4. 1. 2006 - Recap of Jaroslav Tvrdík's Record as Head of ČSA

Prague, January 4, 2006

After more than two years, Jaroslav Tvrdík is leaving the post of President and Chairman of the Board of ČSA. Tvrdík is leaving the company to become the General Campaign Manager for the ČSSD political party. The personnel changes in both statutory bodies of the company await formal approval at an extraordinary meeting of the board of trustees. They will also be taken up at the next meeting of the board of directors. Both of the boards are to meet on Wednesday, January 18.

Under Tvrdík's leadership, Czech Airlines has undergone a series of major changes and moved ahead to become a modern air carrier. Jaroslav Tvrdík's appointment to both of his positions has been repeatedly praised by both of the company's statutory bodies. Just recently, his efforts to accelerate the transformation projects carried out by the company, was unanimously supported by the company's board of trustees at their November meeting.

After his appointment as ČSA's President and Chairman of the Board in September 2003, Jaroslav Tvrdík announced his key strategic directions for the company in the period 2004 – 2014. These directions have two key elements: One was the optimization of the company's internal organizational structure in order to increase productivity and reduce costs. The other element was to increase the carrier's growth in market share.

During 2004, the number of passengers served by the airline grew on a year-to-year basis by roughly 800,000 – reaching a total of more 4,345,000 passengers. Over the past year, ČSA was able to continue with this previous growth trend and in 2005, served more than 5 million passengers. This growth trend has allowed the airline to maintain its healthy market share position. 

The only way to sustain this trend has been through the gradual modernization of the airline's fleet. Over the past two years, the airline has successfully completed a bidding process for the acquisition of medium-distance and short-distance aircraft, including the financing for the planes. These acquisitions have had an immediately positive impact on earnings as well as increasing the market value of the airline by billions of CZK. 
In addition, the main transformational strategies have included efforts such as programs for the optimizing of internal costs. As part of its purchasing system changes, the airline first changed the organizational structure of its central purchasing area with a set of new rules and guidelines. As a result, last year the carrier managed to save roughly 140 million Czech crowns. In 2006, the projected savings are expected to reach approximately five percent of the company's controllable costs (up to CZK 300 million).

Another important step has been the introduction of the so-called 'new generation revenue management' system, which seeks to optimize the seating capacity offered on each flight. This measure has brought about an increase in the airline's earnings of roughly CZK 100 million in 2005, with other improvements, worth hundreds of millions of CZK, being expected this year.

Another of Tvrdík's goals was to improve selected qualitative indicators. In 2004, the airline managed to achieve major improvements in the regularity of its flights, which has had a positive impact on its AEA rating, where ČSA was able to move up from its previous 20th position into being one of the top six. Yet another significant step has been the carrier's focus on improvements in the quality of the services provided to its passengers. By making its OK Plus frequent flyer program even more attractive to its passengers, the membership base in the program grew by roughly 27% in 2004 to a total of 133,000 members. In 2005, ČSA expanded the frequent flyer program by starting to offer OK Plus Corporate – a loyalty program designed for the corporate market. Today, the frequent flyer programs offered by the airline have more than 160,000 individual members and 1,900 corporate clients. 

In the second half of last year, under the leadership of Jaroslav Tvrdík, ČSA successfully underwent an IOSA (Operational Safety Audit Program), organized by the IATA. The thorough audit focused on 661 of the airlines operating parameters and it ended up without a single negative finding, confirming that ČSA is one of the safest air carriers in the world.

This series of transformations has also been reflected in the airlines' financial results. In 2004, the carrier's earnings saw a year-over-year increase of roughly USD 3.4 million, using international accounting standards, reaching a total of USD 22.9 million. The preliminary estimates are that the airline's 2005 results should show a slight profit, based on the same standards. A significant positive impact from the transformational strategies is expected to be seen on the company's bottom line as early as this year.

Jitka Novotná,
ČSA Spokesperson