KLM and Climate Change Aviation Management Conference December 12 th 2007 Diederik Scheepstra, Manager Environmental Strategy KLM Airport & Environmental Strategy

2 Introduction to KLM Climate ChangeCorporate Social ResponsibilityImpression of Activities (Film) Agenda

3 KLM in short Pioneer 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 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 employees: diversity, mobility, health & safety) and caring for the environment

4 Growing market Decreasing prices AEA Total Scheduled Passenger Traffic (in million RPK) 2006 Average growth in : 7.0 % in RPK’s Source: AEA, incl.domestic, excl. charters and LCLF; Average growth 6.5% per year in Passenger numbers in the period of Sensitive to worldwide economic trends, issues and competition

5 June 1989 May ? ? ? 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

9 The Importance of the Transfer Passenger

10 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 KLMClimate Change Corporate Social Responsibility Impression of Activities (Film) Agenda

12 A Licence to Grow License to grow Value creation KLM Policy makers Local community NGO’s Customers Employees Investors Alternative CSR motives: Sustainability Reputation Moral obligation

13 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 Profit PlanetPeople Profit PlanetPeople Text focus CSR focus integration

CSR Statement: Leading European Airline 2005/6No.1 in Sustainability Indices Strategic priority: pro-active CSR policy Initiatives are joint, aligned or coordinated Local action plan 1996: first environmental report 1999: ISO 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 Le Bourget AFI 2004: sustainability charter suppliers Local action plan aligned A joint AF-KL CSR Statement, Local Action Plans

15 July 06 AF-KL: new CSR statement “AFKL wants to set the CSR standards in the airline industry.”

16 Introduction to KLM Climate Change Corporate Social ResponsibilityImpression of Activities (Film) Agenda

17 Worldwide CO 2 Emissions (IPCC)

18 Breakdown of Airline CO 2 Emissions (AF-KL)

19 Air France-KLM Action Plan 1. Actions to REDUCE CO 2 -emissions a.Innovative operational measures, ground improving CO 2 footprint b.Fleet renewal program enhancing CO 2 -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 CO 2 -emissions g.Promote an effective Emission Trading Scheme h. Explore “New Energy Sources” link-ups 3. OFF-SETTING CO 2 -emissions i. CO 2 offset program for customers

20 Fleet Renewal Program (4500 nmi, fuel / ATK) (1000 nmi, fuel / seat) 2003 (3500 nmi, fuel / ATK) Long Haul: Medium Haul: Cargo:

21 Fleet Development Blended Winglets Boeing 737 Next Generation Improves CO 2 emissions with 3% Reduction of noise impact March 2008

22 Technological Breakthroughs Engine Water Wash Better and more environmentally friendly technology to clean engines Significantly reduces engine’s CO 2 emissions

23 “KLM commits to CO 2 neutral growth from 2007 – 2012” Largest CO 2 commitment in airline industry Compensation of all CO 2 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 CO 2 emission % absolute increase/year WWF Partnership CO 2 REDUCTION CO 2 OFFSET

24 Where are we now? Reduced CO 2 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 (3 rd year in a row) 3.9 litres/100km per passenger

25 Introduction to KLMClimate ChangeCorporate Social Responsibility Impression of Activities (Film) Agenda

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