Transcript Tomaz_SKOFIC-_Adria_Airways

Adria Airways
Slovene Airline Company
4th Vienna Economic Forum
Tomaž Škofic
Depuity V.P. Sales & Marketing
Vienna, 6 November 2007
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Company history
1961 ● establishment of the charter airline Adria Aviopromet, operating DCaircraft, end of the sixties purchase of DC-9 aircraft.
 1984 Adria becomes a member of the IATA. Starts developing scheduled
services with: DC-9, MD-80 and Dash 7 aircraft. Fleet: DC 9, MD 80, Dash 7
aircraft.
1989 ● Purchase of first Airbus A320 aircraft.
1991 ● On 25 June, the Republic of Slovenia declares independence, for
political reasons Adria is grounded for three months.
1992 ● End of January operations restarted in a significantly reduced
market. The structure of operations is markedly changed, from primarily a
charter airline to a mainly scheduled service carrier.
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Company history
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1995 ● Start of cooperation with Lufthansa, inclusion in European integration
processes.
1998 ● Purchase of three new CRJ 200 aircraft.
2000 ● Purchase of fourth CRJ 200.
2001 ● The first scheduled flight in the EU, from Vienna to Frankfurt.
2002 ● Adria selected as first European authorised Bombardier maintenance
centre for CRJ aircraft.
2004 ● Adria joins the global association of airlines, Star Alliance, as a regional
member.
2005 ● Purchase of fifth new CRJ 200 aircraft; opening of a new hangar.
2006 ● In November, Adria starts introducing e-ticketing.
2006 ● In December, Adria carries more than one million passengers for the
first time in the independent Slovenia.
2007 ● Purchase of two new CRJ 900 aircrafts.
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Start
2005
Reorganisation
of business operation
Future
2006
2008
2007
Problems
Solutions
Stabilized
operating,
further experience
based development
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Difficult situation in 2005
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Extensive loss in the amount of 9,6 mio EUR
Inadequate fleet (gap between the 48-seater and the 162-seater )
Global drop in ticket prices
Global increase in oil prices
Lack of controling of financial risk
Lack of planning and creating of reserves for aircraft investment
maintenence
 High operating costs (airport handling, catering)
 High financial costs
 Cash flow problems
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Measures for the improvement of business operation
Measures for increasing the revenues
Revenues from scheduled passenger services
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Stop further decreasing of the value of passenger coupon (sticter
limitation of promotional fares, general fare increase, increase of tariff
add-ons, RSFs and No-show control)
Reorganization of revenue management process
Insateing new routes
Adding new frequencies
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Measures for increasing the revenues
Revenues from charter services
 Charter services remain complementary services to the scheduled
services and are aimed at optimising returns and not primarily at
increasing the volume.
Revenues from maintaining aircraft for third parties
 Maintain the leading position in maintenance of CRJ 100/200/700/900
 Expansion on the C-checks market for Airbus A-319/320/321 aircraft
 Building of a new hangar.
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Measures for increasing the revenues
Other operating revenues
 More active and inovative approach to marketing of our own media (the
In-flight magazine and aircraft interior and exterior)
 Active markting of Adria Airways web site
 Further developement of our own pilot training resources and facilities
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Cost Management
Direct operating costs
 Fleet optimisation
- Lease of two A320 aircraft in “wet lease”
- Due to too large gap between the Canadair CRJ-200 and the Airbus
A320 aircraft, we leased two intermediary capacity aircraft with crew
- Purchase of two new CRJ 900 aircrafts.
- Lower operating expenses
- Better occupancy of the aircraft
- Options for CRJ900 and CRJ1000
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Cost Management
Direct operating costs
 Mitigating high prices of kerosene through certain measures:
- selecting the most competitive offer
- planning the use of aircraft appropriate to the number of passengers;
- adding of fuel surcharge
- use of financial derivatives
 Reviewing contracts with individual airports to achieve significant
savings in airport charges
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Cost Management
Direct Operating costs
 Maintenance costs
- Challenge of cost management in fleet investment maintenance
- Signing a contract with the manufacturer of the engines for the A320,
IAE, to maintain engines and for payment of costs by engine flight hours;
advantages:
– An easing of cashflows
– Equal distribution of costs over years
– Lower maintenance costs
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Cost Management
Indirect operating costs
 reduction of cabin services
 rationalisation of distribution network
 reorganisation of company structure and job descriptions (introducing
stimulating salary system with variable part of he salary)
 outsourcing of certain activities (maintenence of IT systems, general
purchasing, cleaning…)
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Cost Management
Non – operating result
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Refinancing of the majority of long-term foreign currency loans; replacing fixed
high-interest Dollars loans to Euros and cheaper sources of finance
– cash-flow was improved due to the moratorium on repayment of the principal
– Savings in financial costs
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Adoption of a financial risk management strategy in order to achieve effective
and systematic risk management
- interest rate risk
- currency risk
- risk associated with fuel price changes.
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Miscellaneous
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Intensively progressing with the electronic ticket project
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Continuing with the trend of encouraging internet sale and other modern sales
channels.
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Building new headquarters and centraliseing the company in one location.
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Organisation of effective controlling; primarily by establishing profit and cost
centres.
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Effective management of IT system.
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Results
 Continuous improving of load factors.
Load factors
2005
63,50
2006
66,40
estimate 2007
0,00
Index
105
68,37
20,00
40,00
103
60,00
80,00
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 A growing number of passengers carried
Number of passenger carried
2005
2006
estimate 2007
0,00
Index
928.662,00
1.018.007,00
110
1.126.460,00
500.000,00
111
1.000.000,00
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 Growth of the scale of operations of Adria Airways d.d.
Operating Revenues in EUR
2005
Index
134.534.125
2006
154.802.456
estimate 2007
115
174.665.677
0
50.000.000
100.000.000
113
150.000.000
200.000.000
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Net profit of Adria Airways d.d.
Net profit/loss in EUR
-9.572.274
2005
2006
estimate 2007
-9.600.000
70.102
125.258
-4.600.000
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Summery
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Striving to became leading carrier in the Balkans
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Striving to expend and optimize the fleet
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Remain the main maintenance centre for CRJ aircraft
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Profiting Slovenia’s forthcoming EU Presidency for proving our excellence
and improving our business results
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Adria Airways Fleet
3 Airbus A320
2 Canadair Regional Jet 900
7 Canadair Regional Jet 200
The Adria Airways network of scheduled and charter flights
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Thank you for your attention
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