27. 02. 2008 - Czech Airlines Increased Its Operating Income in 2007 by 798 Million, Reporting a Profit of CZK 111 Million
Prague, 27 February 2008
According to preliminary results, after years of losses, Czech Airlines reported a profit of CZK 111 M. Its financial results are more than half a billion crowns better than in 2006, when its finances ended up with a loss of CZK 396 M. The plan for 2007 had expected a profit in the range of CZK 40 M.
“We are successfully meeting our three-year OK 2006 – 2008 strategy, whose main goal was to lead the Airline from its losses and direct it towards further development,” said Czech Airlines’ President, Radomír Lašák, in commenting on the results. “Today, the Airline is stabilised, and prepared for potential privatisation, and we can say with a large degree of certainty that Czech Airlines can expect further growth,” he added.
The 2007 results include extraordinary income from the sale of the Air Cargo Terminal subsidiary, with a net impact on the financial results of CZK 50 M. That means that, even without the Cargo divestment, Czech Airlines would have ended up with a profit of approximately CZK 60 M. The income from the sale of Air Czech Catering will not reflect in the 2007 results at all, as the transaction will not be settled until 2008. “We managed to make up for the missing income of some CZK 380 M, for which we had originally planned in the 2007 results, by revenue from our main business line, i.e., air carriage,” said Radomír Lašák. “Furthermore, we repaid operating loans of one billion crowns last year, and invested CZK 1.4 billion into aircraft. In 2008, we plan to invest a further CZK 1.7 billion. The value of the Airline and its financial stability are thus on the rise,” he added.
The Airline’s stability is also enhanced by the fact that, since January 2008, it has had three-year collective agreements concluded with all of its nine trade unions. The agreed salary increases range from one to two percentage points above inflation, depending on the Airline’s financial results.
Operating Income Increased Significantly
Operating income increased by CZK 798 M y/y, reaching CZK 23.779 billion. Income from scheduled carriage accounted for the greatest part of income, having grown by CZK 348 M y/y, to CZK 19.007 billion. Charter carriage also noted an increase, by 147 million, to CZK 2.776 billion. The average annual yield, i.e., the average income per person-kilometre used, increased by 7.8 percent year on year, to CZK 2.432.
A change in the passenger structure has had a great impact on the increased revenue. The number of passengers in the highest fare groups is increasing. For example, the number of Business Class passengers grew by five percent in 2007, and the number of better-paying Economy Class passengers grew by a whole 37 percent. The increasing demand of business travellers serves to document that the low-cost brand CLICK4SKY.com has no negative impact on the demand for Czech Airlines’ own flights.
Costs Dropped, in Spite of an Increase in Salaries and Aircraft Instalments
On the other hand, operating costs dropped by CZK 240 M, to CZK 23.397 billion, in spite of the fact that salaries grew y/y by CZK 250 M, and the costs of aircraft instalments by nearly CZK 400 M. Savings were achieved, for example, in the cost of fees, handling, telecommunication, and maintenance.
Passenger Carriage Results
In 2007, Czech Airlines aircraft carried more than 5.6 million passengers, even when ACMI leases are taken into account. With a comparable capacity, their number grew by 2.7 percent year on year. In 2006, Czech Airlines carried over 5.4 million passengers, and 5.2 the year before. Czech Airlines charter flights carried 797,300 passengers last year. Foreign clients accounted for 40 percent of last year’s charter carriage.
A Plan for the Years To Come
This year, our business plan expects a profit of CZK 391 M, and a further increase is expected in the upcoming years. In 2008, four brand new Airbus A319 aircraft will be included in the fleet, each for 135 passengers. In 2008, the Airline plans to introduce six new regular flights to Almaty, Tbilisi, Rostov-on-Don, Strasbourg, Damascus, and Heraklion. Service will be increased on the following routes: Oslo, Stockholm, Düsseldorf, Hamburg, Stuttgart, Milan, Venice, Bucharest, Sofia, Larnaca, and Yekaterinburg.
Czech Airlines’ future profitability will be assisted by development projects launched late last year/early this year. A new comprehensive airline system supporting key business activities will bring savings in the order of one billion crowns. The system will replace the 14 presently used systems and bring improvements in services, such as booking, sales, ticketing, and check-in. The Worldspan system, to be supplied by the international corporation Travelport, will also bring the Airline additional revenue.
In the sphere of maintenance, Czech Airlines is implementing a modern integrated information system for aircraft maintenance administration and management. The system will significantly reduce costs and make the functioning of maintenance at Czech Airlines more efficient. The Airline strives to reduce maintenance time by up to 20 percent and cut stock of aircraft parts by at least CZK 90 M.
Czech Airlines Spokesperson