WORD FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS AND THE PRESIDENT OF CSA
A Productive 1997
In 1997, CSA recorded the highest annual revenues since the founding of the company in 1923: revenues of 11.41 thousand million CZK. Record revenues have been reached for the fourth consecutive year - in 1996 it was 9.76 thousand million CZK, in 1995, 9.01 thousand million and in 1994, 7.85 thousand million CZK. The company also achieved similar positive results in the number of transported passengers in 1994 -1997: CSA transported 1.24 million passengers in 1994, then 1.49 million, and 1.61 million to 1.73 million passengers in 1997. The amount of realised revenues (11.41 thousand million CZK) places CSA amongst the largest firms in the Czech Republic. The company turned a profit of 89.3 million CZK in 1997 and thus returned, after a year hiatus, to profitability. Compared to 1996, the 1997 results represent an improvement of 296.3 million CZK.
§ Air Transport
The main activity of CSA - air transport - placed revenues in the amount of 8.50 thousand million CZK, which is also the best result in the history of CSA air transport and indicates a year-to-year increase of 14.7 percent. The available transport capacity in the indicator, i.e. available transport activity in available tonne-kilometres (atkm), showed a year-to-year increase of only 4.6 percent. Another positive point is the improvement of the qualitative numerical index of the available seat capacity in 1997 to 66.8% as compared to 66.0% in 1996. From the point of view of the quality of CSA transport, the continuous decrease in the value of average delays in minutes per CSA departure in the past years is very encouraging. In 1997, the company had an average delay of 9.90 minutes per departure as compared to 11.88 minutes in 1996 and 14.54 minutes in 1995. This positive trend is supported by the stellar position of CSA in the evaluation of European airline companies associated in AEA (27 most important air carriers in Europe): this indicator has named CSA as a frontrunner amongst the top fourth of the best carriers over the individual quarters of 1997.
§ Non-transport Activities
In non-transport activities the company showed revenues of 1.38 thousand million CZK, which is a year-to-year improvement of 254.5 million CZK, i.e. an increase of a total 22.6 percent. CSA activities in the field of passenger and aircraft handling, duty-free sales at the airport and on board, external aircraft maintenance and catering reached the highest level of year-to-year increase. Non-transport activities represented 12.1 percent of all company income and remarkably added to CSA profitability in 1997.
Restructuring Programme Results (1994 - 1997)
The CSA restructuring programme was established in the first half of 1994 as a reaction to the historically recorded financial losses incurred by the company in 1993 (1.55 thousand million). The restructuring programme therefore set out to limit losses to a total amount of 1.52 thousand million over 1994 - 1997. Accounting results for the monitored period (1994 - 1997) equalled a loss of 0.53 thousand million CZK, which represents an overall improvement of 0.99 thousand million CZK compared to the forecasted losses estimated in the restructuring programme.
After the first year of the restructuring programme (1994) the company showed a loss almost 60% lower than in 1993. In the following three years (1995 - 1997) the company twice turned a profit and once a loss. With favourable initial prospects we can also expect a profit in 1998 which would mean that the company will make a profit three times running since the implementation of the restructuring programme. This result considerably exceeds expectations. The influence of objective factors such as an increasing demand for air transport worldwide, the subjective influence of company management as pertaining to an increased emphasis on the effectiveness of CSA profitability in all activities, the gradual elimination of unprofitable operations and activities, an increase in labour productivity, and other causes, all remarkably influenced this success.
The restructuring programme and its main objectives - to create a prosperous company which will be competitive and flexible enough to meet market conditions, with an efficient professional team of employees and which will offer optimal services to its customers - remains in effect. It is necessary to further extend this programme for the coming period and link new goals to it.
Strategy for the Forthcoming Period
CSA provides its services in the environment of the global, highly competitive environment of the civil aviation market. The strategy of CSA joint-stock company growth must start from both creative procedures and market-aggressive solutions. The basic elements of the CSA strategy must underline our obligation to innovate as well as to increase the competitiveness of CSA on the market while diversifying the activities of our company.
§ Air TransportIn the area of the main activity of CSA - air transport - an emphasis has been put on updating the definition of territories, markets and clientele CSA wishes to focus upon. When formulating this strategy, it is necessary to start from the subjective/internal limitations of CSA as an air carrier, and on the other hand, from objective conditions which are set up by the air transport market both abroad and in the Czech Republic, especially by transport streams of passengers, market size and the purchasing power of citizens. In the upcoming years, the tasks aimed at privatising CSA and engaging CSA in an existing alliance of airline carriers will take the highest priority and have decisive relevance for the further existence and development of CSA in general.
§ Non-air Traffic ActivitiesFurther development of the company's business ventures in the realm of non-air traffic activities is desirable and, indeed, crucial. This means the pertinent diversification of the company's business practices which in turn bring to CSA the desired effects. This further development may, in principle, follow several levels, which are defined by a request for the highest possible effectiveness of a certain activity on one hand, and by its long-term competitive development in the market environment on the other. In principle, it will be a search for an optimum solution between the variants of organisational structure, i.e. placement of a certain activity inside CSA or its organisational independence as a limited or joint-stock company. Other variants are necessarily to be sought at the conceptual level with an eye to develop these activities (CSA as a sole owner or finding a respectable partner for the given activity).
In Conclusion
RThe year 1997 was important from a developmental point of view for CSA. Basic preconditions for the further development of CSA were established with the fulfilment of the contract of purchase of ten Boeing 737 aircraft in 1997-2000: the first of which joined the CSA fleet in the course of 1997. Additional investments realised from the previous period also played a role in setting out this groundwork for future progress. CSA services are competitive both in the realm of air transport and in non-air traffic activities.
All CSA employees who have strived daily to mould CSA into a profitable, competitive and respected airline company should be commended for the exceptional year of 1997. The members of the highest bodies of the company - the Board of Directors and the Supervisory Board - also deserve thanks for their contributions, especially in the sphere of the long-term strategic management of CSA.
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| Antonin Jakubse, M.Sc. |
| Chairman of the Board of
Directors and president of CSA |