KLM and Climate Change

Aviation Management Conference

December 12th 2007

Diederik Scheepstra, Manager Environmental Strategy

KLM Airport & Environmental Strategy

2

Introduction to KLM

Climate Change

Corporate Social Responsibility

Impression of Activities (Film)

Agenda

3

KLM in shortPioneer in the airline industry - Founded in 1919, Joint Venture with Northwest

Airlines in 1989, merger with Air France in 2004

Core business – Transportation of 22 million passengers and 620.000 tonnes of

freight and KLM Engineering & Maintenance is the largest technical maintenance

company in the Netherlands

Sustainable and committed – Profitable growth, considerate to people (more

than 30.000 employees: diversity, mobility, health & safety) and caring for the environment

4

Growing market Real prices in deregulated markets

60

65

70

75

80

85

90

95

100

105

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Inde

xed

to 1

00

US domestic airline market

Intra-European airline market

UK telecoms market

Decreasing prices

AEA Total Scheduled Passenger Traffic (in million RPK)2006

Average growth in 1988-2005 : 7.0 % in RPK’s

2011

2007

Source:1988-2005 AEA, incl.domestic, excl. charters and LCLF;

Average growth6.5% per year in

Passenger numbersin the period of

2007 - 2011

Sensitive to worldwide economic trends, issues and competition

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June 1989

May 2004

1993

?

?

?1992

1999

2000

Coöperation: alliances, joint-vertures and mergers

KLM

Source : OAG (jun’07)

The KLM Product: a worldwide network

128 destinations

Summer 2007

236 destinations

KLM + Air France

Source : OAG (jun’07)

Summer 2007

731 destinations

SkyTeam

Source : OAG (jun’07)

Summer 2007

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The Importance of the Transfer Passenger

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The Air France - KLM Strategy

1. Profitable growth through ‘dual hub’ system

2. Improve competitive position: developing SkyTeam

3. Ensure sufficient infrastructure

4. Remove national boundaries

With respect for the environment

11

Introduction to KLM

Climate Change

Corporate Social Responsibility

Impression of Activities (Film)

Agenda

12

A Licence to Grow

License to growValue creation

KLMPolicy makers

Local community

NGO’sCustomers

Employees

Investors

Alternative CSR motives:• Sustainability• Reputation• Moral obligation

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People, Planet and Profit

CSR as separate staff function, disconnected from business

CSR integrated in all businesses, centrally supported and led by

management

CSR business integration

AND…..

KLM ambition

Focus initiatives are developed with only a single focus (either Planet, Profit or People)

Integrated approach, combining Planet, People and profit as much as possible

focus focus

focus

Profit

Planet People

Profit

Planet People

Textfocus

CSR focus integration

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• 2006 CSR Statement: Leading European Airline• 2005/6 No.1 in Sustainability Indices• 2007-11Strategic priority: pro-active CSR policy • Initiatives are joint, aligned or coordinated

• Local action plan

• 1996: first environmental report• 1999: ISO 14001 for entire operations• 1995-present: noise program• 2002: Environmental best practices outstations• 2004: fuel program

• 1986: purchase 200 LPG vehicles• 1996: first environmental report• 2001: ISO14001 for AF industries Orly• 2003: ISO 14001 Le Bourget AFI• 2004: sustainability charter suppliers

• Local action planaligned

A joint AF-KL CSR Statement, Local Action Plans

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July 06 AF-KL: new CSR statement

“AFKL wants to set the CSR standards in

the airline industry.”

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Introduction to KLM

Climate Change

Corporate Social Responsibility

Impression of Activities (Film)

Agenda

17

Worldwide CO2 Emissions (IPCC)

Human Related Emissions

3%

Natural Emissions

97%Airline Industry

Emissions2%

Other Sources 98%

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Breakdown of Airline CO2 Emissions (AF-KL)

1%

2%14%

79%

4%

99%

Ground Process Flight Process Taxiing

Climb Cruise Approach

5%

14%

81%

Domestic Medium Haul Long Haul

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Air France-KLM Action Plan 1. Actions to REDUCE CO2 -emissions

a. Innovative operational measures, ground improving CO2 footprint

b. Fleet renewal program enhancing CO2 -efficiency

c. Involvement in breakthrough technology and innovation

d. Promoting Single European Sky (-6% to -10% emission)

e. KLM leading the way in Schiphol community (working group)

f. Mobilizing our staff to contribute their part

2. Measures to CONTROL CO2 -emissions

g. Promote an effective Emission Trading Scheme

h. Explore “New Energy Sources” link-ups

3. OFF-SETTING CO2 -emissions

i. CO2 offset program for customers

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Fleet Renewal Program

2003-2007(4500 nmi, fuel / ATK)

2007-2008(1000 nmi, fuel / seat)

2003(3500 nmi, fuel / ATK)

B747-400 ERFB747-300 Cargo -20% fuel

B737-300 (7x) B737-800 winglet (7x)-25% fuel

B737-8/900 (22x) B737-8/900 winglet (22x)-2½ % fuel

B747-300

B767-300ER A330-200

B777-200ER

-15% fuel

- 25% fuel

Long Haul:

Medium Haul:

Cargo:

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Fleet Development

Blended Winglets

• Boeing 737 Next Generation

• Improves CO2 emissions with 3%

• Reduction of noise impact

• March 2008

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Technological Breakthroughs

Engine Water Wash

• Better and more environmentally friendly technology to clean engines

• Significantly reduces engine’s CO2 emissions

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“KLM commits to CO2 neutral growth from 2007 – 2012”

Largest CO2 commitment in airline

industry

Compensation of all CO2 emission

growth

Reducing emission per pax with 3%

in 2012 and 17% in 2020

This is a voluntary commitment…

…in preparation of the introduction of ETS for aviation in 2012

CO2 emission

2008 2009 20102007

3% absolute increase/year

WWF Partnership

CO2 REDUCTION

CO2 OFFSET

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Where are we now?

Reduced CO2 emissions• Fuel efficiency : 12% improvement in 6 years• 25% more efficient than AEA average

WWF Partnership• Support nature conservation projects• Commitment to environmental goals

Offset Program• Gold Standard Projects

Dow Jones Sustainability Index: AF-KL is airline industry leading company (3rd year in a row)

3.9 litres/100km per passenger

25

Introduction to KLM

Climate Change

Corporate Social Responsibility

Impression of Activities (Film)

Agenda

Please visit www.klm.com/mvo for more information on this subject