travel grew 47 per cent." In 2018, Qatar Airways was ranked the second-best airline in the world while Emirates was ranked fourth (see Exhibit 4). Lufthansa was the only European airline present in the top 10 (in seventh position). THE AIR FRANCE-KLM MERGER Prior to the Air France-KLM merger, Compagnie Nationale Air France (Air France) and Koninklijke Luchtvaart Maatschappelijkbusiness and high-end leisure customers. Air France was launched as France's national airline in 1933 and privatized in 1999." Throughout its long history, the company was considered a part of French heritage. From 1946 onward, the company offered luxurious in-flight services that included private cabins, meals cooked by top chefs, and champagne and claimed to be the ambassador of French gastronomy." In 1995, the company restructured its hub networks at Paris's Charles de Gaulle (CDG) and Orly airports. In 2018, 51.4 million passengers travelled on its airlines, which included Air France, Air France Hop (HOP!), Joon SAS, and Transavia Airlines SAS (Transavia France)." Total operating revenue was E166 million with an operating margin of 1.7 per cent (see Exhibit 5). KLM was launched as the Netherlands' national airline in 1919 and was the oldest airline to continue using its founding brand name. KLM's main hub was located at Schiphol Airport in Amsterdam. It managed four subsidiaries: KLM CityHopper, for short- and medium-haul flights; Transavia Airlines CV Transavia), in operation since 1966 for low-cost travel; and KLM Cargo and Martinair, for the transport of goods. KLM was the leading airline in the Netherlands, with Transavia in second place. In 2018, KLM posted an operating revenue of El,073 million and an operating margin of 9.8 per cent (see Exhibit 5). In May 2004, Air France and KLM merged, creating a joint venture based in Tremblay-en-France. 4 The Air France-KLM Group held 100 per cent of KLM's economic rights but only 49 per cent of KLM's voting rights. The remaining 51 per cent of voting rights remained in the hands of two Dutch foundations (44.84 per cent), the State of the Netherlands (5.92 per cent), and other shareholders (0.30 per cent). Air France- KLM was comprised of two divisions: Air France, with 51,707 employees, and KLM, with 29,818 employees. In 2018, through its 548 aircraft (see Exhibit 6), the group earned 93 per cent of its revenuePage 7 W25116 with the intention of increasing profitability and flexibility while becoming more customer-centric. KLM's chief operating officer, Rene de Groot (also a veteran employee of 24 years) stated, "We have determined that we will never be the cheapest or the most luxurious airline. We have the ambition to become the most focused European airline to customers, most innovative and most effective."10 As part of the plan, the firm launched "KLM Compass," a program aimed at retaining employees and raising their awareness of the company's mission and values, employee responsibilities, client expectations, and the principles of leadership. In an effort to increase productivity, in partnership with employees and with the support of new technologies, organizational hierarchy levels were reduced and employees were given more responsibility. In 2016, KLM launched "Digital Studio" to improve customer service and operational efficiency. The firm used technology to track baggage locations, decrease losses, and enable faster baggage offloading in the event of a passenger's absence. In addition, to provide competitive customer service, 9,500 cabin crew and ground staff were given tablets and access to "Appy2Help," which provided access to customer profiles (e.g., birthday information). Appy2Help also provided information on connecting flights and allowed passengers to be checked in and assigned seats, compensated in the event of a broken-down plane, and rebooked in the case of a schedule disruption. Other applications that focused on improving operational efficiency included Bax@Risk, which could predict which passengers were in danger of missing a flight, and PLUG, which optimized aircraft parking. Digital Studio apps reduced delays and maximized aircraft use." KLM was present on all social networking platforms, supported by the largest digital team in the industry (300 employees)." The platforms used artificial intelligence to provide customer service including packing instructions and information on checking luggage size in 10 languages."KLM was also the first company to sell tickets on Facebook Messenger (2016) and the first non-Chinese company to authorize payments via WeChat (2018). "# Through social media, customers could upgrade their seats or buy in-flight services. KLM also moved upmarket with "World Business Class," which provided more services and access to the Schiphol Airport lounge. KLM was considered to be one of the best companies, globally, with a Net Promoter Score of 42. 116 THE TRANSAVIA BUSINESS In service in the Netherlands since 1966, and in France since 2007, Transavia operated 225 lines in Europe and North Africa. As the group's low-cost carrier, it maximized capacity while offering simplicity in service and pricing through a light management model and significant outsourcing of activities. In 2014, Air France-KLM launched Transavia Europe to open new hubs in Portugal and Germany and attempted to renegotiate pilot and crew contracts to save on costs. In response, Air France pilots launched a strike, leading to E330 million in losses. "The group abandoned the project, deciding instead to further develop Transavia France. The unions supported a maximum increase of 40 aircraft on Air France routes. 120 Transavia specialized in customer relations with its slogan "Make Low Cost Feel Good."12 The firm had 1.2 million Facebook followers and managed customer service with the help of artificial intelligence. It was also the first airline to offer reservations through WhatsApp and Google Home. The firm managed over 500 conversations through the social networking platforms per day. In 2018, it transported 15 million people, who could earn Flying Blue miles, to France and the Netherlands; was awarded for its reservation service; and was ranked first as the most punctual company in Europe. It was also recognized for its climate- related commitments, which included promising to ban plastic from its planes by 2020, and it had a customer satisfaction rate of 86 per cent. 123 NEXT STEPS Smith was scheduled to present his strategy to the board on February 22, 2019. What should he propose to make Air France-KLM a leader, once again, in the European air transport industry?Page 8 W25116 EXHIBIT 1: MAIN COSTS OF AIRLINES Salary Deprecia Maintenance Operating Roads and Companies Costs (%) tion (%) (%) Costs * (%) Charges (%) Fuel (%) Air France-KLM SA 30.0 11.1 9.3 23.0 7.3 19.2 Deutsche Lufthansa AG 24.9 6.2 5.2 33.8 12.6 17.2 International Airlines 22.7 10.1 8.6 23.3 10.3 24.9 Group Ryanair 14.7 9.6 2.9 25.3 11.2 36.3 easyJet plc 14.7 4.2 6.1 44.4 7.8 22.9 Note: *Operating costs included commercial charges, airport services, aeronautical services, and other unspecified expenses. Sources: Air France-KLM, Document de reference 2018 (n.p.: Air France KLM Group, 2019), https://www.airfrancekim.com/fr/system/files/document_de_reference_air_france-kim_2018_vf.pdf; Lufthansa Group, Annual Report 2018 (Cologne: Deutsche Lufthansa AG, 2019), https://www.lufthansagroup.com/en/themes/annual-report- 2018.html; International Airlines Group, Annual Report 2018 (Harmondsworth, UK: International Airlines Group, 2019), https://www.iairgroup.com/~/media/Files/I/IAG/documents/annual-report-and-accounts-2018-interactive.pdf; Ryanair DAC, Annual Report 2019 (Dublin: Ryanair, 2020), https://investor.ryanair.com/wp-content/uploads/2019/07/Ryanair-2019-Annual- Report.pdf; EasyJet Plc, The Warmest Welcome in the Sky: Annual Report and Accounts 2018 (Bedfordshire, UK: EasyJet PIc, 2019), http://corporate.easyjet.com/~/media/Files/E/Easyjet/pdf/investors/results-centre/2018/2018-annual-report-and- accounts.pdf. EXHIBIT 2: MARKET SHARE OF THE TOP 10 AIRLINES IN EUROPE (IN SEATS) Ranking Companies Share of Seats in Europe (%) Deutsche Lufthansa AG 12.5 International Airlines Group 9.2 Ryanair 8.7 Air France-KLM SA 7.4 easyJet plc 6.3 " 6 0 V O UI A W N - Turkish Airlines Group 6.0 Aeroflot Group 4.5 Norwegian Group 3.1 SAS Group 2.8 Pegasus Airlines Group 2.2 Source: CAPA Centre for Aviation, "Europe Airline Outlook 2019: The Haves vs the Have-Nots," February 1, 2019, CAPA, https://centreforaviation.com/analysis/airline-leader/europe-airline-outlook-2019-the-haves-vs-the-have-nots-457915.Page 6 W25116 In 2016, the "Trust Together" program was launched to enhance customer experience. For example, Air France spent E250 million to modernize its long-haul planes by installing better entertainment systems and new seats and refining cabin design; ' Air France employees underwent new customer service training; and gourmet chefs introduced new dishes for first- and business class travellers on main long-haul routes. In the first half of 2018, Air France employees launched a series of strikes, demanding wage increases. The strikes caused flight delays and trip cancellations, leading to a loss of E335 million. The Air France-KLM CEO at the time, Janaillac, resigned. By the end of 2018, Air France's Net Promoter Score was 18 out of a possible 50 points and the airline was ranked 70th (of 87) on the list of most punctual airlines. According to Skytrax, Air France was the 25th best company in the world, down 10 spots from 2015.89 Despite 73 per cent of French citizens holding a positive opinion of the firm, 43 per cent felt that Air France's image had deteriorated and 83 per cent said that their fares were excessive." HOP! In 2013, as part of Transform 2015, HOP! was created as a separately managed, single-class airline dedicated to regional flights. HOP! flew Air France passengers from regional airports into the CDG hub, enabling long-haul connections from across France. The airline also flew point to point between French cities," focusing on the busier airports and adapting to the schedule needs of business customers." HOP! also offered customers low prices, particularly with flexible price grids," along with a self-service website. The logo included Air France in small print. All flights qualified for Flying Blue miles." In addition to HOP!'s offerings, Air France offered several short-haul options. For example, passengers could book both plane and train travel on the Air France website by choosing from 13 possible rail routes to and from CDG." First-class and business travellers who were provided the equivalent rail travel class, could earn Flying Blue points, and were entitled to free taxi transfers between the airport and rail station." Despite the desire to provide lower prices to its customers, HOP! was often criticized for its high prices." In 2018, the short-haul network recorded losses of about E170 million.98 Joon In 2017, as part of the Trust Together program, Air France-KLM created Joon, also independently managed within the Air France division, to operate 18 medium- and long-haul routes where Air France was experiencing losses. "Joon's crews were paid less than Air France crews, and operating costs were 13 per cent lower. The airline targeted the 18- to 35-year-old segment, which was price sensitive but also in search of comfort. " It offered several travel classes and on-board services such as Wi-Fi and in-flight entertainment. It also offered a menu that included detox drinks, craft beer, organic products, and tapas. When Joon was launched, Air France-KLM's CEO defined it as a "long-haul company with lower costs" that stood for "comfort, business class travel, flexibility, attractive offers, modern chic, relaxed, eco responsible, digital."103 Business class passengers experienced the same level of service as on Air France, while economy class services came at an additional cost. Within a year of service, Joon flew at 90 per cent capacity. 04 THE KLM DIVISION As one of the oldest traditional airlines, KLM, like Air France, also targeted the business and high-end leisure traveller. In 2014, a veteran KLM employee of 21 years, Pieter Elbers, was appointed as chair of the KLM management board. The focus was on reducing costs, investing in the future, and transforming the organizationPage 10 W25116 EXHIBIT 4: SKYTRAX RANKING OF THE 10 BEST AIRLINES IN THE WORLD Companies 2018 Ranking Ranking Change (from 2017) Singapore Airlines +1 Qatar Airways ANA All Nippon Airways Emirates EVA Air 7 0 0 V OR UI A W N - Cathay Pacific Airways -1 Lufthansa Hainan Airways +1 Garuda Indonesia +1 Thai Airways +1 Source: "Airline of the Year Winners," Skytrax World Airline Awards, accessed June 11, 2021, https://www.worldairlineawards.com/airline-of-the-year-winners. EXHIBIT 5: FINANCIAL RESULTS FOR AIR FRANCE AND KLM Operating Costs (E millions) and 2013 2014 2015 2016 2017 2018 Margin (% Air France Division -174 (-1.0%) -314 (-2.0%) 426 (2.6%) 372 (2.4%) 588 (3.7%) 266 (1.7%) KLM Division 301 (3.0%) 175 (1.8%) 384 (3.9%) 681 (6.9%) 910 (8.8%) 1,073 (9.8%) Sources: Air France KLM Group, "Full Year 2018 Results," press release, Air France-KLM, February 20, 2019, https://www.airfrancekim.com/sites/default/files/q4_2018_press_release_en_vdef_0.pdf; Air France KLM Group, "Full Year 2016 Results," press release, Air France-KLM, February 16, 2017 https://www.airfrancekim.com/sites/default/files/communiques/fy_2016_press_release_en.pdf; Air France KLM Group, "Full Year 2014 Results, press release, Air France-KLM, February 19, 2015, https://www.airfrancekim.com/sites/default/files/communiques/2014-q4_press_release_en_def.pdf. EXHIBIT 6: AIR FRANCE-KLM FLEET-NUMBER OF AIRCRAFT, 2018 Air KLM Transavia Transavia Owned Finance Operating Aircraft Total France* France NL Lease Lease Long Haul 106 66 69 32 71 172 Medium Haul 115 50 34 40 77 28 134 239 Regional 82 49 60 33 38 131 Cargo 2 4 I 6 6 Total 05 169 34 40 212 93 243 548 Note: *Includes HOP! and Joon. Source: Air France-KLM, Registration Document 2018 , Air France KLM Group, 2019, https://www.airfrancekim.com/en/system/files/registration_document_air_france-kim_2018_va_def.pdf.Page 9 W25116 EXHIBIT 3: FINANCIAL RESULTS OF THE MAIN AIRLINE COMPETITORS (IN E MILLIONS) Competitor Results 2018 2017 2016 2015 2014 Income 35,844 35,579 31,660 32,056 30,011 Operating Revenue 2,800 3, 140 2, 190 1,555 1, 171 Lufthansa Group Operating Margin 7.8% 8.8% 6.9% 4.8% 3.9% Net Profit 2, 163 2,340 1,776 1,698 55 Income 24,406 22,880 22,567 22,858 20, 170 International Operating Revenue 3,230 2,950 2,535 2,335 1,390 Airlines Group Operating Margin 13.4% 12.9% 11.2% 10.2% 6.9% Net Profit 2,481 2,231 1,990 1,.539 1,003 Income 7,697 7, 151 6,647 6,535 5,654 Operating Revenue 1,016 1,667 1,543 1,460 1,042 Ryanair Operating Margin 13.1% 23.3% 23.2% 22.3% 18.4% Net Profit 385 1,450 1,315 1,559 867 Income 6,542 5,598 5, 178 5,197 5,021 Operating Revenue 510 448 552 763 644 easyJet Operating Margin 7.7% 8% 10.6% 14.7% 12.8% Net Profit 397 338 236 482 470 Sources: Lufthansa Group, Annual Report 2018 (Cologne: Deutsche Lufthansa AG, 2019). https://www.lufthansagroup.com/en/themes/annual-report-2018.html; Lufthansa Group, Annual Report 2016 (Cologne: Deutsche Lufthansa AG, 2017), https://investor-relations.lufthansagroup.com/fileadmin/downloads/en/financial- reports/annual-reports/LH-AR-2016-e.pdf; Lufthansa Group, Annual Report 2014 (Cologne: Deutsche Lufthansa AG, 2015), https://investor-relations.lufthansagroup.com/fileadmin/downloads/en/financial-reports/annual-reports/LH-AR-2014-e.pdf; International Airlines Group, Annual Report 2018 (Harmondsworth, UK: International Airlines Group, 2019), https://www.iairgroup.com/~/media/Files/I/IAG/documents/annual-report-and-accounts-2018-interactive.pdf; International Airlines Group, Annual Report 2016 (Harmondsworth, 1, UK: International Airlines Group, 2017), https://www.iairgroup.com/~/media/Files/I/IAG/annual-reports/iag-annual-reports/en/annual-report-and-accounts-2016- iag.pdf; International Airlines Group, Report and Accounts (Madrid: International Airlines Group, 2015), https://www.iairgroup.com/~/media/Files/I/IAG/annual-reports/iag-annual-reports/en/annual-report-and-accounts-2014- iag.pdf; Ryanair DAC, Annual Report 2019 (Dublin: Ryanair, 2020), https://investor.ryanair.com/wp- content/uploads/2019/07/Ryanair-2019-Annual-Report.pdf; Ryanair DAC, Annual Report 2016 (Dublin: Ryanair, 2017), https://investor.ryanair.com/wp-content/uploads/2016/07/Ryanair-Annual-Report-FY16.pdf; Ryanair DAC, Annual Report 2014 (Dublin: Ryanair, 2015), https://investor.ryanair.com/wp-content/uploads/2015/04/2014-Annual-Reports-Annual- Report.pdf; EasyJet Plc, The Warmest Welcome in the Sky: Annual Report and Accounts 2018 (Bedfordshire, UK: EasyJet Plc, 2019), http://corporate.easyjet.com/~/media/Files/E/Easyjet/pdf/investors/results-centre/2018/2018-annual-report-and- accounts.pdf; EasyJet Plc, Investing in Our Strengths: Annual Report and Accounts 2016 (Bedfordshire, UK: EasyJet Plc, 2017), http://corporate.easyjet.com/~/media/Files/E/Easyjet/pdf/investors/result-center-investor/annual-report-2016.pdf; EasyJet Plc, Making Travel Easy and Affordable: Annual Report and Accounts 2014 (Bedfordshire, UK: EasyJet Plc, 2015), http://corporate.easyjet.com/~/media/Files/E/Easyjet/pdf/investors/result-center-investor/annual-report-2014.pdf.Page 11 W25116 EXHIBIT 7: CONSOLIDATED FINANCIAL RESULTS FOR AIR FRANCE-KLM (in E millions) 2018 2017 2016 2015 2014 Turnover 26,515 25,864 24,844 25,689 24,912 Other Activity Income 2 18 Product Activity Ordinary 26,515 25,867 24,846 25,691 24,930 External Charges (15,224) (14, 188 (14,243) (15,768) (15,791) Staff Costs (7,759) (7,620 (7,474) (7,464) (7,316 Taxes and Duties (166) (158) (164) (155 (169) Other Income and Expenses 851 862 842 1, 110 (65) EBITDA' 4,217 4,763 3,787 3,414 1,589 Operational Rents (Aircraft) (1,073) (1,027) EBITDA 2,714 2,387 Depreciation, Impairment, and Provisions (2,885) (2,840) (1,665 (1,607) (1,718) Current Operating Results 1,332 1,923 1,049 780 (129) Disposal of Aeronautical Equipment 4 18 21 (5) Other Income and Expenses Non-Current (16) (1,925) 46 305 880 Results of Operational Activities 1,320 16 1, 1 16 1,080 751 Cost of Gross Financial Debt (465) (570) (309) (372) (446) Cash Income and Cash Equivalents 39 34 49 62 76 Cost of Net Financial Debt (426) (536) (260) (310) (370) Other Financial Income and Expenses (271) 649 (33) (604) (318) Pre-Tax Profit of Integrated Companies 623 129 823 166 63 Taxes (227) 21 (294) (30) (209) Net Income from Discontinued Operations (8) 270 26 (4) Net Profit 411 163 792 127 189 Note: *EBITDA = earnings before interest, taxes, depreciation, and amortization. Sources: Air France-KLM, Document de reference 2018 Air France KLM Group, 2019, https://www.airfrancekim.com/fr/system/files/document_de_reference_air_france-kim_2018_vf.pdf; Air France-KLM, Reference Document 2016 [in French], Air France KLM Group, 2017, https://www.airfrancekim.com/sites/default/files/publications/afk_amf.pdf; and Air France-KLM, Reference Document 2014 [in French], Air France KLM Group 2015, https://www.airfrancekim.com/sites/default/files/publications/afkim_doc_de_reference_2014_fr.pdf