Good day, welcome to the Half Year 2020 Results Presentation. Today's conference is being recorded. At this time, I would like to turn the conference over to Benjamin Smith, CEO of Air France-KLM. Please go ahead, sir.
Morning. I welcome you. As you are all well aware, our industry is amongst the hardest hit by this unprecedented crisis, with April and May activity levels near zero, both in our home market as well as in most other countries in Europe and around the world. In June, we saw demand start to show some signs of recovery, mainly in Europe. However, demand ramp-up remains still very uncertain. COVID-19 triggered a global industry restructuring in which airlines are forced to make bold decisions. This has large implications for our group, our employees, our customers, our shareholders, and all other stakeholders. I imagine you have many questions about the current situation we are facing and what it means for our future.
Therefore, I suggest we go through the Q2 2020 results relatively quickly, and then focus on the situation at hand, and our Go Forward plan in the context of the COVID-19 crisis. Frédéric and I will do our utmost to provide answers to your questions as clearly as we can. Moving to page three. As already mentioned, the COVID-19 crisis has had an unprecedented impact on the industry, and also, consequently, on the Air France-KLM group. With operations at a near standstill in April and May, and a slow resumption of operations in June, after our home markets and other countries in Europe came out of the lockdown. In the Q2 2020, we carried 95% fewer customers than what we did last year during the same quarter.
Thanks to quick and effective measures implemented since the start of the COVID-19 crisis at KLM and Air France, we managed to minimize our operational cash burn to an average of EUR 250 million per month and posted a consolidated operating loss of EUR 1.5 billion. To overcome the crisis, both the French and Dutch governments provided financial support packages to the Air France-KLM group, its airlines, albeit with strict conditions attached. As per the end of the second quarter, our group has EUR 14.2 billion of cash available after EUR 7 billion in financing support from the French government and EUR 3.4 billion from the Dutch government. In the context of the COVID-19 crisis, and as an integral part of the financial support measures, the group will accelerate its key transformational initiative.
I will go into more detail on our approach and new focus during the strategy update at the end of this presentation. I would like now to hand over the phone to our CFO, Frédéric Gagey, to provide further details on the financial impact on the Q2 2020 financial results.
Hi, everybody. If you move page five. The first slide, consider that the most important was to look at the cash issue. You see from the left of the slide the evolution of the EBITDA loss on a monthly basis. You see that, in fact, due to the light recovery we have observed in June, we have a slight improvement. You see the EBITDA close, moving from -EUR 300 million in April to -EUR 200 million in June. It is a slight improvement, which is also the sign of the recovery of the traffic, quite light and be honest, we have observed at the end of the Q2 . Concerning the cash control, we have also tried to be extremely strict concerning the CapEx. We have the CapEx also on a monthly basis in the middle of the slide. You see that in April it was -EUR 94 million.
In May, it was close to zero, and in June, it was only one aircraft for around EUR -140 million. This aircraft would be financed in July. In terms of net cash, the CapEx is close to zero. The net CapEx is close to zero during the quarter. Good news concerning the working capital, with a positive contribution during the quarter, quite close to zero, something around EUR 70 million, which is due to the good control of the payment delay we have introduced with our suppliers, but also the fact that we have proposed to some passengers to extend their travel vouchers, which explain why we have not had so much reimbursement during the period. There is all the cost control measures we have applied during this period, and also the first effect of the reduction of the FTEs.
Since the beginning of the year, we have -4,000 FTEs for the entire group, mainly because of the natural departures. As you know, and as discussed by Ben later, we also know that we are opening discussion with unions and with employees concerning voluntary departure plans for both in Air France and in KLM. I move to the slide number six. When you see the description of the activity during this quarter, in fact, and to be honest, a very poor activity. I show first Transavia on the right of the slide, you see that it was almost zero in April, May, and with the beginning of the holiday period. Clearly for Transavia, it will be a bit better in July and August.
Concerning the group Air France-KLM and the network, activity is also close to zero in April and May. There was a turnover of EUR 57 million in April, EUR 88 million in May, and in June, we moved to close to EUR 200 million, which is a sharp increase compared to the month before, it is almost nothing, of course. If you compare that to what we did last year during the same period, in terms of capacity versus second quarter, the reduction has been 88%, which is, of course, extremely large. The traffic is 5% compared to what it was last year. Load factor, of course, is suffering from the situation and is 51 points below what we had in 2019. The unit revenue, mainly caused by the reduction of the load factor, is at -35%.
Clearly, a very bad period concerning the development of the turnover, a good cost control, and many actions in order to reduce the cash drain. I move page seven, where we describe per activity, the main KPI. Concerning the network, I have already described it, capacity -88%, unit revenue negative, and a change in the revenue by -93%. The good news and the good surprise is coming from the cargo. In fact, when you look at the cargo industry around the world, there is a reduction of the volume, but which is expected at -30% only, which is a good performance, of course, compared to the passenger activity.
At the same time, since the volume of the demand is lower, there was also far more capacity going down due to the fact that large parts of the cargo activity is in the bellies of the passenger aircraft, which means that the balance of the equilibrium between demand and capacity was going into the right direction, which is then why the unit revenue is positively oriented during the period for Air France-KLM, we posted a unit revenue +145% compared to last year. Surprisingly, also, the revenue for the cargo activity picked up by 6%, but as you can see on the table, it is, of course, one exception. Transavia, I told that before, close to zero in April, May. There is slight recovery in June, probably better result during the summer.
Transavia expect to have capacity close to 50% at least in July and probably more in August, which means that the result can improve significantly, at least during the summer period. On the maintenance, the revenue is down 60% at EUR 222, there is a sharp deterioration of the operating revenue, which is moving -EUR 370 million compared to last year. More than one half of that is due to exceptional items. With the crisis, we have bad debt, we have the clients which are going into bankruptcy, we have clients which are changing their contract. There is provision to be taken because there are some excess of stocks, or there is some reevaluation of the profitability of some contract. Because of that, there is almost EUR 200 million of exceptional items, which are hitting the operating result of the maintenance operations.
All in all, an operating result at -EUR 1.5 billion, a change of close to EUR 2 billion compared to last year. I move to page eight with the general metrics of this quarter. The revenue down. Fuel expense, of course, is also down. It is not really a good news because it is only explained by the fact that we are operating less capacity, and you can see the sharp drop in the fuel expenses. EBITDA is negative, of course, it is according to the guidance we gave you in the first quarter. Operating result, -EUR 1.5 billion. Operating margin is a bit meaningless due to the level of the revenue. The net income at -EUR 2.6 billion due to mainly some exceptional items due to COVID-19. I will come back on that in the next slide.
The ROCE and the net debt on the EBITDA ratio are still not as intended, of course, but are deteriorating slowly, but don't forget that they are calculated over a 12-month period, and the net debt, this is increase of almost EUR 2 billion during the quarter, largely explained by the poor portion of cash coming from our activity. I move page nine to make the waterfall between the operating result and the net income. Operating result, -EUR 1.5, and you have to take into consideration to move up to the net income, to the fleet impairment. As you know, due to the COVID-19, we have accelerated the Airbus A380 phase-out, and this decision has an impact of EUR 500 million negative. We have also taken the decision to phase out the Airbus A340 subfleet into Air France, and the impact of this decision is -EUR 72 million.
On top of that, we have the over hedge impact. We have largely explained in the first quarter what was the exact nature of the overage concept and how that to be treated accounting. The impact of this overage is for the second quarter, estimated to minus EUR 100. It is a combination of the impact of the fuel price between Q1 and Q2, and also the impact of new calculation concerning the volume of this overage fuel. Last element to be taken into consideration, the restructuring cost. For this quarter, we have posted mainly the provision coming from the KLM voluntary departure plan, which has an impact close to EUR 200 million. We have also taken the impact of the Air France pilot voluntary departure plan, with an impact of EUR 40 million. The rest in others is mainly the cost of the debt of the group.
We move from CESAR operating result, minus EUR 1.5 billion to the net income, minus EUR 2.6 billion. I move, slide 10. When you have the impact of the crisis during the second quarter for both Air France and KLM, no real surprise. If I look, for example, to the bottom of the slide for the half one of the year, in KLM, the deterioration of the operating result is EUR 1 billion. In Air France, it is EUR 1.5 billion, which is totally aligned with the proportion of the size of the company before the COVID crisis. Now we also price, only difference perhaps is the fact that in KLM, the turnover is a bit higher due to the fact that thanks to the position of the KLM network concerning the cargo, KLM has been able to operate a bit more cargo activity than Air France.
For the rest, as you can see, the impact of the crisis is the same for everybody, alas. Page 11, evolution of the balance sheet. I've already indicated the net debt moving from EUR 6.1 -EUR 7.9, explained mainly by the fact that we have an adjusted operating free cash flow, which is negative by EUR -2.3 billion. It is a result of a cash flow before working capital negative, EUR -1.3, which is close to what we have indicated at the beginning of the presentation. The change in working capital is positive, as I told you, plus EUR 500 million over the quarter. Net investment, in Q1, we spent EUR 900 million, in Q2, EUR 200 million. In total, EUR 1 billion of CapEx, which is lower than last year, of course. In the same period, 2019, we spent EUR 1.4 billion for the capital expenditure.
It goes to a net operating free cash of minus EUR 1.9. If on top of that, you have the payment of the lease debt, you have an adjusted operating free cash flow of minus EUR 2.3, which is mainly explaining the evolution of the net debt. I move now to the outlook for the rest of the year. I move, page 13. When you see the possible development of the capacity during the next two quarters. What we plan today is to operate 45% of the capacity compared to last year for the third quarter of the year, and 65% of the capacity for the fourth quarter. Just keep in mind that, of course, we continue to be extremely flexible. It is what we plan to do today.
If there is new event, new political decision, new rules imposed by some countries, of course, we'll be able to adjust extremely rapidly these capacities. We're also taking into consideration what we see in the bookings. Even if concerning the booking, the situation is not really easy. We see various change in behavior amongst the customers, and one of the most important is that passengers are booking later and later or taking later and later the decision to buy the ticket. You can see that on the values that are at the right of the slide, when we give the forward booking load factor 2020 for a given period, and we compare it to the forward booking load factor last year. I take, for example, the French domestic for September. Last year, we had capacity at index 100, and this year, we plan to be at 80.
Last year, the forward booking was 31%, and today it is only 15%. Just indicating that there is very late booking. There is also a strong shift to online channels. We see people moving more and more to the online channels. Not a surprise, the business recovery seems to be longer than what we observe concerning the leisure activity. Of course, we developed a quite active commercial policy with specific attention to the business segment. Really, the situation remain both difficult and uncertain. However, if you look at the month of July, you can observe that the load factor was not so small and not ridiculous at all.
For example, for the French domestic in July, we have a load factor at 76%, for the medium haul at 75%. For the long haul, close to 50%, which is, I think, a good indication of the know-how and the attention paid by our commercial teams concerning the choice of the flights and the capacity to be sure that there will be passengers in the flight we are operating. Of course, for every flight, it is checked by the teams, before to operate it, we are sure that it is, in terms of cash, positive and is bringing positive cash to the company. I move page 14. Second guidance on the CapEx evolution. In Q1, we have indicated that the CapEx was reduced by EUR 1.2 billion compared to the initial guidance coming from the budget.
We are able to reduce, again, by EUR 300 million this guidance, which means that we expect the CapEx close to EUR 2 billion for the year 2020, coming from a budget initially with almost EUR 4 billion of CapEx. That is reduction by almost EUR 2 billion. We continue, of course, to control the labor cost with a plan, a sharp reduction of 50, both into Air France and into KLM.
On top of that, or a part of that, we have just obliged to admit that there will be, again, a significantly negative EBITDA for the second half of the year, which is not really a surprise. In terms of cash, page 15, as indicated by Ben before, we have cash available or directly or with a credit line, which are available thanks to the government or the loan, which are available in the case of the French aid scheme.
We have EUR 14 billion of cash at hand, which is EUR 10.4 billion coming from the support of the government and EUR 3.8 billion of the cash in the hands of the group before the support of the government. It is, we consider, a large level of cash available. We continue, of course, to control the cash drain. What are the risks for the rest of the year? Clearly, there will be a working capital risk due to the cash refund on the prepaid ticket. In total, it is a global value of EUR 1.6 billion, but there is also, in this EUR 1.6 billion, EUR 900 million, which have been already distributed to the passenger with a voucher. We consider that the risk of cash out for the rest of the year is probably far below EUR 1.6 billion.
We will have also the CapEx spending for the second part of the year, is estimated close to EUR 1 billion, but part of that will be also financed. I remind you that the financing market is still open. During the period March to July, the group has financed four 350 Airbus and two Boeing 787 using JOLCO. It means that it is still possible, of course, to finance their cost thanks to the support of the financial partners of the group. Part of the CapEx will be financed, and the cash drain will be less than EUR 1 billion. On top of that, of course, KLM will have to reimburse its credit facility, the former credit facility, when we will draw the new one.
As you know also, we have to reimburse EUR 400 million of hybrid at the group level, and we are still considering if it is possible to refinance it. All in all, we are relatively comfortable with the level of cash, and clearly, we have time in front of us before to be in cash difficulty, if any. Next slide. As a conclusion, very simple, because I think it's also the same conclusion for the entire industry. Clearly, COVID-19 is an extremely severe crisis, which is impacting all the industry financial metrics and KPI. It was true in Q2. It will be probably also true for Q3, Q4. Second element, clearly, the state aid schemes have been extremely important because they allow us to release significantly the cash constraints. Third point, not a surprise also, the level of uncertainty.
We don't know yet, to be honest, totally what will be the level of the demand by the end of the year, and more specifically, what will be the reaction of the business people traveling for business. It is, of course, a high level of uncertainty on our future profitability. Last element, I suppose that it is true also for all our peers, the current situation is impacting quite drastically the balance sheet of the group, and we are continuing discussion on the plan to reinforce by equity or quasi-equity our balance sheet. Thank you for your attention. I give the floor to Ben again.
Thanks, Frédéric. The group's Go Forward Plan started delivering results in 2019 with significant steps forward across key areas. This was achieved firstly through a dialogue with labor partners that has dramatically improved between management and the elected employee representatives. More than 40 labor agreements across Air France and KLM were signed last year, which gave us much-needed future commercial and operational flexibility. Secondly, we made some significant decisions on fleet restructuring, bringing increased productivity gains and organizational simplifications, which further drive unit cost improvements. Drastically increasing operational reliability has been the third fundamental building block of our plan. We started the year 2020 with confidence, and were on track to continue the positive trends of improvements in our main KPIs until the onset of the COVID-19 crisis. As I mentioned earlier, this crisis is unprecedented.
The impact to the global economy by COVID-19 is far more severe than previous economic crises. It is particularly devastating to the airline industry, which is strongly impacted by the subsequent travel restrictions imposed around the globe, including the closure of the Schengen borders and various lockdown measures in place across Europe. In addition, the full duration of the crisis is as yet unknown, with IATA forecasting a lengthy and uncertain capacity development resumption after the crisis for the air transport industry. Moving to page 20. During the second quarter of 2020, Air France and KLM seat capacity decreased by 95% in April, while bookings were unsurprisingly significantly diminished compared to last year.
As explained earlier in the outlook by Frédéric, and in line with predictions of IATA for the air transport industry, thanks to the progressive lifting of intra-European border restrictions from June onwards, our booking trends show some sign of recovery, mainly within Europe. Page 21. To help support our group overcome this crisis, both the French and Dutch states have provided financial packages to the Air France-KLM Group with various conditions attached. The support of the French state in the form of guaranteed loans amounting to EUR 7 billion is accompanied by strong commitments to sustainability. Air France must accelerate its transformation to achieve unit cost reductions to be in line with its peers, British Airways and Lufthansa, net of costs of doing business in France, and thus regain its competitive market position.
Air France must also strengthen its leading position in terms of sustainability, including canceling routes where a train option shorter than 2.5 hours is available. Concretely, the airline must reduce its global CO2 emissions per passenger kilometer by 50% in 2030 compared to 2005 levels, while CO2 emissions in France must be cut by 50% in 2024 compared to 2005 levels. Biofuel development will also be accelerated. In addition to the EUR 7 billion in funding granted by the French state to Air France, the Dutch state provided a financial support package to KLM in the amount of EUR 3.4 billion. Conditions associated with the direct state loan are linked to the airline becoming more sustainable as well, and the restoration of performance and competitiveness of KLM, including a comprehensive restructuring and contributions made by employees. Moving to page 22.
Before I move on to the implications of the COVID-19 crisis on our strategic areas of focus and key issues ahead, I'd like to make it clear that the main pillars of the Group's Go Forward Plan, as presented in November, remains unchanged, that we are committed to improving the Group's competitive position and global environmental sustainability by leveraging our unique strengths. Page 23. In order for the Group to reaffirm its leadership position in the sustainable transition of the air transport industry, the Group has set a very specific 2030 commitment to reduce its global CO2 emissions per passenger kilometer by 50% compared to 2005 levels.
This will be achieved through a multifaceted strategic solution with tangible reductions of CO2 due to a modernized fleet, better fuel optimization, increased use of sustainable aviation fuels, as well as compensation via market-based measures like CO2 schemes and voluntary offsetting by Air France and KLM customer programs. Since 2005, we have reduced our CO2 footprint by 30%, and despite the fact that COVID-19 has created even more pressure, we have put an even stronger emphasis on our sustainability focus as part of the French and Dutch state aid schemes, and through the accelerated transformations I will go through later. Moving to page 24. Network coverage over the past few months was strongly driven by repatriation flights and cargo demand. Customers' preferences and travel expectations have also changed.
Besides assurance from regulators, lifting of travel restrictions, and governments advising against travel, as well as awaiting the widespread availability of a vaccine and rapid accurate testing, customers also now expect generous flexibility and cancellation policies and evidence of strict sanitation and cleanliness aboard aircraft. This is exactly why we have, for example, introduced the most stringent sanitary measures on board and are actively promoting our Travel with Confidence campaign. We see our customers' preferences in these COVID-19 crisis times expressed through their changed booking behavior, which is now, as Frédéric mentioned, very last-minute, with a strong shift towards our online channels. Overall, there remains a high level of uncertainty regarding demand in the year, especially on our long-haul network.
Air France-KLM and Transavia are all carefully increasing capacity for the summer months, where overall capacity levels are managed based on continuously scrutinizing developments of market demand and government policies, including opening of borders and slot moratoriums. The group aims to rebuild its worldwide network step by step, with a wide variety of destinations in its portfolio. Moving to page 25. As indicated on the previous slide, in the booking trend for the remainder of 2020, we see a clear distinction between short and medium-haul versus long-haul recovery. The Air France-KLM Group will reduce its global capacity by a minimum of 20% in 2021 compared to 2019 levels, and will continue to evaluate if further adjustments are required.
A prolonged negative impact on passenger demand, in which demand is not expected to recover to pre-crisis levels for several years, will result in pre-crisis capacity levels at Air France-KLM not being reached by 2024. Moving now to page 26. In the post-COVID world, Air France-KLM Group, we must balance its short-term or medium-term focus on managing liquidity risk and optimizing of CapEx investments with long-term focus on achieving increased competitiveness and sustainability targets. We are trying to do this through five key levers, labor, productivity, cost management, network, and fleet. I will now take you through each one of these, one by one. Page 27. First, with regards to labor, it is crucial for the group and its airlines to restructure their organizations to adapt to the new reality of reduced capacity and prolonged period of uncertainty.
The airlines of the group will accelerate their ongoing transformation plans and readjust their organizational size to match these new activity levels. We have an overall target to reduce headcount by around 17% compared to the 85,000 full-time equivalent we have across the group at the end of 2019, which translates to a reduction of around 14,000 FTEs across the group. In France, Air France will prioritize mobility options and voluntary departure programs in order to avoid involuntary layoffs, while also utilizing some new French labor tools, notably the Groupe Convention Collective for LCC, in order to permit voluntary departures beyond those which would normally be permitted under French labor laws.
In the Netherlands, KLM has launched a voluntary departure program to which 2,000 FTEs had subscribed at the time of the deadline, and combined with the departures due to reduction of external and temporary contracts, this results in a total reduction of 4,500-5,000 FTEs compared to pre-COVID. KLM will announce their final restructuring plan by October later this year. Moving to page 28. Besides the resizing of their respective organizations, both Air France and KLM will focus on further reducing labor costs. Since March, staff in France have been on what's called partial activity and a variable remuneration system for pilots and flight attendants, otherwise known as the minimum monthly guarantee or MMG, reflects lower levels of flight activity.
In both France and the Netherlands, a percentage of employee wages are paid via the unique furlough schemes offered by the respective governments as part of their COVID support measures. In addition, at Air France, base salaries, variable income, and any profit-sharing schemes will be temporarily frozen. Individual salary increases will be limited to contractual seniority increases and those associated with any promotions. Ongoing discussions are currently being held with all staff categories with the goal to negotiate agreements permitting increased flexibility in order to achieve unit cost parity with peers. At KLM, wage reductions for these employees who earn over the Dutch modal wage are conditional to the state financing package and are currently under discussion with labor representatives. Like in France, variable income and profit-sharing schemes will be temporarily suspended until loans related to state financing have been fully repaid.
Moving to page 29. For the second lever, increase of productivity, both the numerous agreements signed with our staff over the course of last year and a dedicated focus on network optimization and improvement to aircraft utilization are helping to reduce costs and increase productivity. I'd like to specifically highlight the agreement we recently reached with the elected representatives of the SNPL, which is the largest pilot union at Air France, concerning a restructuring of the French domestic network, including shifting some domestic operations to our lower-cost Transavia platform. The pilot union members at large are now in the process of voting on a referendum concerning this agreement. We look forward to a positive outcome before the end of the summer. Moving to page 30. This agreement with the SNPL is an important first step in our strategy to accelerate our transformation into profitability.
The agreement is part and parcel of a full transformation of the French domestic market, with Air France maintaining operations on the historic Navette routes of Marseille, Nice, Toulouse, as well as routes to Corsica from Orly, while Hop! will refocus on the Paris Orly hub and Lyon. Transavia will begin operating domestic routes in addition to its continued development towards other European destinations. Page 31. Looking to lever 3, network, and lever 4, fleet. Our future competitive position, focus on sustainability, and CapEx investments are largely linked to decisions we make with regards to network and fleet. First, as just explained, we must deal with the unprofitable domestic network, which lost EUR 200 million in 2019. Secondly, Air France has amongst the oldest fleets versus its key European competitors, leading to reliability issues, high maintenance cost, or CapEx required for end-of-life extensions.
Thirdly, on the Air France side, the aircraft utilization is simply too low on narrow-body and regional aircraft. On the contrary, on KLM, we have one of the highest aircraft utilization rates in Europe. At KLM, it is of utmost importance that we strengthen our leadership position at Amsterdam Schiphol through continued growth while continuing to maintain this high aircraft utilization rate. The principles of our fleet strategy remain as follows. One, exit aircraft as planned in order to avoid CapEx through the life extension. Two, optimize our current fleet, for example, through densification or other improvements to the layout of the interior seating configuration, otherwise known as LOPA. Three, introduce committed new aircraft in line with our existing fleet plan. Continuing to invest in new aircraft will support the group's sustainability commitments and cement its future competitive position. Page 32.
In the short term, linked to delays in production of Airbus and Boeing in response to the crisis situation at hand, some Airbus A350-900 deliveries at Air France and some committed and uncommitted Boeing 787-10 deliveries at KLM have been postponed. As just explained, mid- and long-term fleet investments are essential to achieve our ambitious future competitiveness and sustainability targets. In addition, we plan to continue retiring aircraft with the highest cost, fuel consumption, and CO2 emissions and introduce new generation aircraft in order to, firstly, improve economics through lower costs pertaining to fuel, MRO, and LOPA. For example, at KLM, replacing Airbus A330-300 by Boeing 787-10 yields a 20% fuel savings per seat, while at Air France, the new Airbus A350-900s represent a per seat fuel savings of 18% compared to the Boeing 777-200ERs that they are replacing.
Secondly, to obtain economies of scale via, for example, MRO facilities and employee training. Thirdly, to reduce our environmental footprint, a new generation wide-body aircraft will typically produce 25% lower CO2 emissions versus the previous generation aircraft it replaces. For a narrow-body aircraft, it is around a 20% reduction. Moving to page 33. Last but not least, the fifth lever, reducing our group costs and non-essential CapEx investment spend. Key measures to structurally improve future unit costs are being implemented throughout each of our business units, such as a stringent policy to cancel or delay non-essential and non-fleet CapEx investments, including IT, ground, and real estate investment projects. In addition, we have implemented a so-called control tower procedure to scrutinize all controllable external expenses and have also frozen contracting of external staff.
Finally, new initiatives linked to transformation to further simplify the support functions have been identified and added to our list of objectives. Page 34. Based on the group's strategic plan with the initiatives deployed under the header of five key levers, we restate the Air France-KLM group's objectives in the medium term as presented in November 2019, albeit with a two-year delay to reach our target now in 2025. We maintain our target for a mid-cycle operating margin of between 7% and 8%, and to be adjusted operating free cash flow positive. On page 35, as a conclusion for today, the COVID-19 crisis has had an unprecedented impact on our industry, and it is our expectation that the 2019 market will not return for several years. The group is agile and is adapting its capacity and commercial approach to cope with an uncertain demand ramp-up.
Our capacity in ASK in 2021 will be reduced by a minimum of 20% compared to 2019. With a consequential organizational restructuring and acceleration of transformation programs, the group is adapting and aligning to the new reality at hand. We are maintaining our medium-term financial goal through a three-year delay, affirming the objective for 2025 to reach an operating margin of 7%-8% and a positive operating free cash flow. Our responsibility will be a key metric to our future, and we are committing to reduce global CO2 emissions per passenger kilometer by 50% in 2030 compared to 2005 levels. We are working full steam ahead on our new plan to ensure that the Air France-KLM group regains its competitive position in a deeply shaken world and reaffirms its leadership position in the sustainable transition of the air transport industry.
I'd now like to hand it over to the moderator to start with the Q&A.
Thank you, sir. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We will now take our first question from Daniel Roeska from Bernstein Research. Please go ahead.
Good morning, gentlemen. Three questions, if I may. Number one, how are you thinking about the cash burn in the restart winter quarter and into next year? What will you have to achieve to break even, maybe in terms of a break-even load factor, how you could articulate that? What levels would you need to see to be cash break even on those flights? Secondly, could you elaborate a little bit for the network airlines, how you think the slower demand recovery on the long haul, the slower reopening of global markets or the impaired business demand, how does this slower long-haul recovery impact the short-haul operations since there's significant connecting travel between the two? Just how are you thinking about the short-haul ramp-up being influenced by that long-haul recovery into next year?
On the financials, your plan calls for net CapEx of up to EUR 3 billion per year, and probably repayment of EUR 10 billion of government and state-backed loans within the next three, or respectively, five to six years. Even with your transformation plan, if we assume a favorable cash flow from operations of EUR 2 billion-EUR 3 billion, that may just be enough to pay for the CapEx, but repaying the EUR 10 billion will be difficult. How do I reconcile this with your three times leverage target you just mentioned? How are you planning to bridge that, almost probably EUR 8 billion-EUR 10 billion size gap within the next five years? Thanks.
Yeah. That's a very nice question. Thank you. I will take together the first and the third one. On CapEx, it's clear for me that if we cannot finance mainly the fleet CapEx, we will have to postpone the delivery. It will be the rules in the future. As I told you in the first presentation, today, the market is not closed. We have indicated that in the last month, in the middle of the crisis, Air France and KLM together have been able to finance six aircraft. For the time being, the team is working on the delivery of 2021. We have already created a good approach to the market concerning four aircraft to be delivered in Air France in 2021. First rule, we have reduced drastically all the CapEx except fleet. The market for financing aircraft is still open.
It is clear that if one day we are not able to finance aircraft, we will not take the delivery. We are also extremely flexible. The EUR 3 billion, which is given in the press release, is according to the fleet plan we have today. I can give you many examples of flexibility. All the fleet in Transavia for both Transavia France and Transavia is not committed, which means that we can immediately adjust the fleet plan if we decide to do it. There is in the contract of the delivery of the 350 to Air France, also a possibility to play a lot with the contract in order to avoid and postpone some deliveries. In KLM, a large part of the fleet plan today is not committed. EUR 3 billion is the ideal number.
If an aircraft is not financed, we will not take the delivery, and there is a full flexibility in the fleet plan we have today in our plan. It is just in order to make a bit more smooth as a reference to see the EUR 3 billion of CapEx. Second, concerning the reimbursement of the EUR 10 billion of loans. Let us be just quite simple and quite realistic. If you look in the case of Lufthansa, if you consider the announcement made by British Airways this morning, it is clear that one day there will be a need for some equity or quasi equity operations in order to reinforce the balance sheet of the group and also to smooth the amount to be reimbursed in the future.
It's clear that there is one specificity of the support provided by both the Dutch and the French states where Air France-KLM, that it has been decided to play first on the debt side, which is different compared to the scheme provided to Lufthansa. In the case of British Airways, you have some search this morning that our colleagues in London are considering, of course, the possibility to inject new equity into their balance sheet. It will be also necessarily the case for Air France-KLM. Because it's clear that, and I suppose, to be honest, that it is also the case for many, many corporates having benefited of aid provided by the state. If we apply the normal calculation concerning the possibility to reimburse in the next three, four years, clearly, you cannot do that without some specific operation concerning the balance sheet.
Your first question is linked to season, it's very difficult to answer, to be honest, because we will be breakeven totally based on the evolution of the demand. For the time being, I can only consider that there is a lot of uncertainty. It's clear that you see during the summer, a level of activity clearly improving compared to what we had in spring, happily. It is still quite modest, to be frank. I think that we manage that in a very accurate manner in the sense that the people in the network sales are observing the data day after day in order to add a flight, cancel a flight, open a new frequency, reduce it immediately if they consider that the demand is not there, or following the decision taken by the government concerning the way they manage their borders.
I can only see that we continue to work in an extremely efficient way in order to be able to beneficiate of all opportunities, if any, and to adjust immediately if there is some news, decisions which are suddenly giving the indications that the demand will totally disappear. I take, for example, the case of Algeria. We know that there is a very large number of people living in France and moving for the summer to Algeria. The demand is there, and today it is impossible to satisfy it, because the border is closed. Clearly, this is a new world in which we are living today, which asks us to be extremely agile, extremely precise in the decision we take. Of course, your second question is linked to that.
When the long haul will increase, of course, it will support the development of the medium haul for further connections. For the time being, it's clear that a large part of the medium haul activity is intra-Europe for visiting friends and relative purpose.
Great. Thanks. Maybe since the demand recovery is very uncertain, I take that on board. With the 50% load factor you have on long haul right now, what you saw in Q2, how far away was long haul from breakeven during that phase, and how would you think about that right now in the current market environment for July?
I can just tell you that all the flights are breakeven in terms of cash. We are never flying one flight when we consider that in terms of cash contribution, it is negative. After that, of course, we have to if consider breakeven including the depreciation, this is another world. Clearly, all the flights, all the revenue coming from the flights are covering the cash cost attached to the operations.
That's helpful. Thanks.
Just a few other comments to what Frédéric just mentioned regarding the network. Both of our hubs, Schiphol and at Roissy in Paris, both have well-diversified networks, very well-balanced. Unlike some of our competitors in Europe, we're not heavily exposed to specifically any of our markets any more than the other, North America, South America, Africa, Asia, the Outre-mer, as we say in France, or the Caribbean markets we have out of the Netherlands. We do have that to balance off. As predicted by many analysts and ourselves, we do see the visiting friends and relatives traffic coming back first, followed by leisure, and then business. We have the added flexibility at Air France.
We do have 32 Boeing 777s that do have a quick change configuration option, which only takes one day per aircraft to put in place, and that significantly reduces the business class cabins on those aircraft, which in previous years we've used for the month of August, when there's heavy holiday demand in France. These aircraft can stay in that configuration for as long as we'd like. We do have a few levers that I believe put us in a slightly better position than some of our competitors.
Great. Thanks.
We will now take our next question from Savanthi Syth from Raymond James. Please go ahead.
Good morning. Thank you. Just follow up on Daniel's question. I'm not sure I quite understood, Frédéric, your cash burn perspective. It came in line with your Q2. Is it close to breakeven currently, or what's the actual cash burn expectation for the Q3 versus that EUR 200 million a month that you did in Q2? Just a little bit on Transavia, what's the expectation on capacity there in Q3, Q4, and 2021? Along those lines, I'm a little surprised that long-haul capacity is not that much different than medium-haul in 2021. I'm guessing it's been along your lines of given diversity and given your willingness to maybe change your mix of business or leisure, maybe that's what's driving that. I was curious if there is risk to the 2021 numbers, if that's where it is from a long-haul perspective. Thanks.
I'll do the cash burn, then we will deal with the capacity. We have indicated clearly that we still expect an EBITDA negative during the second part of the year. Will it be more or less than what we have in half one? Not necessarily worse, to be honest. Of course, it is based on the capacity that we have in mind today. Again, we will be linked to the development of the demand, but we are not necessarily, to be honest, planning cash flows at the EBITDA level worse in the second quarter compared to the first quarter. This is an indication, at least it is an indication that with the cash available today, we are clearly comfortable for more than the end of the year, of course.
For the rest, it's difficult to say more, to be honest, because the demand, and more specifically the demand that we have after the summer period, is something which is for the time being extremely difficult to anticipate. You remember perhaps that in the past presentations, we were providing you the forward-booking load factor for the next three, four months, which was for us a very good indication what was happening in the market. For today, such data is extremely difficult to interpret, because again, the decision to travel are taken later and later by the passengers. We can just see that the forward-booking load factor are far lower than what we had last year. It is a sign that the demand will be so low, or it is only the indication that the decision to book the flights are coming later. It's very difficult to say.
For me, the crucial question, and it is true for Air France-KLM, but I think it's true for everybody in the industry, will be what kind of rebound or not concerning the demand after the summer period. The summer period is relatively clear. We have built the skeleton network, as we say, based on the mainly repatriation flights, tourism and visit friends and relatives in Europe. Very few demand coming from the business. For me, the crucial question will be, is there or not a recovery coming from the business after the summer period? The answer is not necessarily totally negative. As I told you during the presentation, our salespeople are quite close to their business clients. They made some workshop to discuss with them what will be the demand, what could be the reaction, how do they anticipate the fall and the winter period.
There is some positive element, to be honest. People from the commercial, they need to visit their clients, and after the crisis of the spring, to get in touch with their clients is something important. There are also people who need to visit for technical reasons, plants that they have overseas. Clearly, the answer coming from the business world is not totally negative. Clearly, for me, it is the most important question, and you will have the answer only in September, October.
Just a few other points from my end. The group has been quite nimble on the fleet side. We made some decisions quite early, ahead of many of our competitors on the fleet side. Many of you know, we made the firm decision to retire all A380s. This is over and above the decision we made before the crisis of early retiring these airplanes. A340s will no longer be flying, and the 747s at KLM, retirement is being early-ed up. We do have a lot of flexibility on the Air France side with our 777-200 fleet and at KLM with the A330 fleet. Those two aircraft types we're using as flexible capacity when demand returns. On the narrow body side, Air France, we have a lot of leases that are coming up for renewal, which do not need to be extended.
On the KLM side, the 737NGs. Also, this negotiation that has been taking place over the last few months, even prior to COVID-19, with the Air France main pilot union, the SNPL. Looks like we're going to have in place a tool that Air France has never had in the past to be able to finally address the issues surrounding the profitability of the domestic market. The Transavia tool will have cost similar to the low-cost carriers that we compete against. If this vote does go through in a positive way, and we're quite confident that it will, we will replace our most unprofitable flights in domestic France as quickly as we can with Transavia. None of the planes that we plan to use to increase the fleet of Transavia have been committed.
We have a lot of flexibility because of the availability of airplanes, as you can imagine, on the market. This new tool, first of all, last year, we were able to remove the cap, which was at 40 airplanes, before the negotiation took place. Throughout the development of Transavia France over the last few years, it's been very contentious with pilots. Two big strikes at Air France over this creation and expansion. Then to be able to lift this cap last year was a big win. Now to be able to put it on the domestic market is extremely important. As Frédéric mentioned, the domestic market, the return to activity has been encouraging. We're seeing, obviously with no border restrictions or no health restrictions in place for travel throughout domestic France, the return to travel is extremely encouraging.
We're seeing customers are showing a high level of confidence. We expect that that should extend to Europe once a similar level of confidence around the sanitary measures will be in place. We're well along the way of our plans to reduce HOP. As I mentioned earlier, the HOP operation, the fleet will be cut in half and the operation will be reduced down to two main focuses, feeding our Roissy-Charles de Gaulle hub in Paris and maintaining our mini hub in Lyon. All other transversal flights, these are flights that we call internally at the group domestic France flights that do not touch Paris, will be eliminated along with the flights that have a train option of under two hours and 30 minutes.
That's all helpful. Thank you.
We will now take our next question from Jarrod Castle from UBS, London. Please go ahead.
Thank you. Good morning, everyone. Three as well, please. I just want to get some indication in terms of how you're thinking about revenue management. You've given, obviously, expectations for capacity. You're also saying that bookings are much more last minute. How does the revenue management system handle? Because they're last minute as well, does that mean that there's a very positive mix, given historically at least, kind of last minute tickets are more expensive tickets? Secondly, just on capacity. If the EU doesn't extend the slot rule in terms of not having to fly at slot-constrained airports and retaining the slots, what does that mean in terms of your expectations for Q4 capacity and potentially just some color on Q1? Lastly, there's been obviously some legal challenges against the aid that has been provided to Air France and Lufthansa.
What is your views on the potential ruling around the challenges that have been put forward to the EU? Thanks.
Okay. On your revenue management question, look, Air France-KLM has one of the strongest revenue management teams in the world. Plenty of experience, both in origin, destination and connection traffic in economy, business class, as well as our low cost unit of Transavia and of course, domestic France. The group is used to managing various types of demand and demand curves that are totally different depending on the specific route. The group also has a lot of experience in starting up new routes, both short, medium, and long haul.
As you can imagine, as we mentioned a few times here, with the demand curve significantly changing with this new way of the new booking trends that we're seeing, we're looking at this in a similar way as to, let's say, starting a new domestic route where we do not have a history of what type of booking patterns that would have been in place for other routes. Sometimes if we're going up against a competitor, what needs to be done to take business or to convince business to come to us. As I said, we're quite confident that the experience of our revenue management teams will be able to manage through this as best as possible.
We are focusing a lot more on the experience as opposed to the automated tool that we significantly count on in the past, and I think that will serve us well. On the slot side, we've benefited quite extensively with the moratorium that is currently in place. The European Commissioner for Transport has publicly indicated that she plans on extending this until the end of the year, and then the question on whether this will be expanded into next year, the second half of the winter season, yet to be determined. However, there is a strong desire to, not only from airlines but also from the European Commission, to put something in place so that we do not have to keep coming back to request for exemptions or moratoriums when other crises do come up.
As I just said, we do have some visibility through the end of the year, and because of the way bookings are coming in, that serves us well. At Orly, we do have two plans in place, both one through the end of the year, now that we have good confidence that the slot rules or the slot restriction exemption will be in place, that we have a plan around that. Then, of course, at the second half of the winter, we do have to operate the full portfolio of slots. We do have a plan surrounding that. Amsterdam, same thing. We do have quite a bit of flexibility in terms of gauge, so that will help us manage the level of capacity.
The legal issue, I think at first we have to remind you that everything which has been done by Air France, by KLM, by SAS, by Lufthansa, by Iberia, is according to the temporary framework decided by the European Commission. We are not an exception. The last part of the general airlines in Europe have requested support from the government and all the government concerned by this request have acted according to legal framework, extremely clear and decided by the government of the European community. I must say that I cannot say more. After that, you can have one or two players trying to explain to the rest of the world that the situation is totally unacceptable. Frankly, due to the crisis in which we are living right now, I give personally not a lot of importance to this communication and this type of reaction.
Okay. Thanks very much, gentlemen.
We will now take our next question from Neil Glynn from Credit Suisse. Please go ahead.
Good morning, everybody. If I could ask three, please. The first one, just following on from some of the comments on feedback from your corporate customers and thinking about that in the context of the guidance that you've issued this morning. Just interested in your view on the premium cabin. It's clearly very important to your restructuring plan over the medium term. Does that actually imply the fact that you still see those targets as achievable, that you don't see this crisis as having a structural impact on corporate demand over the medium term? Would love to hear your thoughts on that. Secondly, on net working capital developments, and apologies if I've missed this, but you've obviously highlighted the inflow of working capital in the second quarter, and trade receivables were a big source of that.
Can you clarify, Frédéric, exactly what happened there and whether any of that might reverse into the third quarter? The final question. You obviously have some trade and industry partners as shareholders. Interested to what extent has this been relevant or helpful to how you've dealt with the crisis so far? Given its extremity, has it been not that relevant as each party really needs to focus on its own issues before plotting medium-term benefits from those relationships?
I'll take the first question in terms of our view as to whether there will be or has been a structural change to business traffic demand. For the short, medium term, most definitely, business demand will be heavily impacted. We are all inside Air France-KLM quite bullish and optimistic on the medium, long-term business traffic demand returning. As Frédéric mentioned, talking to our corporate customers, but also to individuals who will be spending more time and traveling in the future. We've reached the point, before COVID-19, where companies are global. A lot of our customers are global. Air France does not have the business market share that it could have and should have in Paris. The diversified network we have at Amsterdam is the same.
If some markets do not come back as quickly as possible, just want to re-mention that flexibility that we have, that we are confident and bullish that in the medium and long term, that the business market will return.
Yeah. Concerning the working capital, yes, indeed, we are expecting the working capital contributing less positively or contributing negatively, sorry, to the cash level in the second half of the year compared to the first one. There is two reason for that. The first is that clearly we asked our suppliers some postponement of payments. Sometimes it has been negotiated in a very positive way with some of our preferred supplier. Ultimately, the bill will have to be paid in the second half of the year. Second, we have still a significant volume of unflown ticket for flights before the 1st of July. The total volume of these tickets still in circulation is in the range of EUR 700 million.
We have already provided voucher to some of them. There is still for EUR 670 million of tickets unflown for flights before the 1st of July. These ticket have not yet been reimbursed. Which is, for me, part of the risk we can have also in terms of working capital for the second part of the year. We have also, as you know, distributed vouchers. The value of these vouchers is around EUR 900 million. Altogether, these two elements are the EUR 1.6, which is indicated page 15. Yes, both coming from the bids to suppliers, which have been postponed, and tickets still to be reimbursed or used, which has also an impact in terms of working capital ultimately and in terms of cash in.
We have in the forecast we build internally, the negative contribution of the working capital to cash for the second part of the year, where it was positive for the first part of the year, as indicated before. It is a risk, and that's why we listed it. We listed it in the slide 15. We have also indicated something concerning these type of things in the press release. In short, a negative contribution of the working capital in part two.
We will now take our next question from James Hollins from Exane. Please go ahead.
Hi. Good morning. Just a couple on fleet for me. Ben, when you joined, or at least soon after you joined, you said taking new aircraft was about sustainability but also about product quality. I think you noted that your current CO2 emissions are 30% below 2005, and obviously the target is 50% by 2030. Just wondering how much of achieving that is coming from these new aircraft, because clearly your commitment on aircraft and despite the flexibility in CapEx, is very high. What happens if you don't achieve that? I'm assuming the French government don't slap you on the wrist too hard and start demanding massive repayment or anything. Just a bit more update on that. Secondly, you talked in your investor day last year about a leased fleet ratio coming down to 33% by 2024. I'm guessing that's changed.
I'm just wondering if you could give an update on where that number might be. Thank you.
Okay, James. To comply with the sustainability condition that the French government has attached to the loan support, fleet does take on a significant portion in helping us reach that condition or attain that condition or comply with that condition. The balance of the percentage of fleet, the level of activity, what type of aircraft will operate in domestic France, all play off, and we're working on plans on how that's going to be. We do have the Airbus A220 that will be starting to deliver next year. We do have the reduction of all the transversal flights that do not touch Paris or Lyon in domestic France. We do have the 737NG from Transavia, which will be also starting to fly in domestic France, which will be replacing smaller, fuel-inefficient aircraft.
Replacing on a, let's say, we add one Transavia flight, we'll replace three or four hub flights that we may have had in the past. The mix of new aircraft, A220, the reduction in activity on the flights where they were losing too much money and there's no future for making money. The replacement of Transavia, where we had multiple hub flights, all that will be put together to ensure that we comply with this 50% reduction of our CO2 activity by 2004. Big balance going on there.
On the second, yes, you're right. Probably we will be less aggressive in the next year concerning the target of the percentage of leased aircraft into the fleet. Clearly, I think that it will be less optimal compared to what we have indicated during the investor day.
Okay, thanks a lot.
We will now take our next question from Andrew Lobbenberg from HSBC. Please go ahead.
Oh, hi there. Can I ask for some explanation on how quickly the state support in its different ways on labor is likely to taper down, and how much of a challenge that can be to cash or to P&L? Another question is, in the original plan, an interesting part of the Air France move was to do more point-to-point flying rather than connecting. I guess in the short term, you'll just take any bloody passenger going anywhere. Does the idea of taking more point-to-point Paris market rather than connecting, is that still part of the vision?
Okay. We'll start with your second question. In terms of the mix on board the Air France aircraft and the presentation that we made in November versus our position and their plans now going forward. No change. The Paris market is very big. It's the largest market in Europe. Air France, from a capacity perspective, has just under 50%, and a big portion of that large percentage is connecting. As I said earlier, we have a huge diversified network. We do clearly believe and see, based on historical data, that we can make higher margins in some markets, or many markets, if we change the mix of local versus long haul. That strategy will continue.
Then also, out of Orly Airport, there are big opportunities for some of the high volume routes out of France, where we can focus more on Paris and less on some of the domestic connecting traffic. Out of Paris, the number 1 long-haul market is New York, but the next three markets are in the French ultramarine, so Pointe-à-Pitre, La Réunion, and Fort-de-France. These are very, very big markets where today Air France only has a 33% market share position, and a big portion of that is based on connections. Just to give you an idea of the top 100 routes that the group operates out of Paris, three of them are very big French O&D, French traffic O&D markets, to which Air France is not the majority player. Just as one example.
On your first question, Andrew, I don't know exactly how to answer. In the conditions requested by the government in going together with a state aid scheme, I think there is two things. There is, first of all, and it's true for Air France and it's true for KLM. I must say that the request is even expressed in the same way in the two packages. Please come back with a restructuring plan which is credible. It is exactly on what the two managements are working right now. With already first presentation yesterday concerning Air France, a presentation after summer concerning KLM. Clearly, the macro request is one. Please come back. We support you, but you need to demonstrate that you have a strategy and a recovery plan, even if the environment is extremely difficult.
For me, this is the most important request, together with elements concerning sustainability, which are also of quite strong importance. After that, we have some micro demands, which are different between the two companies. Concerning profit sharing, concerning variable income, concerning efforts, concerning general increase, et cetera. I would say that to give the impact of that is a bit difficult because I think that for us, at the group level, the most important, of course, is the demand on the whole structuring plan, which are requested. It is a normal request, of course, by the governments to each of the two carriers.
Yeah.
To have a precise valuation of the micro demand concerning the variable, the profit sharing, the bonus organization.
Frédéric ?
Yes.
Frédéric, sorry to interrupt. I was wondering about the furlough support.
To the fact that the request is about the social restructuring plan.
Frédéric, I was just wondering about the impact of the tapering off, the slowing down of the part-time working support from the government, rather than specifically the state aid package.
Sorry. I was a bit confused with your question. I come back to you probably later. I have to collect all the data to give you an estimate. If your question is on the order of magnitude of the state support concerning the labor cost?
Yes. Right.
Let me to come back later on it.
Thank you.
We will now take our next question from Malte Schulz from Commerzbank. Please go ahead.
Hi, good morning. Two questions from my side. First of all, can you give us an idea of how you see already voucher redemptions and by what time you assume that the majority of them will be redeemed, Frédéric? Because I assume there will also be a drag on further working capital because then there's no capital coming in. The second question would be also now with Schiphol having basically no restrictions on growth or any kind of allocation there, do you plan to grow KLM over proportionally over Air France, given the higher profitability of their network?
Sorry. On your second question, could you just repeat that? Because it broke up here in our room.
Okay, no problem. Given that Schiphol now with, lower capacity in general, has a lot of capacity left, do you consider growing to larger share KLM, given that KLM has a significantly higher profitability than Air France?
Look, we have two great hubs. The Schiphol from a slot perspective, once we get to COVID and prior to COVID, was basically closed for additional flights. Increased activity at KLM can only be done by using larger gauge airplanes. On the narrow body side, this is exactly what our plans are. On the long haul side, you can see we're focusing on all new airplanes being the 787, most cases the dash 10. We did order two more 777-300ERs at the end of last year. There are gauge opportunities, and when you look at the exit of the 747 combis, here again, replacing those with full passenger size aircraft does increase our average seat count on airplanes out of Schiphol. Then again, we can play with the mix and how much local, how much long haul.
Schiphol, I think we are in a great position with an opportunity to increase gauge, change the mix, optimize the profitability of that hub. On the French side, if you look at the productivity benefits that the 42 new agreements that were signed with the various unions at Air France last year have opened up enormous flexibility for Air France to start increasing its profitability in a significant way. Of course, there are some unique costs and taxes in the French transportation sector. Those will not go away, or we're pushing for those to go away, but that's not the expectation. We're not counting on that. With the improvement of the cost structure at Air France and the beginning of this year, we saw a fantastic reduction in unit cost reduction.
That was done on top of the slight wage increases that were put in place last year. With the amazing productivity flexibility that we signed off with the various agreements, the margin potential at Air France with that lower cost structure and with the diversification of the network, with the flexibility we have from a mix perspective at Air France and with the updated fleet and the more optimized interior layout, the options and the opportunities in and out of Paris are great. When you look at the market share position we have in Paris versus Amsterdam, there is a lot of opportunity to grow the Paris operation.
The question of funding, sorry, because I also was not the correct one. We have some variation of the support provided by the two states, both Air France and KLM, concerning the question of the partial work time of specific support, which is NOW system in the Netherlands, which are bringing to corporates, not only airlines, I think it's something which is open for all the corporates, support concerning the labor cost. A rough estimate is that for KLM in the second quarter, the global compensation brought by the Dutch state is in the range of EUR 340 million. For Air France during the second quarter, for Air France company, it is something in the range of EUR 100 million per month. It is a global evaluation of the support provided by the states to the two airlines in the second quarter.
Again, it is not something which is specific to airlines, of course. It's something which is applicable to all companies in both the Netherlands and in France.
We will now take our next question from Johannes Braun from MainFirst Bank. Please go ahead.
Yes. Thank you for taking my question. I have two questions. First one is a clarification. On slide 21, you mentioned that Air France needs to reduce unit costs to be in line with BA and Lufthansa as a condition to the state aid. Just wondering, does that mean that you need to reach unit cost level of BA and Lufthansa, or is it only means that you need to reduce unit costs in line with BA and Lufthansa? First one. Second one, your equity position in the balance sheet has turned negative to, I think, EUR 2.5 billion at the end of H1. Just wondering, is that a problem in terms of governance, or is that putting more pressure on you to do a capital injection rather sooner than later, or any other implications of that? Thank you.
Okay, for your first question regarding the conditions imposed by the French state on unit costs at Air France, they are quite clear. The unit cost at Air France and its subsidiaries, we do have to get those down to British Airways and Lufthansa levels. Similar, if not exact, CASK levels. The key point is net of the unique charges and costs of doing business in France. I guess you could interpret that as you add all those, or you take into account all those charges and taxes that are unique here in France, the CASK needs to be extremely close to, or exactly the same as, our two main full-service long-haul carriers of similar size. The French government imposed this condition in a more flexible way than on the Dutch side.
On the French side, we can negotiate with the various unions to trade off productivity with actual wages and the conditions surrounding those wages. In the Netherlands, there's more of a across-the-board salary reduction, which we do not have to put in place at Air France. As I just said, there's more flexibility with these costs at Air France, where at KLM, yes, we are going to, obviously, negotiate with our unions to ensure that the company remains viable and remains as competitive as it was prior to COVID. We'll be doing that and approaching that in a slightly different way under the conditions of the Dutch loans.
Yeah. Concerning the negative equity, I would say, we all know that it is absolutely not satisfactory, and we have to try all the way to solve that, and the sooner, the better. It has not, legally speaking or in terms of financing, it has not immediate negative impact by itself. It's clearly something which has to be taken extremely seriously, because it is something that we have to solve. Okay. Again, the sooner is the better, but not immediately very negative implication or impact.
Okay. I'll just follow up on the first one. Can you be specific on how much higher the unit cost levels are in France, or I think, the natural unit cost levels are in France, opposed to doing business in Germany or in the U.K.?
If you do the breakdown of the cost of doing business at Aéroports de Paris and the unique taxes, that's relatively straightforward. What we're still working through here, to fully answer your question, have to give us a little bit of time, is these social charges and how they're broken out direct paid by the company and by the individual employee to give us and to give you a full picture on how it is that we're going to calculate those reductions. That last part, the social charges, is complex, and we're in the middle of calculating that to ensure that we have the right goals to comply with that condition.
Okay. Thank you.
Okay. We're 10 minutes over our allotted time. Moderator, we're going to have to cut it off at this moment. To all the financial analysts who took the time to listen to us today and ask questions, we thank you. We thank you for listening today and for all your questions. Again, if you do have further questions, you can contact any of the members of our finance team here at Air France-KLM. Thank you.
This concludes today's call. Thank you for your participation, ladies and gentlemen. You may now disconnect.