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Annual Report08 / 09

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Capt. Alaa Ahmed Mohamed AshourChairman

EGYPTAIR AIRLINES

Capt. Hassan Abu GhonimaSecretary General

Ministry of Civil Aviation

Capt. Ayman Adel NasrVice Chairman

EGYPTAIR AIRLINES

MR. Nidal El Kassem Assr Assistant Sub Governor Central Bank of Egypt

Eng. Sabry El Said Diab VP Companies Performance Follow-up & Coordination

EGYPTAIR HOLDING

Capt. Mohamed Manar KamalSenior Pilot

EGYPTAIR AIRLINES

MR. Sherif Mostafa El MaghloubVP Commercial

EGYPTAIR AIRLINES

MR. Ahmed Sherine ArefChief Cabin Crew

EGYPTAIR AIRLINES

MR. Sayed Abd Allah MohamedManager Personnel Benefits

EGYPTAIR AIRLINES

Capt. Tarek Mohamed Watany Syndicate Representative

BOARD OF DIRECTORS

EGYPTAIR AIRLINES is currently undergoing a serious stage of development to deal with the new variables of the airline industry. We are convinced that the human resources of the company are our most valuable assets. EGYPTAIR AIRLINES has taken strategic and tactical action to overcome the effects of the current global economic crisis.

Due to the negative impacts of the financial crisis on the airline industry in Fiscal Year 2008 /2009, EGYPTAIR has revised its priorities to focus on the African market. It has a plan to expand its routes in Africa; thus we have resumed our operation to Dar El Salam and have launched a new destination, Abuja.

Through 2008 /2009, we set the base developing our IT, fleet, network, product features and above all our human capital. Our aim is to develop EGYPTAIR into a modern, profitable and competitive airline and to transform the Cairo Airport into a main international hub.

Chairman’s Message

EGYPTAIR has demonstrated its eagerness and ability to grow a customer-oriented airline with our new structure wherever we serve you globally.

Capt. Alaa AshourChairman

EGYPTAIR AIRLINES

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COMPANY PROFILEEGYPTAIR AIRLINES is the core of EGYPTAIR HOLDING. Throughout more than 77 years of service, we have successfully extended our network to reach major destinations across the world. EGYPTAIR has been an active member of the Star Alliance since July 2008. Being a part of that huge network, EGYTPAIR customers are able to reach destinations in 162 countries all over the globe. Also, EGYPTAIR customers will be entitled to all Star Alliance Gold and Silver benefits through EGYPTAIR Plus Loyalty Programs.

NEW PROJECTSEGYPTAIR AIRLINES moved its operations to the new Terminal of the Cairo Airport, TB3, with great success; it was joined by seven Star Alliance members to realize the Alliance’s concept of ‘Move Under One Roof’. The new Terminal TB3 is expected to handle 11 million passengers annually.It is worth mentioning that TB3 is equipped with state-of-the-art technology and constitutes and important asset for EGYPTAIR and its partners in the industry.

DEVELOPMENT STAGESIn compliance with the international challenges facing the aviation industry, we have restructured the entire company and our vision statement basically focuses on: offering our valued customers the ultimate possible service in a competitive way; mixed with our unique Egyptian spirit. On the other hand, EGYPTAIR AIRLINES’ mission statement is to provide high quality services by the most skilled and well-trained staff with an eye on profit.

CHAIRMAN

ORGANIZATION CHART

GM Chairman’s Office

GM Safety, Quality &Environmental Affairs

VP CommercialVP Flight Operations

GM Security

GM Legal Affairs

GM Financial Affairs

GM Technical Affairs

GM Technical Inspections

GM PR

GM HR

GM Standard & Documents Control

GM CommercialResearch

Purchasing & Inventory Manager

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Main Goals Enhance EGYPTAIR AIRLINES’ image, making it a

passenger’s first choice. Maintain our ambitious fleet modernization program Improve EGYPTAIR AIRLINES’ competitive stance

regionally and internationally Activate Cairo International Airport as a major hub Increase EGYPTAIR AIRLINES’ share in different markets Insure the implementation of a comprehensive training

and development program covering all company staff. Improve company internal and departmental communication

through enhanced information system Generate revenue and achieve profitability Reduce cost without affecting quality Change EGYPTAIR AIRLINES’ staff culture to reflect

the Egyptian spirit in performance.

MAJOR DEVELOPMENTS Development of the current FFP program Transfer to ‘Amadeus’ – the new global reservation system Use the PAXIS program to form sales strategies and set

marketing plans Implementation of e-commerce Forming ties with the partners and increasing our staff’s

awareness and efficiency. Signing a memo of understanding with Egypt Post to

increase EGYPTAIR AIRLINES’ sales outlets without an increase in cost Develop means of media advertising Contribution in Star Alliance’s ‘Move Under One Roof’. Developed EGYPTAIR AIRLINES’ network and schedules

of operation Improvement in EGYPTAIR AIRLINES’ call center Establishment and activation of the Integrated Operation

Control Center (IOCC) equipped with the latest international systems to provide information, support decision-making and follow-up on the network’s operation Activated yield management on all international and

domestic flights Establishment of the group desk to organize reservations

and pricing for groups to generate revenue

Customer-relation management to fulfill the customer’s major requirements Increase code-share agreements (20 code-share

agreements) Partnership in the ARABESK project that includes nine

Arab airlines under the auspices of the AACO Opening a new sales office at TB3 with an area of 350

square meters including 40 service screens EGYPTAIR AIRLINES inaugurated First and Business

Class lounges with Star Alliance standards at TB3 The opening of a new sales office at the Air Mall with an

area of 300 square meters working 24-hours a day with 12 screens to serve Terminal One passengers.

Development of EGYPTAIR AIRLINES’ Network and Operation SchedulesEGYPTAIR AIRLINES’ main strategy is to: Attract premium customers by operating double daily

connections to most of our destinations. Improve and develop the most efficient network structure

to identify the best long haul opportunities with our new wide bodies. Complete study with a global consultant to further optimize

the network’s connectivity of strategic travel flows through the Cairo hub – in consideration of an expanded and efficient fleet. Two phases of the study covering Winter 2009- 2010 and Summer 2010 seasons have been finalized. The third phase will build a clean sheet network structure for 2010 -2012 Increasing EGYPTAIR AIRLINES’ share of traffic flow

and shorten minimum connecting times.

The fleet growth plan has mainly focused on: Restructuring EGYPTAIR AIRLINES’ own network; we

have reached 61 international points in the summer of 2009 with 412 weekly international flights. A huge increase is expected during the summer of 2010, planning to reach 492 weekly international scheduled flights. Expanding the fleet through an ambitions plan to double

and renew the fleet to reach 56 aircrafts by FY 2013 /2014. Increase load factors to comply with the fleet expansion

and consequently increase the number of seats available.

EGYTPAIR AIRLINES Call CenterThe call center is now working 18 hours a day to provide our valued customers with the best possible level of reservation and is equipped with the latest technological systems. Eighty-two terminals are run by skilled, well-trained staff in order to offer the following services:

Reservations Modifying reservations Following up on waiting lists reservations Providing customers with the best fares and offers Offering information about schedules and flight timings Providing new and unique services for First and Business

Class customers

EGYPTAIR AIRLINES’ contribution in Star Alliance On the 10th of July, 2008, EGPYTAIR became the 21st member of the Star Alliance, becoming only the second carrier in the Middle East to be part of a global alliance network, EGYPTAIR AIRLINES provides a strong network fit for the Star Alliance, with connections between the Middle East, North

Africa and Europe as well as a handful of long-haul destinations in Asia and North America. In addition, our entry into the Star Alliance allows members access to nine new airports that were previously not served by Star Alliance carriers.

For EGYPTAIR AIRLINES, joining the Star Alliance has fulfilled one of its major long-term business goals. With additional connectivity through code shares and interlining, it will significantly enhance the airlines’ competitive stance in the Middle East and international long-haul markets.

TB3 has become the house of all of EGYPTAIR AIRLINES’ operations and serves as a hub for all Star Alliance members, thus achieving effective service for transit passengers.

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Code-Share AgreementsWith regards to the continuous development of our network to reach new markets previously not served by EGYPTAIR AIRLINES, several code-share agreements have been signed to increase EGYPTAIR AIRLINES’ market share through cooperation with the partners. EGYPTAIR AIRLINES has focused on profitable markets and currently has 20 code-share agreements signed with major international airlines.

Austrian AirwaysSwiss International Airlines

South African AirlinesThai Airways INT

Korean AirOlympic Airways

Singapore AirlinesLufthansa

BMI British MidlandSyrian AirlinesAsiana Airlines

Gulf AirSaudi Arabian Airlines

TAPTurkish Airlines

AerosvitYemen Airways

Tunis AirMalaysian Airlines

United Airlines

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ARABESKEGYPTAIR AIRLINES has partnered with the ARABESK project that comprises of the following nine Arab Airlines under the auspices of the AACO:

EGYPTAIRSaudi Airlines

Gulf AirYemen AirwaysRoyal Jordanian

Middle EastTUNISAIR

SYRIAN AIRETIHAD AIRWAYS

The project has been activated in January 2006 having several commercial aspects and means of cooperation among its members, such as schedule and network coordination, followed by commercial agreements such as code-shares, special prorate agreements (SPAs) targeting full commercial cooperation among the members. EGYPTAIR AIRLINES’ partnership in the ARABESK project does not contradict the terms of membership in the global alliance.

Frequent Flyer Program (FFP)FFP Achievements in 2009:1. Training courses for most of EGYPTAIR AIRLINES overseas offices and stations2. Achieving the transitional period from non Star Alliance FFP cards to Star Alliance FFP cards

3. Adding FFP service to the EGYPTAIR AIRLINES call center4. Starting a new service along with the official opening of Cairo International Airport’s TB3 by opening an EGYPTAIR Plus booth to serve our members and to obtain new members to the program.5. Installing EGYPTAIR Plus drop point boxes all over TB36. Activation of retro claim (claim missing miles) online for EGYPTAIR flights as well as Star Alliance partners7. Updating our members with all new services and promotions through mass mailing as well as Horus magazine «our inflight magazine»8. Installing up to date printing and auto mailing site to be the core of an advanced communication center

New FFP projects in process:1. Launching a co-branding credit card with a major bank.2. Expanding partners network regionally and globally3. Applying new look and feel to egyptairplus.com4. Adding new services to our website such as online redemption and upgrade and online purchase of miles.

Market Data Analysis DepartmentFollowing the strategic direction of operating the Cairo airport as a hub, maximizing the feed and de-feed of the EGYPTAIR AIRLINES network and in the face of the highly competitive airline industry and the competition with airlines of the region, and to maximize use of the facilities extended to EGYPTAIR AIRLINES’ operations after moving to TB3, a contract was signed with IATA to purchase a PAXIS system which provides airlines with the most possible accurate data extracted from BSP including: Ticketed data from BSP for 80 offices High coverage in Asia Domestic data Average fares data Revenue data Tickets issued through 30 CRS/GDS around the world Identify regional traffic flow, potential new market and

real market size Benchmark studies on optimal flow patterns Evaluate the effectiveness of pricing strategy vs.

competitors Flag market-share gap

In an effort to realize the above issues and to increase the awareness of our strategic direction the following steps were taken: Execution of PAXIS training course to EGYPTAIR

AIRLINES managers and staff Following the performance of single routes and

stimulating EGYPTAIR AIRLINES offices abroad by the provision of data regularly Following the competitors market performance to/from

points operated by EGYPTAIR AIRLINES Performing workshops at headquarters by having the

engaged outstations meeting together Focusing on the importance of beyond hub points to

promote traffic on these routes.

E-CommerceEGYPTAIR AIRLINES constantly aims to deliver high quality travel experience at every customer touch point, particularly online on our website. Our website offers our customers the ability to book their tickets, select their favorite seats and special meals, if any, at the lowest fare during the time of booking with the highest level of personal data protection and allows users to view the aircraft’s status by simply entering the relevant flight number, flight departure, arrival destination and print out their booking. The entire interface of the EGYPTAIR AIRLINES website is now available with customized features in 19 countries with discounted special offers, different homepages and different currencies. EGYPAIR has also launched its mobile portal in cooperation with Star Alliance. This globally accessible mobile portal enables our customers to benefit from the new technology through their mobile phones. The mobile services are being executed in various stages and presently encompass offerings such as flight schedules, real time schedule of departures and arrivals, lounge information, a currency converter, 5-day weather forecasts

for arrival destination, baggage tracing and destination airport information. Additionally, more interactive services such as itinerary display, Frequent Flyer Program status and online check-in with seat maps for seat selection are available. EGYPTAIR will also have mobile boarding passes with 2D barcodes and irregularity notifications by SMS. Customers can use these services through the WAP on their mobile phones by visiting www.egyptair.mobi or mobile.egyptair.com.

Increasing Staff Awareness.EGYPTAIR AIRLINES is increasing staff awareness through methods such as: Training courses given to employees in collaboration

with major training centers inside Egypt and world wide Setting annual plans for staff training Monthly bulletins for internal events and news to increase

staff awareness to improve internal communication Working on cultural change Regular meetings between management and staff to

retain communication channels

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STATISTICS

Distribution of Passengers by Region (Scheduled)

DISTRIBUTION OF PASSENGERS BY REGION 08/ 09

DISTRIBUTION OF PASSENGERS BY REGION (SCHEDULED)

Despite the negative impacts of the global financial and economic crisis on the airline industry in the Fiscal Year 2008 /2009, EGYPTAIR AIRLINES achieved 10% growth in the total number of scheduled uplifted International Passengers, after excluding the domestic uplifted passengers traffic on EGYPTAIR, which decreased by 24% compared to the previous year , due to EGYPTAIR EXPRESS domestic network expansion starting Summer 2008.

Most Regions witnessed passengers growth , The largest increase in passengers carried was(26%)in Africa ,(11%)in the Middle East , (7%) Europe and (2%) Far East . America region was decreasd by (1%).

F.East 6%

Africa 13%

Europe 22% M.East 38%

Domestic 18%

America 3%

2006/ 20072007/ 20082008/ 2009

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PASSENGER LOAD FACTOR BY REGION (SCHEDULED)

PASSENGER LOAD FACTOR

Our passenger load factor has increased over the last 3 years from 63% to 68%.

Total Available seat Kms (000)Total Passanger seat Kms (000)Passanger Load Factor

WEIGHT LOAD FACTOR BY BY REGION (SCHEDULED)

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TOTAL SCHEDUAL BLOCK HOURS FLIGHTS PUNCTUALITY

The total scheduled block hours increased by 8.7% during 2008 /09.

TOTAL SCHEDULED BLOCK HOURS

AVERAGE DAILY UTILIZATION

EGYPTAIR AIRLINES Flights Punctuality Reaches to 86.4 % During FY 08/ 09

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NETWORK AROUND THE WORLD

Code Share Flights

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Code Share Agreements with Star members

Code Share Agreements with non-Star members

Reciprocal

MS Operating

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FINANCIAL STATEMENTSEGYPTAIR AIRLINES Statement of Financial Position at 30 /6/ 2009 (EGP 000)

EGYPTAIR AIRLINES Profit and Loss Account at 30 /6 /2009 (EGP 000)

COSTS & EXPENDITURES

REVENUES