March 27 2009, Moscow. – Board of Directors of Aeroflot Russian Airlines at the meeting on March 26 considered the performance of the program aimed at the improvement of the company’s profitabiliry. In the conditions of declining overall passenger flow, Aeroflot is implementing its anti-crisis program, initiated in July 2008. In 2009, the effect from implementation of the efficiency-raising and cost-cutting initiatives is expected at the amount of $161 million. The total effect from the anti-crisis program implementation in the period of 2008-2010 is expected to exceed $400 million. The Board recommended the company’s administration to achieve the full completion of the planned measures and continue the search for additional ways to increase the company’s financial and economic efficiency.
The Board examined the performance of Aeroflot’s 25 subsidiaries and branches in 2008. It was noted that the enterprises of the group are enabling different stages of the passenger and airline servicing flow, from ticket selling and terminal servicing through to maintenance and flight safety, in compliance with Aeroflot standards. In spite of the financial and industry-specific crises, the enterprises of the group show financial and operational growth. Providing services to both the parent company and other carriers, Aeroflot Group companies satisfy the highest standards of service and production quality, at the same time optimizing their production costs.
The company sees the following key areas of sunsidiary management in 2009: top line increasing, adoption of new strategy for subsidiary development, improving the corporate management system, including increased number of independent directors in the subsidiaries’ Boards of Directors.
Within the discussion on the Aeroflot Group development strategy, the Board considered the measures aimed at provision of flight safety, operational efficiency and traffic development of the subsidiaries Aeroflot Don, Aeroflot Nord and Aeroflot Cargo. The Board paid attention to the fact that the subsidiaries are currently implementing Aeroflot’s flight safety management system, with its efficiency corresponding to those of the world’s leading carriers. Aeroflot Don was certified in compliance with the international standard IOSA (International Operational Safety Audit). On goes the implementation of the risks evaluation and analysis system for flight safety. The Board set the objective to drive flight safety level in Aeroflot Don and Aeroflot Nord to that of the parent company.
Special attention was given to Aeroflot Cargo. The Board considered the options for operational and economic rehabilitation of the company. It was suggested that Aeroflot administration in the shortest possible time should implement the most effective option of the company’s turnaround in order to provide its financial and economic stability.
Analysing the ways to improve commercial performance and minimize the consequences of air traffic market downturn, the Board considered suggestions on improving efficiency through route network improvement, better fleet arrangement, application of micro seasons technique in scheduling, interlining improvement. It was noted that over 43% of passenger traffic in Russia is made by charter, which gives reason to view this market segment as an important resource in the light of the regular traffic drop. Under these circumstances, Aeroflot decided to substantially enhance its charter traffic, at the same time retaining its regular flights network developing the network carrier strategy. For this purpose, the Board approved the proposal of Administration on creation of a separate charter division organized as a Moscow branch of Aeroflot JSC. Setting up the branch will require an extensive employment in charter flights of Ilyushin96 aircrafts, which are most effective in the segment, along with tactical usage of airplanes operated on regular lines.
The Board terminated Valery Okulov’s CEO authority and elected to this position Vitaly Savelyev, who will enter upon his duties from April 10 2009, according to the Board’s resolution.
AEROFLOT is headquartered in Moscow, in the Sheremetyevo International Airport. As Russia’s largest carrier, the company flies around 10 million passengers annually, together with its subsidiaries, around 12 million passengers.
Aeroflot operates its own flights to 96 destinations in 48 countries. It accounts for over 45% of Russia’s scheduled international traffic. The company strives to enhance its share of domestic traffic, which now is 12.5% (with its subsidiaries, 17%t).
Aeroflot is a member of SkyTeam, a global airline alliance. Aeroflot has given its customers an access to a route network covering 905 in 169 countries (more info is available on our website www.skyteam.com). Aeroflot operates code-sharing agreements with 28 foreign and Russian airline companies.
Aeroflot has one of Europe’s youngest air fleets that consists of 96 aircrafts, more than half are state-of-the-art airliners. The air fleet is regularly replenished. The company plans to receive the new generation Russian airplanes Sukhoi SuperJet-100.
Aeroflot complies with the highest international safety standards. Following the results of the International Air Transport Association’s Operational Safety Audit (IOSA), the company was the first Russian carrier to be included in the IOSA Registry. In 2007, Aeroflot confirmed the certificate in compliance with the new, a more strict regulation version. Since March 2008, the company’s Quality Management System has been certified as complying with ISO 9001:2000.
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