Consolidated financial statements and notes AFKL as of December 31, 2024

                                                    Consolidated financial statements                                    3

                                                    Consolidated income statement                                        3

Consolidated statement of recognized

4

income and expenses

                                                  Consolidated balance sheet                                                5

Consolidated statement of changes

7

in stockholders’ equity

                                                     Consolidated statement of cash flows                              9

Notes to the consolidated financial

10

statements

5.2                           CONSOLIDATED FINANCIAL STATEMENTS

5.2.1              Consolidated income statement

Period from January 1 to 31 December                                                                                                                                       

The accompanying notes are an integral part of these consolidated financial statements.

5.2.2                    Consolidated statement of recognized income and expenses

Period from January 1 to December 31

The accompanying notes are an integral part of these consolidated financial statements.

5.2.3            Consolidated balance sheet

ASSETS

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated balance sheet (continuation)

LIABILITIES AND EQUITY

The accompanying notes are an integral part of these consolidated financial statements.

5.2.4                    Consolidated statement of changes in stockholders’ equity

                                                                         Equity attributable to equity holders                                                                  Equity attributable to

                                                                                     of Air France-KLM                                                                                 non-controlling interests                        Total

(1) As of December 31, 2023 and in the context of the exit of the French Recapitalization State Aid under the EU Covid-19 Temporary Framework, the Group paid a €90 million compensation to the French State required for the shares subscribed in April 2021.This payment was considered as a dividend payment and was therefore recognized in equity accordingly to IFRS principles.

                                                                                                     Equity attributable to equity holders                        Equity attributable to

                                                                                                                                of Air France-KLM                non-controlling interests                        Total

The accompanying notes are an integral part of these consolidated financial statements.

5.2.5               Consolidated statement of cash flows

Period from January 1 to December 31

2023

(1)                See Note 3 of the notes to the financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

5.3      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1                                          BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL

STATEMENTS

As used herein, the term “Air France-KLM” refers to Air France-KLM SA, a limited liability company organized under French law. The term “Group” is represented by the economic definition of Air France-KLM and its subsidiaries. The Group is headquartered in France and is one of the largest airlines in the world.

The Group’s core business is network activities which includes passenger transportation on scheduled flights and cargo activities. The Group’s activities also include aeronautics maintenance, leisure passenger transportation (Transavia) and other air-transport-related activities.

The limited company Air France-KLM, domiciled at 7, rue du Cirque 75008 Paris – France, is the parent company of the Air France-KLM Group. Air France-KLM is listed for trading in Paris (Euronext) and Amsterdam (Euronext).

The presentation currency used in the Group’s financial statements is the Euro, which is also Air France-KLM’s functional currency.

1.1             Accounting principles

Accounting principles and policies used for the consolidated financial statements

Pursuant to the European Regulation 1606-2002 of July 19, 2002, the consolidated financial statements of the Air France-KLM group as of December 31, 2024 were established in accordance with the International Financial Reporting Standards (“IFRS”) as adopted by the European Union on the date these consolidated financial statements were established.

The consolidated financial statements were approved by the Board of Directors on March 5, 2025 and submitted to the Annual General Meeting for its approval on June 4, 2025.

Change in accounting principles

IFRS standards which are applicable on a mandatory basis to the 2024 financial statements

Amendments to IAS1 “Presentation of Financial Statements and notes ”

These amendments are related to the classification of the liabilities in current liability or non-current liability, mostly for the non-current liability with covenants.

These amendments precise that only the covenants of which an entity is required to comply with, no later than the closing date, have an incidence on the classification of a debt in current or non-current. The classification is not impacted when the right to postpone the payment of a debt for at least 12 months, depend on the respect of a covenant at a date later than the closing date.

The Group carried out a review of the terms of each significant loan, drawn or not. No loans has been reclassified following this review.

Amendments to IFRS 16  “Leases”

These amendments “Lease Liability in a Sale and

Leaseback” bring clarifications on the valuation post sales and leaseback transactions, when the initial sell of the underlying asset corresponds to the criteria of IFRS15 for being compatibilized as a sell. These amendments precise how to evaluate the lease debt, resulting of these transactions in presence of variable leases that don’t depend on an index or a rate.

The Group apply this amendment since January 1^st, 2024, without observing any significant retroactive impact.

The principles judgments and accounting estimates are described in the Note 1.2 “Material judgment and accounting estimates”.

OECD Pillar Two model rules

The Air France-KLM Group is subject to the OECD's Pillar 2 rules, following their transposition into French law and enaction for fiscal years beginning on or after December 31, 2023. Under this legislation, the Group is required to pay an additional tax for the difference between its GloBE effective tax rate (TEI GloBE) in each jurisdiction and the minimum rate of 15%.

Temporary protection schemes have been introduced for a maximum of three financial years, enabling the rules to be deferred. These schemes consist of simplified tests against the Pillar Two rules, calculated by jurisdiction and at the end of each financial year.

At the closing date, the Group considered that it could benefit from the temporary protection schemes in almost all the jurisdictions in which it operates, except for France mainly due to recognition/derecognition of deferred taxes and in  non- significant jurisdictions, which must therefore carry out a full calculation of TEI GloBE in accordance with the law in force and the available OECD recommendations.

The full calculation of the TEI GloBE for the French jurisdiction exceeds the minimum rate of 15%. Consequently, no additional tax expense has been recorded at December 31, 2024.

The Air France-KLM Group applies the IAS 12 exception not to measure or recognize deferred tax assets and liabilities relating to the additional Pillar 2 tax.

Other amendments or IFRS standards The mandatory amendments or IFRS standards for the financial statements 2024, which are not mentioned in this paragraph are considered as non applicable or without significant impact on the Air France-KLM Group financial statements.

1.2      Material judgements and accounting estimates

The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates based on judgements and assumptions that affect the information presented in the consolidated financial statements and their notes.

The Group’s management makes these estimates and assessments continuously on the basis of its past experience and various other factors considered to be reasonable.

The consolidated financial statements for the financial year have thus been established on the basis of the financial parameters available at the closing date.

These accounting estimates are based on the mostrecently available, reliable information.

The actual results could differ from these estimates depending on changes in the assumptions used or different conditions.

The main estimates, assumptions and judgements made in the preparation of the consolidated financial statements and notes are described below:

■ the valuation of revenue, related to passenger tickets and freight airwaybills issued and not used (see Note 6 “Information by activity and geographical area”);

■ hypothesis used for impairment testing of non financial assets – including assumptions about on climate issues – (See Note 21 "Impairment");

■ useful life of the fleet (See Note 17 “Tangible assets”);

■ calculation of implicit interest rate and incremental borrowing rate for the recognition of lease contracts (See Note 19 “Right-of-use assets and lease debt”);

■ calculation of the discount rate for the valuation of the return obligation liabilities and provision for leased aircrafts (See Note 30 “Return obligation liability and provision for leased aircraft and other provisions”);

■ determination of the deferred tax assets recoverability (See Note 13 “Income taxes”).

These principles must be reviewed at the same time with the notes to the financial statements to which it refers in each paragraphs.

1.3             Consolidation principles

Subsidiaries

In conformity with IFRS 10 “Consolidated Financial Statements”, the Group’s consolidated financial statements comprise the financial figures for all the entities that are controlled directly or indirectly by the Group, irrespective of its level of participation in the equity of these entities. The companies over which the Group exercises control are fully consolidated. An entity is controlled when the Group has power over it, is exposed or has rights to variable returns from its involvement in this entity, and has the ability to use its power to influence the amounts of these returns. The determination of control takes into account the existence of potential voting rights if they are substantive, meaning they can be exercised in time when decisions about the relevant activities of the entity need to be taken.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control begins until the date this control ceases.

Non-controlling interests are presented within equity and on the income statement separately from Group stockholders’ equity and the Group’s net income, under the line “non-controlling interests”.

The effects of a buyout of non-controlling interests in a subsidiary already controlled by the Group and divestment of a percentage interest without loss of control are recognized in equity.

In a partial disposal resulting in loss of control, the retained equity interest is re-measured at fair value at the date of loss of control. The gain or loss on the disposal will include the effect of this re-measurement and the gain or loss on the sale of the equity interest, including all the items initially recognized in other comprehensive income and reclassified to profit and loss.

Interest in associates and joint ventures

In accordance with IFRS 11 “Joint Arrangements”, the Group applies the equity method to partnerships over which it exercises control jointly with one or more partners. Control is considered to be joint when decisions about the relevant activities of the partnership require the unanimous consent of the Group and the other parties with whom control is shared.

In cases of a joint activity, the Group recognizes assets and liabilities in proportion to its rights and obligations regarding the entity.

In accordance with IAS 28 “Investments in Associates and Joint Ventures”, companies in which the Group has the ability to exercise significant influence over financial and operating policy decisions are also accounted for using the equity method. The ability to exercise significant influence is presumed to exist when the Group holds more than 20% of the voting rights.

The consolidated financial statements include the Group’s share in the net result of associates and joint ventures from the date the ability to exercise significant influence begins until the date it ceases, adjusted for any impairment loss of net investment.

The Group’s share of losses of an associate exceeding the value of the Group’s interest and net investment (longterm receivables for which no reimbursement is scheduled or likely) in this entity are not accounted for, unless the Group has:

■ incurred contractual obligations to recover losses; or ■ made payments on behalf of the associate.

Any surplus in investment cost over the Group’s share in the fair value of the identifiable assets, liabilities and contingent liabilities of the associate company on the date of acquisition is accounted for as goodwill and included in the book value of the investment accounted for using the equity method.

Investments in which the Group has ceased to exercise significant influence or joint control are no longer accounted for by the equity method and are accounted at their fair value as other financial assets on the date of loss of significant influence or joint control.

Intra-Group operations

All intra-Group balances and transactions are fully eliminated. Profits and losses resulting from intra-Group transactions are also eliminated.

Gains and losses realized on internal sales with associates and jointly-controlled entities are eliminated, to the extent of the Group’s interest in the entity, providing there is no impairment.

Translation of foreign companies’ financial statements

The financial statements of foreign subsidiaries are translated into euros on the following basis:

■ except for the equity for which historical prices are applied, balance sheet items are converted on the basis of the foreign currency exchange rates in effect at the closing date;

■ the income statement and the statement of cash flows are converted on the basis of the average foreign currency exchange rates for the period;

■ the resulting foreign currency exchange adjustment is recorded in the “Translation adjustments” item within equity;

■ goodwill is converted into euros using the foreign exchange rate in effect at the closing date.

Translation of foreign currency transactions

Foreign currency transactions are translated using the exchange rate prevailing on the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated at the rate in effect at the closing date.

Non-monetary assets and liabilities denominated in foreign currencies assessed on a historical cost basis are translated using the rate in effect at the transaction date or the hedging rate, when applicable.

The corresponding exchange rate differences are recorded in the income statement. Changes in fair value of the hedging instruments are recorded using the accounting treatment described in Note 35 “Financial risk management”.

1.4                            Alternative performance measures

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization): by excluding the main line of the income statement which does not involve cash disbursement (“Amortization, depreciation and provision”) from income from current operations, EBITDA provides a simple indicator of the cash generated by the Group’s current operational activities. It is thus commonly used for the calculation of the financial coverage and enterprise value ratios (see “Consolidated income statement”).

Operating free cash flow: this corresponds to the net cash flow from operating activities net of the purchases of property, plant and equipment and intangible assets, plus the proceeds on the disposal of property, plant and equipment and intangible assets. It does not include the other cash flows linked to investment operations, particularly investments in subsidiaries and other financial assets and net cash flow from the operating activities of discontinued operations (see Note 37.1 “Operating free cash flow”).

Recurring operating free cash flow adjusted: this corresponds to operating free cash flow net of the payment of lease debts and of the interests paid or received and paid or received  exceptional payments affecting the comparability between each year (see Note 37.1 “Operating free cash flow”).

Distinction between income from current operation and income from operating activities: the Group considers it relevant to the understanding of its financial performance to present in the income statement a subtotal within the “income from operating activities”. This subtotal, entitled “Income from current operations”, excludes unusual elements that do not have predictive value due to their nature, frequency and/or materiality, as defined in recommendation No. 2020-01 from the France’s accounting standards authority. Such elements are as follows:

Net debt: this corresponds to the amount of the Group’s financial liabilities less net cash (see Note 32 “Net debt”).

Financial liabilities include:

■ current and non-current financial liabilities (excluding accrued interests);

■ current and non-current lease debt (excluding accrued interests);

■ deposits related to financial liabilities and lease debt; ■ derivatives impact on debt.

Net cash include:

■ cash and cash equivalents;

■ marketable securities over 3 months; ■ bonds investments; ■ Bank overdraft.

Climate change is a major concern for the air transport industry, and for the Air France-KLM Group in particular. Attitudes towards the acceptability of air transport are evolving both at the political level and in society at large. France and the Netherlands have implemented policies aimed at ensuring the transition to a carbon-neutral society by 2050, in line with the European Union's strategy in this domain, reflected in the commitments made by Air France as part of France's Stratégie Nationale Bas Carbone (SNBC) and by KLM to the Dutch government.

The Air France-KLM Group and its airlines intend to be key players in             the           sustainable               transformation          of             their activities, and aim to take a leading role and influence in the decarbonization of air transport.

Air France-KLM plays an active role in advancing the ambition of Net Zero emissions by 2050 as an industry, and is committed to science-based targets in line with the SBTi criteria approved in November 2022. The Group’s environmental efforts are summarized in a Climate Transition Plan, with the objective of reducing the intensity of greenhouse gases (gCO2eq/TKT on scopes 1 and 3.3) by 30% in 2030 compared to 2019, in particular by progressively incorporating SAF and investing in the renewal of the Group's fleet for new generation aircraft emitting up to 25% less CO₂ per passenger km.

Independent agencies regularly assess the extra financial performances of the Air France-KLM group based on ESG criteria (Environmental, Social and Governance). In 2024, the Group’s performance was recognized through four  ESG ratings. 

In the ISS ESG Corporate Rating 2024, the Air France-KLM Group   has           been         awarded   “Prime      Status”     with         a

“C+” (issued in January 2025). Prime status refers to a company’s demonstrated ability to adequately manage material ESG risks.

With a score of 77/100 from EcoVadis (Gold Status), the Air France-KLM Group is in the top 5% of all evaluated companies.                The           EcoVadis assessment               evaluates 21              sustainability            criteria     across       four          core          themes: Environment,               Labor&Human Rights,      Ethics       and Sustainable Procurement. More than 150,000 companies globally have been rated by EcoVadis.

The US rating agency MSCI has reanalyzed the Air FranceKLM Group’s sustainability management and has given it a “BBB” rating (issued in February 2025). MSCI ESG Research provides MSCI ESG Ratings on global public and a few private companies on a scale of AAA (leader) to (CCC (laggard), according to exposure to industry-specific ESG risks and the ability to manage those risks relative to peers.

CDP confirmed the Group a B score (issued in February 2025), corresponding  to the level “Taking coordinated action on climate issues”. CDP environmental disclosure serves as a one-stop shop for understanding and disclosing according to relevant market and regulatory demands.

The Group’s financial statements integrate climate change and sustainability issues in various items as described below.

2.1      Valuation of assets and consideration of environmental risks and commitments

The impact of climate change has been taken into account in preparing the Group’s financial statements for the year ending December 31, 2024. In order to identify the physical and transitional climate-related risks to which the Group is exposed, a climate scenario analysis was carried out. However, the physical risks identified in this way were not considered likely to have a significant impact on operational continuity, given the Group's balanced network between the different continents and the flexibility of its fleet, which minimizes the economic consequences of extreme weather events.

The impacts of expected or probable regulatory changes are included in the Air France-KLM group’s five-year plan, notably:

These elements are consequently taken into account in the assumptions used to test the recoverable value of assets (see Note 21 “Impairment”).

In 2024, the environmental impacts have not led to the recognition of any impairment or accelerated depreciation of the Group’s assets.

2.2      Sustainable investments and financings

2.2.1            Fleet modernization

The Air France-KLM group has committed to reduce its CO₂ emissions per ton per kilometer transported (on scopes 1 and 3.3) by 30% by 2030 compared to 2019. Currently, one of the most impactful ways to reduce the carbon footprint is to invest in a more fuel-efficient fleet. The Group is focusing on simplifying and rationalizing its fleet to make it more competitive. The Group’s transformation is therefore continuing with the phase in of more modern, high-performance aircraft with a significantly lower environmental impact and a reduced noise footprint.

The renewal of the Group’s airline fleet for new generation aircraft, that are up to 25% more efficient in terms of fuel consumption and therefore CO₂ emissions, and generate less noise, resulted in capital expenditures on aircraft equipment amounting to €1,419 million as of December 31, 2024 (€1,738 million as of December 31, 2023) (see Note 18 “Capital expenditures”) and resulted in new lease contracts or renewal of lease contracts excluding sales and leasebacks operations of 2024 amounting to € 966 million as of December 31, 2024 (€202 million as of December 31, 2023) (see note 19 “Rightof-use assets and lease debts”).

Pursuing its fleet renewal plan, the Group will continue to receive new generation aircraft over the next few years, with the aim of having up to 80% of its fleet composed of new generation aircraft by 2030 (see Note 38 “Flight equipment orders”).

2.2.2           Other investments

The decarbonization of the Group's activities is also reflected in investments in materials and equipment designed to reduce its environmental footprint.

In order to adapt its business to climate change and in particular reduce  emissions of its ground operations, the Air France-KLM Group is pursuing a sustainable investment policy and is notably investing in fully electric ramp equipment (vehicles, tractors and loading equipment) and the energy renovation of its buildings.

These investments represented €36 million as of December 31, 2024 (€55 million as of December 31, 2023).

2.2.3             Sustainable financings

To support its investments, the Air France-KLM Group has entered into secured financing agreements integrating sustainable development issues, through which the Group and its airlines benefit from more advantageous financing conditions if it achieves targets related to the reduction of its greenhouse gas emissions, fleet renewal and the incorporation of SAF.

On January 2023, Air France-KLM issued sustainabilitylinked bonds for a total amount of €1 billion (see Note 31.2.2 "Sustainability-linked bonds").

On April 2023 Air France-KLM, Air France and KLM have signed two ESG (“Environmental, Social and Governance”) KPI-Linked Revolving Credit Facilities (“RCF”) with a pool of internation financial institutions. As of December 31, 2024 these credit lines (undrawn) amount respectively  to € 1 405 million and €1 000 million with a maturity in 2028 (see Note 31.7 “Credit lines” and 4.1 “Significant events occurring during the period”).

To support their investments in new-generation aircraft, Air France and KLM have also entered into financing or lease contracts with specific clauses linked to compliance with environmental criteria. On December 31 2024, these financings amount for:

2.3      SAF–Greenhouse gas emission rights and CO₂ compensation

2.3.1        SAF

“SAF” refers to an alternative to regular aviation fuel, identified as « sustainable aviation fuel » within the meaning of article 3(7) of Regulation (EU) 2023/2405 of 18 October 2023 on ensuring a level playing field for sustainable air transport (ReFuelEU Aviation) and is defined as aviation fuels that are either:

(a)  synthetic aviation fuels; or

(b)  aviation biofuels; or(c) recycled carbon aviation fuels.

As part of its decarbonization objectives, the Air France-KLM group has developed a progressive and proactive  SAF purchasing policy, aiming to incorporate 10% SAF by 2030, above and beyond its regulatory obligations.

SAF expenses amounted for €(170) million as of December 31, 2024 (€(172) million as of December 31, 2023) (see Note 7 “External expenses”).

To cover the additional costs incurred by SAF purchases, the Air France-KLM Group introduced a specific surcharge on tickets departing from France and the Netherlands on January 1, 2022. In addition, voluntary contribution mechanisms enable the Group's customers to contribute financially to the supply and use of SAF beyond the regulatory incorporation. As of December 31, 2024, the total amount collected in respect of the surcharge and voluntary contributions represented €153 million (€134 million as of December 31, 2023).

In order to secure its future purchases of SAF, Air France-KLM signed several contracts with the suppliers Nesté, DG Fuels, SkyNRG and TotalEnergies for the supply of 3.25 million tons of SAF between 2025 and 2037 (see Note 39.1 "Commitments made").

2.3.2      Greenhouse gas emission rights and CO₂ compensation

Since January 1, 2012, airlines have been subject to the Emission Trading Scheme (EU-ETS) regulations for all flights to or from the European Economic Area, as described in Note 25 “Other assets” and Note 35.4 “Carbon credit risk”. As such, the Group must purchase CO₂ allowances, in addition to the free allowances, to offset its emissions.

Since January 1, 2020, Air France has also been offsetting all its customers' CO₂ emissions on French domestic routes, in line with French regulations, by purchasing credits representing carbon offsetting from approved partners.

The Group accounts for these CO₂ quotas in the line "other assets" of its balance sheet (see Note 25 "Other assets"). As of December 31, 2024, the value of the CO₂ quotas related to the EU-ETS program and to the offsetting of emissions on French domestic flights in the Group’s balance sheet amounted to €470 million d’euros (€395 million as of December 31, 2023).

To meet its obligation to surrender the allowances corresponding to its emissions, the Group recorded a net expense of €(249) million as of December 31, 2024 (€(203) million as of December 31, 2023)(see Note 7 “External expenses”).

The obligation to surrender allowances, valued at acquisition cost for rights acquired (including free allowances) and at market value for rights yet to be acquired, is recorded as provisions in the Group’s balance sheet. These “provisions for CO₂ quota surrenders” amounted for €250 million as of December 31, 2024 (€213 million as of December 31, 2023) (see Note 30

“Return obligation liability and provision for leased aircraft and other provisions”).

Finally, the Group has hedging instruments for its future purchases of CO₂ quotas for a nominal amount of €240 million as of December 31, 2024 (€12 million as of December 31, 2023) (see Note 35.4 “Carbon credit risk” and Note 28.5 “Derivatives instruments reserves”).

2.4              Management compensation

The performance criteria taken into account for the calculation of both annual and long-term variable management compensation (see Note 40.1 “Transactions with the principal executives”) include sustainabilityrelated performance indicators linked related to sustainable development, notably the compliance with the decarbonization roadmap and the reduction of CO₂ emission.

The net cost of financial debt of Air France-KLM Group is detailed in Note 12 “Net cost of financial debt and other financial income and expenses” and mainly comprises income from cash and cash equivalents, interest on financial liabilities, interest on lease liabilities and capitalized interest and may be cash or non-cash related items.

Until December 31, 2023 the Group disclosed the monetary components of the net cost of financial debt within the “cash flow from operating activities” in the consolidated cash flow statement. As a result:

■ the non-monetary items of the cost of net financial debt were neutralized within the “cash flow from operating activities before change in working capital” in the line “other non-monetary items”;

■ the monetary items were not neutralized and therefore impacted the “cash flow from operating activities” through their contribution to the net income of the period and the change in “working capital requirement” for accrued interest not yet due.

As from January 1, 2024 and in order to have a better representation of its activities and a better comparability with other competitors in the air transport industry, the Group has decided to change its method of presentation in accordance with the option offered by IAS7 “Statement of Cash Flow” on interest and to adjust the disclosure as described below:

This change in disclosure has been applied retrospectively to allow the comparison with comparative periods in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.

NOTE 4                 SIGNIFICANT EVENTS

4.1      Significant events occurring during the period

Evolution in the commercial cooperation

in air cargo between Air France-KLM and CMA CGM

Air France-KLM and CMA CGM have decided to terminate the agreements signed in May 2022 with effect from March 31, 2024 as the tight regulatory environment in certain important markets has prevented the cooperation from working in an optimal way.

CMA CGM remains a core shareholder of Air France-KLM. The parties have agreed to amend  the existing lockup on CMA CGM shares in Air France-KLM’s capital until February 28, 2025. CMA CGM stepped down from the Air France-KLM Board of Directors on March 31, 2024.

Sales of KLM Equipment Services B.V.

On February 1, 2024, KLM sold its 100% owned subsidiary KLM Equipment Services B.V. to a third party, TCR international N.V., Belgium (TCR). Under the agreement, KLM will become a TCR customer for the maintenance and lease of ground operations equipment at Schiphol, while TCR will be responsible for investments in ground operations equipment.

As of December 31, 2024, the disposal had the following impact on the Group’s consolidated financial statements:

■ Recognition of a proceeds of €30 million within the “Cash flow used in investing activities” in the consolidated cash flow statement (including €8 million from the sale of shares and €22 million from the sale of equipment to TCR);

■ Recognition of a gain on disposal of €2 million within the “Other non-current income and expenses” in the consolidated income statement (linked to the sale of the shares taking into account the net book value of KLM Equipment Service B.V. in the consolidated financial statements at the date of the disposal).

Early repayment of OCEANE bonds

Early repayment of €452 million of OCEANE bonds

As of March 25, 2024, Air France-KLM has repaid, at the request of the bondholders, €452 million of the outstanding €500 million of the bonds convertible into new shares and/or exchangeable for existing shares due March 25, 2026 .

This amount is equivalent of 25,246,843 of bonds. This early redemption option on March 25, 2024 was part of the terms and conditions of the bonds.

Early repayment of the remaining €48 million of OCEANE bonds

The remaining €48 million of bonds due March 25, 2026 have been repaid in cash on May 10, 2024 under the conditions set out in the Terms and Conditions of the said OCEANE 2026 for cancellation in accordance with the applicable law. These remaining bonds were repaid in advance.  This residual redemption amount is equivalent of 2,654,942 of bonds.

There is therefore no outstanding OCEANE 2026 bonds as of December 31, 2024.

Increase and extension of revolving credit facility (“RCF”) linked to ESG KPIs

Air France-KLM and Air France

Air France-KLM and Air France, combined borrowers, signed in April 2023 a €1.2 billion Sustainability-Linked RCF. This facility included an accordion increase option executed during the first quarter of 2024 for an amount of €90 million bringing the amount available to around

€1.3 billion.

The RCF also had an initial maturity in 2026 and two oneyear extension options. In April 2024, Air France and Air France-KLM executed the extension option for one year, extending to a 2027 maturity.

Finally and as of July 18, 2024 a new amendment has been signed for Air France-KLM and Air France credit facility involving:

■ an extension of the maturity to July 2028 associated with a one-year extension option;

■ an increase of the facility from €1,290 million to €1,405 million.

Following this renegotiation, the RCF lenders pool is composed of 17 banks (16 previously) and the financial conditions of the credit facility have been revised.

KLM

In April 2023, KLM signed a €1.0 billion RCF including ESG Key Performance Indicators. This RCF had an initial 2027 maturity and included two one-year extension options. In Apri 2024, a one-year extension option has been executed extending to a 2028 maturity.

Issuance of a €650 million bonds and tender offer on two series of existing notes

Issuance of a €650 million bonds

As of May 23, 2024, Air France-KLM has made the issuance of new notes of a total principal amount of €650 million with a 5-year maturity and bearing coupon at an annual rate of 4.625% under its Euro Medium Term Note program.

The net proceeds has been used to finalize the tender offer launched as of May 13, 2024 as described in the paragraph below.

Tender offer on two series of exiting notes

On May 24, 2024, Air France-KLM finalized the tender offer on two series of existing notes announced on May 13, 2024: ■ €750 million 1.875 %  notes due January 16, 2025; ■ €500 million 3.875 % notes due July 1st, 2026.

On these two series, existing notes for a total principal amount of €452.7 million, representing 36.2% of the outstanding existing notes, have been tendered for purchase in the tender offer and €452.7 million have been accepted, of which €234.8 million of 2025 notes and €217.9 million of 2026 notes. As a result, the principal amount of outstanding existing notes after completion of the tender offer will be €797.3 million, of which €515.2 million of 2025 notes and €282.1 million of 2026 notes.

Acquisition of a non-controlling stake in the share capital of SAS AB

As of October 3, 2023, Air France-KLM had been selected by SAS AB’s Board of Directors as the winning bidder in SAS’s exit financing solicitation process, collectively with a consortium.

After the receipt of regulatory approvals in Europe and the United States, the Air France-KLM Group finalized as of August 28, 2024 the acquisition of a 19.9% noncontrolling stake in the share capital of SAS AB.

The members of the Consortium (which also includes Castlelake L.P. on behalf of certain funds or affiliates, Lind Invest ApS, and the Danish State) now effectively hold an aggregate 86.4% stake in the share capital of the reorganized SAS AB (exclusive of the recovery by the Danish State in its capacity as a creditor of SAS and pursuant to SAS’s restructuring plans), having invested $1.2 billion USD in the company, by subscribing for $475.0 million USD of common shares and by purchasing $725.0 million USD of senior secured convertible notes.

The Air France-KLM Group itself invested a total of $144.5 million USD (circa €133 million) in SAS AB, by subscribing for $109.5 million USD (circa €101 million) of common shares and by purchasing $35.0 million USD (circa €32 million) of senior secured convertible notes.

As of December 31, 2024, the acquisition had the following impact on the Group’s consolidated statement of cash flow:

Based on the analysis of the features of the transaction including the shareholders’ agreement, the Group does not have the control of SAS AB either within the meaning of EU merger regulation nor based on IFRS 10. However despite they remain business competitors, the Air France-KLM Group meets the requirements of IAS 28 to account SAS AB for using the equity method since the acquisition date.

Restructuring the domestic flights departing from Orly and of call centers

In order to further the transformation required to be more competitive, Air France presented a project to the employee representatives on October 18, 2023 on adapting the supply of  domestic flight departing from Paris by 2026.

The purpose is to have all of  Air France’s domestic and international flights depart from the Roissy Charles de Gaulle hub (except for the delegation of public services for the Air France from/to Corsica transfers which will be departing from Paris-Orly), making Transavia the main representative of the Air France group in the Orly airport.

The Collective mutual termination agreement (RCC) containing an end of career scheme, presented by the executives to realize the project was signed by representative union organizations on February 9, 2024.

According to this agreement’s calendar, application process took place in the middle of the fourth trimester of 2024. Consequently, a provision for restructuring has been booked as of December 31, 2024.

Furthermore, Air France management has presented a project to develop the call centers’ activity (Customer Contact) resulting in a provision for restructuring booked as of December 31, 2024.

For these restructuring, the group has booked a net expense of €49 million as of  December 31, 2024 in other non-current income and expenses including €60 million of restructuring provision and (11) million of reversal of provision for retirement commitments (see Note 11 “Sales of aircraft equipment and other non-current income and expenses”).

On February 1^st, 2024, KLM sold its 100%-owned subsidiary KLM Equipment Services B.V. to TCR International N.V.

(TCR). The impact of the sale is detailed in Note 4.1 "Significant events occurring during the period”.

As of October 3, 2023, Air France-KLM had been selected by SAS AB’s Board of Directors as the winning bidder in SAS’s exit financing solicitation process, collectively with a consortium. After the receipt of regulatory approvals in Europe and the United States, the Air France-KLM Group finalized as of August 28, 2024 the acquisition of a 19.9% noncontrolling stake in the share capital of SAS AB. The impact of the transaction is detailed in Note 4.1 "Significant events occurring during the period”.

No significant acquisitions or disposals took place in 2023.

Business segments (Note 6.1)

The segment information is prepared on the basis of internal management data communicated to the Executive Committee, the Group’s principal operational decision-making body.

The Group is organized around the following segments:

■ Network: The revenues for this segment, which includes the Passenger and Cargo network, primarily come from passenger transportation services on scheduled flights with the Group’s airline code (excluding Transavia), including flights operated by other airlines under code-share agreements. They also include code-share revenues, revenues from excess baggage and airport services supplied by the Group to third-party airlines and services linked to IT systems. Network revenues also include freight carried on flights operated under the codes of the airlines within the Group and flights operated by other partner airlines under code-share agreements. Other cargo revenues are derived principally from the sale of cargo capacity to third parties and the transportation of shipments on behalf of the Group by other airlines;

■ Maintenance: Maintenance operating revenues are generated through maintenance services provided to other airlines and customers worldwide;

■ Transavia: The revenues from this segment come from the “leisure” activity realized by Transavia;

■ Other: The revenues from this segment come from various services provided by the Group and not covered by the three segments mentioned above.

The results of the business segments are those that are either directly attributable or that can be allocated on a reasonable basis to these business segments. Amounts allocated to business segments mainly correspond to the EBITDA, current operating income and to the income from operating activities. Other elements of the income statement are presented in the “non-allocated” column.

Inter-segment transactions are evaluated based on normal market conditions.

Geographical segments (Note 6.2)

Activity by destination

Group Traffic sales by destination are broken down into seven geographical areas:

 ACCOUNTING PRINCIPLES

6.1                Information by business segment

Year ended December 31, 2024

(1)                           This line includes compensation paid to clients in accordance with EU261 (see Accounting Principles).

The non-allocated assets, amounting to €8.7 billion, comprise cash and cash equivalents of €4.8 billion (see Note 26), other financial assets of €2.6 billion (see Note 22), deferred tax of €0.7 billion (see Note 13.4), income taxes of €0.2 billion (see Note 25) and derivatives financial assets of €0.4 billion (see Note 35).

The non-allocated segment liabilities, amounting to €5.2 billion, mainly comprise pension provisions for €1.7 billion (see Note 29), tax and employee-related liabilities of €2.6 billion (see Note 34), other provisions litigation, restructuring and others for €0.7 billion (see Note 30) and derivatives financial liabilities of €0.2 billion (see Note 35).

Financial liabilities, lease debts, bank overdrafts and equity are not allocated.

The non-allocated assets, amounting to €9.9 billion, comprise cash and cash equivalents of €6.2 billion (see Note 26), other financial assets of €2.6 billion (see Note 22), deferred tax of €0.7 billion (see Note 13.4), income taxes of €0.1 billion (see Note 25) and derivatives financial assets of €0.3 billion (see Note 35).

The non-allocated segment liabilities, amounting to €6.2 billion, mainly comprise pension provisions for €1.7 billion (see Note 29), tax and employee-related liabilities of €3.6 billion (see Note 34), other provisions litigation, restructuring and others for €0.7 billion (see Note 30) and derivatives financial liabilities of €0.2 billion (see Note 35).

Financial liabilities, lease debts, bank overdrafts and equity are not allocated.

6.2                Information by geographical area

Activity by destination

TRAFFIC SALES BY GEOGRAPHICAL AREA OF DESTINATION

Year ended December 31, 2024

Year ended December 31, 2023

NOTE 7                 EXTERNAL EXPENSES

Period from January 1 to December 31

(1) Starting 2024, airlines are eligible for compensation based on their usage of SAF from and to the  European Economic area . CO₂ quotas to be received in 2025 for the year 2024 under the SAF Allowances schemes (part of EU-ETS) have not been taken into account, as the European directive has not yet been published at the date of the financial statements.

A portion of external expenses, mainly aircraft fuel and maintenance, is sensitive to fluctuations in the US dollar exchange rate. The hedges covering this currency exposure are presented in Note 9 “Other current operating income and expenses”.

NOTE 8                      SALARIES AND NUMBER OF EMPLOYEES

 ACCOUNTING PRINCIPLES

IFRS 2 “Share-based payment” requires share-based payment services to be recognised as an employee expense. These services are measured at the fair value of the instruments granted.

The accounting policies applied by the Group to recognize its defined obligations in accordance with IAS 19 (revised) are detailed in Note 29 “Pension assets and retirement benefits”.

SALARIES AND RELATED COSTS

Period from January 1 to December 31

Pension costs on defined contribution plans

The Group pays contributions to a multi-employer plan in France, the CRPN (public pension fund for crew). Since this multi-employer plan is assimilated with a French State plan, it is accounted for as a defined contribution plan in “pension costs on defined contribution plans”.

Payment linked with shares

In 2023, The payment linked with shares amounted to €(35) million (including social charges) and related mainly to the employee share ownership plan offered to all Air France-KLM group employees.

All major KLM pension plans in the Netherlands are qualified as defined contribution scheme.

FULL-TIME EQUIVALENT  ⁽¹⁾

(1)                             Calculations are made using the double-weighting method (time present over the period and working time).

NOTE 9                         OTHER CURRENT OPERATING INCOME AND EXPENSES

Period from January 1 to December 31

In 2024, the line “Other” includes in particular indemnities received from suppliers to compensate operational issues supported by the Group.

NOTE 10                     AMORTIZATION, DEPRECIATION AND PROVISIONS

Period from January 1 to December 31

The amortization variations for intangible and tangible assets are presented in Notes 16 and 17, and for right-of-use assets in Note 19.

The variations relating to inventories and trade receivables are presented in Notes 23, 24 and 25.

The balance sheet movements in provisions for risks and charges are detailed in Note 30.

NOTE 11                  SALES OF AIRCRAFT EQUIPMENT

AND OTHER NON-CURRENT INCOME AND EXPENSES

Period from January 1 to December 31

Year ended December 31, 2024

Sales and leaseback

The impact of aircraft sales and leasebacks resulted in a profit of €8 million in the income statement and a result on disposal of €584 million in the cash flow statement as of December 31, 2024.

Other aeronautical sales

The           impact      of             other        aeronautical              sales         mainly corresponds to a B777 refinancing for KLM and has led to a gain of €16 million as of December 31, 2024.

Other non-current income and expenses

The impact of other non-currrent income and expenses includes a compensation of €(115) million to be paid by Air France-KLM to Virgin as part of the renegotiation of a contract and the provision booked at Air France level in the context the restructuring of the domestic offer adaptation plan in Orly and of call centers for 49 million (See Note 4 “Significant events occurring during the period”).

Year ended December 31, 2023

Sales and leaseback

The impact of aircraft sales and leasebacks resulted in a profit of €4 million in the income statement and a result on disposal of €772 million in the cash flow statement as of December 31, 2023.

Other aeronautical sales

The           impact      of             other        aeronautical              sales         mainly corresponded to a B777 refinancing for KLM and has led to a gain of €20 million as of December 31, 2023.

Net cost of financial debt

Income from cash and cash equivalents mainly comprises interest income from marketable securities and other financial assets, as well as net income on disposals of marketable securities.

In 2023, the bank loan guaranteed by the French State (“PGE”) was fully repaid generating a net positive impact of €10 million in financial income, consisting of an expense of €(96) million related to the guarantee contractually due, recognized in the line “Interest on financial liabilities” and an income of €106 million, related to the application of the amortized cost at the effective interest rate methodology, recognized in the line “Other non-monetary items”.

Foreign exchange gains (losses)

As of December 31, 2024, the foreign exchange result includes an unrealized currency loss of €(201) million composed of:

■ an unrealized loss of €(221) million on return obligation liabilities and provisions on aircraft in US dollars;

■ an unrealized gain of €24 million on the net debt, mainly composed of a loss of €(20) million on US Dollar, a gain of €26 million on Japanese Yen, a gain of €7 million on Swiss Franc and a gain of €11 million on other currencies;

NOTE 13             INCOME TAXES

 ACCOUNTING PRINCIPLES

■ an unrealized loss of €(3) million on other assets and liabilities mainly due to US dollars on the working capital.

As of December 31, 2023, the foreign exchange result included mainly an unrealized currency gain of €92 million composed of:

Undiscounting of provision

The rate used to undiscount the long term return obligation liability and provision for leased aircraft and other provisions non current is 7.3% in 2024 against 5.5% in 2023 (see Note 30.1.1 “Return obligation liability and provision on leased aircraft”).

The current tax expense (or income) is the estimated amount of tax due in respect of taxable income for the period.

Deferred taxes are recognized on temporary differences between the net booked value and the fiscal value of assets and liabilities recorded on the balance sheet, as well as on tax losses. They are recognized only to the extend that it is probable that a sufficiently precise future taxable profit will be generated at the level of the taxable entity. Deferred tax assets relating to tax losses are capitalized on the basis of the prospects of recoverability arising from the budget and mid-term plans prepared by the Group. The assumptions used are the same that the ones used for the impairment test.

The tax expense reported in the income statement comprises the current tax expense (or income) and the deferred tax expense (or income).

The tax rates used to measure deferred taxes are the ones enacted or substantively enacted at the balance sheet date.

Net deferred tax balances are determined on the basis of each entity’s tax position.

Taxes payable and/or deferred are recognized in the income statement for the period, unless they are generated by a transaction or event recorded directly in equity. In such cases, they are recorded directly in equity.

Impact of the Contribution on Added Value of Enterprises

The CAVE (Contribution on Added Value of Enterprises/Cotisation sur la Valeur Ajoutée des Entreprises – CVAE) is calculated by the application of a tax rate to the added value generated by the company during the year. As the added value is a net amount of income and expenses, the CAVE meets the definition of a tax on profits as set out in IAS 12.2. Consequently, the expense relating to the CAVE is presented under the line “Income taxes”.

13.1          Income tax charge

Current income tax expenses and deferred income tax are detailed as follows:

Period from January 1 to December 31

The current income tax charge relates to the amounts paid or payable to the tax authorities in the short term for the period, in accordance with the regulations prevailing in various countries and any applicable treaties.

French fiscal group

In France, the corporate tax rate, including additional contribution, is 25,83 %  for 2024.

Tax losses can be carried forward for an unlimited period. However, the amount of fiscal loss recoverable each year is limited to 50% of the profit for the period beyond the first million euros. The Group limits its recoverability horizon on the deferred tax losses of the French fiscal group to a period of five years, consistent with its strategic plan.

In view of the medium and long-term outlook, the fiscal group has recognized deferred tax assets for an amount of €456 million as of December 31, 2024  instead of €465 million as of December 31, 2023. The deferred tax assets position for tax losses was therefore increased to €746 million (versus €707 million as of December 31, 2023).

Dutch fiscal group

In the Netherlands, the tax rate is 25.8% in 2024. Tax losses can be carried forward for an unlimited period. However, the amount of fiscal loss recoverable each year is limited to 50% of the profit for the period beyond the first million euros.

The results of the period allowed the use of deferred tax losses and deductible financial interests. The deferred tax asset position for tax losses and deductible financial interests was therefore increased to €314 million (versus €332 million as of December 31, 2023).

13.2 Tax recorded in equity (equity holders of Air France-KLM)

Period from January 1 to December 31

13.3 Effective tax rate

The difference between the standard and effective tax rates applied in France is detailed as follows:

Period from January 1 to December 31

Deferred tax has been calculated on this basis of the 25,83% corporate income tax rate for the French tax group and the 25,80% corporate income tax rate for the Dutch tax group, applicable in 2024.

13.4 Variation in deferred tax recorded during the period

French fiscal group

The deferred taxes recognized on fiscal losses for the French fiscal group amounts to €746 million with a basis of € 2,888 million as of December 31, 2024. As of December 31, 2023, it amounted to €707 million with a basis of € 2,737  million. The deferred taxes increase on fiscal losses is explained by forecasts of future tax profits.

The total deferred-tax position of the French fiscal group stands at a net asset of €456 million (€465 million as of December 31, 2023).

13.5 Unrecognized deferred tax assets

Dutch fiscal group

The Dutch fiscal group recognized €314 million deferred taxes on fiscal losses with a basis of €1,217 million as of December 31, 2024. As of December 31, 2023, it amounted to €332 million with a basis of €1,287 million. This reduction is due to the consumption over the period of deferred taxes on tax losses and deductible interest.

The total deferred tax position of the Dutch fiscal group stands at a net asset of €196 million (versus a €216  million net liability as of December 31, 2023).

French fiscal group

As of December 31, 2024, the cumulative effect of the limitation of deferred tax assets results in the nonrecognition of a deferred tax asset amounting to

€3,572 million (corresponding to a basis of €13,829 million), of which €2,998 million relating to tax losses and €574 million relating to temporary differences.

As of December 31, 2023, the cumulative effect of the limitation of deferred tax assets resulted in the nonrecognition of a deferred tax asset amounting to

€3,349 million (corresponding to a basis of €12,966 million), of which €2,944 million relating to tax losses and €405 million relating to temporary differences.

Others

Other unrecognized tax assets mainly correspond to tax losses of Air France group subsidiaries prior to tax consolidation.

As a reminder, Air France- KLM carried out in August 2023 the reverse share split of all outstanding shares of the Company and the capital reduction by reduction of the nominal value of each share and in December 2023 a capital increase as part of the “Ensemble pour l’avenir” employee share plan, impacting the weight average number of share as of December 31,2023.

Following the repayment of € 452 million of OCEANE bonds on 25 March 2024 (Refer to Note 4.1 “Significant events occurring during the period”), the number of potential dilutive shares linked to the outstanding OCEANE 2026 has therefore been decreased from

4,966,518 shares to 472,580 shares.

The remaining €48 million of bonds due March 25, 2026 have been repaid in cash on May, 10, 2024 under the conditions set out in the Term and Conditions of the said OCEANE 2026 for cancellation in accordance with the applicable law. These remaining bonds were repaid in advance. This residual redemption amount is equivalent of 2,654,942 of bonds.

There is therefore no outstanding OCEANE 2026 bonds as of December 31, 2024.

The number of potential dilutive shares linked to the subordinated perpetual convertible bonds, convertible into new shares and/or exchangeable into existing shares is 19,996,070 shares.

NOTE 15            GOODWILL

 ACCOUNTING PRINCIPLES

In addition to the OCEANE transactions described above, the weighted average number of potentially dilutive shares is 21,198,607 at December 31, 2024.

The potential conversion of these two instruments and their impact on earnings have, nonetheless, not been taken into consideration as of December, 31, 2024 to determine diluted earning per share. Indeed, this would have had the effect of increasing the earning per share.

As of December 31, 2024, taking into account the above items, the basic earnings per share amounts to €0.93 and the diluted earnings per share amounts to €0.93.

Goodwill corresponding, at the acquisition date, to the aggregate of the consideration transferred and the amount of any non-controlling interest of the acquired business minus the net amounts (usually at fair value) of the identifiable assets acquired and the liabilities assumed from the acquired entity.

Goodwill is measured in the functional currency of the acquired entity. It is recognized as an asset on the balance sheet.

It is not amortized and is tested for impairment test on a annual basis or whenever there is an indication that it may by impaired. As described in Note 21, the impairment loss can’t be subsequently reversed.

If the fair values of the identifiable assets acquired and liabilities assumed exceed the consideration transferred, the resulting negative goodwill is recognized immediately in the income statement.

When a subsidiary or associate is sold, the amount of goodwill attributable to the sold company is included in the calculation of the gain or loss on disposal.

15.1             Detail of consolidated goodwill

15.2 Movement in net book value of goodwill

As of December 31

NOTE 16              INTANGIBLE ASSETS

 ACCOUNTING PRINCIPLES

The intangible assets mainly comprise:

■ the KLM and Transavia brands and slots (takeoff and landing) acquired by the Group as part of the acquisition of KLM. These intangible assets have an indefinite useful life as the nature of the assets means that they have no time limit; ■ software and capitalized IT costs.

NOTE 17              TANGIBLE ASSETS

 ACCOUNTING PRINCIPLES

Aeronautical assets under construction mainly comprise advance payments, engine maintenance work in progress and aircraft modifications.

Details of fixed assets given in guarantee are provided in the Note 39.

Commitments to assets purchases are detailed in Notes 38 and 39.

NOTE 18                CAPITAL EXPENDITURES

The detail of capital expenditures on tangible and intangible assets presented in the consolidated cash flow statements is as follows:

Period from January 1 to December 31

The line “Acquisition of flight equipment” includes investments linked to the renewal of the fleet for new generation aircraft, for an amount of €1,419 million as of December 31, 2024 (€1,738 million as of December 31, 2023).

NOTE 19                    RIGHT-OF-USE ASSETS AND LEASE DEBT

 ACCOUNTING PRINCIPLES

The table below presents the right-of-use assets per category:

Excluding the sales and leasebacks operations of 2024, the line “new contracts” includes €823 million as of

December 31, 2024 related to contracts for new-generation aircrafts (€155 million as of December 31,2023). The line “change in contracts” includes €143 million as of December 31, 2024 related to contracts for new-generation aircrafts (€47 million as of December 31,2023).

The line “Others” includes mainly movements of the return obligation liability following aircrafts restitution (see Note 30).

The amount recognized in the income statement in respect of lease contracts not subject to IFRS 16 amounts to:

As of December 31

The table below presents the lease debt per category:

To support their investments in new-generation aircraft, Air France has also entered into lease contracts with specific clauses linked to compliance with environmental criteria. On December 31 2024, these financings amount for €497 million booked in the line “lease debt aircraft”.

The tables below present the change in lease debt:

New

                                                                                          contracts and                                                                      Currency

                                                               December 31,                renewals of                                                                translation                                          December 31,

(in € millions)                                                                                            2022                          contracts Reimbursement                      adjustment              Others                                  2023