Annual report 2008 - Advanced Inflight Alliance AG

4.4 Currency developments
On an annualized basis, the US dollar declined by about 8% against the euro (2008: EUR 1.00 = USD 1.4743;
2007: EUR 1.00 = USD 1.3615; Reuters, end of day annualized exchange rates). The company‘s earnings
have been negatively affected by the development of the US dollar because the greater part of our business,
both in purchasing and in sales, is transacted in US dollars and because our German offices in Munich and
Duisburg incur considerable fixed costs in euros. However, we did succeed in cushioning the negative effect
to some extent by means of foreign currency hedges.
5. Industry-specific business environment
The International Air Transport Association (IATA) expects the worldwide aviation industry to suffer substantially
under the economic crisis. While the cargo segment will account for a large portion of the anticipated
losses in global aviation, passenger numbers are also expected to decline by about 5.7%. However, falling
fuel prices will prevent even higher losses. IATA even anticipates US carriers, which were affected by the
crisis early on and cut their capacities earlier than others, to post slight profits in 2009. The carriers in Asia
Pacific are expected to be most strongly affected in 2009. IATA anticipates the situation to improve slightly
toward the close of the year.
As before, inflight entertainment through films, music, and computer games is one of the most important
features by which carriers distinguish themselves in the competition for passengers. Demand for services in
the inflight entertainment segment (IFE) remains high.
The company is well positioned owing to its collaboration with leading international manufacturers of the
hardware electronics used in inflight entertainment as well as the broad range of its offerings in the entire
IFE segment.
6. Market volume and market share
The content service providers‘ competitive structure did not change much during the reporting period. As
before, the market is dominated by a few larger providers with an international customer base, as well as
many smaller, primarily regional providers.
The current difficulties of the global economy will continue to fuel the trend toward consolidation in the
industry, particularly because small providers will have difficulties compensating for the pressure on selling
prices. In addition, technical innovations have created a dynamic whereby carriers are increasingly looking
to enhance their position through partners capable not only of satisfying the new requirements in this arena
too but also of making both the products and the services available that are in demand.
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