1. European Air Cargo Perspectives 30th Annual FAA Aviation Forecast Conference March 18, 2005 Dick van den Berg Senior Business Analyst KLM Cargo

2. The year 2004 2004 was memorable year for air transport: Merger of Air France and KLM Highest growth in a decade Emergence of the new economic super power China Fuel prices reach high new highs US dollar continues downward trend

3. Air France - KLM Air France - KLM Group Air FranceKLM PassengersMaintenanceCargo One Company 2 Airlines 2 Hubs: Paris and Amsterdam 3 Businesses The Cargo Business will have an unified management body: This is called “European House” This team will be in charge of network management, marketing and sales

4. Air France - KLM AF-KL is world’s largest airline group in international FTK 3 of top-5 are from Asia Korean Air is now larger than Lufthansa

5. Air France - KLM AF-KL is world’s largest airline group in international RPK 3 of top-5 airlines are from Europe

6. Air France - KLM KLM wide body fleet –3 B747 freighter –17 B747 combi – 5 B747 full pax –10 MD-11 –10 B777 –11 B767 Air France wide body fleet –13 B747 freighter –16 B747 full pax –35 B777 –37 A330/340 Total capacity (freighter+combi+belly) is similar to 35 B747Fs

7. Air Cargo Growth Air freight growth shows a “roller coaster ride” 2004 was best year of the last 10 years: +15% FTK Forecast for 2005 and 2006 is lower growth

8. Growth of Air Cargo Correlation with GDP growths hard to find Manufacturing trade gives good correlation

9. Growth of Air Cargo The growth of air freight correlates well with the growth of semiconductors The crisis of 2001 was mainly a high tech market crisis

10. European Growth Why is FTK growth in Europe high while GDP growth is low? It is the dollar! And China’s currency is pegged to US $ Jan 1, 2004 1 euro = 1.26 US$ Jan 1, 2005 1 euro = 1.36 US$ Purchasing power in US$ increased by 8% USA and Europe compared: Growth of air transport and car sales in Europe is not lower than in USA

11. China will overtake the USA as Europe’s largest import country European Growth Imports from China are rising fast China will become dominant in European imports

12. European Growth Rising imports from China are reflected in the air freight data Other Asian markets show much lower growth

13. European Growth Ports: Airports: 1. Rotterdam1. Frankfurt 2. Hamburg 2. London 3. Antwerp3. Paris 4. Bremen4. Amsterdam Sea trade grows faster than air trade in Europe

14. European Growth In Europe there are 8 large freight hubs within 500km These 8 hubs are the largest cargo airports in Europe

15. Amsterdam Stockholm Vienna Rome London Paris Madrid Munich Economic development in Europe Shaded Areas Indicate Economic Activity Amsterdam Airport

16. European Distribution Centers Netherlands is market leader! The Netherlands: Gateway to Europe 611 American E D D Cs UK Netherlands Belgium Germany France Other 12% 13% 7% 6% 5% 57% 344 Asian E E D D Cs 4% 56% 12% 22% 5% 1% UK Netherlands Belgium Germany France Other Amsterdam Airport

17. Amsterdam 17th centuryAmsterdam 21st century The Dutch always excelled in trade and transport

18. Amsterdam Airport China is 47% of growth Import growth is 3 times export growth Amsterdam is now number 1 airport in Europe for China air freight

19. Amsterdam Airport China is now larger than the USA for Amsterdam imports Exports to China are much lower than to USA

20. Air France - KLM Future Growth Cornerstones of KLM Cargo Network Strategy Exploit the position of Amsterdam Schiphol Airport –In heart of Europe and good facilities –Large trucking network in Europe Combination of freighter, combi and belly flights –large network: 20 main deck + 34 wide-body belly destinations Growth with Skyteam Cargo –Largest cargo alliance –AeroMexico, Air France, Alitalia, CSA, Delta Air, KLM and Korean Air Growth with special partners –NCA, China Southern, NWA, MAS, TNT

21. Air France - KLM Future Growth Air France and KLM plan to growth with market: –4 - 6% annual growth Focus on Far East and China in particular Gradual increase of freighter fleet KLM combi fleet will remain in coming years Increase of wide-body belly capacity

22. Conclusions Air Cargo is growth business with 4-6% annual growth China is exception: booming growth Business cycle of air cargo is dependent on high tech market Growth in Euope is mainly imports from China The Netherlands is primary gateway to Europe for Chinese products KLM Cargo has strong focus on Far East and China Air France - KLM will grow with market and will remain the number 1 airline group for international air cargo