25. 6. 2004 - Czech Airlines Shareholders’ meeting approved the Company’s Strategy for 2004- 2014
Prague, 25 June 2004
Today, the Czech Airlines (CSA) Shareholders approved the Company’s Strategy for the 2004-2014 period at its regular meeting.
“CSA’s vision is to be a modern, dynamically-developing, cost-optimized air carrier, aggressively taking advantage of the opportunities available in the field of its business,” says Jaroslav Tvrdík, President and Chairman of the Board of Directors, CSA.
The main strategic objective of CSA is to increase the value of the company and to maximize profit, while minimizing the cumulative loss from previous periods is planned for 2006 at the latest.
To realize the CSA vision and the strategic objectives, a strategy of internal optimization and external expansion will be implemented.
Internal optimization as a condition for Company profitability and efficiency
The strategy of internal optimization is focused on process, structure and cost restructuring with the objective of increasing company efficiency and reducing unit costs by 10-20%.
External expansion as a condition for keeping a share of the growing market
The strategy of external expansion is focused on:
- achieving a minimum share of 55% in the number of transported passengers at the home-base hub
- renewal and development of the fleet
- extended integration in the SkyTeam alliance and the strategic anchoring of CSA on the Central and Eastern European markets.
The main measure to fulfil the strategy of external expansion is the Plan for network development 2004-2014, which is based on marketing analyses and prognoses of air transport market growth. The plan also estimates the growth in the number of transported passengers, it should exceed 5.5 million passengers in 2006, and the plan estimates that almost 8 million passengers will use CSA services in 2014.
The necessary condition for the implementation of the strategic objectives and the Plan for network development is the renewal and development of the fleet as specified in the Fleet development plan 2006-2014.
In 2006, the CSA fleet will have 50 airplanes (4 long-haul, 34 medium-haul, and 12 short-haul) and in 2014 the plan estimates that there will be more than sixty airplanes.
The successful implementation of the CSA Strategy, especially the Plan for network development and the Fleet development plan, is covered in the Financial plan 2004-2014 and ensures the following:
- an operating income in 2005-2014 exceeding 1 billion CZK annually
- permanent net income
- the covering of all obligations from operations and planned investments
Jaroslav Tvrdík commented on the newly approved strategy: “Growing economic and operations indicators for the five months of this year and their impact on the cash-flow growth and the development of financial productivity confirm the positive impact of the CSA Strategy on the growth of company value.”
One of the pillars of the approved strategy is the substantial modernization of the CSA fleet
The modernization of the short-haul fleet was already begun this year with the introduction of new ATR 42-500 airplanes and its completion is planned by 2007. The long-haul fleet will be developed according to the offer of available capacities on the market, with an ambition to modernize it in 2006.
The medium-haul fleet which is the backbone of the CSA fleet and is principal for company development, will see a complete change in the 2005-2014 period. The current Boeing 737-400’s and 737-500’s will be replaced by Airbus A320’s or a new generation of Boeing 737’s.
At the end of April this year, CSA has initiated a tender for 12 new medium-haul airplanes for 2006-2008 and has addressed the two most important aircraft manufacturers, Airbus S.A.S and The Boeing Company.
The decisive criterion for the evaluation of offers will be their complex and long-term economic profitability for CSA. Czech Airlines plans to add the first new generation medium-haul airplanes into its fleet in spring 2005.
The expansion and modernization of the medium-haul fleet is one of the basic conditions for the further development of CSA. New airplanes will allow CSA to take advantage of several business opportunities that are economically attractive yet difficult to access with the current fleet – especially the opening of flights to new destinations, particularly those destinations where the current CSA Boeing 737’s cannot be operated. New airplanes will also allow CSA to offer a wider range of services and travel comfort to passengers.
The acquisition of new generation medium-haul airplanes is also the fundamental condition for the long-term improvement of CSA competitiveness on the air transport market.