Press Release
CSA Cuts Losses in 2006 and Achieves Objectives of the OK 20062008 Strategic Plan
Prague, May 24, 2007
Czech Airlines (CSA) came out of 2006 with an after-tax loss of CZK 396.9 million. This
puts CSA's results 100 million crowns ahead of where it was in 2005, despite the fact
that the company had to face significantly greater financial obligations last year. The
audited results have therefore confirmed the originally announced figures and shown
that the company has so far been able to meet the objectives of its OK 2006-2008
Strategy plan that was approved by the company's general meeting in 2006. Based on
international standards, CSA reported a pre-tax loss of USD 1.5 million for 2006.
"In 2006, we had to generate an additional 700 million crowns in revenues, compared to
2005. These were additional costs related to aircraft financing and increased salaries. This
year, we have to do even better by at least another 700 million crowns, which we will once
again need to cover similar unavoidable expenses," stated CSA's President, Radomír Lašák.
Earnings Up, Costs Down
In 2006, CSA generated operating revenues of nearly 23.56 billion Czech crowns,
representing a year-to-year increase of 6.3%. The greatest share of the airline's revenues
(64%) came from regular ticket sales. The strongest growth (30%) was seen in revenues
generated by the charter segment of the business. At the same time, the company's
operating expenses increased (by 3.5%) to a total of 23.6 billion crowns. The airline was
able to successfully control its rising expenses, despite the fact that the company's payroll
expenses increased by CZK 400 million in 2006 under the current collective bargaining
agreements and its aircraft lease costs added an additional expense of CZK 200 million.
In 2006, CSA's management started to introduce a series of standardized management tools
to support and monitor sales. These the company had previously been lacking. Other
changes were in line with its current marketing strategies. Here CSA has introduced a series
of motivational programs for its sales associates and an incentive system for ticket agencies.
The first positive results started to be seen towards the later part of 2006. While in the first
half of 2006, the company's revenues coming from regular ticket sales – the airline's main
source of revenues – came in five percent under plan, the results for the second half of the
year came in one percent ahead of plan. Ticket sales are continuing to move up with the
trend clearly evident in the results for the first few months of 2007.
CSA's goals are to generate more revenue and to continue to provide better passenger
service. An example of this ever improving quality of CSA's services is evident in the fact that
the company was rated the second most on-time airline, according to data for the first quarter
of 2007. The competition for this rating was made up of the 26 major airlines that are
members of the Association of European Airlines (AEA). Even better, in March, CSA was at
the top of the AEA on-time list. Additionally, for the fourth time, CSA was voted the "Best
Airline Based in Central / Eastern Europe" – an award voted on by industry professionals and
organized by the London-based, Official Airline Guide industry publication.
In 2006, Czech Airlines carried 5.5 million passengers, which represented a year-on-year
growth rate of 4.8%.
Results Based on International Accounting Standards
Based on international accounting standards, which are used by the majority of airlines for
the reporting of financial results, CSA reported a pre-tax loss of USD 1.5 million in 2006. The
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Press Release
company generated earnings from operations of USD 13.752 million. Revenues from
passenger traffic were up by 16% year-on-year, increasing to a total of USD 1.08 billion.
Maintaining 50 Aircraft and 5,000 Employees
"2006 was a year for recovery and the settlement of past obligations. It was a year in which
CSA was able to live up to the commitments it had made to its employees, clients and
shareholders. 2007 is to be a year for stabilization and the making of major decisions –
decisions regarding the strategy for our fleet, and specifically our long haul aircraft, and the
decisions regarding the completion of our divestitures," said CSA President Lašák.
The company's plan for 2007 is built around realistic assumptions that should allow the
company to return to profitability after a number of years with red ink. The business plan,
which has been approved for this year, anticipates a profit of 42 million Czech crowns this
year. However, the company's liabilities from previous years will add an additional 700 million
to this year's expenses. The existing collective bargaining agreements, which were signed by
the previous management, and the new Labor Code will result in an additional cost of at least
CZK 300 million and aircraft lease payments will cost the company another CZK 400 million.
The projected results also anticipate the completion of the currently ongoing restructuring of
the company, which includes the sale of two subsidiaries – Air Cargo Terminal and Air Czech
Catering.
The company's current strategic plan envisions maintaining the current size of the company
– i.e. 50 aircraft and roughly 5,000 employees. For 2007, the company has adequate
financial reserves and the airline has also been able to obtain guarantees for the financing of
the five new Airbus A320/319 aircraft that it is adding to its fleet in 2007.
Daniela Hupáková
CSA Spokesperson
*****
Czech Airlines (CSA) – the largest national carrier of the new EU member countries according to the number of
passengers carried. In 2006, the airline carried a record 5.5 million passengers. Since 2001, it has been a
member of SkyTeam, one of the leading global airline alliances.
CSA currently offers connections to 104
destinations in 44 countries worldwide. The fleet contains 50 aircraft – ATR 42’s/72’s, Boeing 737’s and Airbus
A310/A320/A321’s.
In 2006, CSA ranked second in on-time flight performance among the 26 member airlines of the Association of
European Airlines (AEA).
For the last four years, CSA has been selected as the “Best Airline Based in Central/Eastern Europe - 2004,
2005, 2006 and 2007”. This title is awarded annually by the Official Airline Guide (OAG) and is based on the
votes of frequent business travellers.
In January 2006, Czech Airlines also won the “Best Airline in Eastern Europe” Award (the Annual GT Tested
Awards) for a second year running. CSA was also on the shortlist of the eight best world airlines in 2005.
CONTACT: daniela.hupakova@csa.cz; Czech Airlines, Ruzyně Airport, PRAGUE 6, tel.: 220 11 6220,
www.czechairlines.com
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