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Czech Q3 exceeds expectations

Over the first three quarters of this year, Czech Airlines managed to reverse the trend of growing costs rather than revenue, and thereby keep its financial results above the approved plan.  According to Czech accounting standards, the Company reported a loss of CZK 324 million, as at 30 September, which is a better result than was planned for that period.  The plan for all of 2006 continues to expect the same result as in 2005.  According to international accounting standards, according to which most airlines report and publish their results, the company’s loss in the same period is CZK 25 million.  The difference between Czech and international standards is due primarily to a different methodology of accounting for the financial leasing of aircraft.

“We are increasing the numbers of passengers carried as well as aircraft utilisation; the average price of tickets is suppressed by competition, and with it our revenues.  But, in spite of that, the gap is narrowing!  We are working on internal efficiency.  In particular, non-personnel cost figures show that we are being successful at it.  Costs are dropping in items which the management can influence, with revenue increasing,” said ?SA’s President, Radom’r La?ák, with respect to the results, adding: “Unfortunately, we have not managed to do the same in terms of personnel.  At yesterday’s meeting with the unions, we did not reach an agreement about lower wage increases in 2007.  Collective agreements raise the wages of ?SA employees by an average of 8% per year. In order for ?SA to achieve the same result as in 2005, we must earn an additional CZK 400 million for wages.  To that, add CZK 200 million for instalments on new aircraft.  In order for us to report the same result this year as in 2005, we must be CZK 600 million better than last year.”

Total operational revenue increased, year-on-year, by 5.6%, reaching CZK 17.79 billion.  Regularly scheduled carriage accounts for the greatest share of the operational revenue; compared to the same period last year, regularly scheduled carriage increased by just under three per cent.  Charter carriage has noted significant growth, with its revenue rising by 35% over the first three quarters of the year.

The total operating costs of ?SA reached CZK 17.81 billion.  Expenditures on aircraft fuel increased by 16.6%.  Wage costs increased by 13%, especially due to three-year collective agreements.  The cost of leasing (the purchase of new aircraft) increased by nearly 10%.  All other costs combined have dropped by 1.4%.  The decline in operating costs is driven by the strict steps taken by the management, especially in central purchasing and supplier services.

The number of passengers carried over the first three quarters of the year increased by 5%, with ?SA having carried a total of 4.2 million passengers.  Regularly scheduled carriage accounts for the greatest share of the carriage results, with nearly 3.6 million passengers.  A 15% increase was noted by charter flights, which carried 685,000 passengers from January to September.  In the first three quarters of the year, ?SA flights were the second most timely among the 26 members of the Association of European Airlines, AEA.