Adria Airways d.d. Annual Report 2005 A dria Airw a ys d.d. A ...

7.5. Plans and operating conditions in 2006
One of the main factors that will mark the future of the air transport sector is the increased competition and the concomitant
lower returns, which given the relatively modest success of airlines in reducing costs means a deterioration in
operating conditions. The biggest difficulty is the intractability of fixed costs (air transport is a capital-intensive sector),
for which reason carriers have trouble adapting to the competitive environment.
In view of this fact the most important thing is that Adria Airways optimises its operations in terms of revenues and
expenses.
• With the aim of improving the revenues to expenses ratio and reducing losses, we are planning to adapt the fleet as
soon as possible to the market conditions.
• We are planning for an 11% increase in flights, 9% more passengers carried and 12% growth in total revenues.
• Relative to turnover in 2005 we intend to increase the number of weekly flights, by 13% in the summer timetable and
5% in the winter timetable compared to turnover in winter 2005/2006, or 13% more than winter 2004/2005.
• For 2006 we are planning four new scheduled services, involving a twice weekly seasonal service to Barcelona, a weekly
seasonal service to Birmingham and a service to Rome four times a week. We are also planning to re-establish the
scheduled service to Tirana.
• In 2006 we plan to sell charter flights on the domestic market, where the aim is to maintain and consolidate our position
as the leading charter carrier and at the same time to make further inroads into foreign markets.
• The marketing plan of the cargo transport division will seek to generate considerable growth in the sales of its services
and to contribute to increased profits for the company in the coming year. The planned growth in sales relative to previous
years should be between 20% and 37%.
• In the area of maintaining foreign aircraft we will continue our strategy of expanding the volume of work on aircraft in
the A320 family and at the same time we plan to maintain our leading position in the CRJ market.
• We aim to lessen our exposure to certain kinds of risk, especially the risk of changes in fuel prices and exchange rate
and interest rate risk. Implementation of the strategy should have a major impact on operations in 2006.
• We wish to carry out a reorganisation of jobs and to gradually introduce a wage and salary system geared towards results-based
incentives.
• The company is tackling the organisation of effective controlling, primarily by establishing profit and cost centres. We
will be greatly assisted in this by the planned replacement of the IT system in the finance and accounting division and
by the construction of an effective management IT system; all of this will provide the basis for timely, accurate and
high-quality information and rapid adjustment to changes.
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Adria Airways d.d.
Annual Report 2005
• We will devote particular attention to controlling all kinds of costs; we will continue to review contracts with individual
airports and even in 2006 to achieve planned savings of SIT 335 million; the impact of lower prices will have a favourable
effect on the company’s long-term plan.
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