After more than two years, Jaroslav Tvrd’k is leaving the post of President and Chairman of the Board of Czech Airlines. Tvrd’k is leaving the company to become the General Campaign Manager for the CSSD political party. Under Tvrd’k’s leadership, Czech Airlines has undergone a series of major changes.
After his appointment as CSA’s President and Chairman of the Board in September 2003, Jaroslav Tvrd’k announced his key strategic directions for the company in the period 2004 - 2014. These directions had two key elements: One was the optimization of the company’s internal organizational structure in order to increase productivity and reduce costs. The other element was to increase the carrier’s growth in market share.
During 2004, the number of passengers served by the airline grew on a year-to-year basis by roughly 800,000 - reaching a total of more 4,345,000 passengers. Over the past year, CSA was able to continue with this previous growth trend and in 2005, served more than 5 million passengers.
The only way to sustain this trend has been through the gradual modernization of the airline’s fleet. Over the past two years, the airline has successfully completed a bidding process for the acquisition of medium-distance and short-distance aircraft, including the financing for the planes. These acquisitions have had an positive impact on earnings as well as increasing the market value of the airline by billions of CZK.
Other transformational strategies have included efforts such as programs for the optimizing of internal costs. As part of its purchasing system changes, the airline first changed the organizational structure of its central purchasing area with a set of new rules and guidelines. As a result, last year the carrier managed to save roughly 140 million Czech crowns. In 2006, the projected savings are expected to reach approximately five percent of the company’s controllable costs (up to CZK 300 million).
Another important step has been the introduction of the so-called ‘new generation revenue management’ system, which seeks to optimize the seating capacity offered on each flight. This measure has brought about an increase in the airline’s earnings of roughly CZK 100 million in 2005, with other improvements, worth hundreds of millions of CZK, being expected this year.
This series of transformations has also been reflected in the airlines’ financial results. In 2004, the carrier’s earnings saw a year-over-year increase of roughly USD 3.4 million, using international accounting standards, reaching a total of USD 22.9 million. The preliminary estimates are that the airline’s 2005 results should show a slight profit, based on the same standards. A significant positive impact from the transformational strategies is expected to be seen on the company’s bottom line as early as this year.