Czech Airlines has finished the draft of its planned new organizational structure, which is to be submitted by the company’s president Radom’r La?ák to the Board of Trustees within the next few days. The major change is the separation of the existing Marketing and Sales Division into two restructured divisions, wherein the Sales Division - one of CSA’s key priorities - will be operating as a separate division. The following two new divisions will be put into place, starting May 1st - (1) the Sales Division and (2) the Marketing and Product Development Division.  The company will complete the process of centralizing selected activities such as finance, human resources, accounting and legal. The brand new Management of Supplier Services section will bring the central purchasing, administration and investments, the new vehicle operations and in-flight services (including catering) areas under one roof. 

This organizational structure will lead to a simpler and better functioning model, supporting the current priorities of CSA in the area of income and expenses that are part of the TURNAROUND 2006 - 2008 program. The program has been introduced at CSA under the leadership of the company’s president, Radom’r La?ák, as a replacement for the 2005 - 2015 Strategy, which was abandoned by CSA due to its inability to meet the plan and due to the fact that the numbers that were part of the Strategy did not correspond with the actual situation. (The 2005 plan forecast a profit of CZK 522 million, while the expected financial results for 2005 will be a loss of roughly CZK 496 million.) The objective of the highly ambitious, realistic and achievable Turnaround 2006 - 2008 program is to restore the airline’s profitability. Part of this year’s (2006) plan is to implement changes and turn around certain trends, while keeping the loss rate at the same level as in the previous year. 2007 will be a year of stabilization for CSA and in 2008, the airline should be on a path leading to long-term profitability.

“During the three months of having worked together, my colleagues and I have had plenty of time to get to know one another. Some of us realized that our ideas about the right approach to CSA’s financial situation were different and some of us have ended up pursuing a different career. I wish these people only the best. Although it might not be a popular approach, it is a routine executive decision, behind which is only one interest - the prosperity and the future of CSA and its employees,” said Radom’r La?ák, who took over the presidency of the company on January 19, 2006 - commenting on the issue of the recent personnel changes at the company’s management. He also added, “I have said several times in the past that a good team must always include a combination of people from different management positions within CSA and new people from the market. And, I keep my promises.” 

Marie Macounová, who has been with CSA for more than 30 years and whose domain is the area of sales and marketing, has accepted the offer of the president of the company for the position of Vice President of the new Marketing and Product Development Division. After her appointment by the respective boards of the company, she should start in her new position on May 1, 2006.

Jan Vá?a, the Executive Director for Strategic Planning and Development and a member of the CSA Board of Directors will terminate his position on May 31, 2006. The standalone Strategic Planning and Development Division, which had the primary responsibility for the expansion of the CSA fleet, safety and crisis management, CARGO and - until February 1, 2006 - also the management and administration of our subsidiary companies, will be closed down and the sections that fell under this division will be relocated to other divisions. 
Marcela Hrdá, the Vice President for Marketing and Sales has accepted an offer for a different position, also in the airline industry. Jaroslav ?t?pánek, the Executive Director of the Sales Section will be temporarily appointed as the Head of the Sales Division, starting on May 1, 2006.
CSA has announced the opening of two vice president positions. Whereas the new Vice President for Flight Operations is expected to be selected from within the company, the position of Vice President for Ground Operations can be applied for by candidates and applicants from both within and outside of the company. The closing date for the first round of the selection process is April 27, 2006 and the entire hiring process should be completed by May 30. Until the finalization of the selection process, the current vice presidents Ji?’ Pos (ground operations) and Peter Jusko (flight operations),who are currently considering offers from both within and outside of CSA, will remain in their positions.

Jan Pavel will remain in his position as Vice President for Finance until May 31, 2006. He is leaving the company for family-related reasons and the process of finding his replacement is underway. 
Tomá? Heczko will remain in his position as Vice President for Technology and Du?an Ryban will remain as Vice President for Human Resources. Kate?ina Hobzová-Chalupová will continue to act as an executive director, specializing in IT. The improvement of this area is one of our key priorities - especially in the customer service segment.
In the second half of April, the following new managers will be joining CSA, reporting directly to the President of the company.

Franti?ek ?’r - the Executive Director of Management of Supplier Services, our only new section, which will encompass Central Purchasing, Administration and Investments, the centralized vehicle operations with the standard car policy and Catering (in-flight services).
Petr Somol - will be the new head of the Safety Section, replacing Josef Sojka, who will be leaving CSA upon a mutual agreement, after handing over his position. 

The primary tasks of the new management will be to simplify and improve the operations and effectiveness of the directly managed organizational units, to set out clear rules for the compensation of management (KPI’s), to continue with the divisional cost cutting strategy, which was announced by the company’s president in March and which so-far has produced annual savings of only CZK 200 million (i.e. roughly 40% of the projected number) and, most importantly, to support the company’s profitability and the supply of high quality services to our customers and provide good value at all service levels. 

 

The proposal for the current changes to the company’s organizational structure will be reviewed by the personnel committee of the Board of Trustees on April 19, 2006 and subsequently by the Board of Trustees itself at its regular meeting on April 28, 2006. If approved, the new organizational structure will come into effect on May 1, 2006.
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