21. 05. 2009 - Czech Airlines Fighting the Effects of the Global Crisis, Plans a Profit Again Next Year.

Prague, May 21, 2009

Czech Airlines is successfully standing up to the worldwide crisis, which has, without exception, affected all airlines. This is possible thanks to the comprehensive system of measures adopted in the “Action Plan 2009”. These measures, the goal of which is to increase revenue from regularly scheduled flights, lower manageable expenses, optimize the flight schedule and efficiently utilize the fleet capacity, should bring more than one billion CZK into this year’s business results.

Taking into account the development of the situation in the field, we have revised the company’s financial plan for this year as well as for the following year and have begun implementing Action Plan 2009, with the goal of lessening the impact of the worldwide crisis on Czech Airlines.” says Radomír Lašák, explaining the steps management is taking. The overall, pre-tax losses should not exceed 361 million CZK for this year, according to the plan. “We are already counting on a profit of 157 million Czech Crowns in 2010, with the forecasted growth of travellers on regular flights and keeping the same number of flights as this year”, Radomír Lašák adds.

Action Plan 2009: Revenue projects with a quick return
The first three projects with a quick return have already been successfully implemented and they are now generating their first revenues. Their aim is to achieve additional revenue without increasing fares. Travellers on all routes, with the exception of domestic ones, now have the opportunity of purchasing additional drinks and snacks over and above the normal refreshments, which will still be served free of charge. From March, Czech Airlines travellers can purchase travel insurance together with their flight tickets at bargain prices from the reputable AIG Europe Insurance Company. April saw the introduction of a new opportunity for travellers – they can now purchase selected services at the check-in counters at Prague airport. They can, for example, take advantage of an upgrade to a higher price category or use the VIP lounge. This can be done because all Czech Airlines check-in counters at Prague airport now have payment terminals. This makes it much easier for the airline to accept payment for excess baggage. Czech Airlines has high hopes for the modern O&D pricing system. Czech Airlines would like to introduce a system, which optimizes the price not only on individual transit routes, but according to the starting point and final destination of the journey, during the course of this year. This year Czech Airlines are anticipating that thanks to these projects, a total profit of 364 million Czech Crowns will be achieved.

Action Plan 2009: Lowering Costs
In addition to the measures aimed at supplementing revenue, the Company is also continuing its fight against costs, despite the fact that in the last three restructuring years of Czech Airlines, costs have been fiercely slashed. Savings on initial expenses are being sought this year above all in the technical division. In previous years this division has dramatically improved the operating efficiency of its administration and management of maintenance, and a modern system of integrated management has been established. In the next four years, changing over to a single provider of a virtual private network, which will create the basis for data communication between head office and dozens of retail and operational branches of Czech Airlines in Europe, Asia and America, for example, will return savings of approximately ten million Czech Crowns. The company expects a marked reduction of costs in the tens of millions of Czech Crowns by continuing to use its real estate more efficiently. Czech Airlines has already begun saving on office supplies and consumable materials.

The management of Czech Airlines had already reacted to the crisis in the airline industry in December of last year, when members of the Board and the Supervisory Board lowered their salaries by 15 percent and froze salaries at 2008 levels for hundreds of managers. The company leadership also agreed with most employees to freeze salaries at 2008 levels as of April 2009. Overall savings of 5% on payroll costs will save 250 million Czech Crowns this year.

Action Plan 2009: Using the Available Plane Capacity
In this challenging period of economic crisis, Czech Airlines is working on its flight schedule. For the summer, the company has increased the frequency of flights to those destinations and markets that have not been so hard hit by the crisis and where there is still potential for higher revenues, such as Moscow, Ostrava, Brno and Hamburg. The capacity for these now more frequent destinations of Czech Airlines is achieved by restricting flights on routes with lower
revenues, such as Tallinn, Zagreb, Bucharest and Manchester. In addition to changes in the flight schedule, Czech Airlines is striving to take advantage of every appropriate business opportunity. An example of this is the signing of a contract with Nayzak Air Transport for an annual lease of two Boeing 737 planes including crew, maintenance and insurance to Libya. Optimizing the flight schedule and using all available capacity will bring Czech Airlines revenue of approximately 440 Million Czech Crowns this year.

Czech Airlines in the first quarter of 2009
Overall, in the first three months of this year, Czech Airlines carried 945,000 passengers on its flights. Of these, 850,000 were regular transportation, which is decreasing slower than the overall number of transported travellers. The most popular destinations on regular routes are still
Paris, Moscow, Amsterdam, Madrid, Rome, Brussels, Vilnius, Copenhagen, London and Barcelona. Czech Airlines transported 95,000 passengers on charter flights for travel agents and other clients. The greatest demand was for flights to the Egyptian destinations of Hurghada , Sharm El
Sheikh and Taba, and to the Canary Islands of Lanzarote, Gran Canaria and Tenerife. Also popular were long-distance destinations, such as Varadero in Cuba, the Caribbean island of La Isla Margarita and Punta Cana in the Dominican Republic and Salvador. During the first quarter of this year, Czech Airlines planes transported over 430 tons of goods and mail. In freight transport, which is a good barometer of the economic situation, signs of the worldwide recession had already begun to appear in the middle of last year. At the beginning of this year, however, the decrease began to slow down. During the first quarter, Czech Airlines freight transport dropped by 17.1 percent. Despite the measures adopted in Action Plan 2009, Czech Airlines business results for the first quarter of 2009 are -1, 318 billion Czech Crowns. Nevertheless the company is expecting a profit of a billion Czech Crowns for the period from April to December 2009.

Audited Results for 2008: Profit of 500 Million Czech Crowns
Despite the onset of the economic crisis and a drop in air transportation Czech Airlines achieved a pre-tax profit of 500 million Czech Crowns in the second half of last year according to the audited business results, which is just under 390 million Crowns more than in the preceding year.
According to international accounting standards (IFRS) Czech Airlines’ audited, pre-tax profit was 15 million USD, which is over 23 million USD more than in 2007.

Ilona Vysoudilová
Communications for Czech Airlines