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Good morning and welcome to the Air France KLM half-year 2026 results presentation. Today's conference is being recorded. During the presentation, participants will be on listen mode only. At the end of the presentation, analysts will be able to ask questions by dialing pound key 5 on their telephone keypad. At this time, I would like to turn the conference over to Benjamin Smith, CEO, and Steven Zaat, CFO. Please go ahead, sirs.

Thank you. Good morning, everyone, and thank you for joining us for Air France-Klm's second quarter 2026 results presentation. As usual, I'll begin with the strategic and operational highlights of the quarter before handing over to Steven Zaat, our CFO, who will walk you through our financial performance in detail. I will then return to take your questions together with Steven, Anne Rigail, Air France CEO, and Marianne Rintel, KLM CEO. As the entire industry, Air France-Klm continued to operate in a highly volatile environment this quarter, yet we delivered a strong commercial performance. Group revenues increased by nearly 10% to €9.3 billion, supported by growth across all our businesses. Passenger demand remained robust, with more than 28 million customers traveling on our network during the quarter. As anticipated during our last quarterly update, higher fuel prices weighed on Q2 profitability. Our adjusted operating profit reached €484 million, representing an operating margin of 5.2%. At the same time, we continued to strengthen our financial position. Recurring adjusted operating free cash flow reached €920 million for the first half of the year, while our cash at hand rose to more than €10 billion. Fleet renewal remains a central priority to improve our financial and environmental performance, while next-generation aircraft now represent 38% of our total fleet, driving both an upgraded customer experience and higher operational efficiency. So we're going to spend a few minutes on the fuel situation. During the second quarter, following the escalation of the conflict in the Middle East, our fuel bill increased by approximately €900 million compared to last year. However, this remained below the US$1.1 billion increase we had initially projected at the start of the quarter. Thanks to our strong commercial performance, coupled with disciplined pricing and cost management, we successfully recaptured approximately 86% of that additional fuel bill. This once again demonstrates the resilience of our business model in an uncertain market. Looking ahead, while the outlook has improved relative to the assumptions we shared in April, We still expect our full-year fuel bill to be roughly US$1.9 billion higher than in 2025. This reinforces the absolute necessity of maintaining the pricing agility and cost discipline that have underpinned our performance throughout the first half of the year. So turning to slide four, premiumization continues to be a structural driver of our commercial performance and revenue quality. underpinned by robust global demand for premium travel across all our core markets. Premium cabins now represent 38.5% of our total passenger revenues, continuing to expand their share within our overall revenue mix. During the first half of the year, revenues in business and La Première grew by 11%, while premium and premium comfort revenues increased by 13%, both cases significantly outpacing This positive momentum was widespread across our global network with standout performances in India, Asia, and the Americas. I'd also highlight the sustained contribution of high-yield leisure travelers who continue to provide strong structural support to this premium growth trajectory. Turning now to the next slide, our ongoing ambition is to elevate and inspire our customers at every stage of their journey while continually strengthening the global appeal of our brands. During the second quarter, Air France continued to showcase the finest in French hospitality and gastronomy both on board and the ground. In partnership with the Groupe Aéroport de Paris, we launched Paris Stopover, a new offering that allows passengers connecting in Paris at Paris CDG Airport to extend their stay by up to four days, providing travelers a seamless, curated opportunity to explore the capital and its iconic sights through exclusive partner offers enriching their journey before flying onward. At the Cannes Film Festival, the iconic Air France beach once again elevated our brand presence, while this summer our pop-up restaurant in Marseille is bringing our long-haul business cabin dining experience to an entirely new audience and location, reaffirming our presence in key French cities. We also further continue to elevate our ground product, with Air France opening a brand new lounge at London Heathrow Terminal 4, and unveiled an enhanced La Première lounge at Paris CDG, Terminal 2E, while Transavia inaugurated its very first lounge at Paris Orly Airport at Terminal 2, marking a major step forward in elevating the passenger experience across all customer segments. For KLM, the brand reinforced its regional and international visibility through its long-standing partnership with the KLM Open golf tournament, one of the Netherlands' premier sporting events. On the fleet and operational front, I'm delighted to highlight the future entry into service of KLM's first Airbus A350, alongside KLM being named best cabin service in Europe, a distinction that reflects both the dedication of our crews and the consistency of our products' investments. Our loyalty program, Flying Blue, also achieved exceptional recognition at the renowned Freddie Awards, earning the Best Program in the World Award for the second consecutive year. Flying Blue also swept four out of six awards for the area Europe and Africa, including Best Redemption Ability. This award in particular highlights the sophisticated joint work between our revenue management and Flying Blue teams. Finally, on the sustainability and operational efficiency front, we signed a key five-year agreement with GE Aerospace for Fuel Insight. This extends a state-of-the-art fuel optimization tool across all group airlines, allowing us to further refine fuel planning and reduce emissions. Turning now to slide six, we continue to pursue our ambition of building a truly pan-European global champion to discipline consolidation. As you already know and subject to regulatory approvals, we intend to increase our stake in Scandinavian Airlines system SAS to 60.5%. We expect this transaction to close by the end of this year Further, solidifying our position in Northern Europe and enhancing the reach of our overall network. Furthermore, yesterday we submitted a binding offer to acquire a strategic stake of up to 49.9% in TAP Air Portugal. If selected, Lisbon will be positioned as the group's unique hub in Southern Europe, significantly expanding our connectivity to key growth markets, particularly South America, Brazil and Africa. This transaction will unlock substantial synergies for both TAP and Air France-Klm, while offering our customers even greater global choice. Both opportunities are fully aligned with our long-term vision and demonstrate our disciplined, structured approach to strategic consolidation. And now with that, I'll hand over to Steven, who will walk you through our financial results in more detail.

Thank you, Ben, and good morning, everybody. Let's start maybe with a remark about our new definition of operating profit. We had current operating income before, but we changed already to IFRS 18. So we're not only a leader and innovator in aviation, but even in accounting. So having said that, let's start with the good news. You see that the unit revenues were up 9%. We guided that we expected around 60% fuel recapturing and we are now at 85%. That is one-third is related to a lower fuel price. There is $200 million lower fuel bill in the second quarter related to the price. But the main part is coming actually from the unit revenue. We had very strong revenue in cargo. We actually beat our cargo unit revenue with 13% as expected. On the passenger revenue, It was 3% higher than what we expected and also Transavia did 2% better. At the same time we had our unit cost under control. We are still within the guidance between 0 to 2% and I will explain you later if we don't have all these problems with the spare parts we would have done even better. But all in all despite the fact that we have a lower adjusted operating profit we are quite satisfied with this result for the moment. But there's still a lot of uncertainty in the world. If we go to page 9, you can see per business segment how we are performing. So as said, and I come back on that later, the unit revenue is very strong on the passenger side, 8.9%, but cargo is up 26.7%. So cargo is benefiting from one, the fact that people probably, if they need speed, they prefer a plane above a ship, given all the circumstances in the street of Hormuz. and of course there's also the increase of fuel price which always impacts significantly the unit revenues at the cargo. If we go to Transavia, we increased our capacity with 7%. There was an increase of the fuel bill of 100 million that could not be fully offset. So we see that only unit revenue is up with 1.6% and you need around 10% to, let's say, to recapture your fuel impact. So, all in all, I think we could not do that on Transavia. I think we are not the only in the industry which are seeing that we cannot fully recapture what we have, let's say, in the low-cost market. The good news is that still the unit cost is decreasing with 2.5% for our Transavias in this quarter. The maintenance, we grew further our revenues, we grew further our order book. but here we are hampered especially by in the engine sector because we don't have the spare parts to perform all the shop visits which we have in our shop. So we have a reduction in result of the engines. It's compensated by a stronger improvement on the component side especially on KLM engineering and maintenance where we did much better than what we did last year. So all in all the result is more or less flattish compared to last year but there should be more coming when we have this spare part situation solved in the supply chain. If we then go to page 10, then I think the good news is to see that KLM, we see the results of back on track. So KLM actually stabilized the result. We see that Air France was impacted by the higher fuel price, which was partly offset by passenger and cargo unit revenues. We did of course deeply the analysis internally about these two carriers. First, KLM is always a better Q2 than Air France. So let's say if you look at 2025, 42% of the profits of that year was made in the second quarter for KLM, where it's just 35% for Air France. Second, KLM is bigger exposed. to Asia, where we benefit a lot from the higher yields in the market. So all in all that is also one of the reasons that actually KLM could have a higher fuel recovery than Air France. KLM was almost at 100% fuel recovery in this quarter. So with that, you see that it's good to see because I should also mention that the cost control is really there and that we see now a reduction of unit cost at KLM. So the back on track is becoming really effective. If we go to page 11, you see the world map and our business performance on revenues. As I said, very strong performance on the long haul, more than 11% yield increase. First in business, still doing very strong, as explained also by Ben. 11% in yield, almost 2% in load factor up. Premium economy, we grew our capacity almost with 8%, but still the pricing is up 9%. And then economy is at 6%. You see that North America is still holding strong, despite the fact that we increased our capacity by 7%. And of course, Asia and Middle East, where we had a yield increase of 20%. The capacity is down but be aware that it is minus 18% for the Middle East and at the Gulf we are almost let's say at 0% capacity. So we grew the rest of Asia at a very attractive yield in this quarter. Then on the short and medium you see that we increase our load factor and we are slightly up in terms of yield. But all in all, it's not enough to actually recapture the increase of our fuel price. So, very good news on the long haul. So-so news on the medium haul. And I think Transavia, they increased significantly in capacity. They were able to increase also the load factor. That's good. So the demand is there, but the pricing power in this segment is rather difficult, which we also have seen at our competitors. If we then go to the unit cost, so we are up at 1%, which is fully in line with our few-year guidance. There is the 0.4% on the premiumization, which we earn back easily through our unit revenues. And it's a bit of a pity that actually the better operations is not completely visible in our results. We had less wet leases which has a positive impact on our unit cost of 0.6%. We have due to all the fleet renewals we gained in fuel efficiency so we should have gained 1% out of the operations but unfortunately due to all the problems in the supply chain we had higher maintenance costs and at the same time we have a lot of leases for engines and rotables which are included in our unit costs. So all in all that is the bad news on our operations and at the other side you see that we are partly compensated the labor price increase by productivity. Then on the cash side. So on the cash side we did actually better if you look at our recurring adjusted operating free cash flow than last year. Last year we were around 800 million. We are now above the 800 and 900 million. The net debt is more or less flattish despite the fact that we paid 250 million of deferred social charges and wage tax and we also paid the cargo claim. So if we would not have these incidentals we would actually have reduced the debt. You see that the leverage is down with 0.1 compared to the beginning of the year. So all in all the net debt is quite stabilizing despite the fact that we still have this Let's say impact of the COVID years which are still running through our cash flow but that will end from the next year where we will see that we don't have that impact anymore only slightly on KLM where it runs for 200 million on the wage tax till October. Then we go to the balance sheet. So very strong cash at hand, 10.3 billion, much above our targeted liquidity. We put two senior bonds in the market at very attractive prices, so let's say around 4%. I think the timing of the last bond was really, really great. If you look where we were in terms of peace treaty for the street of Hormuz and what happened afterwards. And we also put in place a new multi-purpose credit facility. We didn't draw that. The purpose to draw that actually it is a way to manage the fact that at a certain moment you have to redeem the bonds and to issue a new bond so that you have more flexibility and agility during the year so that you don't put a lot of cash on the bank accounts to secure that you can redeem a bond any time. You see that we reduced the very expensive sustainably linked bonds which had a coupon of over 7%. We did that just after the Ukraine war started and when we had to repay the PGE in France, you see that we repaid the KLM Perpetual which had a coupon of almost 6% in Swiss franc and we pay back this week the hybrid of Apollo with a coupon of 7%. So all in all you see a balance sheet simplification and a reduction of our interest cost. And that has also been, let's say, if you look at the credit ratings, we were reaffirmed in May and June on our credit rating. Then we go to the outlook. So the biggest chunk is, of course, again, the fuel bill. It is still very stable, unstable, sorry. We had 200 million gain in the second quarter compared to our previous guidance in dollars. Q3 you see that we go to 600 up year over year which was 200 million less than what we guided previously which was around 800 and Q4 we are still at 500 so they didn't change so much for Q4 unfortunately because we all expected that the fuel price would come down further because of the US elections if you go what we did on the hedging so we stopped at the end of Q1 our hedging policy we did still some tactical moves If there was any news coming from the president of the US regarding his view of the war, so every time there was a drop in the yet fuel prices or the oil prices, we acted on it. But in general, we restarted our hedge strategy policy during the peace treatment, so that was in June. So we continue our hedge strategy, but we have a maximum price, so we don't do it at any price. and if you look where we are for 2027 you see that we are 40% hedged. At the end of Q1 we were 33% hedged. Usually we should increase it by 10% per quarter so actually we lost around 3-4% in our hedging strategy due to the pricing. We stopped all the hedging by the way for the year 2026 because we have already a portfolio of 67% which is close to the 70%. If we then go to the booking trends, you see that there is a drop in bookings, so it's minus 2 for the long haul, minus 2 for the short and medium haul, but Transavia is up 2%, which is very promising for this quarter. It's always a balance between yield and load factor. We see that there is in general a trend of later bookings. It has probably also to do that ticket prices are higher. So people are waiting and wait that the fuel price comes down, which is not going as fast as we all expected. So what we see up to the first four weeks of July, and I talk about passenger business numbers, we see that the load factor is minus 1%, but at the same time the yield is up 7%. And everybody can then do the math on the fuel recapturing because it all depends what the fuel will do. but you can have an order of magnitude and we still see strong cargo unit revenues not in the 20 ranges but at least you should expect something with a double digit number but at the lowest lowest side of a double digit number so I think I guide you more than I should actually do. If we go then to the capacity You see that we are of course we are getting into the year so we have more visibility of the capacity because half a year is already behind us. So for the long haul it is around 2%. For the short and medium haul we are at minus 1% for year over year. And on Transavia we are at 8%. So in total you see that we will grow this year 2 to 3%. We are very privacy guided 2 to 4% but we all have to see still What will happen in the winter? Because if we have these very high fuel prices, we probably will act further to reduce capacity. And then on the outlook, so group capacity already explained, 2 to 3 percent, unit cost 0 to plus 2 percent, where there is 0.5 percent coming from the premiumization, capex below 3 billion, and our leverage between 1.5 to 2. Before I hand over, and probably everybody knows already in the news, but Michiel Klinkers is leaving his position. He will become VP Commercial Controlling and Alliances in our group entity, and we will have Romain Valent, who is currently responsible for the fleet financing in Air France. I worked with Romain many years when I was the head of audit of KLM. We will miss Michiel. I think everybody will appreciate his honesty and his transparency. So we really will miss him. I think we had a very bumpy road together the last years from, let's say, the capital increases we did in 2022 up to the moment where we are. So I would wholeheartedly thank Michiel for all his contribution to this company. And with that, I hand over to Ben Smith.

Okay, thanks Steven. To conclude, I want to express my sincere gratitude to all Air France K11 employees for their hard work, dedication, and resilience throughout this quarter. And together with Marianne and Anne, we thank all our teams who remain on the front lines to run our operations safely and smoothly through this busy peak season. So thanks for your attention, and we're now happy to take your questions.

Ladies and gentlemen, if you wish to ask a question, please press pound key 5 on your telephone keypad. If you wish to withdraw your question, please press pound key 6. The next question comes from Alex Irving from Bernstein. Please go ahead.

Good morning. Two for me, please. First of all, on premium revenues, these keep outgrowing economy despite premium capacity continuing to grow quite quickly. How long can that go on, and what is the risk that as competitors also all invest into their own premium products, then premium yields end up compressing? Second question is around the recent SAS fleet order. They'd ordered some A330s, but no A350s, and I imagine you were likely involved in that decision. Why is there no more A350 order, and is this maybe a plane that's too large for the role you see SAS playing in the group network structure?

Thank you.

Thanks, Alex. On the premium cabin front, so our premium economy cabins, business class and first class, we continue to retrofit the existing fleet with a higher percentage of premium seats, as you know, and the new aircraft coming in are equipped with a higher percentage of premium seats as well. So the markets are really strong. The power of the US dollar is quite helpful and the attractiveness of Paris in particular continues to grow. The image of the Air France brand, the The strength of the brand is reaching levels that were not there a few years ago. Because we are starting from a lower base, I think the numbers you're seeing from us are showing much more positively than some of our other competitors. That's number one. On the KLM side, premium comfort was not there before. KLM was one of the last carriers to introduce it, so here again a very low base. We still don't have it on the entire KLM fleet, so this will continue to improve. And as you know, with most airlines, premium economy is usually the highest yielding real estate on the airplane. So that is another, I'd say, element to what you're seeing there. On the SAS fleet side, we're not directly involved, as you know, because we don't control the company as of today, and we don't manage the company. However, on the fleet side, SAS already has Airbus A350s more than enough to cover their long-haul network. And on the shorter international flights, and shorter, I mean, you can go up to 10, 12 hours very efficiently with the A330s, All right, thank you.

The next question comes from Jared Castle from UBS. Please go ahead.

Good morning, everyone. And as Steven said, thanks, Michiel. I'm sure all the analysts appreciate all you've done for us. Three from me, if you don't mind. Obviously, the announcement around TAP, you have touched on it. I think the next stage is the Portuguese government comes back maybe sometime in September. Could you then see a situation where There's the next round of bids, and can you give any color how you feel you've differentiated your bid compared to Lufthansa? I mean, a lot of mention around Delta, for instance, and MRO, but I'll leave that to you, Ben, I guess. And then secondly, you kind of highlight, obviously, and you don't spread out cargo profits, but obviously very good yields. I mean, is it fair to assume that profitability Incargo internally is going up quite nicely and all the pressure is in the passenger side of the business. And looking forward, that's where the pressure is expected to stay. And then lastly, we saw probably two weeks ago the EU changing or proposing to change the rules around the ETS scheme, which will encompass 5,000 kilometers now. I'm just interested to hear if you've done any math in terms of how much more of your network you think will be impacted by 2029 or potentially even what the additional cost would be for you under the expansion of the scheme. Thank you.

Okay. Thanks, Jared. The TAP process and how the Portuguese government and the other bid we understand has been submitted. We're not in control of that for us to speculate how they're going to move forward. Obviously, when these kind of bids have evolved in the past, they've all done so in different ways. In the end, we'd like to prevail between now and prevailing. I assume there's going to be lots of different iterations of How the deciding government is going to pick, but I think it's much too early to speculate on that process. Our strengths, which I think are well known by those who follow this file or those who've been following this file, is we are not a centralized airline. We are much more a group. We are much less centralized than our two major competitors in Europe. We have a fantastic set up with our three major brands Transavia, KLM and Air France and in particular KLM we have a 21 year history with the first consolidation operation that took place 21 years ago and we have a head office for KLM next to Amsterdam Schiphol we have the brand Secure which was a Adriaan den Heijer, Steven Zaat, Anne Rigail on the TAP file. We also were surprised that the Portuguese or the TAP Portugal unions have publicly come out. They are nervous about what they're seeing with the other bidder. We've had good alignment with our staff on our strategies over the last eight years. We put a lot of effort into that. and we see a very different result to the east of us. So those, I think, with all stakeholders, hopefully it's going to help our bid and we'll see how things go going forward. And for Cargo, I'll let Steven touch on this one.

Yes, you can imagine that, of course, this cargo contribution is helping a lot our long-haul network. So we don't have an integral profitability for cargo, as you know, Gerrit. We look at it from a contribution perspective. Of course, we look at the profits from our full freighter, so it helps a lot if you compare it to last year. But we take it into account for the full contribution of our long-haul network on which cargo is indeed quite bringing a lot of value to the profitability.

And on the ETS change, our proposed change, so going up to now destinations up to 5,000 kilometers, there's pluses and minuses. Obviously, it's now going to impact some of our biggest competitors, which will level a little bit the playing field. And then we also really welcome the obligation for member states to allocate at least 50% of ETS revenues to the decarbonization of ETS sectors. So that's a big plus. At least the money is going towards something that would be good for our business. And we firmly believe it should be 100%. And we also welcome the extension of SAF allowances and the Commission's openness to a book and claim system. both of which can support the scale-up of sustainable aviation fuels. However, we're totally opposed to any additional ETS-related costs that would further burden the aviation sector and weaken its ability to finance its own transition. Ensure a global-level playing field, and we've been saying this for a while, as well as our partners and competitors. We believe the EU must continue working to strengthen CORSIA as the global framework applicable to all airlines, and not add additional burdens such as this unique European tax. So to size the additional cost of this, it's a bit early for us. I mean, net-net of what benefits we will now get from the lowering of the level playing field and what that would bring, along with this ETS charge increase, to come up with the net value, it's a bit early for us. We're still calculating what that could be.

And Gerrit, sorry, Michiel... Yeah, Gerrit, I'll come back on the cargo. If you want a number, because Michiel said you should give him a number in my last analyst call, so it's around 100 million additional contribution.

Thanks very much.

The next question comes from Steven Furlong from Davie. Please go ahead.

Yeah, good morning, gentlemen. And I echo comments about Michiel. Thanks for all your help. I'm assuming you're kind of, it's not mentioned, but that your medium-term margins and other targets are unchanged, and I presume you kind of model out or make some assumptions about that there's a recovery in your competitor airlines in the Middle East. That's the first question. And then the second one, just on... the merger or the the acquisition or the bid for TAP. Just wanted to add some general comments on your view that you reference SAS where you don't where you didn't have controls and of course it's only a minority stake in TAP but are you obviously comfortable enough that you will have a big say in that business going forward so that'd be great thank you

Hi Steven, if you could clarify the second question again, it didn't come through clearly.

Yeah, so what I was basically saying, because the bid is only a minority stake, does that, let's say, prevent, I guess, the kind of control you'd really like to have with the company or it doesn't really change things?

So let me come back on your question on TAP. Let's say on SES we have a minority stake, really a minority stake, and we didn't go to, let's say, the merger process at the EU. So that's totally different. For TAP, we talk about a much higher stake. It is up to 49%. And we will go to a merger process. So we will have the synergies which you usually have on the network, on the cargo, on the MRO, so we can completely work together and that also is a reason that for SCS we could implement immediately let's say the the shareholding but we could not implement all the synergies. The synergies on the SCS for part came due to the fact that they moved from the Star Alliance to the Sky Team so we have code shares and we work together but we don't work together on the loyalty, we don't work together on network coordination, we don't work together on pricing so we have a lot of synergies to come from SCS and for TAP Again, it is a minority share, but we have, let's say, we can cooperate together with TAP to optimize both companies. If we win the bid, of course, just a remark. And then there was a question on the Middle East.

Well, there's more comments on the midterm targets, and obviously you're maintaining them greater than 8% margins, but... Yeah, sorry, we...

Yeah, so let's say we just come from our strategy session with our board, which we had last month. Of course, we keep our mid-term target. Otherwise, we should adjust it and tell you. There is, of course, an uncertainty where we will be in 2027, because it's very difficult to see what will be the fuel price, etc. But we still keep our trajectory for 2028, and you can imagine that we are Let's say there's a kind of linear line where we are today and where we will end in 2028. So that is the discussions we have with our board. But there's a lot of uncertainty still for Q4 at the moment. So in that context, it's always difficult to tell what will be the exact number in the meantime. But for 2028, we are still adhered to our targets.

Thank you.

The next question comes from James Hollands from BNP Paribas. Please go ahead.

Thanks very much. And Michiel, I never knew how to say your name correctly, but good luck. And then two questions, please. Just on the ADP announcement yesterday, maybe just get your broader thoughts, first take on that ADP proposing tariffs of CPI plus 2.1%. 2027-34, whether you're comfortable with that, whether you plan on challenging it if you can. Just let us know your thoughts there. And secondly, Steven, on unit cost ex-fuel up 0.5% Q1, up 1% in Q2, clearly you flagged those maintenance costs. Maybe just run us through, I think you were hinting at a few bits, but run us through how we should be thinking about some of the puts and takes on into Q3, and in particular on MRO costs or staffing, etc. Thank you.

We are trying to get Anne Rigail on the...

Sorry, it was difficult to find the mic. Yeah, you're talking about the... You're talking about the Aéroport de Paris proposed economic regulation agreement. We think in this increasingly competitive market environment that it's a strategic priority to strengthen the efficiency of our hub in Paris Charles de Gaulle. You know that we have been working very closely with Aéroport de Paris with the Connect France initiative that we launched last year at the Paris Airshow. We support indeed this long-term economic agreement because it provides the visibility that we need to deliver the investments that are required to modernize our airport and you know that we account for around half of this airport activity. We worked with Aéroports de Paris on this investment program to focus on the key priorities which are the optimization of the passenger and aircraft flows, the simplification of the passenger journey, the increasing that is really needed of the number of contact stands, and also the acceleration of the decarbonization and the strengthening of the connection with the railway station, so the intermodal connectivity. It's clear that we need to make significant investments significant investments have already been made for other areas in Paris including the full refurbishment of terminal 1 which now offers 100% contact stands and major upgrades to the terminals to A, B, C, D and only 3 so we've not been developing our hub since the opening of the whole M that was in 2012. So you see a while ago and the hub has grown but with capacity constraints that have emerged with several critical points particularly on the aircraft parking stands and also the border control facilities that are quite congested. So this proposed investment plan addresses those challenges so we fully support it.

Hi, Steven. Yes, so let's say the trend on the maintenance cost will continue. It's not that it's going up further, but let's say we still see an increase year over year in the same kind of magnitude. I don't expect that the OEMs get their acts together on this area, so we have that in our forecast, but that's still all within the guidance of the 0% to 2%. So if you take out the 0.5%, you could say it's between 0% and 1.5. So we offset that. We have, of course, the fuel efficiency, which you have seen in the second quarter. We still have benefits of the fleet. We have less wet leases, especially in the third quarter. So that trend will also continue for the summer. And last but not least, we expect a better operation than we had last year, and that should also contribute to our unit costs in the customer compensation. The increase of the maintenance will be offset by other operational measures.

Thanks very much.

The next question comes from Harry Gowers from JP Morgan. Please go ahead.

Yeah, morning everyone. Two questions if I could. First one. Steven, just going back on your comments, I think on July yields up 7%. I was wondering if you could give any color on what Asia and the Middle East was within that figure. You know, with Middle East capacity coming back, I presume Asia yields kind of normalizing will be the main difference between the plus 7 and what you guys delivered, the 8, 9% in Q2. So maybe just a bit more color on that. And then second question, just one for Ben, a big picture one. You know, once Once things are fully normalized, do you think anything will structurally change off the back of the Middle East conflict, whether that's positive or negative for Air France-Klm, or are we just kind of going to go back to where we started in terms of earnings trajectory, but just with some volatility from the conflict in between? So yeah, anything structurally which can change into 27 or 28? Thanks a lot.

Thank you, Harry. Yeah, if you look at Asia, of course, we don't have the dynamics which we especially saw in March and April, where there was so much tight in terms of seats availability and we could give the seats actually what usually should have given by the Middle East carrier. So we benefit a lot of that at that moment, but it's still doing much better. So you can still talk about double digits, but also more Starting with a one and not starting with a two or with a three. So we benefited a lot from that moment. Of course, we should also take into account that the fuel price is down. But of course, there's much more availability of seats from everybody because there are, of course, we are in another booking curve than when we were in March, April when it just started. So that is one. And also the Middle East carriers are coming back. But we still have a benefit. in terms of yield and of course unit revenue because also the load factor is quite good.

And on how this conflict in the Middle East could structurally impact Air France-Klm going forward, as of today, we don't see that impact potential in the mid to long term. So we believe things will come back to where we were before as of today. and hopefully that will be soon. Great. Thanks a lot, both.

The next question comes from Andrew Lobenberg from Barclays. Please go ahead.

Oh, hi there. Yeah, let me just join the chorus of thanking Michiel and also Marouane who also left earlier. They've been a great, great partnership and we'll miss them. Just coming back on where you were just being quizzed on the Asia fade from Harry, can you tell us, I mean, you're pooling the Asia and Mideast revenue data that you give us for Q2. Can you tell us what happened on the Asia routes in Q2? And can you tell us what happens on the Asia routes for July, just rather than the pooling of the Mideast? And then can I just ask, you know, how is trading on the overseas territories routes? Because I think, you know, I saw some press about Air Austral needing to get funding. I'm not sure how the other competitors have got on fuel hedging. So, you know, you had quite healthy yields on the overseas territories market. Is that a big opportunity for you looking into the winter with peers perhaps less financially stable than yourself?

Hi, Andrew. Can you repeat a little bit what kind of colouring you want more on the Asia for me?

Yeah, you've told us that Asia and Mideast yields in Q2 were up 20%. What was Asia? You told us that... Okay, okay.

Yes, okay. That is pretty clear. Let's say, of course, the Middle East, there was almost no impact. So this is actually all coming from the Asian part. So it was especially strong on India. It was especially strong on Korea. And it was especially strong on Southeast Asia. Those were actually driving up, let's say, the yields which you see, let's say, on page 11. But, of course, let's say the Middle East itself... was not in this kind of range. First of all, what we still had in had a negative load factor and it almost a flat-ish yield. So it is especially all coming from there. And then your second question, yeah. We are getting into the season where airlines at least burning their ticket sales. So we will see what will happen to other carriers which are not hedged. We had of course a big contribution from the hedge in our results, especially till the end of the year. So it is in quite a good cushion. Let's see what will happen. We are always surprised these airlines are still alive, but we benefit from it. at the end of the day in our yields and unit revenues.

Thanks.

The next question comes from Rory Cullinane from RBC Capital Markets. Please go ahead.

Yes, good morning. First question is, should we expect this scope to retain unit revenue increases if and when fuel costs decline given the higher than expected recapture rates in the quarter. And then secondly, on fuel, how to hedge prices in full year 27 compared to full year 26. So I can see you're 40% hedged. And should we be concerned that jet fuel availability concerns could recur given Thank you.

It was very, very difficult to hear, but I think I catched it. Let's say I give you already indication for let's say the first four weeks in terms of the yields, which are not the same as what we have seen in the Q2. So there is of course the fact that fuel price is coming down. I gave a fuel recapturing for the second quarter after the first quarter because I think that was very relevant. But now you see that the fuel price is continuously changing, which you also have seen in Q2. But we are, let's say, we are still having an increase in our yields year over year to cover this higher fuel price. We also have still, let's say, in our tariff structure, we keep that still. If you look at the hedges, I think on page 16 we explained it quite well. So you can see that we will benefit this year from 1.6 billion dollars. And the YetView price goes from, let's say, on average for 2026, for 1200 dollars per metric ton to around 1000 of metric ton. We use collars, so most of our instruments are collars. So it's not one-to-one. It depends are you just over and above a certain level before the hedges kicks in. But you see quite an effective hedge result for this year.

Thank you.

The next question comes from Axel Staes from Morgan Stanley. Please go ahead.

Morning everyone, thanks for taking my questions. Apologies for coming back on this, but you mentioned yields up 7%, growth factors down 1% in the first four weeks, but fuel has increased quite meaningfully in the last couple of weeks, right? So I just want to understand here, why not higher yields? Is it driven by demand? Is it driven by capacity? And how should we look at August, September based on the data that you can see internally? Can we assume August is softer than July, for example? And then second question is on Transavia. We have seen that the load factors are up 200 bps year over year for Q3. Can you quantify maybe the pickup in pricing that we have been seeing in July for Transavia specifically and potentially what we can expect for August and September as well? Thank you.

Sorry, we had some internal debates. If you look at the yields, the 7%, if you look at the current fuel price, it's not too bad, to be honest, but it depends on where the fuel price is going. Of course, it's up. We gave you the curve of last Monday, so we are pretty close to what is, let's say, the current fuel price. But you're right, if it goes up very steeply again, and therefore I don't want to give any guidance on the fuel recapture. But I think the 7% yields are, I find them not too bad, especially if you take on average what the unit cost, because the fuel is not 100% our unit cost, so you should take the part which is related to fuel and then the increase which you see year over year. And then I think the 7%, but do your math yourself, is not too bad. If you look at the two months,

August is indeed a bit softer, that's true.

So July looks a bit better than August, and September looks better than August. So I think August and September are balancing out in that sense, but we have to see because the late bookings, they are very favorable in yield. So it always is about the last two weeks when you really see some upticks in the pricing.

And on Transavia, Q2 is the first quarter. Transavia has an extensive network that touches the Middle East so that's obviously impacted Transavia in a material way so those Those airplanes have been redeployed across the Transavia network and the overall balance is positive. The network has taken a big shift and transition since Q1. Very happy to see the initial performance of Transavia in the French domestic market. This is one of the major underpinnings of the strategy behind Transavia. It's moving in a positive direction much faster than we would have expected. And if we were not in this difficult period, as you saw in Q1 last year, Transavia continues to do support. Air France is a much stronger result than its results it had in the past. Now, as I've always said, you have to balance the two, at least in this midterm, until we have Transavia in a position where it can Okay, thank you. The next question comes from Kiran Mulder from Ing. Please go ahead. Good morning, everyone.

Congratulations with your numbers in the second quarter, I would say. And of course, I would like to thank Michiel for his contribution to the IR. Very helpful, I can say. Very accurate and always calling back. So my question, I have two questions. The first question is about KLM. If you look at the numbers, so it's a little bit better, but it's purely thanks to the 100% hatching, let me say the hatching of the fuel, so it was all passed on. But if you look at the progression with regard to the target of 8% by 2027, in the line, it does not look very, very, very exciting. And I'm very wondering how you're going to reach the targets given the progress to, let me say, the last couple of quarters. And the second question is about the Portuguese acquisitions. What are your plans for, let me say, to combine with the Portuguese? More Zazian-like or is that more, let me say, network-like opportunities there you see for, let me say, for example, for South America or whatsoever? Can you maybe elaborate a little bit on that?

Hi Quirijn, I will start on KLM but we have Marianne Rintel and Bas Bruns in the room so they can add on it. I would say I think it's quite promising. It's not completely coming from the hedge, it is also coming from the unit revenue and there is a unit cost decrease but at the end of the day, As we say in Dutch, eens waarde maakt nog geen zomer. So let's keep that in mind. There's still a lot of work to be done, but I think it's a very good step first towards an improvement and towards the 8% margin target.

And for... Oh, sorry.

No, hello, this is Marianne. So yeah, the results improved. So it shows that what we are doing, that it has an effect, in effect, that there's a strong discipline, cost reduction, productivity improvements, full program running, like back on track achievements that we made within a real insecure world. So it's step by step and we are progressing.

And on the question of TAP and some of the reasons that interest us in making this bid, well, the geographical position of the Lisbon hub on the Iberian Peninsula is key. We don't have a strong presence in that area and access to Latin America, in particular to Brazil. South America is a really important market for us. So if we were successful with TAP, that will strengthen our position there. Synergies, of course, are a major justification behind this bid. Brazil, obviously, is the major market transatlantic for TAP, and one of the major objectives is to better align our network, our pricing, all of that commercial management that we'll We're hoping to put in place, if we are successful in this bid, we've done, even before taking management control, which you've heard us already say at the beginning of this call, the synergies that we've been able to enjoy from SAS without management control have given us confidence that even early stages before we're able to align, if we do win, would be strong. Thank you.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Jack Rayburn from Bank of America. Please go ahead.

Hi, good morning. Standing in for Muneeba today. Three questions from me. What are your yield expectations on the North Atlantic for the remainder of the year? Do you expect yield growth to continue? And have there been any changes to the US point-of-sale strong, European point-of-sale weaker rhetoric? Secondly, I was wondering if you could provide more details on cargo. How do you view supply-demand dynamics moving forward? And do you expect this market to remain structurally tight despite returning Gulf capacity due to hyperscaler and AI demand? And finally, when do you think airlines will start to make decisions about potential winter capacity rationalization? And do you expect it largely into Europe or on the transatlantic too? Thank you.

Hi, Jack. Let's say if you look at the US, we still expect strong pricing. So we don't expect that the prices are coming down. You know that our competition over there is not hedged. So with the current fuel price, they need much more yields to recapture all the fuel costs than the European carriers need. So we are staying in the market and we expect A strong yield. If you look at it from the point of sale we have seen that again indeed in this quarter the US point of sale is getting stronger and we are now almost reaching a point that two-thirds of all our passengers back and forth from the US are American passengers. So we are really really dependent on that part of the world but it is still doing very strong and very well. On the cargo, you have to keep in mind that most of the capacity is in the belly and most of the capacity in the belly is not totally sold out except for our Asian network. So we benefited also part because we are stronger to Asia in the last quarters where we could also have better yields than, for instance, towards the US. So I think the supply demand will not change that much. All the freighters of the Middle East are in, so there's still the competition over the Middle East, probably some forwarders are trying to avoid it to have no insecurity, but all the capacities and so from a supply demand, I don't expect anything different except that I expect in the current circumstances that there's a little bit more preference for flights above shipping due to the fact of the security that we will make it at the end from A to B on time. And then on the winter capacity, yes, I think our profitability on the long haul is quite good. So if we are going to reduce capacity, it's probably more on the European part.

Thank you.

The next question comes from Antonio Duarte from Goodbody. Please go ahead.

Good morning, gentlemen, and thank you, Michiel, for all the help. It was a pleasure working with you. My question relates to Flying Blue. Of course, I appreciate it's still a small part of your business, but maybe taking a step back and having a look at the progression of that part of the business and of the strong margin, just asking your thoughts about progression there for growth going into FY27 and the outer years. Thank you.

Yeah, Antonio, good morning. Sorry, I should have addressed much more on the flying blue if you see what is the improvement in the second quarter. We are really, really optimizing, let's say, all our partner activity and we see more incremental revenue. So, the revenues are up with more than 40% and driving up further the profits. So, we expect a lot to come. I probably have seen the IAG... Thank you for your questions.

Let me hand the conference back to the speakers for closing remarks.

Well, thank you for participating on the call today and we wish you all a fantastic summer and we'll talk with you at our next call in November.