Yearbook - Assaereo · 2007. 1. 18. · Middle East traffic grew by about 20% and the much more substan-tial Far Eastern market was close behind, with a plus 18.9%. Broadly, if the

Yearbook 05Adria AirwaysAer Lingus | Air FranceAir Malta | AlitaliaAustrian | bmiBritish Airways | CargoluxCroatia Airlines | CSACyprus Airways | FinnairIberia | IcelandairJat Airways | KLMLOT | Lufthansa | LuxairMalev | Olympic AirlinesSAS | SN Brussels AirlinesSpanair | SWISSTAP Portugal | TAROMTurkish AirlinesVirgin Atlantic Airways

“Making European Aviation More Efficient and Sustainable”AEA Action Plan

Association of European Airlines

Disclaimer

Any views or opinions presented in this Yearbook are solely those of theAEA and do not necessarily represent those of individual member airlines.

Avenue Louise 350 B - 1050 BrusselsTel. +32 (0)2 639 89 89 Fax 639 89 99 E-mail [email protected] www.aea.be

.

_________

Association of European Airlines

Adria Airways, Aer Lingus, Air France, Air Malta, Alitalia, Austrian, bmi, British Airways,Cargolux, Croatia Airlines, CSA, Cyprus Airways, Finnair, Iberia, Icelandair, Jat Airways, KLM,LOT, Lufthansa, Luxair, Malev, Olympic Airlines, SAS, SN Brussels Airlines,Spanair, SWISS, TAP Portugal, TAROM, Turkish Airlines, Virgin Atlantic Airways.

Dear reader of the AEA Yearbook,

As always, every year is a special year. You will see on the cover page some photos whichmay be familiar, as having already served to illustrate the “AEA Action Plan”. The Action Planis designed to stimulate discussion amongst all stakeholders in aviation and hopefully arriveat the consensus that it is not enough to deal with a cyclical crisis – the key for sustainablerecovery is to overcome the structural crisis in our industry which requires dialogue. Thus thephotos are not of aircraft, but of the different phases of a flight.

2004 was a year of remarkable change in Europe, as described in last year’s Yearbook. 2005is even more remarkable. In 2005 fuel prices soared to record highs; financial analysts areattempting to predict what these could mean for an industry which is already suffering underthe effects of many extraordinary events in recent years. Coming into 2005 we find itconfirmed that established carriers have learned the lessons from the market which is clearlyin a growth phase again: internal costs are going down and capacity increases are prudent,so that seat load factors reached a record high. That is very good news from an industrytraditionally plagued by overcapacity and legacy costs.

But 2005 also shows that it takes time to convince regulators of the need for a consistent andcoherent policy approach. A fuel tax or a ticket tax are not measures called for by the Lisbonagenda, which was developed to ensure that all European regulatory initiatives would bedirected at enhancing European competitiveness.

An industry can become competitive if market mechanisms can function, and market entrybarriers are not too low and exit barriers too high. This is debatable in aviation. But theseissues must be resolved if European aviation is to remain competitive on a global scale. Andthat in turn is predicated upon a political understanding that regulatory intervention should bekept to a minimum.

All the more reason to continue a dialogue with the EU institutions which my colleagues and Ihave taken it upon ourselves to engage in. And all the more reason to keep our readersinformed about developments in an industry which is doing its best to meet the challenges,but which understands more than ever that it requires a consensus with the political decisionmakers on the required framework for a sustainable recovery.

The following pages illustrate this learning and recovery process.

Fernando PintoChief Executive OfficerTAP PortugalAEA Chairman 2005

Contents

AEA Airlines in 2004 1 n At a Glance 2 n Global Economic Environment 4 n Traffic Trends 2004 5 n Spotlight on the North Atlantic 6 n Operating Results 2004 7 n No- Frills ‘Bloodbath’ - Did it Happen? 8

Outlook for 2005 9 n Looking Forward ... 10 n Macroeconomic Developments 11 n Sustaining the Recovery 12

A call to Action 13 n AEA Action Plan - What, and Why 14 n The ‘Lisbon Agenda’ - What is it? 15 n Infrastructure 16 n Environment 18 n Protecting the Consumer 19 n External Relations 20 n Security 21 n The Big Picture... 22

Spotlight on the AEA 23 n AEA Fast Facts 24 n About AEA 25 n Airline Profiles & Review of 2004 26 n Key Statistics 56 n Glossary 58

ASSOCIATION OF EUROPEAN AIRLINES 1

At a Glance

2004 was yet another year charac-

terised by major swings - in this

case a recovery from the 2003

SARS and Iraq War effects. Some

underlying growth was detectable,

substantially so in the case of

Eastern routes, but there was no-

ticeable weakening towards year-

end.

The industry continued to suffer

from very high oil prices, with an

increase of 26% over previous year.

Fears of a massive impact on gen-

eral economic conditions, as in

1979/80, have not materialised,

however; in real terms, both the

cost increase and the high-inflation

environment were much more se-

vere at that time.

Results continued to be influenced

by extreme changes in exchange

rates, with yet another substantial

appreciation of the Euro against

the US Dollar - and, by extension,

the other major currencies linked to it.

-40

-30

-20

-10

0

10

20

30

40

50

60% change in Revenue Passenger Kilometres

'052004200320022001

Total Europe

North Atlantic

Far East / Australasia

Total Scheduled

Monthly Traffic Monitor

Source: AEA

0

10

20

30

40

50

60

70

80 constant Q4 2004 USD/bbl

2004200319801979

+45%

+26%

Source: US EIA

World Oil Prices

0.8

0.9

1.0

1.1

1.2

1.3

1.4 USD per Euro

'05200420032002200120001999

+5.3%

+19.8%

+10.0%

+38.7%

Annual appreciation of Euro against USD

Source: OANDA

Currency effects: Strong Euro, Weak USD

ASSOCIATION OF EUROPEAN AIRLINES2

At a Glance


0.4

6.6

14.3

7.4

9.2

financial result in USD (billion)

more revenue in USD (billion)

more passengers carried (million)

% increase in passenger traffic (RPKs)

% increase in capacity (ASKs)

2004 over 2003

Global Economic Environment

2004 saw, from a worldwide per-

spective, the strongest economic

performance since 1976, with a

growth of 5.1%.

The two main drivers of growth, the

USA and China, together ac-

counted for half the total increase.

US growth reached 4.4% in 2004,

as a consequence of an exception-

ally laissez-faire monetary policy

which has continued to encourage

consumer spending and economic

recovery through tax cuts and low

interest rates.

China has been experiencing an

investment boom, resulting in a

GDP growth of 9.5%.

Japan and Europe continued to

underperform, with GDP increases

of 2.6% and 2.4% respectively.

Nonetheless, these were still the

highest figures for some time.

Within the EU, all the accession

countries with the exception of

Malta returned above-average

growth, with the list headed by the

three Baltic states.

Of the major European economies,

the UK posted the highest growth,

at plus 3.1%. The three largest

Eurozone countries, Germany,

France and Italy, did less well, with

increases of 1.6%, 2.5% and 1.2%

respectively.

The average for the Eurozone at

plus 2.0%, was somewhat lower

than for EU-25, an indication of

how the strength of the single cur-

rency was constraining the per-

formance of the Euro economies.

Year-on-year the Euro appreciated

10% against the Dollar. Since

2001 it has risen by almost 40%

against the US$.

Within this broadly favourable eco-

nomic environment, threats and

challenges remain. The most ob-

vious of these is the oil price and

its effect on inflation in general.

IMF research suggests that any

permanent $5/barrel increase could

produce a reduction in global GDP

growth by a third of a percentage

point.

The growth-induced demand for oil,

which is maintaining the high price

levels, is anticipated to remain

strong. World demand for crude oil

increased by 2.7 million barrels/day

in 2004, of which China alone ac-

counted for 1m.

The unprecedented Chinese in-

vestment boom also put pressure

on world supplies of other base

commodities, such as iron ore,

copper, concrete and rubber. The

price of steel products has risen by

80% over the past two years.

0

1

2

3

4

5

6

7

8% Real GDP growth

20052000199519901985198019751970

2004 GDP growth: +5.1%

World Economic Growth

Source: IMF World Economic Outlook

0

2

4

6

8

10% GDP growth at constant prices

Latv

ia

Lith

uani

a

Est

onia

Slo

vaki

a

Irel

and

Pol

and

Slo

veni

a

Gre

ece

Luxe

mbo

urg

Cze

ch R

ep.

Hun

gary

Fin

land

Cyp

rus

Sw

eden UK

Spa

in

Bel

gium

Fra

nce

Aus

tria

Den

mar

k

Ger

man

y

Mal

ta

Net

herla

nds

Italy

Por

tuga

l

EU

-25

Eu

ro-z

on

e

Source: EU Commission Spring Economic Forecast 2004-2005Economic Growth EU-25 2004


Traffic Trends 2004

After the minimal market increase

of the year before, 2004 was a time

of renewed growth, driven in the

first instance by recovered traffic in

the areas hardest-hit by the previ-

ous year’s war and SARS shocks,

but overlaid with a solid market

increase.

The one segment where this was

not the case was in AEA members’

Domestic traffic, which barely grew

in passenger-kilometres and actu-

ally declined in passenger board-

ings. This gives rise to some dis-

tortions and discrepancies in ag-

gregated figures, where the effect

on boardings is much greater than

on RPKs.

Overall, total scheduled passenger

numbers increased 4.9% to 307

million. The more representative

growth figure, however, was the

9.2% increase in passenger-km.

Largest increases were in the re-

gions which suffered the greatest

downturn in 2003; North Africa and

Middle East traffic grew by about

20% and the much more substan-

tial Far Eastern market was close

behind, with a plus 18.9%.

Broadly, if the effects of the Gulf

War and SARS are discounted, this

represented an underlying growth

rate through the year of about 7%.

Driving the growth on the Far East

has been a very buoyant

Europe/China demand.

This market collapsed in mid-2003

when the SARS impact was at its

greatest, so 2004 growth rates

were hugely inflated. Adjusting for

SARS, the real growth in 2004

China traffic could nevertheless

have been in excess of 30%.

Cross-border European traffic (ex-

cluding Domestic) remained fairly

buoyant through the year and reg-

istered a plus 7.5%.

As anticipated, there was substan-

tial growth in traffic to and from the

10 EU accession countries, with

AEA members registering a year-

on-year growth of 15.4%, with dou-

ble-digit (and even triple-digit)

growth in all markets except Slove-

nia and Cyprus.

The North Atlantic market experi-

enced strong growth up to mid-

summer, boosted by increases well

into double digits around the anni-

versary of the Gulf War. Thereafter

the growth dropped away signifi-

cantly and towards year-end had

slipped into negative figures. For

the year as a whole, the increase

was 7.2%.

With the exception of Domestic

operations, load factors improved

across the networks. Overall, the

figure of 74.6% was an all-time

high, an improvement of 1.2 per-

centage points over 2003.

80% was reached or surpassed on

North, Mid and South Atlantic sec-

tors, while the greatest improve-

ment, of 3.6 points, was recorded

on African routes.

The cross-border European load

factor of 65.4% was also a record.


0 50 100 150 2000

5

10

15

20

25% growth in RPK

Size of Region in 2003 RPK (bn)

North Africa

Sub-Saharan Africa

Far East/Australasia

Geographical Europe

North Atlantic

Mid Atlantic

Domestic

Middle East

South Atlantic

Traffic Growth by Region

Source: AEA

55

60

65

70

75

80

85

90% load factor

2004200019951990

Geographical Europe

North Atlantic

Far-East/Australasia

Total Scheduled

Passenger Load Factors

Source: AEA

Spotlight on the North Atlantic

In 2004, AEA members’ traffic on

North Atlantic routes totalled 30

million passengers. In passenger-

km terms the route forms the most

important region for the AEA air-

lines, some 27% greater than

cross-border Europe and 50% lar-

ger than the Far East.

When AEA membership changes

are taken into account, the market

in 2004 remained slightly below the

level it had reached in 2000. While

all other operating regions have

recovered from the intervening

setbacks and moved on to new

yearly highs, the North Atlantic still

carries the legacy of 9/11.

Earnings on North Atlantic routes in

2004 totalled US$13.3 billion, split

approximately 5:1 between pas-

sengers and cargo.

Some 12% of the traffic relates to

Canada which, with passenger

figures in excess of 3 million, repre-

sents AEA’s fourth-largest non-

European market, behind Japan

and China/Hong Kong.

Nevertheless the route is domi-

nated by the huge Europe-US

flows. The New York market alone

is twice the size of the second-

ranked country market.

21 AEA member airlines (including

one all-cargo) fly between Europe

and the USA at a frequency of

more than 150 roundtrips per day

in peak Summer. They face strong

competition from, essentially, six

US mega-carriers with an almost

identical flight frequency.

In terms of seats and passengers,

however, the European carriers

have a slender advantage arising

from their deployment of generally

larger aircraft.

In the Summer 2005 timetable,

AEA carriers will offer 55.3% of the

available Europe/US capacity,

compared with a US carrier share

of 43.4% (some non-AEA and 5th-

freedom carriers make up the re-

mainder).

This represents a reduction in AEA

share of 1.1 percentage points, and

a 0.9-point increase in the US

share, with an appreciable closing

of the gap.

As the European carriers practice a

cautious approach to expansion in

the US market, with a 5% capacity

increase in 2004 and little addi-

tional growth projected for 2005,

US carriers, with +6% and +5%

respectively, are expanding some-

what more aggressively.

30

35

40

45

50

55

60% share weekly seats offered

2005est.

20042003200220012000

Europe-USA Summer Seats share

Source: OAG-Max

US carriers

AEA

400

500

600

700 weekly seats (000)

200520042003200220012000

Europe-USA Weekly Seats Offered

AEA

US carriers

Source: OAG-Max


Operating Results 2004

After five consecutive years of

heavy losses, AEA airlines posted

an aggregate operating profit in

2004, of US$ 417 million.

The result, while long-awaited and

evidently welcome, was nonethe-

less an extremely marginal one.

The profit represented an Operat-

ing Ratio (revenue:expenditure) of

just 100.6, far below the level re-

quired for the industry to recover its

cost of capital and remain sustain-

ably viable.

Amongst the member airlines, Op-

erating Ratio varied between 81

and 111, a range which is tending

to narrow as the industry stabilises.

While there were winners and los-

ers all along the size range, in

general the larger airlines fared

better than the smaller ones.

A contributory factor has been a

relatively better profitability on long-

haul, reflecting product differentia-

tion targeting an identifiable busi-

ness-travel segment, compared to

the intense price-driven competi-

tion on European routes.

Cost/revenue trends had a nega-

tive impact on the result, as a unit

cost increase of 4.6% (excluding

exchange-rate effects) cancelled

out an overall yield improvement of

3.9%.

Evidently, much of the cost in-

crease was due to the continued

escalation in the price of fuel.

Equally, a part of the yield increase

reflected the impact of successive

fuel surcharges which, broadly,

covered about half the additional

fuel costs.

The main contributor to the im-

proved results in 2004 was an all-

time high load factor (passengers

and cargo combined) of 70.0%, up

from 67.9% in 2003, when the

SARS effect in particular degraded

load factor on Eastern routes.

The relationship between yield and

load factor translates into the load

factor needed to break even. For

the AEA airlines, this has become

a statistic which exhibits only the

smallest of year-on-year changes.

In the 5 years 2000-04 breakeven

has been confined in the range

between 69.3% and 69.7%. The

2004 result aside, only once before

has the achieved load factor

(69.4% in 2000) fallen within this

range.

The implications are clear: at

breakeven levels such as these,

only record load factors will pro-

duce an operating surplus, and

then by only the smallest of mar-

gins. For the industry to thrive, the

breakevens must come down, per-

haps to the levels around 65%

where they found themselves in the

late 1990s.

Relentless price competition, how-

ever, mitigated against achieving

this through yield improvements.

As ever, it is to the cost side of the

equation that the airlines turn first

as they seek to consolidate bottom-

line improvements into something

which can sustain them through the

industry’s next phase of develop-

ment.

TOTAL CHANGES

Change in net interest rates

Cost vs revenue deviation

Change in load factor

Change in operating ratio:

98.0 100.6Operating ratio after interest

+

+

=

2003 2004

+3.0

-0.7

+0.3

+2.6

Factors affecting Operating Ratio

Source: AEA

-3.5

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5 billion USD

04030201009998979695

Operating Result after Interest

Source: AEA


No-Frills ‘Bloodbath’ - Did it Happen?

In 2004, the CEO of Ryanair fore-

cast a ‘bloodbath’ in the no-frills

sector as more new entrants joined

the fray and competitive pricing

responses from the network carri-

ers became more widespread.

His prediction was that a major

market shake-out would leave only

two or three significant players in

this segment.

Events have only partly vindicated

the statement. A major casualty in

late 2004 was the Italian carrier

Volare, which had ranked no3 in

the sector during that Summer.

Other departures from the scene

were the much smaller carriers

Duo (UK), V-Bird (GER) and Air

Polonia (POL).

SAS’ Snowflake brand has also

exited the market and the UK’s

MyTravelLite has severely cut back

its operation.

The sector continues to attract new

entrants, however. In the UK mar-

ket, 2004 new entrants Thomson-

Fly and Jet2Com have both ex-

panded substantially and have

been joined by EUJet.

In Central Europe, Wizz and Smart

Wings have joined SkyEurope to

offer no-frills product from Brati-

slava, Budapest, Prague and sev-

eral Polish cities. Swiss and Span-

ish carriers Helvetic and Vueling

have also joined the sector.

Also included in the AEA1 list for

2005 is Aer Lingus’ shorthaul op-

eration, which has completed the

transition to a rigorously-applied

no-frills business model.

Coupled with continuing strong

growth for the major players, the

result has been another substantial

increase in this sector between

Summer 2004 and Summer 2005 -

measured in scheduled seats per

week - of around 40%.

Approximately one-quarter of this

increase is provided by Aer Lingus,

which moves into third position,

behind Ryanair and Easyjet, and

ahead of the three large German

operators Germanwings, Air Berlin

and HLX.

1 The AEA survey, which makes no claim to be comprehensive, includes airlines with substantial networks (>15,000 seats/week) encompassing business and leisure destina-tions, which conform substantially to the ‘no-frills’ business model.

Ryanair

easyJetaerlingus.com

'No-frills': 2.6 million weekly seats

Summer 2005

Source: OAG-Max / websites

bmibabyHapag-Lloyd Express

GermanwingsTransavia

Air Berlin

MyTravelLite

ThomsonFlyJet2com

Virgin ExpressSkyEurope

WizzVueling

EuJetHelvetic Airways

Smartwings

31%

27%7%

35%

0

2

4

6

8

10 million weekly seats

Weekly Seats in Europe

Source: OAG-Max / websites

Summer 2000 Summer 2005

AEA

No-frills


Contents

AEA Airlines in 2004 1 n At a Glance 2 n Global Economic Environment 4 n Traffic Trends 2004 5 n Spotlight on the North Atlantic 6 n Operating Results 2004 7 n No- Frills ‘Bloodbath’ - D id it Happen? 8





Looking Forward...

Outlook for 2005 is for a year of

reasonably strong growth, led by

sustained buoyancy in Far Eastern

markets. European traffic should

also grow at marginally above-

average levels, but the North Atlan-

tic is expected to deliver only small

increases.

Overall, a 6.5% passenger traffic

increase should marginally exceed

the extra capacity on offer and su-

per-high load factors are once

again in prospect.

If, as anticipated, continuing cost

control can neutralise the down-

ward pressure on yields, operating

results will show a further im-

provement in 2005.

1.0

6.5

forecast financial result in USD (billion)

forecast % increase in passenger traffic (RPKs)

30 000

40 000

50 000

60 000 monthly million RPKs

2005200420032002200120001999199819971996

+ 6.5% est.

+ 9.2%

yearly average

AEA Total Scheduled Traffic - Seasonally Adjusted

Source: AEA


Macroeconomic Developments

Although 2004 set a recent record

for economic growth, there was

evident weakening in the trend

towards year-end, a weakening

sustained into early 2005.

The latest projection for 2005 is

nevertheless buoyant at plus 4.3%.

Of the decrease from the +5.1%

recorded in 2004, one-third is ac-

counted for by high oil prices.

Reduction in growth is foreseen

over a range of major economies.

The Chinese boom is expected to

continue at a slightly lower rate,

estimated at +8.5% in 2005 and

8.0% in 2006.

A reduction is also forecast in US

growth, to 3.6% for both years.

The outlook for the EU is for a plus

2.0% in 2005, increasing to +2.3%

in 2006, with the Eurozone econo-

mies performing at slightly below

these levels.

The level of uncertainty surround-

ing these projections is relatively

high as policy-makers confront a

period of slowing growth and in-

creasing prices.

In the USA, a gradual increase in

interest rates - f rom a historic low

level - is aimed at slowing con-

sumer spending, and consequently

current-account deficit, while avoid-

ing too strong an impact on the

economic recovery.

The Chinese authorities, mean-

while, are engaged in controlling a

slowdown in their GDP growth rate

through credit controls which will

reduce investment and consumer

spending.

Within the EU, several Eurozone

countries are struggling to stay

within the Maastricht convergence

criteria for the European Monetary

union of fiscal deficit not exceeding

3% of GDP (in 2004, Italy 3.0%,

France and Germany 3.7%,

Greece 6.1%).

Consequently, restrictive tax re-

gimes cannot be loosened to en-

courage consumer spending to rise

from currently subdued levels.

A further uncertainty is the price of

oil. Most observers predict that it

will climb down slightly from the

current $50+ levels but the con-

sensus is that it will not return to

the $20-$30 levels which prevailed

through most of the 1990s.

-1.5

-1.0

-0.5

0.0

0.5

1.0 %-points change in GDP growth at constant prices

Ger

man

y

UK

Fra

nce

Italy

Spa

in

Net

herla

nds

Pol

and

Bel

gium

Aus

tria

Sw

eden

Gre

ece

Por

tuga

l

Den

mar

k

Cze

ch R

ep.

Fin

land

Hun

gary

Irel

and

Slo

vaki

a

Lith

uani

a

Slo

veni

a

Luxe

mbo

urg

Latv

ia

Est

onia

Cyp

rus

Mal

ta

Eu

ro-z

on

e

EU

-25

Economic weight increases

Economic Forecast EU-25 - 2005 Variance over 2004Source: EU Commission Spring Economic Forecast 2004-2005


Sustaining the Recovery

Early results for 2005 have pointed

to a continuation of the growth

trends which emerged towards the

end of 2004, with a reasonably

buoyant European cross-border

market, very good growth on Far

Eastern routes, but weakness in

the North Atlantic market.

This broad pattern is foreseen to

continue through the year. In par-

ticular, the Far East market is pro-

jected to remain strong and a year-

on-year growth in excess of 12% is

expected.

European cross-border traffic is

also forecast to maintain its growth

profile, ending the year at close to

7% up on 2004.

Following a first-quarter growth of

just 1.3%, the North Atlantic market

is projected to improve marginally

through the Summer, but the year-

end outcome is not expected to

exceed plus 2.5%.

Overall, a growth in passenger-km

of about 6.5% is projected for what

is hoped will be the first ‘normal’

annual growth, free either of major

external shocks or market recover-

ies from external shocks, since

2000.

Despite 2004’s record load factors,

there are indications that some

incremental improvement can still

be realised. Capacity development

remains on the cautious side, as

industry consolidation - with Air

France/KLM being joined by Luft-

hansa /Swiss - brings elements of

network rationalisation.

The first three months of the year

saw a growth in passenger load

factor of 1.2 points to 72.8%.

There is scarcely the potential to

sustain such improvements

through the Summer, nevertheless

a half-point increase in annual load

factor would more than double the

operating surplus.

Yield trends are difficult to predict.

It is certainly the case that down-

ward pressure through low-fare

competition - and passenger ex-

pectations of low fares - will con-

tinue, although the expectation is

that the pace of yield erosion will

slow.

On the cost side, fuel prices con-

tinue to exert an inflationary influ-

ence, and there are as yet no en-

couraging signs that other external

costs are abating - although the

potential certainly exists for sub-

stantial savings along the airlines’

Value Chain.

Nevertheless, the assumption is

that AEA carriers will continue to

identify and implement internal cost

savings which will at least counter-

act any fall in yields.

Consequently, the likely financial

outcome for 2005 is foreseen to be

an improvement on 2004, with an

operating surplus after interest of

$1 billion.

Projected Traffic Growth

Source: AEA

2005 over 2004 Revenue Passenger Kilometres

Route Area% change

RPK

Europe cross-border

North Atlantic

Far East / Australasia

Total Scheduled

+7.0

+2.5

+12.0

+6.5

-3.5

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5 billion USD

05E04030201009998979695

Operating Result after Interest

Source: AEA


Contents

AEA Airlines in 2004 1n At a Glance 2n Global Economic Environment 4n Traffic Trends 2004 5n Spotlight on the North Atlantic 6n Operating Results 2004 7n No- Frills‘Bloodbath’ – Did it Happen? 8

Outlook for 2005 9n Looking Forward ... 10n Macroeconomic Developments 11n Sustaining the Recovery 12

A call to Action 13n AEA Action Plan - What, and Why 14n The ‘Lisbon Agenda’ - What is it? 15n Infrastructure 16n Environment 18n Protecting the Consumer 19n External Relations 20n Security 21n The Big Picture… 22

Spotlight on the AEA 23n AEA Fast Facts 24n About AEA 25n Airline Profiles & Review of 2004 26n Key Statistics 56n Glossary 58


AEA Action Plan - What and Why?

In the latter part of 2004, AEA un-

veiled its ‘Action Plan’, a blueprint

for the industry‘s relationship with

its regulators for the period 2004-

2009.

The initiative was a particularly

timely one. A new, expanded

European Parliament had been

elected. New Commissioners were

in the process of being appointed,

with consequent changes to the

structure of the Commission.

The Action Plan is based on a

number of premises:

n Aviation is of crucial importance

to European competitiveness;

n Aviation is in a structural crisis

which will be eased but not solved

by improved economic conditions;

n Airlines‘ financial performance is

poorer than that of all the other

elements in the Value Chain that

supports them;

n These more successful elements

are invariably not subject to the

same market forces as airlines, but

tend to be monopolistic;

n Airlines are also hampered by

burdensome and uncoordinated

regulation in many fields;

n There is no coherent policy

aimed at providing the conditions

for an effective and competitive

industry to evolve.

The Action Plan coincided with the

move by new Commission Presi-

dent Barroso to revive the ‘Lisbon

Agenda’ for European competitive-

ness.

This, too, has enhanced the impact

of the AEA initiative, since it is

clear that, for Europe to trade suc-

cessfully in a global marketplace, it

needs a strong international airline

industry.

Moreover, the airline industry itself

is a global player and competes

against carriers from every region

of the world, on a playing-field

which is not always level.

In the past, regulation has been

imposed in a largely piecemeal

fashion, addressing specific politi-

cal objectives as and when they

arise. Sometimes these objectives

diverge, and even conflict.

Two of these objectives, in particu-

lar, pull in different directions. Two

cities on opposite sides of the

world - Lisbon and Kyoto - have

given their names to specific goals

which, while not mutually exclu-

sive, will need a level of engage-

ment from the EU‘s decision-

makers greater than hitherto if they

are to be achieved.

While the Kyoto Protocol is the

better-known, the Lisbon commit-

ment to European competitiveness

is nonetheless a driver of EU pol-

icy. Unfortunately, too much of the

present crop of regulation, actual or

proposed, appears to weaken the

European airlines vis-à-vis their

global competitors.

The AEA Action Plan is, in fact, a

challenge to the European rule-

makers - design and develop a

regulatory structure within which all

sectors of the industry can flourish.

It should be stable, transparent and

predictable, and its elements

should conform to a single vision,

recognising the importance of air

travel for the social, political and

economic fabric of Europe, com-

bined with environmentally-

responsible policies and a determi-

nation that European airlines retain

their position as globally-respected

brands.


AB

CD

EJ

I

HG

F

BA

DC

FE

HG

JI

seicneiciffEskrowteN fo

gniylf tfarcriA 5evres tniop-ot-tniop

tuo gniylf tfarcriA 5tcennoc buh a fo

setuoR 5

snoitcennoC 55

snoitcennoC 012

2 Connected hubsmultiply

the connectivity

Making European AviationMore Efficient and SustainableAEA’s Call for Action

Network Airlines – Securing Europe’s prosperity and mobility

Why?

Since 2001, European network airlines haveadapted to new market conditions by slash-ing all costs under their control. They havereduced staff by 35,000 and readjusted thei rbusiness models. The airlines’ cost reductionsare, however , neutralised by external costincreases – costs beyond the control of theairlines.

The regulators must focus on the rightissues .

Airlines are faced with substantial costincreases for anti-terror security , insurancepayments, implementation of cumbersom eregulations and an array of taxes and fees.

The so-called Lisbon agenda set out a num -ber of measures designed to promote thecompetitiveness of the European industr y inall sectors. In order to fulfil that politicalobjective, European regulators must alsoensure that the backbone of European pros -perity , aviation, can become and remai ncompetitive.

For this industr y to thrive sustainably in theglobal market, not only must the airlines ’costs be further reduced, but the aviationsystem costs must also be brought in line.Airports, air traffic control systems and otherservice providers must become market-ori -ented. Governments must act now toensure that the entire aviation sector is fullyliberalised – not only airlines but all the players.

Our lifestyles, our living standards – canwe take them for granted?

After a long haul flight from Australia, theFar East, North or South America, virtuallyever y city in Europe is just a short connectingflight away.

We live in an interconnected world.Transport guarantees that goods and ser vic-es are available at our fingertips. Airlines arean important part of that network. They pro -vide access to global markets for Europeanbusiness, secure over 3 million jobs in Europeand enable the sourcing of goods and ser vic-es that enrich our lives. Without travel andlogistics things don’t happen. Many regionsof Europe would simply wither without theservices of civil aviation. Airports are thegateways – and airlines keep businesses con-nected with the rest of the world .

The airlines’ contribution to global eco-nomic growth is under threat.

According to the statistics of theInternational Civil Aviation Organisatio n(ICA O), the scheduled airlines of ICAO’s 188member states have experienced a com -bined loss of USD 13 billion over the past 14years. AEA statistics reflect this trend for theEuropean network airlines. Network airlinesare not able to generate sufficient returns oninvestments even when economic cyclespeak.


The ‘Lisbon Agenda’ - What is it?

The ‘Lisbon Agenda’ - or Strategy,

or Process - has entered the EU

collective consciousness through

its very public re-launch in 2004 by

the new President of the European

Commission, Josè Manuel Barroso.

In fact the Strategy first appeared

at the European Council meeting,

in the city from which it took its

name, in March 2000.

Its aim was for Europe “to become

the most competitive and dynamic

knowledge-based economy in the

world, capable of sustainable eco-

nomic growth with more and better

jobs and greater social cohesion’’.

The concept of a Knowledge

Economy is one which has a strong

resonance with the airline sector.

The industry has always had a high

information/knowledge intensity

and indeed was a pioneer in the

widespread application of computer

technology.

Globalisation is a key driver of the

Knowledge Economy, as the EU’s

policy recognizes. The European

airlines are facilitators of global

business and, at the same time,

participants in a global marketplace.

A further feature of the Knowledge

Economy is networking and con-

nectivity. Evidently, the full-

service network airlines have a

wealth of experience in maximizing

this aspect of their business model

which, essentially, is what differen-

tiates them from the new breed of

‘no-frills’ carriers.

The Lisbon Agenda has strong

social and environmental dimen-

sions. A stronger economy will

drive job creation, but the process

must also encompass environ-

mental policies which ensure that

development is sustainable.

As well as the 400,000 people di-

rectly employed by European air-

lines, many more owe their liveli-

hoods to other aviation sectors,

industries which provide goods and

services to aviation, to its passen-

gers, and to its workers.

For this reason, AEA is very anx-

ious that the relaunch of the Lisbon

Agenda reshapes the European

regulatory environment, to the ex-

tent that regulatory measures are

formulated in a manner which is

consistent with maintaining the

industry’s, and hence Europe’s,

competitiveness.

In particular, new regulations

should be subject to a full assess-

ment of their likely impact, on air-

lines’ economics, on jobs, on their

relationship with their customers,

and especially on their competitive

situation vis-à-vis their global com-

petitors.


Infrastructure

When the European airline sector

was liberalised more than ten years

ago, the stated aim was to offer the

passenger more choice and lower

fares.

Clearly, both of these objectives

have been achieved, but at the

cost of congestion and delay.

Since the last pre-liberalisation

year, 1992, passenger traffic on

AEA intra-European routes has

almost doubled. During the same

period the average aircraft size has

fallen from 124 to 119 seats.

This has placed a great deal of

strain on infrastructure, notably

airports and airspace.

Airports are the airlines’ key ser-

vice providers. In particular, net-

work airlines rely upon their hub

airports to be able to operate a

consistent pattern of incoming and

outgoing flights and thereby offer

convenient connectivity.

Hub-based networks compete vig-

orously with each other - this is

indeed one of the most important

legacies of the liberalisation proc-

ess. This competition can be se-

verely distorted if an airline cannot

access the capacity it needs to

match its rivals.

Throughout the post-liberalisation

period, far more political effort has

gone into managing the problem of

capacity shortage, than solving it.

Successive slot regulations have

sought to redistribute capacity

away from the incumbent network

carriers, despite the consequence

that this fragmentation weakens

competitiveness on the pan-

European and global scale.

Meanwhile, procedures for infra-

structure construction - be it termi-

nal buildings or runways - are ex-

tremely complex and lengthy.

As traffic has grown in the chang-

ing regulatory environment, the

business of operating airports has

also been transformed. With sub-

stantial revenue streams from both

aeronautical and non-aeronautical

activities, airports are blue-chip

investment opportunities.

The ongoing privatisation of air-

ports paves the way for private

investors to ensure that efficient

organisational structures and ap-

propriate market-oriented strate-

gies are put in place.

There is a need, however, for regu-

latory safeguards, recognising the

natural monopoly of the hub air-

ports, but also their potential to

generate higher returns from non-

aviation-related activities. Gov-

ernments must ensure that instru-

ments to steer growth-related avia-

tion policies are available to them.


Infrastructure

The other pillar of aviation infra-

structure, airspace and its man-

agement, also has a politi-

cal/regulatory dimension, albeit the

perspective is somewhat different.

The enactment of the Single Euro-

pean Sky legislation in early 2004

created the de jure framework for a

unified European airspace.

The ongoing task is to make this

long-held ambition (on the part of

the users) a reality through the

dismantling of the archaic, frag-

mented Air Traffic Control system

which for 15 years has been rec-

ognised as a source of delay, inef-

ficiency and environmental dis-

benefit.

The Single Sky brings together not

only a large number of sovereign

‘territories’ in three dimensions, but

also a similar number of pre-

existing route networks which meet,

not always seamlessly, at national

frontiers. Within these frontiers,

the sometimes incompatible re-

quirements of civil and military traf-

fic have to be accommodated.

In other words, the redesign of

European airspace involves both

the political will to reassess sover-

eignty issues, and the expertise to

construct a network of airways fine-

tuned to the needs of the market,

rather than the exigencies of na-

tional borders.

AEA is heavily involved in projects

which will use the Single Sky

framework to achieve early imple-

mentation of Air Transport Man-

agement (ATM) improvements,

and in the longer term to define the

baseline of an ATM system for

2020 and map out the transitional

stages necessary to achieve it.

Throughout these processes, it is

of the greatest importance that the

parties involved - national authori-

ties (civil and military), Eurocontrol,

service providers and airspace

users - remain focused on the ob-

jectives; the achievements in build-

ing the Single Sky framework are

too important to be squandered.

1989

1991

1993

1996

2000

2001

2002

2004

2005

2006

2008

2011

Airbus 380Terminal 5 at LHR

From concept to reality

Talks begin for super-large passenger aircraft.Airbus consortium partners work on individual schemes which lead to A3XX project.

Airbus Large Aircraft Division formed. Projectchiefs opt for new specially designed engines tocope with aircraft size.

Commercial launch of the A3XX, later named A380.

Work begins on manufacturing key components in UK.

A380 to take off as a commercial airliner.Singapore Airlines to operate first trailblazing aircraft.

First engines delivered by Rolls-Royce - 2 months laterthe first wing rolls off the production line. Assembly beginsin May.

Design competition.

Planning application submitted.

Go-ahead decision.

Construction begins.

Planned opening.

Fully complete.

A380 unveiled to the world first test flight in April.

Are we there yet?


Environment

Recent months have seen a sig-

nificant raising of the stakes in the

debate on aviation’s environmental

impact.

While the European airlines con-

tinue to work towards defining an

Emissions Trading scheme for

Carbon Dioxide (CO2) which will

have a genuine impact on the sec-

tor‘s contribution to climate change,

external pressure to subject it to a

Taxes and Charges regime has

intensified.

Curiously, the issue has been

linked to humanitarian as well as

ecological objectives. In Septem-

ber 2000, 189 governments signed

the UN Millennium Declaration

which set a number of Develop-

ment Goals to be achieved by 2015,

aimed at reducing poverty and ine-

quality, and improving education

and health on a worldwide scale.

Financing these commitments is

currently under debate. Following

comments by the French and Ger-

man Premiers, the EU ECOFIN on

12 April 2005 was presented with a

proposal which, amongst other

suggestions, included two aviation-

related sources of revenue: a ticket

tax of €10 for intra-EU journeys

and €30 from an EU to a non-EU

destination, and a kerosene tax of

€330 per 1000lit of fuel, for intra-

EU journeys.

These proposals, it was argued,

would also benefit the environment,

(a) by reducing the demand for air

travel and hence the production of

greenhouse-gas emissions, and (b)

by giving the airlines an incentive

to invest in greener, fuel-saving

technology.

The impact on AEA airlines, how-

ever, would be immense. Annual

revenue losses could be as high as

€9bn per year. Total profit in 2004

was around $0.4bn, and has never

exceeded $2.5bn even in the very

best of trading circumstances.

For European airlines, it would be

extremely damaging to their global

competitiveness. Financially-weak

airlines, operating out of an artifi-

cially-constrained home market,

would find it ever more difficult to

take on competitors from around

the world who are more than likely

enjoying active government sup-

port. Circumstances would also

arise where passengers could re-

duce their tax exposure by choos-

ing non-EU carriers for journeys

involving hub transfers.

Ironically, the very communities in

the developing world that the initia-

tive is supposed to help would be

among those who suffer. Euro-

pean airlines are net contributors to

the economies of the developing

world, in terms of tourism, trade

and social mobility.

AEA believes that other, far more

efficient, mechanisms for contain-

ing emissions can be developed.

These include infrastructural im-

provements which could deliver

substantial reductions but which

require political will for their imple-

mentation. They also include tech-

nological improvements in the form

of more efficient aircraft although

these require the financial re-

sources on the part of the airlines

to replace their fleets.

Ultimately, AEA sees the need to

evaluate an Emissions Trading

scheme whereby airlines buy and

trade credits. This too would not

be without its costs but would have

the multiple benefits of ensuring

that resources are directed to

where they do the most good, of

being capable to be fine-tuned to

meet specific targets, and being

suitable for implementation on a

global scale.


Protecting the Consumer

The early months of 2005 have

seen a flurry of regulatory activity in

the field of consumer protection.

Most importantly, the 1991 Regula-

tion on Denied Boarding Compen-

sation was revised, effective Feb-

ruary 17th, to increase compensa-

tion levels for involuntary denied

boarding, extend the compensation

to cancelled flights, and provide for

assistance, accommodation and

refund in the case of delay.

The legislation also made it man-

datory to conduct volunteer calls in

instances where not all booked

passengers can be accommo-

dated. This has long been pro-

posed by AEA as a solution to de-

nied boarding, and inconsistent

with a punitive statutory compensa-

tion level.

However it is in the other provi-

sions of the rules where the airlines

encounter most problems with the

new legislation. Specifically, they

are wholly inconsistent between

delay and cancellation in the cir-

cumstances that can trigger the

provisions, as well as being totally

unclear as to what those circum-

stances might be.

All delays are deemed to be the

responsibility of the airline in terms

of applying the conditions of the

Regulation. This is an evident in-

congruity given that most delays

are outside the control of the air-

lines and that major events such as

extreme weather and politically-

driven decisions can cause mas-

sive schedule disruption.

As regards service cancellation,

the airlines can claim relief in the

case of exceptional circumstances,

but the legislation gives no guid-

ance as to when this might apply.

Apart from the obvious cost impli-

cations of such burdensome and

poorly-constructed legislation, air-

lines believe that their fundamental

relationship with their customers

may be threatened.

While any travel plans, by any

travel mode, are susceptible to

unforeseen disruption, major in-

convenience of the kind covered by

the EU Regulation is extremely

rare.

When it occurs, the most likely

reaction of a service-driven quality

airline is to act in its customersí

best interests. Flexible solutions

are invariably favourable to manda-

tory ones. The new rules could

work against flexible solutions,

however.

One of the major obstacles to

maintaining a good relationship

with the customer is likely to be the

misunderstanding and misinforma-

tion surrounding the issue.

Within days of the Feb 17th imple-

mentation date, a number of high-

profile incidents involving severe

weather, strikes and in-flight tech-

nical malfunctions attracted wide-

spread publicity, invariably over-

stating or misrepresenting the pas-

sengers’ statutory rights.

In such circumstances, it is inevita-

ble that passenger expectations in

the case of journey disruption will

on occasion differ from the per-

spective of the airline, with damag-

ing outcomes.


External Relations

The AEA Action Plan highlights the

necessity for the EU to develop an

external aviation relations policy

which is coherent, pragmatic, and

which delivers added value to the

airlines and their customers.

What the policy should avoid is that

it should become driven by political

rather than commercial objectives.

Following the suspension of EU/US

negotiations in 2004, the Commis-

sion has sought to extend its man-

date to other ‘Third Countries’ in

the wake of the 2002 European

Court of Justice ruling that estab-

lished Community responsibilities

in certain areas of external rela-

tions in aviation.

While US talks are being reacti-

vated in early 2005, the Commis-

sion is also pushing to secure a

mandate to negotiate comprehen-

sive agreements with a number of

other countries, top of the list being

Russia and China.

There are also moves to extend the

frontiers of the European Single

Market for air transport, in succes-

sive waves of expansion taking in

firstly Romania, Bulgaria and the

Western Balkans, then the coun-

tries bordering the Mediterranean

to the East and South, then

Europe’s Eastern neighbours from

the former USSR.

Finally the ‘horizontal mandate’ allows the Commission to negotiate

worldwide to amend nationality

clauses in bilateral agreements

(which limit operations to the air-

lines of the two countries con-

cerned) and other areas addressed

by the ECJ ruling.

With technical discussions between

Europe and the USA having re-

sumed in early 2005, the hope of

the European airlines is that full

talks may be resumed as quickly

as possible.

The AEA airlines remain convinced

that the preferred solution for the

North Atlantic is the ‘Open Aviation

Area’ concept developed in the

1990s by AEA and adopted by the

European Commission and the

Member States.

This model provides for a genuine

single-market construction in which

harmonised rules impose a mini-

mum of intervention consistent with

fair and equal opportunities

throughout the three market enti-

ties: Europe, Transatlantic and the

USA.

Although the AEA airlines agree

that it cannot be achieved in one

step, such a solution, it is believed,

would bring benefits to the carriers

of both sides - who are facing the

same challenges - as well as to

European and US consumers.


Security

According to a European Commis-

sion study, European airlines were

saddled with costs of at least €1.6

billion for ‘additional security’ in

2002 alone.

Out of this figure, an estimated

€1bn was not passed on to the

passenger, but was absorbed by

the carriers.

As highlighted in the study, there is

an almost total lack of public fi-

nancing for aviation security, de-

spite the fact that perceived threats

- like the 9/11 attacks - are almost

invariably aimed at civil populations

and national institutions, rather

than specifically at the airlines and

their passengers.

The study also revealed that the

measures undertaken as a reaction

to 9/11 were imposed without cost

impact or risk assessments, de-

spite the fact that measures such

as cockpit door strengthening and

insurance requirements have

grown out of all proportion to the

original threats.

In addition, extra-territorial meas-

ures continue to be imposed,

mainly by the United States, with-

out consultation with the European

carriers‘ national authorities.

With many transit passengers en-

countering a comprehensive EU

security process before being sub-

jected to an equally comprehensive

- but different - screening as they

board their US-bound flight, there

is a pressing need for mutual rec-

ognition of security standards, to

avoid the costly legal obligation to

re-screen transfer passengers and

baggage.

Other divergences are arising in

the area of passenger data provi-

sion. AEA continues to request a

central storage/filtering system to

be recognised as part of national

security obligations, and funded as

such.

Meanwhile, other countries have

followed the US’ lead in introducing

data provision requirements, but

which differ from one state to an-

other. The cumulation of divergent

requirements adds yet another

layer of cost burden onto airline

operations.

It is self-evident that US airlines are

equally affected by the imposition

of new security rules and, as in

Europe, the US Administration

does not apply cost impact as-

sessment procedures to its rule-

making.

Nevertheless, there has been a

willingness on the part of the US

government to fund these meas-

ures; the financial assistance

granted to the US aviation industry

is estimated at $32 billion from

2002 to 2004.

AEA continues to call for a balance

between the costs, the benefits and

the efficiency of each new security

measure. Systematic impact as-

sessments should be carried out,

as recognised by the improve-

ments in regulatory processes

called for under the ‘Lisbon

Agenda’.

Legislation, as it arises, should

address the question of who is

responsible for what - including

who picks up the bill.


The Big Picture...


The global economy depends on

networks - be it telecommunica-

tions or transport, on the ground or

in the air.

Europe’s network airlines are in-

dispensable for the smooth and

efficient functioning of global trade

and understanding between peo-

ples.

The concept of a shrinking world or

a ‘global village’ would not and

could not exist without air transport.

Equally, in Europe, aviation is an

essential part of the geographical,

political and social framework.

Between the 25 EU Member States

there exist 300 possible country-

pair markets. While they obviously

vary in size, these are real travel

markets, particularly since the 2004

enlargement, with real levels of

demand.

Very many of these are only served

by air. For many more, in a Single

Market which stretches 4000km

from North to South and 3000km

from East to West, air is the only

practicable mode of transport.

Without air transport, the funda-

mental concept of the free move-

ment of people, goods and ser-

vices throughout the Community

would be meaningless.

“ Let me be clear on

this. I see a thriving

flourishing aviation

industry as an essen-

tial component of the

EU’s economy and a

pre-requisite for our

continued prosperity.

...

Our economy also

depends on air travel.

Many businesses, in

both manufacturing

and service industries,

also rely on air travel;

and it is particularly

important for many of

the fastest growing

sectors of the econ-

omy ’’ .

Günter Verheugen Commission Vice-President responsible for Enterprise and Industry

AEA would, of course, fully en-

dorse Vice-President Verheugen’s

views. It is also very encouraging

for the industry that Vice-President

Barrot, Transport Commissioner,

has chosen to consult intensively

with AEA Presidents on strategic

issues.

The industry needs a period of

regulatory clarity. The ‘Lisbon

Agenda’ for European competitive-

ness offers a clear direction; regu-

lation of key sectors of European

industry needs to conform to a co-

herent vision.

Within this coherent vision, dispa-

rate parts have their place - the

environment, consumer concerns,

social issues - but each needs to

be addressed in the context of the

whole. They are all part of the Big

Picture.

An elemental component of the

AEA Action Plan is a High Level

Political Conference on Air Trans-

port Policy, involving all the Euro-

pean Institutions - Transport and

Finance Ministers, the Commission,

the Parliament, in dialogue with the

stakeholders.

With a clear understanding of the

industry’s problems, and the indus-

try’s potential to contribute to a

successful Europe, today’s deci-

sion-makers can significantly influ-

ence the lifestyle and livelihood of

tomorrow’s European citizens.

Contents

AEA Airlines in 2004 1 n At a Glance 2 n Global Economic Environment 4 n Traffic Trends 2004 5 n Spotlight on the North Atlantic 6 n Operating Results 2004 7 n No- Frills ‘Bloodbath’ - D id it Happen? 8





AEA Fast Facts

30

60

316

675

159

10,700

2,400

339,000

6

member airlines

billion € turnover

million passengers carried

million tonnes of cargo

destinations served

countries served

flights every day

aircraft in fleet

employees


About AEA

The Association of European Air-

lines is an industry organisation

representing 30 major European

airlines, with a collective turnover

of € 60bn, carrying more than 316

million passengers and 6 million

tonnes of cargo in 2004. AEA air-

lines operate 10,700 flights daily

with a fleet of more than 2,400 air-

craft, serving 675 destinations

worldwide, with a combined staff of

just over 339,000. The membership

of AEA includes European sched-

uled and charter, passenger and

all-cargo carriers, operating do-

mestic, European and international

services.

AEA is a non-profit making asso-

ciation. It operates for, and is rep-

resented jointly by all its members,

expressing the common interests

of its members at international and

governmental level. The Secretary

General acts as the Association’s

spokesman.

The AEA is governed by the full

Assembly of Presidents of its

member airlines. The Presidents

elect a Chairman to represent and

support the AEA for a period of one

year, assisted by the so-called

Presidents’ Committee, which is

composed of the past and present

Chairmen, the Chairman-elect and

nine other Presidents elected by

the Assembly.

The AEA Secretariat, with at its

head the Secretary General, is

located in Brussels and has a staff

of twenty-two.

Assembly of Presidents

Chairman 2005

Presidents' Committee

Fernando Pinto, TAP Portugal

Jean-Cyril Spinetta, Air FranceGiancarlo Cimoli, AlitaliaVagn Soerensen, AustrianRod Eddington, British AirwaysIvan Misetic, Croatia AirlinesKeijo Suila, FinnairFernando Conte, IberiaLeo van Wijk, KLMWolfgang Mayrhuber, LufthansaJorgen Lindegaard, SASRob Kuijpers, SN Brussels Airlines

AEA Secretariat

Ulrich Schulte-Strathaus, Secretary GeneralNathalie Mulleners, Executive Assistant

Giancarlo Crivellaro, General Manager Political AffairsSefik Yuksel, General Manager Trade & Social AffairsLe Thi Mai, General Manager Infrastructure & EnvironmentGuenter Martis, General Manager Technical & OperationsDavid Henderson, Manager InformationVincent de Vroey, Manager Operations & ATMNathalie Herbelles, Manager Legal AnalysisJulia Egerer, Manager Trade & Social AffairsDoreen Blow, Event Co-ordinatorAnn Flynn, Administrative AssistantYvonne Hopkins, Administrative Assistant

Sue Lockey, General Manager Market ResearchDario Spila, Manager Research & AnalysisStefan Bruehlmann, Manager Strategy & Statistics

Mario De Smedt, IT ManagerAnne-Marie Weirauch, Information Base ManagerDidier Poriau, Publishing Manager

Seya Immonen, General Manager Finance & AdministrationJozef Swalus, Specialist Printing & DispatchMiriam Swan, Administrative Assistant

Secretary General

Political Communications Team

Market Research Team

IT Team

Administration Team


^

moc.syawria-airda.

ww

wAdria AirwaysKuzmiceva 71000 LjubljanaSlovenia

17 Scheduled Destinations1 within Slovenia16 rest of Europe0 beyond Europe

552 Employees

9 Aircraft in Fleet3 Airbus A3206 Canadair CRJ-200

0 Aircraft on Order

Status at 31st December 2004 for informationon destinations, employees and fleet.

Owned by…56% Slovenian Pension Fund20% Slovenian Restitution Fund6.5% Daimond d.d.6% Zvon ena holding5% Infond - Investment Company2% National Finance Corporation2% Employees and others1.5% Zvon ena i.d.1% Zlata moneta d.d.

Owner of…-

Major partnershipsMember of the Star Alliance.Various code-share agreements: Aeroflot,Austrian, Croatia Airlines, LOT PolishAirlines, Lufthansa, Montenegro Airlines.

Financial Results€mill 2004 2003

Turnover 133 122Operating profit/loss 3.8 3.9Net profit/loss 0.17 0.45

Review of 2004

Adria Airways was accepted into the Star Alliance in 2004.Adria was one of 6 new applicants, including US Airwaysand South African Airways, accepted into the world’slargest alliance last year. Following regional Scandinavianairline Blue1 in November, Adria Airways and fellowBalkan carrier Croatia Airlines became regional membersin December, extending the alliance’s coverage into thenew Eastern European EU countries. ‘Regional’ membersare sponsored and represented by an established alliancemember with existing links with the prospective newpartners. For Adria Airways and Croatia Airlines Lufthansatakes this role.

Adria Airways launched a co-operation agreement withPolish airline LOT. The agreement includes code-shareon services between the two capitals, Warsaw andLjubljana, timed to coincide with the accession of the twocountries to the European Union on 1st May 2004.

In the fleet Adria took delivery of an additional CanadairRegional Jet 200. The company operates a total of sixaircraft of this type and is an authorised Bombardiercentre for heavy maintenance and overhaul checks forCRJs in Europe. A further three Airbus A320 bring thefleet total to 9 aircraft.

In August Adria was amongst the first airlines in the worldto receive the IATA Operational Safety Audit certificate(IOSA).

Branko LucovnikPresident


moc.sugnilrea.w

ww

Aer LingusDublin AirportDublinIreland

44 Scheduled Destinations3 within Ireland36 rest of Europe5 beyond Europe

3906 Employees

34 Aircraft in Fleet4 Airbus A330-3003 Airbus A330-2006 Airbus A321-20012 Airbus A320-2006 Boeing 737-5003 Boeing 737-400

11 Aircraft on Order11 Airbus A320-200


Owned by…95.24% State ownership4.76% Aer Lingus employees

Owner of…-

Major partnershipsMember of the Oneworld Alliance.Code-share agreements with AmericanAirlines, British Airways, Crossair Europe,Finnair, Iberia, KLM and SWISS.


Turnover 906.8 888.3Operating profit/loss 107.0 83.0Net profit/loss 1.2 69.2

Review of 2004

Throughout 2004 Aer Lingus continued its strategy oftransforming the State-owned airline into a streamlinedand profitable company. Measures taken included thecontinued promotion of aerlingus.com (the website) as theprimary distribution channel, now exceeding 60% of allbookings, fare restructuring (sale of one-way fares only,no restrictions, changes permitted with surcharge), farereductions and the introduction of a new user friendly selfservice check-in service.

The airline continued to increase its profit levels, postingan operating profit in excess of EUR 100 million in 2004.After deduction of exceptional costs related to on-goingrestructuring, net profit stood at EUR 1.2 million.

The fleet currently consists of a mix of Boeing and Airbus.The transition to an all-Airbus fleet, which is a key elementof the company’s cost saving and increase of operationalflexibility plans, is scheduled to be completed by the endof 2005.

In the network, Aer Lingus introduced some seventeennew routes in 2004, including Bristol, Liverpool, LasPalmas, Lanzarote, Budapest and, on longhaul, Orlandoin Florida.

In the latter part of the year Chief Executive Willie Walshtendered his resignation and left the company in January2005. The appointment of Dermot Mannion, currentlyPresident of Group Support Services at Emirates, as newChief Executive from August 2005 was subsequentlyannounced.

Dermot MannionChief Executive

wef August 2005


moc.ecnarfria.w

ww

Air France45 rue de Paris95747 Roissy CDG CedexFrance

200 Scheduled Destinations35 within France68 rest of Europe97 beyond Europe

71654 Employees (Group, average FY 03-04,where air transport accounts for +/-84%.)

252 Aircraft in Fleet22 Airbus A340-30013 Airbus A330-20013 Airbus A321-100/20067 Airbus A320-100/20043 Airbus A319-1007 Airbus A318-1006 Boeing 777-30025 Boeing 777-20016 Boeing 747-4004 Boeing 747-400F8 Boeing 747-200/3008 Boeing 747-200F20 Boeing 737-500

34 Aircraft on Order10 Airbus A3803 Airbus A330-2002 Airbus A319-1008 Airbus A318-10010 Boeing 777-3001 Boeing 747-400F

Status at 31st December 2004 for informationon destinations and fleet.

Owned by…64% Public Float18.7% State ownership17.4% Air France employees

Owner of…100% Régional, Brit Air, CityJet96% KLM39% Sté Nouvelle Air Ivoire33.4% Air Austral11.9% CCM (Corsica)7.7% Air Mauritius7.5% Air Tahiti5.6% Tunis Air3.6% Cameroon Airlines3.5% Air Madagascar2.9% Royal Air Maroc2.1% Air Calédonie2% Alitalia1.5% Austrian

Major partnershipsMember of SkyTeam Alliance.Franchisees:Régional, Brit Air, CityJet, CCM.Various code-share agreements incl. withAustrian, China Eastern, China Southern,Middle East Airlines, Qantas, Royal AirMaroc, South African Airways, TAM,Tunisair.

Financial Results (Group FY 31st March)€mill 2004/05 2003/04

Turnover 12337Operating profit/loss 139Net profit/loss 93

Review of 2004

In May 2004, the consolidation agreement of Air Francewith KLM, which was signed in October 2003, wasfollowed by an exchange of common shares, the issuanceof new shares and the privatisation of Air France, with theState holding falling to 44.2%. In December 2004, theFrench State subsequently reduced its equity stakefurther, with the sale of 18.4% of the airline’s capital. Atthe beginning of this year, in February 2005, employeeswere able to acquire shares through two offerings,whereupon the French State’s stake in the capital of AirFrance-KLM dropped below 20%, to 18.7%, with 17.4% ofshares held by employees, 2% retained by the Group andthe remainder floated publicly.

As of June 2004, the first benefits of the co-operationbetween Air France and KLM came into effect, with co-ordinated schedules between Paris-CDG and Schipholhubs, complementary world networks and combinablefares. More recently the frequent flyer programmes weremerged, named Flying Blue, effective from June 2005.

During the Spring, the company launched a newEuropean product offering new ground and in-flightservices, and a better targeted price schedule. On long-haul, the first 777-300ER went into service on the ParisCDG-New York route, with the New Air France TravelConcept.

Jean-Cyril SpinettaChairman


moc.atlamria.

ww

wAir MaltaHead OfficeLuqa LQA05Malta

47 Scheduled Destinations2 within Malta41 rest of Europe4 beyond Europe

1834 Employees

14 Aircraft in Fleet4 Airbus A320-2004 Airbus A319-1006 Boeing 737-300

8 Aircraft on Order5 Airbus A320-2003 Airbus A319-100


Owned by…97.9% State ownership2.1% Private shareholders

Owner of…100% Malta Air Charter Co Ltd49% AZZURRA Air

(declared bankrupt July 2004)

Major partnershipsCode-share agreement with SN BrusselsAirlines.

Financial Results (FY 31st July)

€mill 2004/03 2003/02Turnover 219.1 215.8Operating profit/loss 9.0 8.2Net profit/loss (34.4) (54.6)

Review of 2004

The year under review was one of challenge and changefor Air Malta, as the industry as a whole struggled to copewith external pressures, including the escalation in fuelprices. In the same year Malta acceded to the EuropeanUnion, participating in the internal market as a fullyfledged Community carrier, taking advantage of the newlyextended geographical borders and rising to the challengeof free competition.

Air Malta’s mission as a scheduled leisure airline has notchanged. However external developments havenecessitated internal change, starting with a modificationin the airline’s strategic objectives and focus on its coreoperations and followed by a major re-organisation of itstop management, that culminated in the appointment ofseven Chief Officers heading the company’s Divisions,soon to be followed by other appointments at GeneralManager level and a zero-based approach to the rest ofthe organisation.

During 2004 the airline also took delivery of eight newAirbus aircraft, four A320s and four A319s, the latter beingthe first of the aircraft type to be put into service at AirMalta. Re-fleeting will continue until 2008 by which timeAir Malta will be operating an all Airbus fleet.

In the latter part of the year a code share agreement wasconcluded with SN Brussels Airlines covering flightsoperated by Air Malta between Malta and Brussels.Discussions with various other carriers are on-going and anumber of code-share agreements will come into force in2005.

Lawrence ZammitChairman


moc.ailatila.w

ww

Alitalia – Linee Aeree Italiane SpaViale Alessandro Marchetti 11100148 RomaItaly

94 Scheduled Destinations22 within Italy44 rest of Europe28 beyond Europe

20575 Employees

190 Aircraft in Fleet155 of which Alitalia23 Airbus A32111 Airbus A32012 Airbus A31910 Boeing 777-20013 Boeing 767-3002 Boeing 747-200F79 MD82 (3 grounded)5 MD11 (2 grounded)35 of which AZ Express6 Embraer RJ-17014 Embraer RJ-14510 ATR-725 ATR-42 (1 grounded)

0 Aircraft on Order


Owned by…62.4% State ownership35.7% Private investors2% Air France

Owner of…100% Alitalia Express2% Air France

Major partnershipsMember of SkyTeam Alliance.Various code-share agreements incl. withJAL and Varig.

Financial Results (Group)

€mill 2004 2003Turnover 4074 4320Operating profit/loss (97) (53)Net profit/loss - (520)

Review of 2004

In October 2004 the Alitalia Board adopted an IndustrialPlan (2005-2008) which provides for a split of the nationalcarrier into two separate companies: AZ Services and AZFly. The non-core ground support business AZ Servicewill include ground support, maintenance, accounting,administration and IT. State-owned engineering holdingcompany Fintecna is due to take control of AZ Servicesand will then dispose of the various activities involved.Alitalia will retain the flight operations part of the company.

The Industrial Plan, which includes substantial cost cutsand productivity improvements, was formally backed bythe Unions on 6th October 2004. The EuropeanCommission is currently reviewing the Plan, which mustobtain official approval, with a pronouncement due in2005.

Meanwhile the company activated a EUR 400 millionbridging loan guaranteed by the Italian Government andprovided by the Dresdner Wasserstein Bank. The loanwas approved by the European Commission in July 2004with a commitment from the Italian authorities to lowertheir shareholding in Alitalia below 50% (the Governmentcurrently holds a 62.4% stake).

In accordance with such commitment, a specific Decreewas adopted by the Government on 3rd February 2005setting out the modalities of such privatisation.

Giancarlo CimoliChairman & CEO


ta.oc.senilrianairtsua.w

ww

AustrianFontanastrasse 1P.O. Box 501107 ViennaAustria

130 Scheduled Destinations6 within Austria84 rest of Europe40 beyond Europe

7984 Employees (Group)

97 Aircraft in Fleet27 of which Austrian2 Airbus A340-3002 Airbus A340-2004 Airbus A330-2003 Airbus A321-2003 Airbus A321-1008 Airbus A320-2003 Airbus A3192 MD8318 of which Lauda Air3 Boeing 777-2006 Boeing 767-3004 Boeing 737-8002 Boeing 737-7001 Boeing 737-6001 Boeing 737-4001 Boeing 737-30052 of which Austrian arrows8 Bombardier Q40012 Bombardier Q30017 Canadair CRJ-1006 Fokker 1009 Fokker 70

8 Aircraft on Order2 Airbus A3192 Boeing 737-8001 de Havilland Dash-83 Fokker 100


Owned by…39.7% OIAG Austrian Privatisation Agency43.5% Free float10.3% Austrian Institutional Investors5.0% Austrian Airlines1.5% Air France

Owner of…100% Tyrolean Airways100% Lauda Air22.5% Ukraine International Airlines

Major partnershipsMember of the Star Alliance.Various code-share agreements incl. with AirChina, Air India, Air Mauritius, ANA, bmi,Croatia Airlines, Egyptair, El Al, Jat Airways,LOT, Lufthansa, MAT, SAS, Spanair, ThaiAirways, Ukraine Intern’l and United Airlines.


€mill 2004 2003Turnover 2363.5 2242.7Operating profit/loss 79.4 63.3Net profit/loss 40.2 45.8

Review of 2004

In February Swiss investment bank Credit Suisse FirstBoston sold its remaining stake in Austrian Airlines Group,bringing the total proportion of AUA shares in free float to43.5%. The remaining shares in the company are splitbetween four groups. The OIAG Austrian PrivatisationAgency owns 39.7%. Austrian institutional investors holdsome 10.3%, Austrian Airlines 5% and Air France 1.5%.

Austrian continued to expand its ‘Focus East’ programmeto Central/Eastern Europe and into the Asia/Pacific regionwhere in the Summer timetable the company operated atotal of 39 destinations in Central and Eastern Europe and15 cities in Asia and Australia, integrating Singapore andShanghai into the network. In June a code-shareagreement with Singapore Airlines on Vienna-Singapore-Vienna was signed and Austrian achieved the completeintegration of all directly operated flights to Asia into StarAlliance partners flight schedules.

Austrian took delivery of its first Airbus A319 in February,the first of an order of 7 aircraft. The 126-seater aircraftreplaces the MD-80s in the fleet. Austrian Airlines alsooperates eight A320s and six A321s. In addition the grouphas agreed to the purchase of 15 Fokker 100s, some ofwhich will be deployed to fulfil the company’s expansioninto Central and Eastern Europe. An order for anadditional Boeing 737-800 for use by leisure carrier LaudaAir was also placed, bringing the total due in the fleet byJune 2006 to eight.

Vagn SoerensenCEO


’

moc.imbylf.

ww

wbmiDonington HallCastle DoningtonDerbyEast Midlands DE74 2SBGreat Britain

37 Scheduled Destinations14 within the United Kingdom17 rest of Europe6 beyond Europe

4621 Employees

42 Aircraft in Fleet29 of which bmi3 Airbus A330-20010 Airbus A321-20011 Airbus A320-2004 Airbus A319-1001 Fokker 10013 of which bmi regional10 Embraer RJ-1453 Embraer RJ-135

2 Aircraft on Order2 Airbus A319


Owned by…50% plus 1 share BBW

(private shareholders)30% minus 1 share Lufthansa20% SAS

Owner of…100% bmi regional100% bmibaby

Major partnershipsMember of the Star Alliance.Various code-share agreements incl. with AirCanada, Air New Zealand, ANA, Austrian,Gulf Air, LOT Polish Airlines, Lufthansa,Qatar Airways, Royal Brunei Airlines, SAS,Singapore Airlines, South African Airways,Spanair, Sri Lankan Airlines, TAP Portugal,Thai Airways, United Airlines, Virgin Atlantic.


mill 2004 2003Turnover 830 772Operating profit/loss - -Net profit/loss 2.1 (9.8)

Review of 2004

In 2004 long serving Chief Executive Austin Reid retiredto be succeeded by Nigel Turner, bmi chief financialofficer. Tim Bye, bmi legal director became deputy CEO.

In 2004 on the longhaul route network, bmi introducedManchester-Las Vegas services, from 31st October,supplementing the existing services from Manchester toWashington DC and Chicago. The Winter timetable alsosaw the inauguration of services from Manchester to threeCaribbean destinations – Antigua, Barbados and St Lucia.On the shorthaul route network in 2004, bmi introducedservices from London Heathrow to Aberdeen, Invernessand Naples, and from Aberdeen to Groningen.

Plans to supplement the longhaul network with services toIndia, were made possible in late 2004 when a newbilateral package was agreed between the UK and IndianGovernments. The bid was however, subsequentlyreverted to a UK CAA scarce capacity hearing, withseveral UK carriers vying for the 21 available weeklyfrequencies. Following this process bmi was awarded fourfrequencies, London-Mumbai, falling short of expectation.The carrier has appealed against the decision.

The company entered into new codeshare agreements in2004, with Singapore Airlines in March, Sri LankanAirlines in May and with Qatar Airways in November. bmialso requested authority from the US Department ofTransport to launch codeshare operations with USAirways on domestic flights within the UK and the US andon routes to third countries. The company alreadycodeshares with another Star Alliance member, UnitedAirlines.

In the fleet, bmi took delivery of its first Airbus A319, of 6aircraft ordered. The 130-seater A319 will be used toreplace the Fokker 100, to be used on shorthauloperations. Delivery of the remaining A319 aircraft in 2005will complete the transition to an all Airbus fleet formainline longhaul and shorthaul operations. Single fleetoperations also exist for bmi regional, operating Embraertype aircraft and low-cost subsidiary bmibaby, operatingBoeing 737 type aircraft.

Sir Michael Bishop CBEChairman

Nigel TurnerCEO

£


moc.syawriahsitirb.

ww

wBritish Airways plcWatersideP.O. Box 365Harmondsworth UB7 0GBGreat Britain


47370 Employees (Group*)

293 Aircraft in Fleet (Group*)

6 Airbus A32127 Airbus A32033 Airbus A31943 Boeing 77721 Boeing 767-30013 Boeing 757-20057 Boeing 747-40010 Boeing 737-50019 Boeing 737-4005 Boeing 737-30028 Embraer RJ-14516 Avro RJ1005 BAe 14610 de Havilland Dash-8

7 Aircraft on Order1 Airbus A3213 Airbus A3203 Airbus A319

Status at 31st December 2004 for informationon destinations, employees and fleet.* Group includes BA and BA CitiExpress.

Owned by…100% Publicly quoted company.

Owner of…100% British Airways CitiExpress18.3% Comair (South Africa)10% Iberia

Major partnershipsMember of the Oneworld Alliance.Franchisees: British Mediterranean, Comair(South Africa), GB Airways, Loganair (UK)and Sun-Air (Denmark).Various code-share agreements incl. withAer Lingus, America West, AmericanAirlines, Cathay Pacific, Finnair, Iberia, JAL,LAN Airlines, Qantas and SN BrusselsAirlines.

Financial Results (Group, FY 31st March)

mill 2004/05* 2003/04Turnover 5924 7560Operating profit/loss 500 405Net profit/loss 242 132

* Refers to 9-months to December 2004 only

Review of 2004

After 21 years as CE and Chairman, Lord Marshall retired.British Airways’ new Chairman is Martin Broughton.

With the close of its 2003/2004 financial year on 31st

March 2004, British Airways completed its two year FutureSize and Shape programme. The company concludedwith an improved financial position, the result of a farreaching cost cutting exercise, which included a 13,000headcount reduction. The new Business Plan 2004-2006aims to achieve a 10% operating profit margin.

In September British Airways completed the sale of its18.25% shareholding in Australian carrier Qantas,purchased in March 1993. The joint service agreementbetween the two companies was given draft approval for a5 year extension.

The company signed an extensive code-sharearrangement with American Airlines on flights between USand UK gateways and beyond, and an agreement todevelop a joint business with partner Iberia on key routesbetween London and Spain.

With a new bilateral agreement between the UK andIndia, and following a scarce capacity hearing at the UKCAA, British Airways was awarded 7 services to India,being 4 additional services to Chennai and 3 new servicesto Bangalore. British Airways has appealed this decision.

In October British Airways received its first Airbus A321. Atotal of six A321s were deployed by year-end, the 194-seater being used on high density shorthaul routes.

More recently, Rod Eddington announced his departure atthe end of September 2005 from the airline he has ledsince 2000. He will be succeeded by William Walsh,former CEO of Aer Lingus, who was appointed CE-designate in May 2005.

Rod EddingtonChief Executive

William WalshChief Executive designate

£


moc.xulograc.w

ww

Cargolux Airlines InternationalLuxembourg AirportL-2990 LuxembourgGrand Duchy of Luxembourg

63 Scheduled Destinations1 within Luxembourg9 rest of Europe53 beyond Europe

1298 Employees

13 Aircraft in Fleet13 Boeing 747-400F

2 Aircraft on Order2 Boeing 747-400F


Owned by…34.9% Luxair33.7% SAir Lines31.1% Luxembourg financial institutions0.3% Others

Owner of…-

Major partnershipsVarious agreements incl. with Aeromexpress,Alitalia, AZAL (Azerbaijan), China EasteranAirlines, China Cargo Airlines, Finnair andPacific East Asia Cargo.


US$ mill 2004 2003Turnover 1205.9 954.3Operating profit/loss 80.7 64.9Net profit/loss 83.5 70.9

Review of 2004

The air cargo market showed a strong performance in2004 growing by 13% measured in freight tonne-kilometres. Cargolux outperformed the market growth by2.4% and ended the year as the 8th largest cargo carrierworldwide (international ranking). The company reachedthe USD 1 billion revenue mark for the first time.

In the fleet, Cargolux added an aircraft in 2004 bringingthe company’s single aircraft fleet total to thirteen Boeing747-400Fs. Two further aircraft orders were placed duringthe year for delivery in October (new) and December(used) 2005.

In 2004 Cargolux furthered its co-operation with ChinaEastern Airlines/China Cargo Airlines in August andlaunched a partnership agreement in November withFinnair for a new route from Luxembourg, Helsinki toHong Kong.

The company inaugurated several new destinations,concentrated in Africa: Kinshasa, Lagos, Eldoret in Kenyaand Lusaka. These connect via Nairobi, Johannesburg,Beirut and/or Sharjah to Maastricht and homebaseLuxembourg. Other new services included an Asia-Spainconnection, between Hong-Kong and Barcelona.

In December Cargolux and SITA Information NetworkingComputing agreed to launch a new joint company, ChampCargo Systems dedicated to providing IT solutions to theair cargo industry, such as data exchanges with thirdparties, shipment tagging, warehousing, etc. Cargolux willtake a 49% stake in the company.

Ulrich OgiermannPresident & CEO


cargolux

rh.senilriaaitaorc.w

ww

Croatia AirlinesSavska 4110000 ZagrebCroatia

26 Scheduled Destinations8 within Croatia17 rest of Europe1 beyond Europe

1080 Employees

11 Aircraft in Fleet3 Airbus A320-2005 Airbus A319-1003 ATR 42-300

0 Aircraft on Order


Owned by…94.77% State ownership2.15% State agency1.46% Croatian Privatisation Fund0.79% Private individuals0.83% Other shareholders

Owner of…-

Major partnershipsVarious code-share agreements incl. withAdria Airways, Air France, Alitalia, Austrian,CSA, Lufthansa, LOT, SN Brussels Airlinesand Turkish Airlines.


Turnover 173.3Operating profit/loss 17.1Net profit/loss 2.0

Review of 2004

In 1989 the first Croatian carrier was established. Thecompany, known as Zagal or Zagreb Airlines, wasrenamed Croatia Airlines in 1990, following the country’sfirst democratic elections. In a year in which the companycelebrated the 15th anniversary of its creation, CroatiaAirlines experienced Croatia’s accession to the EuropeanUnion on 1st May 2004, and was accepted as a member ofthe Star Alliance. Croatia Airlines was one of 6 newpartners accepted to the Star Alliance in 2004, includingUS Airways and South African Airways. Croatia Airlinesand fellow Balkan carrier Adria Airways became activeregional members of the alliance in December 2004,extending the alliance’s coverage into the accessionEastern European countries. ‘Regional’ members of theStar Alliance must be sponsored and represented atadministrative level, by an established alliance memberwith close commercial links with the applicant carrier. Thisrole was fulfilled by Lufthansa.

In a further development of its visual identity CroatiaAirlines launched a new aircraft tailfin design in 2004.

In the fleet, Croatia Airlines introduced an Airbus A319,leased from Lufthansa for the Summer timetable, fromApril to October. The company operates a total of 11aircraft, including five Airbus A319-100, three AirbusA320-200 and three regional ATR 42-300.

Ivan MišeticPresident & CEO


moc.senilria-hcezc.w

ww

Czech AirlinesHead OfficeRuzyne Airport160 08 Prague 6Czech Republic

50 Scheduled Destinations3 within the Czech Republic44 rest of Europe3 beyond Europe

4889 Employees

45 Aircraft in Fleet4 Airbus A310-30014 Boeing 737-50015 Boeing 737-4004 ATR-728 ATR-42

4 Aircraft on Order4 ATR-42

Status at 31st December 2004 for informationon destinations and fleet. Employees as atJune 2004.

Owned by…56.43% Czech National Property Fund34.59% Czech Consolidation Bank4.33% Czech insurance company2.94% City of Prague0.98% City of Bratislava0.49% Shares for Endowment Fund0.24% National Property Fund of the

Slovak Republic

Owner of…-

Major partnershipsMember of the SkyTeam Alliance.Various agreements incl. with Air France,Aeroflot, Aeromexico, Aerosvit Airlines(Ukraine), Air Malta, Atlantic SoutheastAirlines, Bulgaria Air, Comair, CroatiaAirlines, Delta Air Lines, Finnair, Iberia, JatAirways, KLM, Lithuanian Airlines, Lufthansa,Malev, Olympic Airlines, SkyEurope Airlines,SN Brussels Airlines, SWISS, TAROM andTurkish Airlines.

Financial ResultsUS$ mill 2004 2003

Turnover 673.3Operating profit/loss 28.0Net profit/loss 22.9 19.5

Review of 2004

In June 2004 the CSA company strategy for 2004-2014was approved by its shareholders. The main objective isto achieve profitability and efficiency by optimal use ofinternal resources and to achieve external expansion. Thelatter will be made possible by fleet renewal andexpansion, network development and optimisation ofmembership of the SkyTeam alliance, which CSA joinedin 2001.

In August 2004 CSA enhanced co-operation withSkyTeam member Malev of Hungary, increasing theircode-share operations. Code-share operations withLufthansa, belonging to the Star Alliance, were terminatedat the end of October.

In the network CSA added 7 new destinations in itsSummer timetable - Samara, Yekaterinburg, Baku,Krakow, Dortmund, Luxemburg, and Marseille – and afurther three with effect from the Winter timetable -London-Gatwick, Glasgow and the Maldives. CSA alsointroduced a regular Prague-Marseille-Barcelona service.

The fleet grew by 10 aircraft in 2004, to a total of 45, aspart of the expansion and modernisation program. ThreeATR-42s, six Boeing 737s and one Airbus A31 wereadded. Deliveries of the remaining turbo-props on orderwill be completed by 2007. The longhaul fleet will bereviewed in 2006. The medium haul aircraft, the backboneof the company’s fleet, will undergo a complete changebetween 2005 and 2014 with the 737-400s and -500s tobe replaced by A320s and new generation B737s. InOctober CSA placed an order for six 162-seater A320sand six 135-seater A319s due for delivery between 2006and 2008. Until such time, CSA will take an operatinglease on two A321s for charter flights and three A320s forregular flights.

Jaroslav TvrdikPresident, CEO

Chairman of the Board


moc.syawriasurpyc.

ww

wCyprus Airways Ltd21 Alkeou Street2404 EngomiP.O. Box 219031514 NicosiaCyprus

31 Scheduled Destinations2 within Cyprus20 rest of Europe9 beyond Europe

1831 Employees

12 Aircraft in Fleet2 Airbus A330-2008 Airbus A320-2002 Airbus A319-100

0 Aircraft on Order


Owned by…69.62% State ownership30.38% Private shareholders

Owner of…100% Eurocypria75% Hellas Jet

Major partnershipsVarious code-share agreements incl. withAeroflot, Alitalia, El Al, Gulf Air, KLM, LOT,Olympic Airlines, SN Brussels Airlines,Syrianair and Royal Jordanian.


Turnover 246.9 244.7Operating profit/loss (42.2) (44.2)Net profit/loss (35.8) (29.0)

Review of 2004

Cyprus Airways is implementing a restructuring plan tocounter recent poor financial results. Cyprus, home ofCyprus Airways, was one of the ten accession countriesto join the European Union on 1st May 2004 bringing with ita tougher competitive environment in deregulated skies.The plan will involve job losses, a fleet reduction andnetwork review to achieve cost reductions and improvefinances and productivity.

In 2004 Cyprus Airways increased its holding in itssubsidiary Hellas Jet, from 49% to 75%. Athens-basedHellas Jet was established in 2002 and launched in June2003, following a failed attempt to participate in theprivatisation of Olympic Airways. Prior to the membershipof Cyprus in the EU, the company’s holding was limited toa minority stake. Hellas Jet operates a fleet of AirbusA320s, flying from Athens to Manchester, London, Parisand Brussels.

For the fleet, following the completion of a fleet renewalprocess embarked on in 2002 and finalised in 2003, theCyprus Airways fleet is an all-Airbus fleet of 12 aircraft:two A330, eight A320 and two A319. As a first step in theimplementation of the restructuring plan the company puttwo A320s up for sale in October 2004.

Lazaros SavvidesChairman

Christos KyriakidesGeneral Manager


moc.riannif.w

ww

Finnair OyP.O. Box 1501053 FinnairFinland

57 Scheduled Destinations16 within Finland32 rest of Europe9 beyond Europe

9430 Employees

52 Aircraft in Fleet6 Airbus A321-20012 Airbus A320-20011 Airbus A319-1007 Boeing 757-20010 MD82/MD836 MD11

12 Aircraft on Order12 Embraer RJ-170


Owned by…65% Public bodies, of which

58.4% State owned13% Registered in name of nominee7% Households5% Financial institutions5% Private companies4% Associations

Owner of…100% flynordic (Sweden)49% Aero Airlines (Estonia)

Major partnershipsMember of the Oneworld Alliance.Various code-share agreements, with: AirFrance, American Airlines, British Airways,Iberia, Malev, Qantas, SN Brussels Airlines,SWISS and Sun Air.


€mill 2004 2003Turnover 1698 1558Operating profit/loss 17 (19)Net profit/loss 12 (16)

Review of 2004

In May, Finnair acquired the remaining shares in theSwedish airline Nordic Airlink, now called flynordic, raisingits stake in the company from 85% to 100%. Finnair alsoowns a 49% stake in Estonian carrier Aero Airlines. Thelatter operated Finnair’s former ATR fleet in 2004 ondomestic routes in Finland on behalf of Finnair.

In August Helsinki-Vantaa airport inaugurated anexpansion to the International Flights Terminal, which willbe used by Finnair’s Asian flight passengers. Theexpansion of its Asian traffic is a key element of Finnair’sbusiness strategy and Finnair flights to the area havedoubled during the past two years. Summer 2004timetable included daily services to Beijing and Bangkok,five times a week to Shanghai and Osaka, four times toSingapore, three times to Hong Kong and twice to Tokyo,making a total of 15 weekly operations to China and dailyservices to Japan. And more expansion is planned.Summer 2005 timetable will include direct flights to HongKong and increased frequencies to Singapore, and fromSeptember 2005 a new service to the economicallysignificant Guangzhou (Canton) in China.

In the fleet Finnair completed its transition to Airbusnarrow-bodies, with the arrival of the 11th A319. ReplacingDC9s and MD80s in the fleet, the company now operates29 Airbus aircraft; eleven A319s, twelve A320s and sixA321s. Year 2004 further saw the arrival of a 6th MD-11 inthe longhaul fleet, for use on Asian destinations. Inaddition to the Finnair fleet of 52 aircraft, subsidiaries ofthe Finnair Group flynordic and Aero Airlines operate 8MD82/83s and nine ATR-72 respectively. The Groupplaced an order for 12 new 76-seater Embraer 170 jetaircraft with option for a further 8 aircraft, scheduled fordelivery between September 2005 and February 2007.Finnair Group has renewed half of its fleet in five yearsand, on completion, will operate Embraer 170s, Airbusnarrow-bodies, 7 Boeing 757s and 5 longhaul MD-11s.

Keijo SuilaPresident & CEO


moc.airebi.w

ww

Líneas Aéreas de España SACalle Velazquez 13028006 MadridSpain

96 Scheduled Destinations35 within Spain32 rest of Europe29 beyond Europe

24993 Employees (Group)

159 Aircraft in Fleet7 Airbus A340-60018 Airbus A340-30011 Airbus A321-20058 Airbus A320-2007 Airbus A319-10013 Boeing 757-2002 Boeing 747-4002 Boeing 747-3001 Boeing 747-20014 MD8824 MD872 DC8F



Owned by…60% Floating30% Banks and various companies9% British Airways1% American Airways

Owner of…-

Major partnershipsMember of the Oneworld Alliance.Franchisee: Iberia RegionalVarious code-share agreements incl. withAmerican Airlines, Avianca, British Airways,Cathay Pacific, CSA, El Al, Finnair, JAL,LAN, Lithuanian Airlines, Maersk, Mexicana,Qantas, Royal Air Maroc, Royal Jordanian,SN Brussels Airlines, SWISS, Syrian ArabAirlines, TACA, TAM, TAROM, UkraineInternational Airlines.


€mill 2004 2003Turnover 4805.4 4619.3Operating profit/loss 203.3 160.7Net profit/loss 220.0 145.9

Review of 2004

In 2004 Iberia continued to tighten links with BritishAirways, signing a new code share agreement for routesbetween London-Heathrow to Madrid and Barcelona,which took effect in January 2005.

During the year Iberia added new destinations includingLagos in Nigeria and Montevideo in Uruguay. Thecompany decided to close its ‘mini-hub’ in Miami forCentral American connections, and to launch direct flightsfrom Madrid to destinations such as Costa Rica,Guatemala and Panama, with local flights to otherregional airports in code-share with TACA.

A code-share agreement was also reached with Mexicanato transport Iberia passenger traffic within Mexico, whilstproviding reciprocal arrangements for Mexicanapassengers in Spain.

Iberia’s seat supply on routes connecting Spain and SouthAmerica was increased by 25% year-on-year to meetstrongly growing demand. New Airbus A340-600s wentinto service on these and other longhaul routes. The newaircraft came equipped to accommodate Iberia’s businesspassengers in the new and enhanced Business Plusservice class, which will be extended to all Iberia long-haul flights in the course of 2005.

Spain’s airports authority assigned the new Terminal 4 atMadrid-Barajas airport almost exclusively to Iberia and itsOneworld alliance partners, which helped consolidateboth the airport’s position as the main Southern Europeanair travel hub, and Iberia’s position as market leader onroutes between Europe and Latin America.

Fernando ConteChairman & CEO


moc.riadnaleci.w

ww

IcelandairReykjavik Airport101 ReykjavikIceland

25 Scheduled Destinations1 within Iceland16 rest of Europe8 beyond Europe

1020 Employees

16 Aircraft in Fleet2 Boeing 767-3001 Boeing 757-30013 Boeing 757-200

0 Aircraft on Order


Owned by…100% Flugleidir - Icelandair Group

Owner of…-

Major partnershipsCode-share agreement with SAS.


ISK mill 2004 2003Turnover 42587 37561Operating profit/loss 1929 1983Net profit/loss 3419 1121

Review of 2004

Icelandair, member airline of the AEA, is one of 13companies controlled by the Flugleidir-Icelandair group,an investment company specialising in airline operationand travel services. Strategic decisions and budgetaryissues are co-ordinated by the parent company. Icelandairis the Group’s largest subsidiary, contributing 50% of theGroup’s total turnover. Icelandair works closely with thetwo other subsidiaries involved in air transport operations,Lofleidir Icelandic (charter) and Icelandair cargo.

In early 2004 the Group established a new subsidiary,Flugleidir Investment Company which will determineinvestment and growth prospects for the Group. TheGroup made its first significant investment in October withthe purchases of 8.4% of stock in the UK-companyeasyjet, followed by the quick addition of a further 1.7%.Icelandair Group has thus taken a 10.1% stake holding ineasyJet. In November the Group increased its sharecapital.

In the network, Icelandair introduced six new destinationsin 2004; Berlin, Hamburg, Munich, Milan, Helsinki andMadrid. As of next year, May 2005, a sixth destination inthe US is scheduled. Flights to San Francisco, being thecompany’s first destination on the US West coast, will beoperated by 260-seater Boeing 767 aircraft. Existinggateways in the US are Minneapolis/St. Paul, Boston,New York-JFK, Baltimore/Washington-BWI and Orlando.

In early 2005 Sigurdur Helgasonannounced his retirement from thecompany after thirty years of whichtwenty as CEO. He will leave thecarrier on 31st May. Mrs.Ragnhildur Geirsdóttir and Mr. JónKarl Ólafsson were nominated asGroup CEO and CEO Icelandairrespectively.

Ragnhildur GeirsdóttirGroup CEO

(wef 1st June 2005)

Jón Karl ÓlafssonCEO Icelandair(wef 1st June 2005)


moc.taj.w

ww

JAT AirwaysBulevar umetnosti 1611000 BeogradSerbia & Montenegro

40 Scheduled Destinations3 within Serbia & Montenegro30 rest of Europe7 beyond Europe

3528 Employees (2003)

22 Aircraft in Fleet3 Boeing 737-4008 Boeing 737-3002 Boeing 727-2001 Douglas DC104 Douglas DC9-304 ATR-72-200


Status at 31st December 2004 for informationon destinations and fleet; at 31st December2003 for employees.

Owned by…100% State ownership

Owner of…-

Major partnershipsCode-share agreements with Austrian, CSAand Lufthansa.

Financial ResultsYUN mill 2004 2003

Turnover 10200Operating profit/loss (412)Net profit/loss (412)

Review of 2004

In 2004 Jat Airways entered into a code-share agreementwith Austrian on the Vienna-Belgrade route and withLufthansa on the Belgrade-Frankfurt and Belgrade-Munich routes.

In the network Jat Airways launched new services fromBelgrade to Stuttgart and Dusseldorf, expanding thecompany’s German presence, which currently includesservices to Munich, Frankfurt and Berlin, from Nis toParis, Zurich and Tivat in Montenegro, effective from theSummer timetable. In December services betweenBelgrade and Basle, on the Swiss-French border, werelaunched. A code-share agreement with UzbekistanAirways was discontinued.

The anticipated launch of the Jat Airways regional carrier,first announced in 2003, has been postponed until 2005.The company aims to develop its local presence througha new, low-cost, regional airline, named Interair Link. Thiswholly-owned subsidiary will operate five ATR-72stransferred from the parent company’s fleet, flying feederroutes into Belgrade. Start-up destinations will include:Ljubljana (Slovenia), Sarajevo and Banja Luka (Bosnia),Skopje and Ohrid (Macedonia), Tirana (Albania),Podgorica (Serbia and Montenegro), Sofia (Bulgaria),Trieste (Italy) and Thessaloniki (Greece).

For the fleet the carrier is contemplating a 10-year fleetrenewal plan, which would involve the sale of the oldestaircraft in the fleet to be replaced by 60/70-seater aircraft.

More recently in February 2005, Mr. AleksandarMilutinovic, who held the position of President & CEOsince March 2004, was succeeded by Mr. NebojsaStarcevic as interim Director General.

Nebojsa StarcevicActing Director General


moc.mlk.

ww

wKLMP.O. Box 7700Schiphol Airport 1117ZLThe Netherlands

80 Scheduled Destinations1 within the Netherlands35 rest of Europe44 beyond Europe

34529 Employees

100 Aircraft in Fleet8 Boeing 777-20012 Boeing 767-3005 Boeing 747-40017 Boeing 747-400 Combi3 Boeing 747-400F5 Boeing 737-90013 Boeing 737-80013 Boeing 737-40014 Boeing 737-30010 MD11

10 Aircraft on Order6 Airbus A330-2004 Boeing 777-200


Owned by…96% Air France-KLM

Owner of…100% KLM cityhopper100% KLM cityhopper uk100% Transavia Airlines50% Martinair26% Kenya Airways20% Kencargo Airlines International

Major partnershipsMember of SkyTeam.Various agreements incl. with Air Alps, AirEuropa, Air France, Alaska Airlines, AerLingus, China Southern Airlines, Comair,Continental Airlines, CSA, Cyprus Airways,Gulf Air, Kenya Airways, KLM cityhopper,Lithuanian Airlines, Maersk Air, Martinair,MAS, Malev, Northwest Airlines, OriginPacific Airways, Philippine Airlines, SurinamAirways, Syrianair, TAM, Transavia Airlines,Ukraine International Airlines.

Financial Results (Group, FY 31st March)

€mill 2004/05 2003/04Turnover 5877Operating profit/loss 120Net profit/loss 24

Review of 2004

In Autumn 2003 KLM and Air France announced anunprecedented consolidation move in European airtransport, with the combination of the two carriers to beknown as Air France-KLM. Having gained approval of theEuropean and US competition authorities in early 2004, ashare exchange took place in May 2004 whereby AirFrance acquired 86% of KLM’s share capital. Thecompany was subsequently de-listed. In the course of2004 the two companies continued to implement their co-operative activities as planned and in September KLM, aswell as US partner airlines Northwest and Continental,joined the SkyTeam alliance led by Air France and Delta.

In November KLM discontinued its franchise agreementwith regional carrier KLM exel. The company nowoperates as Air Exel, with some services temporarilyperformed on behalf of KLM.

Also in November a new code-share agreement wasannounced, with Gulf Air, the national airline of AbuDhabi, Bahrain and Oman. The move adds destinationpoints Islamabad, Karachi and Lahore in Pakistan, andMuscat in Oman to the KLM offer, with KLM code-shareavailable on Gulf Air flights between Bahrain and Muscat.

With effect from 1st January 2005 KLM no frills unitBasiqair is to be renamed Transavia, to be integrated intothe latter’s charter operations.

In the fleet February saw the delivery of the last of threeBoeing 747-400 freighters for use on routes to the FarEast. Both passenger and cargo capacity to Asia were amain focus in 2004. In December an additional order fortwo Boeing 777 was placed, for delivery in 2006, whichwill bring the total of this aircraft type in the fleet to twelve.

Leo M. van WijkPresident & CEO


‘ ’

moc.tol.w

ww

LOT Polish Airlinesul.17 Stycznia 3900-906 WarszawaPoland

59 Scheduled Destinations9 within Poland46 rest of Europe4 beyond Europe

3788 Employees

48 Aircraft in Fleet35 of which LOT3 Boeing 767-3002 Boeing 767-2006 Boeing 737-5004 Boeing 737-4006 Embraer RJ-17014 Embraer RJ-14513 of which EuroLot8 ATR-725 ATR-42

5 Aircraft on Order1 Boeing 767-3004 Embraer RJ-170


Owned by…67.97% State treasury25.10% Receiver of SAir Lines6.93% Employees

Owner of…100% EuroLot100% CentralWings

Major partnershipsMember of the Star Alliance.Various code-share agreements incl. withAdria Airways, Aeroflot, Aerosvit Airlines, AirCanada, ANA, Asiana Airlines, Austrian,Balkan Air Tour, Belavia, bmi, CroatiaAirlines, Cyprus Airways, El Al, Lufthansa,Malev, SAS, Spanair, TAP Portugal,TAROM, Turkish Airlines, and UnitedAirlines.


Turnover 645.0 642.4Operating profit/loss (3.2) 1.6Net profit/loss 4.0 (24.5)

Review of 2004

In 2004 LOT was hoping to gain approval for its first publicoffering (IPO) on the Warsaw stock exchange from thePolish Government, for implementation within the year.The sale would provide the financial resources needed tofund a fleet renewal and development activities. LOT is68% State-owned, a further 25% is owned by the defunctSwissair, with the remainder the property of LOTemployees.

In December LOT announced the launch of its no-frillsairline, to address the competitive environment in Poland.The country was one of 10 accession countries to join theEuropean Union on 1st May 2004. CentralWings, which isdue to start operations in 2005, will be independent ofLOT, with its own management. It will operate with up to 5Boeing 737 aircraft from the LOT mainline fleet, ondestinations from Warsaw Okecie airport.

US regulators approved blanket code-share agreementbetween Star Alliance partners LOT and United Airlines.The company also entered agreements with Air Canada,Adria Airways and TAP Portugal.

In the fleet, March saw the arrival of the first Embraer RJ-170s. Ten aircraft have been ordered, six were deliveredin 2004, with the remaining four for delivery in 2005, foruse on high-frequency destinations. The company hasoptions on a further 11 aircraft. LOT introduced the firstEmbraer aircraft into its fleet in 1999, with the RJ-145 ofwhich it has fourteen. LOT entered into a contract withEmbraer to establish an authorised service centre inLOT’s technical service works. With a EuropeanCertificate JAR 145, LOT can now undertake technicalmaintenance services for Embraer aircraft for third parties.

Marek GrabarekPresident & CEO


moc.asnahtful.w

ww

Deutsche Lufthansa AG2-6 Von-Gablenz-Strasse50679 CologneFederal Republic of Germany

190 Scheduled Destinations18 within Germany86 rest of Europe86 beyond Europe

90673 Employees (Group, of which Passengerand Cargo air transport account for 39680)

402 Aircraft in Fleet238 of which Lufthansa, LH CityLine

and LH Cargo10 Airbus A340-60030 Airbus A340-3005 Airbus A330-3002 Airbus A330-20026 Airbus A32133 Airbus A32013 Airbus A31915 Airbus A300-60030 Boeing 747-40026 Boeing 737-50033 Boeing 737-30015 MD11F3 of which PrivatAir (operating on

behalf of Lufthansa)2 Airbus A3191 Boeing 737-700161 of which Lufthansa Regional18 Avro RJ8525 ATR 7218 ATR 428 BAe 146-100/200/30020 Canadair CRJ-70061 Canadair CRJ-100/-20011 de Havilland Dash-8

31 Aircraft on Order16 Airbus A3807 Airbus A340-6004 Airbus A330-3004 MD11F


Owned by…91.4% Free float8.6% Block Ownership

Owner of…100% Lufthansa Cargo100% Lufthansa CityLine100% Air Dolomiti49% Eurowings30% bmi25% Jade Cargo International14.44% Luxair10% Condor

Major partnershipsMember of the Star Alliance.Franchisees (Lufthansa Regional): AirDolomiti, Augsburg Airways, LH CityLine,Contact Air, Eurowings.Various code-share agreements incl. withAegean Airlines, Air China, Air One, CimberAir, CSA, Cirrus Airlines, Luxair, Maersk Air,Shanghai Airlines, South African Airways.

Financial Results (Group)€mill 2004 2003

Turnover 16965 15957Operating profit/loss 1004 (147)Net profit/loss 404 (984)

Review of 2004

The Lufthansa Group focused on ensuring the long-termviability of its core passenger transport business.Passenger numbers reached an all-time high and thecompany turned in a net profit in 2004, after the companymaximised market opportunities, expanded and sold extracapacity, and took further steps to ensure its productdifferentiation. Such steps included the opening of adedicated First Class terminal as well as First Classlounges at Frankfurt airport in December, the introductionof on-flight internet connectivity and an improved businessclass product.

Lufthansa raised EUR 740 million in a rights issue in June2004. The capital increase is designed to fund investmentin Lufthansa’s future as a network carrier. It will provideresources to purchase the new A380 and prepare forservices with the Airbus megaliner on profitable longhaulroutes when it joins the fleet in 2007.

Lufthansa and Air China prolonged their successfulmaintenance and engineering joint venture for a further 25years in August 2004. Lufthansa Cargo and ShenzhenAirlines jointly founded the Chinese cargo carrier ‘JadeCargo International’ in October. Both partnerships willhelp further strengthen Lufthansa’s position in Asia.

Lufthansa sponsored the entry of Adria Airways andCroatia Airlines as regional partners into the Star Alliancein September.

At year-end, Lufthansa placed additional orders for sevenAirbus A340-600s, scheduled for delivery in 2006 and2007, when the first Airbus A380 will also be joining theLufthansa fleet.

This year 2005, marks the 50th anniversary of theresumption of air traffic in Germany and of Lufthansa’s re-entry into the airline community after World War II.

Wolfgang MayrhuberChairman & CEO


ul.riaxul.w

ww

LuxairLuxembourg Airport2987 Luxembourg

39 Scheduled Destinations1 within Luxembourg31 rest of Europe7 beyond Europe

2177 Employees

16 Aircraft in Fleet2 Boeing 737-7003 Boeing 737-5003 Fokker 508 Embraer RJ-145

3 Aircraft on Order1 Boeing 737-7002 Embraer RJ-135


Owned by…25.2% Banks23.1% State ownership13.4% State-owned bank13.2% Luxair Group and others13.0% Lufthansa12.1% Panalpina World Transport

Owner of…34.88% Cargolux

Major partnershipsVarious agreements incl. with Air France,Austrian and Lufthansa.


€mill 2004 2003Turnover 306.0 289.1Operating profit/loss 3.9 (4.1)Net profit/loss 13.4 3.6

Review of 2004

Following a difficult 2003, Luxair posted an operationalresult close to break-even in 2004, due to strongperformance by the cargo activities. Cost-cuttingmeasures will continue into 2005 to further improve theviability of the company.

In 2004, Luxair prepared the ground for a fleetmodernisation which will be the cornerstone of thecompany’s 2005 strategy. In February the companyreceived 2 of 3 Boeing 737-700s on order, to replace the737-400s. The 141-seater aircraft will be deployed by in-house Tour Operator Luxair Tour, mainly to destinationsin Africa and the Middle East.

In July Luxair converted options to order two Embraer RJ-135 aircraft, with one more option still held. The 37-seaters were delivered in January and February 2005 andwill replace the Fokker 50s in the fleet. As the EmbraerRJ-135 is one of the few jets certified to operate atLondon City Airport, Luxair opted for this aircraft todevelop LCY as a destination in the future.

As from February 2005 and the phase out of one Boeing737-500 and three Fokker 50, the Luxair fleet iscomposed of three Boeing 737-500, two Boeing 737-700,eight Embraer RJ-145 and two RJ-135 aircraft.

In 2004 Luxair shareholders elected Marc Hoffmann asnew chairman, taking over from Alain Georges whosethree-year term expired in May.

In mid-February 2005, Luxair CEO and ExecutiveCommittee President Christian Heinzmann left thecompany. On February 25th 2005, the board nominatedAdrien Ney as his successor. Adrien Ney will take over hisfunctions on 1st June 2005 latest and Jean-PierreWalesch, Executive Vice President Finance, has beenappointed CEO for the interim period.

Jean-Pierre WaleschInterim CEO

Adrien NeyPresident & CEO

(wef 1st June 2005)


uh.velam.

ww

wMalev Hungarian AirlinesKönyves Kálmán krt. 12-141097 BudapestHungary

58 Scheduled Destinations1 within Hungary50 rest of Europe7 beyond Europe

2776 Employees

28 Aircraft in Fleet2 Boeing 767-2004 Boeing 737-8006 Boeing 737-7006 Boeing 737-6001 Boeing 737-4005 Fokker 704 Canadair CRJ-200

2 Aircraft on Order1 Boeing 737-8001 Boeing 737-700


Owned by…97.9% State privatisation and assets

handling company1.1% Municipalities0.9% Private shareholders and other

organisations

Owner of…100% Malev Express

Major partnershipsVarious agreements incl. with Air Bosna, AirEuropa, Aeroflot, Aerosvit Airlines (Ukraine),Air France, Alitalia, Austrian, Balkan Air,Bulgaria Air, CSA, Finnair, Hainan Airlines,KLM, LOT, Moldavian Airlines, NorthwestAirlines, SN Brussels Airlines, TAP Portugaland TAROM.

Financial ResultsHUF bn 2004 2003


Review of 2004

Malev celebrated its 50th anniversary in 2004. Founded asthe Soviet-Hungarian joint venture ‘Maszovlet’ in 1946,Malev became an independent company in 1954,adopting its current name, when the Soviet Unionrelinquished its 50% holding to Hungary.

In December 2004 APV, the Hungarian State-holdingcompany and owner of Malev, launched a second bid fortender after an unsuccessful attempt earlier in the year.The government has approved plans to privatise Malev,with 99.95% shareholding up for sale. Bids should be filedby end February 2005.

In March Malev signed a memorandum of intent tosupport its entry into the Sky Team. The carrier’s bid issponsored by established Sky Team partner CSA, and thetwo carriers also expanded their co-operation. Malev’smembership will be as ‘associate member’, a formula forincorporating regional partners of full members.

Malev also entered into code-share agreements with SNBrussels Airlines and TAP Portugal in 2004, and withHainan Airlines of China which will operate the code-share flights between Budapest to Beijing.

In the network, the company added several newdestinations, with emphasis on its market expansion intoEastern Europe. Services were introduced to theMoldavian capital Chisinau, Bulgaria’s Black Sea resortVarna, Croatian Adriatic Sea resort town of Dubrovnik,Montenegrin capital Podgorica and to Ljubljana inSlovenia. Other introductions included services to Lyon(France) and London Stansted.

At the beginning of 2005 László Sándor resigned asChairman & CEO of Malev. On the 11th of February Dr.Janos Gönci and Peter Honig were appointed to succeedhim, as CEO and Chairman respectively.

Péter HónigChairman

Dr. János GönciCEO


moc.senilriacipmylo.

ww

wOlympic AirlinesAthens International AirportBldg 975th km Spata-Loutsa AvenueSpata 19019Greece

67 Scheduled Destinations35 within Greece22 rest of Europe10 beyond Europe

1799 Employees

43 Aircraft in Fleet4 Airbus A340-3003 Airbus A300-60014 Boeing 737-4002 Boeing 737-3003 Boeing 737-2007 ATR-726 ATR-424 deHavilland Dash-8

0 Aircraft on Order



Owner of…-

Major partnershipsCode-share agreements incl. with Air Malta,AeroSvit Airlines, Air Malta, CSA, CyprusAirways, Egyptair, Gulf Air, Hellas Jet,Kuwait Airways, TAP Portugal.

Financial Results*€mill 2004 2003


* 2003 data concern the Balance Sheet of the newcompany Olympic Airlines S.A. which derived from theconsolidation of the air transport sectors of OlympicAirways S.A., Olympic Aviation S.A. and MacedonianAirlines S.A. of the Olympic Airways Group of Companies.This consolidation took place on 11th December 2003 andthus data refers to the period from 11th – 31st December2003. 2004 data are estimated based on the company’s2004 Budget.

Review of 2004

In December 2003, weeks before the start of the yearunder review, Olympic Airways was restructured andrenamed Olympic Airlines, following a series ofunsuccessful attempts to restructure and privatise theformer airline.

The new company incorporates the total flight operationactivities of the former Olympic Airways Group (OlympicAirways, Olympic Aviation and Macedonian Airlines) withoperations adjusted to the needs of the internationalairline market and its competitors. It operates under thesame two-letter airline designator code as itspredecessor: OA.

In its first year of operation following the restructuring theairline successfully dealt with a number of challenges,such as initial labour unrest and the Athens 2004 OlympicGames sponsorship. It currently provides services to 67domestic and international destinations and, in 2004,carried 5.8 million passengers.

The latest restructuring aimed at enhancing the appeal ofthe airline for investors, and in December 2004, the Greekgovernment officially launched its latest attempt toprivatise Olympic Airlines. At time of writing the result wasnot yet known.

Petros PapageorgiouChairman

Leonard Odysseas VlamisCEO


ten.naivanidnacs.w

ww

SAS Scandinavian AirlinesFrösundaviks Allé 119587 StockholmSweden

81 Scheduled Destinations34 within Scandinavia37 rest of Europe10 beyond Europe

13528 Employees (Year average forScandinavian Airlines + Spanair, Wideroeand Blue1, where Scandinavian Airlinesaccount for +/- 9254)

197 Aircraft in Fleet7 Airbus A340-3004 Airbus A330-3008 Airbus A321-20017 Boeing 737-80015 Boeing 737-70030 Boeing 737-60014 Boeing 737-5004 Boeing 737-4008 MD90-3015 MD8731 MD8212 MD8124 deHavilland Q4008 Fokker 50

6 Aircraft on Order4 Airbus A321-2002 Boeing 737-800

Status at 31st December 2004 for informationon destinations and fleet.

Owned by…SAS AB, parent company of the SAS Group, is owned by:21.4% Swedish State14.3% Danish State14.3% Norwegian State50% Private interests

Owner of…SAS AB, parent company of the SAS Group, is owner of:

100% Scandinavian Airlines Denmark100% SAS Braathens100% Scandinavian Airlines Sverige100% Scandinavian Airlines International100% Blue1 (Finland)100% Widerøe (Norway)95% Spanair49% Estonian Air47.2% airBaltic (Latvia)37.5% Air Greenland25% Skyways (Sweden)20% bmi

Major partnershipsMember of the Star Alliance.Various agreements incl. with Air China.


SEK mill 2004 2003Turnover 58073 57754Operating profit/loss 1694 826Net profit/loss (1945) (1470)

Review of 2004

During the year the SAS Group's airlines, including AEAmember Scandinavian Airlines, dealt with four crucialchallenges: getting the fall in the yield under control, whiletackling the overcapacity in the market, compensating forthe impact of record-high jet fuel prices and implementingTurnaround 2005, a number of structural measures toreduce the costs.

Due to the aforementioned challenges, earnings for 2004were unsatisfactory although progress was notedthroughout the Group.

The SAS Group, consisting of Scandinavian AirlinesBusinesses and the subsidiary and affiliated airlines,carried more than 32 million passengers in 2004, of whichScandinavian Airlines Businesses accounted for 24million, including a new record for longhaul passengerstransported, totalling 1.5 million for the year.

All data here and in the statistical section of this Yearbook refers toScandinavian Airlines unless indicated otherwise. Scandinavian Airlines(also Scandinavian Airlines Businesses) includes Scandinavian AirlinesDenmark, Scandinavian Airlines Sverige, Scandinavian AirlinesInternational and SAS Braathens.

Jørgen LindegaardPresident & CEO

SAS Group


moc.nsylf.w

ww

SN Brussels AirlinesDelta Air Transport nv/sa trading asSN Brussels AirlinesThe Corporate VillageDa Vinci laan 91930 ZaventemBelgium

56 Scheduled Destinations1 within Belgium42 rest of Europe13 beyond Europe

2152 Employees

38 Aircraft in Fleet3 Airbus A3303 Airbus A31912 Avro RJ10014 Avro RJ856 BAe 146

0 Aircraft on Order


Owned by…92% SN Air Holding8% SIC

Owner of…-

Major partnershipsVarious code-share agreements incl. with AirMalta, Alitalia, American Airlines, BritishAirways, Bulgaria Air, Croatia Airlines, CSA,Cyprus Airways, Finnair, Iberia, LithuanianAirlines, LOT, Malev, Malmö Aviation,Portugalia, Pulkovo Airlines, Royal Air Maroc,Sun-Air, SWISS, TAP Portugal, TAROM andUkraine International Airlines.


Turnover 610.0 534.3Operating profit/loss 10.1 (17.6)Net profit/loss 1.0 0.6

Review of 2004

In 2004 a binding agreement, placing SN Brussels Airlinesand Virgin Express under the common ownership of SNAirholding, was pronounced. Under the agreement VirginExpress Holding transferred all its shares to SNAirholding, in which it subsequently took a 29.9% stake.By December all the necessary regulatory authorities hadgiven their approval, which will now permit the twocompanies to move under common ownership. SNAirholding aims to cover all customer segments with twoclearly separated products and brands.

In October the activities of Birdy Airlines, which operatedAfrican services on behalf of SN, were integrated into thecompany. Birdy’s staff was transferred and the threeAirbus A330-300 are now part of the SN Brussels Airlinesfleet.

In 2004 SN Brussels Airlines developed charter activitiesduring the weekends and the holiday periods. Using sparecapacity the company, which had previously offered onlyad-hoc charters, teamed up with several tour operators inBelgium, France, Switzerland and the UK, operating frommultiple points across Europe.

SN Brussels Airlines and American Airlines were given fullanti-trust immunity by the US Department of Transport,opening the way for more extensive commercial co-operation between the two carriers, beyond the code-share operations already in place.

In 2004 SN Brussels Airlines continued to build itsportfolio of code-share partners. New agreements weresigned with American Airlines to New York, with Malev toBudapest, Russian carrier Pulkovo Airlines to StPetersburg, Malmö Aviation on services to Stockholm andGothenburg in Sweden, with Bulgaria Air to Sofia, Sun-Airto Billund, Royal Air Maroc to Casablanca, Air Malta toMalta and with Romanian airline TAROM to Bucharest.

Rob KuijpersExecutive Chairman

Peter DaviesCEO


moc.rianaps.w

ww

SpanairEdificio SpanairApdo Correos 5008607611 Palma de MallorcaSpain

23 Scheduled Destinations17 within Spain5 rest of Europe1 beyond Europe

2950 Employees

53 Aircraft in Fleet5 Airbus A32114 Airbus A3204 Boeing 71720 MD8310 MD82

3 Aircraft on Order3 Airbus A320


Owned by…94.9% SAS Group5.1% Teinver

Owner of…-

Major partnershipsMember of the Star Alliance.Various agreements incl. with AerolineasArgentinas, Air Canada, Air New Zealand,ANA, Asiana Airlines, Austrian, bmi, LOT,Lufthansa, SAS, Singapore Airlines, TAPPortugal, Thai Airways, United Airlines, USAirways and Varig.


Turnover 874.4 836.0Operating profit/loss 137.7 121.5Net profit/loss (4.5) (4.9)

Review of 2004

In 2004 Spanair continued on an ambitious plan ofexpansion, focusing on services operated from Madridand Barcelona on domestic and European routes, withnumerous additions to the network throughout the yearand particular emphasis on flights to the Canary Islandsintroduced in the Winter timetable: Alicante-Gran Canaria,Vigo-Tenerife, Bilbao-Gran Canaria, Santiago deCompostela-Gran Canaria, Sevilla-Tenerife and Bilbao-Lanzarote. In addition new scheduled services wereadded from Seville to Barcelona in February, Oslo-Madridin April and Dublin was introduced as a new destinationoperating from Malaga, Alicante and Madrid during theSummer timetable.

Perhaps one of the most important strategic decisionstaken within the company in April last year was theintroduction of a new business model on its nationalscheduled flights, incorporating passengers thatpreviously travelled in Tourist Class with flexible fares toits Business Avant Class. Moreover the companyextended its already renowned punctuality guaranteecommitment to all national scheduled flights until July2004 which has since been extended further until June30th 2005.

The course of fast expansion has led to the decision toincrease the incidence of aircraft lease and wet lease(aircraft & crew) from Scandinavian carrier SAS, 95%owner of Spanair, to meet capacity requirements.

In November 2004 Spanair announced it would appealagainst the decision by the Spanish airport authorityAENA to allocate members of the Oneworld alliance,including rival Spanish airline Iberia, almost exclusively tothe new terminal 4 at Madrid’s Barajas airport when itcomes into use in 2005. Spanair and other Star alliancepartners would have to use the older terminal 1.

Gonzalo Pascual AriasExecutive President &Chairman of the Board

Enrique MeliáCEO


moc.ssiws.

ww

wSwiss International Air Lines Ltd4002 BaselSwitzerland

64 Scheduled Destinations3 within Switzerland38 rest of Europe23 beyond Europe

7269 Employees

82 Aircraft in Fleet77 of which SWISS9 Airbus A3409 Airbus A3304 Airbus A32111 Airbus A3207 Airbus A31915 Avro RJ1004 Avro RJ8511 Embraer RJ-1457 Saab 20003 of which Swiss Sun3 Airbus A3202 of which ECA2 Saab 2000

30 Aircraft on Order15 Embraer RJ-19515 Embraer RJ-170


Owned by…61.3% Institutional Investors20.3% Swiss Confederation12.2% Cantons & Communities4.1% Private individuals2.1% Unregistered shares

Owner of…100% Europe Continental Airways

(ECA) ‘Crossair Europe’

Major partnershipsVarious code-share agreements incl. with AirAlps, British Airways, Cirrus Airlines,Crossair Europe, CSA, Denim Airways, El Al,Japan Airlines, Macedonian Airlines,Malaysia Airlines, Oman Air, SN BrusselsAirlines, Sri Lankan, Styrian Spirit, ThaiAirways International, Ukraine International.

Financial ResultsCHF mill 2004 2003

Turnover 3634 4109Operating profit/loss (115) (732)Net profit/loss (129) (705)

Review of 2004

In early 2004 Christoph Franz was appointed President &CEO of SWISS, effective 1st July, following the departureof André Dosé.

Early in 2005 SWISS announced it will be discontinuing itsFrench-based Crossair Europe (ECA) subsidiary as partof on-going restructuring plans. In addition the companywill be reducing its own operations from Basle andGeneva to focus on its Zurich hub, whilst maintaining theexisting network offer through a series of commercialagreements with partner airlines. Measures already takenin 2004 included a consolidation of the route network andreductions in staff and fleet numbers.

In 2004 SWISS and British Airways adjusted their co-operation agreement to cover code-share on flightsbetween Switzerland and Great Britain introduced overthe course of the year. The company also dropped itsZurich-Lugano service, in favour of a partnership withCirrus Airlines, which has the Dash-8 aircraft required tomeet new approach specifications. On the Zurich-Newarkroute, a Boeing Business Jet service was introducedeffective January 2005, which is operated for SWISS byPrivatair under a commercial agreement. Code-shareoperations were also introduced on the flights of theAustrian carrier Styrian Spirit to Salzburg and Krakow,Denim Air to Florence and Venice, Maersk Air toCopenhagen, Malev to Budapest and Libyan Arab toBenghazi and Tripoli.

The network covered 38 destinations in Europe, with 38operated non-stop from Zurich, 13 from Basel and 8 fromGeneva. Among the 2004 introductions were Zurich-Alicante and Basel-London City.

In the fleet, SWISS retired the last of its MD-11s. Thecompany now operates an all-Airbus longhaul fleet,consisting of nine Airbus A330s and nine A340s.

Pieter BouwChairman of the Board

Christoph FranzPresident & CEO


tp.pat.w

ww

TAP PortugalApartado 501941704-801 LisbonPortugal

42 Scheduled Destinations8 within Portugal19 rest of Europe15 beyond Europe

5750 Employees

40 Aircraft in Fleet4 Airbus A340-3003 Airbus A321-20011 Airbus A320-20016 Airbus A319-1006 Airbus A310-300

Aircraft on Order



Owner of…40% Air Sao Tome e Principe15% Air Macau (indirect participation

through a 20% stake held bySEAP holding company, in whichTAP holds 75%).

Major partnershipsMember of the Star Alliance.Various agreements incl. with bmi, Finnair,LAM (Mozambique), LOT, Lufthansa, Malev,Olympic Airlines, PGA Portugalia Airlines,SATA (Air Azores), SN Brussels Airlines,TACV-Transportes Aereos de Cabo Verde,Ukraine International, Varig.


Turnover 1409 1144Operating profit/loss 12.8 22Net profit/loss 8.7 19

Review of 2004

TAP Portugal was appointed a new Chairman in 2004.Manuel Pinto Barbosa succeeded Antonio Cardoso eCunha.

In June the Star Alliance accepted TAP Portugal’smembership application, with the integration process dueto be fully concluded during Spring 2005. Star Alliance,which counts amongst its members United Airlines,Lufthansa and ANA, accepted five new members in 2004.In July TAP Portugal entered code-share agreements withalliance partners LOT and Brazil’s Varig.

In November TAP Portugal established a new charterairline, known as White. White will be a 75%-ownedsubsidiary of the company, with the remaining 25% heldby a Portuguese tourist group Abreu. The creation of‘White’ follows the re-branding of the former Yes CharterAirlines, which principally operated services betweenPortugal, the Canary Islands, Cuba and the DominicanRepublic.

In the fleet, TAP Portugal introduced regular flights to newEuropean destinations - Budapest, Prague, Oslo andVenice - as well as to Natal, in the Brazilian Northeast.

In 2005 TAP Portugal launched a new corporate identity.

Manuel Pinto BarbosaChairman

Fernando PintoCEO


or.morat.

ww

wTAROM – Romanian Air TransportPloiesti Road 16.5 KmOtopeni International AirportBucharestRomania

33 Scheduled Destinations12 within Romania17 rest of Europe4 beyond Europe

2323 Employees

16 Aircraft in Fleet4 Boeing 737-7005 Boeing 737-3007 ATR 42-500



Owned by…92.63% State ownership5.42% Romanian Air Traffic Services1.43% Muntenia (private financial

investment fund)0.52% Romanian Civil Aviation Authority

Owner of…-

Major partnershipsVarious code-share agreements incl. withAeroflot, Air France, Air Moldova, Alitalia,Austrian, Cimber Air, CSA, Iberia, LOT,Malev, SN Brussels Airlines and Syrian ArabAirlines.

Financial ResultsUS$ mill 2004 2003

Turnover 226.5Operating profit/loss (5)Net profit/loss (12.6)

Review of 2004

In September 2004 TAROM celebrated its 50th

anniversary. The past years saw important restructuringefforts with a network review, improved aircraft utilisationand internal measures The company expects this toreflect well on the financial performance of 2004,anticipated to reach break-even.

In 2004 TAROM entered a new code-share agreementwith SN Brussels Airlines from December, whereby thelatter will place its code on TAROM operated flightsto/from Bucharest. Following the discontinuation oflonghaul services in 2003, TAROM embarked on anagreement with Austrian for code-share on Austrian-operated flights Vienna-New York JFK and Vienna-Washington Dulles flights effective from the Wintertimetable.

New TAROM destinations in 2004 included Sibiu andArad, both domestic points in Romania. The company ispredominantly expanding on existing European routeswith the objective of achieving a frequency of 3 flights perweek on all main European destinations within the nextfew years.

In the fleet, TAROM placed an order for four new 100-seater Airbus A318 for use on medium haul routes. Thefirst two aircraft are for delivery in 2006 with the remainingtwo scheduled for 2007. The two Airbus A310s in the fleetwere put up for sale at the end of 2003, when the lastlonghaul flight in the company’s network was ceased.Currently the carrier’s fleet is composed of Boeing 737s, -700 and -300 and ATR 42-500s.

In January 2005 TAROM President & CEO RodicaOdobescu stepped down. Mr. Cristian Becerescu hasbeen appointed interim manager of the company.

Cristian BecerescuActing President & CEO

.


moc.senilriahsikrut.w

ww

Türk Hava Yollari A.O.Genel Müdürlük BinasiAtatürk Havalimani34830 YesilköyIstanbulTurkey

102 Scheduled Destinations27 within Turkey46 rest of Europe29 beyond Europe

10956 Employees

73 Aircraft in Fleet7 Airbus A340-3002 Airbus A321-1009 Airbus A320-2005 Airbus A310-30026 Boeing 737-80017 Boeing 737-4006 Avro RJ-1001 Airbus A310-300F

51 Aircraft on Order5 Airbus A330-20012 Airbus A321-20019 Airbus A320-20015 Boeing 737-800


Owned by…75.17% State-owned Privatisation

Administration24.83% Private shareholders

Owner of…50% SunExpress

Major partnershipsVarious code-share agreements incl. with AirCanada, Air India, American Airlines, AsianaAirlines, Croatia Airlines, CSA, Iran Air, JAL,LOT and SunExpress.

Financial ResultsTRL tn 2004 2003

Turnover 2793 2846Operating profit/loss 143 370Net profit/loss 75 244

Review of 2004

In 2004 the Turkish government offered a share sale inthe national carrier through a public offering. PreviouslyTHY was 98.2% state-owned, with 1.8% of shares traded.An IPO was carried out in the 1990s whilst a furtherattempt to privatise in 2001 was stalled. Initially putting up20% for sale in November, the option to extend this to23% was quickly taken up, as the offer wasoversubscribed. The sale of further shares is planned for2005 and 2006.

In 2004 the company set the stage for the largest fleetexpansion in the carrier’s history. A purchase agreementwas signed for 36 single-aisle and wide-body aircraft fromAirbus, consisting of 19 Airbus A320s, 12 Airbus A321sand 5 Airbus A330-200s. A further order was placed for15 Boeing 737-800s. The fleet, being a mixture of Airbus,Boeing and Avro, will be augmented by the 51 newaircraft on order, with delivery starting in 2005 andexpected to be finalised by 2008.

Candan KarlitekinChairman of the Board

Temel KotilGeneral Manager


moc.citnalta-nigriv.w

ww

Virgin Atlantic AirwaysThe OfficeManor RoyalCrawley, West SussexRH10 9NUGreat Britain


6912 Employees (2003)

29 Aircraft in Fleet7 Airbus A340-6009 Airbus A340-30013 Boeing 747-400


Status at 31st December 2004 for informationon destinations and fleet; at 31st December2003 for employees.

Owned by…49% Singapore Airlines

Owner of…49% Virgin Nigeria Airways

Major partnershipsVarious agreements incl. with America WestAirlines, bmi, Continental Airlines, MalaysianAirline System, Singapore Airlines and SouthAfrican Airways.


mill 2004/05 2003/041

Turnover 1272Operating profit/lossNet profit/loss* 20.9

* pre-tax1 Change of FY: 10 months to Feb. 2004

Review of 2004

In March Virgin Atlantic unveiled its future developmentplan, which includes a period of sustained growth; thelaunch of new routes, including Australia, Cuba and theBahamas; increased frequencies to the US, theCaribbean area and Asia; fleet expansion and therecruitment of 1400 additional staff.

In December 2004 Virgin Atlantic Airways launched itsfirst scheduled service between Hong Kong and Sydney,Australia. The daily flight, operated with an Airbus A340-600, was made possible following the liberalisation of theair service agreements between Hong Kong and theUnited Kingdom in 2003.

In September the Nigerian Government and Virgin AtlanticAirways announced the launch of a new airline, VirginNigeria. Virgin Nigeria will initially benefit from expertiseand services from Virgin Atlantic, which will also hold aminority shareholding of 49%, the remainder being heldby Nigerian institutional investors. The new airline shouldstart operations in 2005.

In 2004 Virgin Atlantic announced code-share agreementswith America West Airlines, for onward connection withinthe US; with South African Airways to benefit from thecarriers pan-African network out of Johannesburg; and anexpanded code-share agreement with shareholderSingapore Airlines.

In the fleet, Virgin Atlantic placed an order for a furtherthirteen Airbus A340-600s, now totalling 18, with optionsfor a further thirteen. Delivery is scheduled between 2005and 2008. The six A380-800 on order will be integratedinto the fleet between 2008 and 2010.

Sir Richard BransonChairman

Steve RidgwayCEO

£


Key Statistics - AEA Total TRAFFIC BY ROUTE AREA

%/pt %/pt %/pt %/pt %/pt %/pt

Passengers (000) 97 942.1 -0.2 140 670.7 5.8 238 612.8 3.3 3 688.0 18.6 6 310.0 17.9 26 950.4 7.7

Passenger Kilometres (mill) 52 008.2 0.8 143 939.1 7.5 195 947.3 5.7 7 216.7 20.1 21 211.3 19.6 183 035.8 7.2

Share in Tot. Sched. AEA Traffic (%) 8.0 22.0 30.0 1.1 3.2 28.0

Seat Kilometres (mill) 79 215.7 2.0 219 985.9 6.3 299 201.6 5.7 10 568.9 15.1 30 463.4 19.4 224 193.1 4.5

Passenger Load Factor (%) 65.7 -0.8 65.4 0.7 65.5 0.3 68.3 2.9 69.6 0.1 81.6 2.0

Total Freight Tonnes Carried (000) 189.4 -4.4 572.1 5.9 761.5 3.2 56.2 7.2 213.8 6.9 1 420.9 6.7

Total Freight Tonne-Kilometres (mill) 151.4 -1.6 784.7 9.9 936.1 7.8 160.0 13.4 978.8 4.8 9 936.4 6.9

% Freight on Passenger Services 80.2 82.4 82.1 99.7 81.7 69.0

Total Revenue Tonne-Kilometres (mill) 5 016.6 0.4 14 440.5 7.7 19 457.2 5.7 849.3 19.8 3 018.9 14.4 27 680.5 6.9

Available Tonne-Kilometres (mill) 8 649.3 1.3 25 088.5 6.5 33 737.8 5.1 1 306.2 13.9 4 708.6 12.8 38 830.3 4.2

Overall Load Factor (%) 58.0 -0.6 57.6 0.6 57.7 0.3 65.0 3.2 64.1 0.9 71.3 1.8

Average Seats per Aircraft 129 119 121 159 195 276

Average Stage Distance (km) 477 897 735 1 687 2 734 6 339

%/pt %/pt %/pt %/pt %/pt %/pt

Passengers (000) 5 925.0 2.6 3 745.4 15.2 7 131.7 4.9 14 399.9 19.4 307 012.9 4.9 9 458.8 2.7

Passenger Kilometres (mill) 45 495.2 3.4 32 582.9 17.0 47 523.1 5.5 120 393.1 18.9 653 643.2 9.2 21 467.6 9.0

Share in Tot. Sched. AEA Traffic (%) 7.0 5.0 7.3 18.4 100.0

Seat Kilometres (mill) 56 873.9 2.6 39 339.0 15.7 60 916.7 0.7 154 574.0 17.2 876 481.9 7.4 27 072.1 10.7

Passenger Load Factor (%) 80.0 0.6 82.8 0.9 78.0 3.6 77.9 1.1 74.6 1.2 79.3 -1.2

Total Freight Tonnes Carried (000) 165.9 9.2 239.7 19.5 422.2 11.3 1 855.8 12.0 5 136.7 9.0 52.4 25.2

Total Freight Tonne-Kilometres (mill) 1 416.1 10.7 2 205.1 19.7 3 077.4 12.9 16 263.4 12.2 34 974.1 10.7 353.4 30.1

% Freight on Passenger Services 82.8 54.2 55.6 35.8 52.9 3.8

Total Revenue Tonne-Kilometres (mill) 5 713.0 4.7 5 303.7 18.7 7 573.6 7.8 27 920.6 14.8 97 539.3 9.7 2 346.8 11.7

Available Tonne-Kilometres (mill) 8 335.3 3.3 7 113.2 15.1 10 827.8 4.6 38 040.0 14.4 142 930.9 7.8 3 382.7 12.9

Overall Load Factor (%) 68.5 0.9 74.6 2.3 69.9 2.1 73.4 0.2 68.2 1.1 69.4 -0.8

Average Seats per Aircraft 325 274 278 293 192 175

Average Stage Distance (km) 6 515 6 601 5 197 6 644 1 272 1 888

For more detailed statistics, download the AEA S.T.A.R. 2005 from www.aea.be

1+2

TotalEurope

1 - 9

DomesticGeographical

Europe

1 2

2004

2004Europe -

Sub Saharan Africa

8 9

Europe -Far East/

Australasia

TotalScheduled

5

Europe - North Africa

3

Europe - Middle East

Non-Scheduled

NorthAtlantic

4

MidAtlantic

6 7

SouthAtlantic


Key Statistics - by Carrier

2004

(000) % (mill) % (mill) % (%) pt (000) % (mill) % (mill) % (mill) % (%) pt

Adria Airways 765.0 0.9 711.0 1.5 1 288.5 2.2 55.2 -0.4 3.5 -8.6 3.2 -10.2 67.2 0.9 136.8 1.8 49.1 -0.4

Aer Lingus

Air France 45 368.9 4.3 107 313.5 8.3 141 558.1 7.5 75.8 0.6 735.9 11.6 5 384.9 10.5 15 224.2 8.9 21 416.6 8.8 71.1 0.1

Air Malta 1 365.2 4.3 2 552.2 17.4 3 201.5 -0.8 79.7 12.3 8.2 -6.6 12.2 -11.9 218.3 3.6 355.4 -0.5 61.4 2.4

Alitalia 21 988.4 -1.2 34 366.3 10.0 48 181.3 10.6 71.3 -0.4 203.6 1.2 1 392.7 2.8 4 842.4 7.6 6 891.2 7.9 70.3 -0.2

Austrian 7 619.1 10.5 17 519.7 20.5 24 279.2 19.1 72.2 0.9 85.3 16.7 511.4 18.7 2 374.2 19.9 3 364.5 19.5 70.6 0.2

bmi 6 892.5 9.1 5 379.2 24.1 8 012.8 20.5 67.1 1.9 20.6 13.6 76.5 37.3 519.9 24.5 950.6 21.8 54.7 1.2

British Airways 35 462.5 1.9 106 500.7 6.0 143 407.0 4.0 74.3 1.4 710.3 13.6 4 778.4 13.9 14 441.1 8.8 22 316.5 5.3 64.7 2.1

Cargolux - - - - - - - - 619.1 19.0 4 849.3 14.7 4 849.3 14.7 6 668.0 12.1 72.7 1.7

Croatia Airlines 1 347.9 5.3 940.5 8.1 1 532.1 4.9 61.4 1.8 3.7 -5.1 2.4 -7.8 87.5 7.4 167.8 4.6 52.2 1.4

CSA 3 994.8 19.4 5 703.5 19.2 8 148.5 23.0 70.0 -2.3 19.4 8.6 40.6 11.9 558.5 18.5 907.1 23.3 61.6 -2.5

Cyprus Airways 1 702.3 0.5 3 421.3 2.1 4 765.1 0.6 71.8 1.0 18.8 9.8 47.5 10.4 358.8 3.0 580.1 1.9 61.8 0.7

Finnair 6 028.1 8.5 10 476.1 21.2 15 804.2 14.6 66.3 3.6 64.0 19.2 324.7 27.1 1 276.8 22.1 2 437.3 17.6 52.4 2.0

Iberia 25 802.7 4.6 45 765.5 9.1 60 843.5 8.8 75.2 0.2 198.6 9.8 964.8 19.1 5 132.6 10.8 8 532.7 9.4 60.2 0.8

Icelandair 1 360.7 20.0 3 702.2 23.4 4 890.2 12.8 75.7 6.5 10.4 -71.2 30.3 -68.3 392.2 -0.8 583.0 -4.7 67.3 2.7

Jat Airways 1 076.8 6.5 1 095.2 5.2 2 010.9 13.5 54.5 -4.3 4.3 21.8 5.9 33.0 105.2 6.7 225.9 10.2 46.6 -1.5

KLM 20 386.2 8.9 63 113.3 11.6 77 059.6 6.4 81.9 3.8 564.7 8.1 4 733.2 15.9 11 030.6 10.8 13 793.9 9.1 80.0 1.2

LOT 3 493.1 7.4 5 860.7 7.9 7 934.3 4.5 73.9 2.3 17.1 -3.7 77.1 9.5 654.3 7.7 1 041.6 3.9 62.8 2.2

Lufthansa 48 255.4 8.5 109 470.9 13.3 139 695.7 12.5 78.4 0.6 1 144.7 12.1 8 039.6 10.7 19 288.6 12.1 26 342.8 11.3 73.2 0.5

Luxair 855.8 4.4 572.6 4.4 1 074.2 -0.4 53.3 2.5 0.3 16.7 0.3 29.1 51.9 4.4 101.7 -1.0 51.0 2.6

Malev 2 546.2 12.6 3 509.7 5.8 5 431.2 12.8 64.6 -4.3 8.5 -13.7 23.4 -17.5 343.4 18.2 725.8 4.8 47.3 5.4

Meridiana 3 597.1 -4.7 2 436.2 -4.9 3 937.7 3.4 61.9 -5.4 0.5 -70.1 0.3 -70.8 219.6 -5.2 456.5 8.1 48.1 -6.8

Olympic Airlines 5 794.4 8.5 6 788.4 6.4 10 504.1 2.7 64.6 2.3 25.3 -15.6 52.8 -9.4 695.5 4.9 1 368.6 1.6 50.8 1.6

SAS 20 378.6 -0.4 24 050.2 4.5 35 087.4 5.3 68.5 -0.5 120.7 -4.9 725.6 0.3 3 170.9 4.3 4 690.2 3.4 67.6 0.5

SN Brussels Airlines 3 192.7 9.9 4 556.0 15.1 7 448.7 8.1 61.2 3.7 16.1 -6.2 91.5 -6.5 505.7 10.7 870.5 7.3 58.1 1.8

Spanair 5 644.4 6.7 5 107.4 12.2 8 463.2 13.0 60.3 -0.4 10.1 24.2 13.6 27.8 473.2 12.6 826.8 10.9 57.2 0.9

SWISS 9 279.1 -13.8 20 598.8 -14.9 27 493.4 -17.9 74.9 2.6 190.6 -15.3 1 089.9 -12.7 2 985.9 -12.4 4 773.3 -17.7 62.6 3.8

TAP Portugal 6 048.2 10.6 13 198.0 13.3 18 747.9 11.4 70.4 1.2 53.3 7.8 224.7 10.4 1 434.7 13.1 2 482.8 12.5 57.8 0.3

TAROM 1 061.7 8.9 1 328.9 -14.1 2 089.1 -13.1 63.6 -0.7 3.1 0.0 4.9 -28.2 125.1 -14.8 363.1 -7.7 34.5 -2.9

Turkish Airlines 11 376.6 15.5 17 382.4 15.5 24 713.4 9.1 70.3 3.9 129.6 10.1 393.7 6.7 2 191.8 13.5 3 321.7 8.7 66.0 2.8

Virgin Atlantic 4 328.6 12.4 30 222.7 12.2 38 879.2 9.2 77.7 2.1 146.6 5.9 1 078.8 5.9 3 919.8 10.4 6 238.0 9.5 62.8 0.5

AEA 307 012.9 4.9 653 643.2 9.2 876 481.9 7.4 74.6 1.2 5 136.7 9.0 34 974.1 10.7 97 539.3 9.7 142 930.9 7.8 68.2 1.1

For more detailed statistics, download the AEA S.T.A.R. 2005 from www.aea.be

AvailableSeat

Kilometres

LoadFactor

TOTAL SCHEDULED - Passenger & All-Cargo Services

PassengersRevenue

PassengerKilometres

OverallLoad

Factor

FreightTonnesCarried

FreightTonne

Kilometres

AvailableTonne

Kilometres

RevenueTonne

Kilometres


Glossary

AAPA. Association of Asia Pacific Air-lines, with headquarters in Kuala Lum-pur. Air Freedom Rights. The liberalisation of European air transport, started in 1988 and completed in 1997 with the so-called ‘Third Package’ of measures included rights of market access, which are defined as follows. First freedom: to overfly one country en-route to an-other; Second freedom: to make a technical stop in another country; Third freedom: to carry passengers from the home country to another country; Fourth freedom: to carry passengers to the home country from another country; Fifth freedom: to carry passengers between two countries by an airline of a third on a route with origin/destination in its home country; Sixth freedom: to carry passengers between two coun-tries by an airline of a third on two routes connecting in its home country; Seventh freedom: to carry passengers between two countries by an airline of a third on a route outside its home coun-try; Eighth freedom or cabotage: to carry passengers within a country by an airline of another country on a route with origin/destination in its home coun-try; Ninth freedom or Stand-Alone cabo-tage: to carry passengers within a country by an airline of another country; True domestic: to carry passengers by an airline in its home country. Association of European Airlines (AEA). A non-profit association for the European airline industry with following members: Adria Airways (JP), Aer Lin-gus (EI), Air France (AF), Air Malta (KM), Alitalia (AZ), Austrian (OS), bmi (BD), British Airways (BA), Cargolux Airlines International (CV), Croatia Air-lines (OU), CSA Czech Airlines (OK), Cyprus Airways (CY), Finnair (AY), Iberia (IB), Icelandair (FI), JAT Airways (JU), KLM (KL), LOT Polish Airlines (LO), Lufthansa (LH), Luxair (LG), Ma-lev Hungarian Airlines (MA), Olympic Airlines (OA), SAS (SK), SN Brussles Airlines (SN), Spanair (JK), SWISS (LX), TAP Portugal (TP), TAROM (RO), Turkish Airlines (TK), Virgin Atlantic Airways (VS). ATC. Air Traffic Control. Available Seat-Kilometres (ASK). The total number of seats available for the transportation of revenue passengers

multiplied by the number of kilometres which those seats are flown. Available Tonne-Kilometres (ATK). The total number of metric tonnes available for the transportation of pas-sengers, freight and mail multiplied by the number of kilometres which this capacity is flown. Breakeven Load Factor (%). The load factor at which operating revenues will cover operating costs. Unit cost divided by yield. CAA.Civil Aviation Authority. CFMU. Central Flow Management Unit, of Eurocontrol. CODA. Central Office for Delay Analy-sis. Code-sharing. A marketing practice by which several airlines put their two-letter code on one flight. Computer Reservation System (CRS). A system for reserving seats on commercial flights electronically by a travel agent. DGCA. Directorate General of Civil Aviation. Distances. Airport-to-Airport great circle distances are used. ECAC. European Civil Aviation Confer-ence, with headquarters in Paris. ECOFIN. Directorate General for Eco-nomic and Financial Affairs of the Euro-pean Union. EU. European Union. The following countries joined, in 1958 Belgium, France, Germany (west), Italy, Luxem-bourg, Netherlands; in 1973 Denmark, Ireland, United Kingdom; in 1981 Greece; in 1986 Portugal, Spain; in 1995 Austria, Finland and Sweden and in 2004 Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic and Slovenia. Membership of Bulgaria and Romania is expected in 2007. Eurocontrol. European Organisation for the Safety of Air Navigation.

Geographical Regions. For reporting related to the air transport operations of member airlines the following regions are identified: 1) Domestic: within a country which is the main place of busi-ness of the reporting carrier. In the case of SAS, which covers three countries, domestic refers to services within each of the three countries, but not services between those countries; 2) Geo-graphical Europe: cross-border services within the geographic area Europe, including Russia up to 55°E; 3) Middle East: to/from the Middle East; 4) North Africa: services to/from Algeria, Egypt, Libya, Morocco, Sudan and Tunisia; 5) Sub-Saharan Africa: services to/from African countries not included in North Africa; 6) North Atlantic: services to/from USA and Canada; 7) Mid Atlan-tic, services to/from Central America; 8) South Atlantic: services to/from South America.; 9) Far East/Australasia: ser-vices to/from points East of the Middle East. All of the above relate to sched-uled services only. Aggregate non-scheduled or charter services are re-ported separately. Calculated regions include: a) Europe Total: 1+2; b) Inter-national Short/Medium Haul: 2+3+4; c) Total Longhaul: 5 to 9; d) Total Interna-tional: 2-9; e) Total Scheduled: 1-9. IACA. International Air Carrier Associa-tion: worldwide membership of leisure (non-scheduled) air carriers. IATA. International Air Transport Asso-ciation, with headquarters in Geneva and Montreal. ICAO. International Civil Aviation Or-ganisation, with headquarters in Mont-real, Canada. OAG. Official Airline Guide, includes scheduled timetables for most airlines. OECD. Organisation for Economic Co-Operation & Development Operating Ratio. The relationship be-tween operating revenues and operat-ing expenses. The latter may be inclu-sive or exclusive of net interest. Overall Load Factor %. The percent-age of total capacity available for pas-sengers, freight and mail which is actu-ally sold and utilised. Computed by dividing total revenue tonne-kilometres


Glossary

actually flown by total available tonne-kilometres. Passenger Load Factor (PLF %). The percentage of seating capacity which is actually sold and utilised. Computed by dividing revenue passenger-kilometres flown by available seat-kilometres flown on revenue passenger services. Non-scheduled services. Are defined as ‘Non-scheduled services’: charter flights and special flights performed for remuneration on an irregular basis, including empty flights and blocked-off charters, other than those reported under scheduled services. Blocked-off charters: when the whole capacity of an aircraft is reserved for charter sale on flights published as scheduled but car-ried out as charter flights on the same or similar routing and timetable. Revenue Freight. All freight counted on a point-to-point basis (in metric ton-nes) covered by air waybills for which remuneration is received. Freight car-ried on trucking services is not in-cluded. Revenue Passengers Carried. A pas-senger for whose transportation an air carrier receives commercial remunera-tion. This includes, for example, (i) passengers travelling under publicly available promotional offers (for exam-ple ‘ two-for-one’ ) or loyalty pro-grammes (for example redemption of frequent flyer points); (ii) passengers travelling as compensation for denied boarding; (iii) passengers travelling at corporate discounts; (iv) passengers travelling on preferential fares (govern-ment, seamen, military, youth, student etc). Are excluded, for example, (i) persons travelling free; (ii) persons travelling at a fare or discount available only to employees of air carriers or their agents or only for travel on the busi-ness of the carriers; (iii) infants who do not occupy a seat. Revenue Passenger-Kilometres (RPK). One fare-paying passenger transported one kilometre. RPK’s are computed by multiplying the number of revenue passengers by the kilometres they are flown. Revenue Tonne-Kilometres (RTK). One tonne of revenue traffic trans-ported one kilometre. Revenue tonne-

kilometres are computed by multiplying metric tonnes of revenue traffic (pas-senger, freight and mail) by the kilome-tres which this traffic is flown. Passen-ger tonne-kilometres are calculated using standard weights (including bag-gage) which may differ between airlines and between domestic/short/long-haul. Scheduled Services. Flights sched-uled and performed for remuneration according to a published timetable, or so regular or frequent as to constitute a recognisably systematic series, which are open to direct booking by members of the public. Extra flights occasioned by overflow traffic from scheduled flights and preparatory revenue flights on planned air services are also con-sidered to be scheduled services. Unit Cost. The average operating cost incurred per available tonne-kilometre. Yield. The average amount of revenue received per revenue tonne-kilometre. Passenger yield: passenger revenue per RPK.


Association of European AirlinesAvenue Louise 350

1050 Brussels, BelgiumTel. + 32 (0)2 639 89 89Fax + 32 (0)2 639 89 99 [email protected]

www.aea.be

Documents

Yearbook - Assaereo · 2007. 1. 18. · Middle East traffic grew by about 20% and the much more substan-tial Far Eastern market was close behind, with a plus 18.9%. Broadly, if the