18. PENSION ASSETS AND PROVISIONS
As of June 30, 2016, the discount rates used by companies to calculate the defined benefit obligations are the
following:
June 30, 2016 December 31, 2015
Euro zone – duration 10 to 15 years 1.05% 1.80%
Euro zone – duration 15 years and more 1.55% 2.35%
Within the context of the decrease of discount rates, long term inflation rates of the euro zone have been
reviewed as of June 30, 2016 using the methodology described in note 31.2 of the annual financial statements as
of December 31, 2015:
June 30, 2016 December 31, 2015
Euro zone – duration 10 to 15 years 1.15% 1.50%
Euro zone – duration 15 years and more 1.30% 1.65%
The impact in variations of discount and inflation rates on the defined benefit obligation has been calculated
using sensitivity analysis of the pension defined benefit obligation. The sensitivity analysis is mentioned in note
31.2 of the annual financial statements as of December 31, 2015.
Over the same period, the fair value of the plan assets of the pension funds increased.
All these items have a cumulative impact resulting in:
A decrease of €1,569 million of the “pension assets” and
An increase of €260 million of the “pension provisions”.
The new Dutch Financial Assessment Framework applicable as per January 1, 2015 resulted in higher required
solvency levels. Pension funds have more time to recover from immediate and material shortages through a
rolling 10 year recovery plan. The existing recovery plan for the KLM Cabin Crew and KLM Ground Staff plan
was updated per April 1, 2016. For the KLM Flight Deck Crew plan, a recovery plan was prepared and issued to
the Dutch Central Bank for the first time at April 1, 2016. It is not expected that the current low interest rate
environment will have an impact on future contributions for the KLM Cabin Crew and KLM Ground Staff
schemes.
Air France-KLM Group
- 27 - 26/07/2016
The current funding agreement of the KLM Flight Deck Crew pension plan provides that pilots will be
guaranteed for pensions indexation. With the further decrease of interest rates and the new Financial Assessment
Framework applicable as per January 1, 2015, the Group could need, if there is no change in market conditions,
to make an additional contribution by the end of the year in order to reach the required coverage ratio for the
Plan to grant indexation. As this contribution could be significant, the Group is currently in discussion with the
KLM Flight Deck Crew Union to renegotiate the funding agreement. Should these discussions not be conclusive
in the short term, the Group may decide to terminate the funding agreement promptly and to start negotiations on
a new agreement. In that case, the Group could have to derecognize the net pension assets associated to the KLM
Flight Deck Crew plan with an estimated on the income statement (based on June 30, 2016 figures) of € (553)
million after tax.
