Annual report 2008 - Advanced Inflight Alliance AG

2. Significant individual risks
External risks
All risks that affect the aviation industry from without are classified as external risks. This includes the
increase in prices for jet fuel (as reference, please see the information regarding the increase in the perbarrel
price of Brent Crude); the ongoing risk of terrorism, which affects civil aviation, in particular, given the
potentially large number of victims; as well as, increasingly, the consequences of global warming, which
could undermine air traffic in the future.
During the reporting period, speculation caused oil prices to soar and then fall back down again by the end
of the year. There were no terror attacks in the aviation industry. The worldwide debate on global warming
will not have any significant impact on aviation since no actions that will apply across the board are to be
expected for 2009 either.
Operational risks and sectoral risks
Operating risks and sectoral risks concern risks arising from competitive operations and changes in operations,
in particular, changes at customers.
The loss of one substantial customer during the reporting period was offset by new customers equivalent
in qualitative terms. While we expect to lose one customer in 2009, we are confident that we will also be
able to gain new customers.
We believe that losing an individual customer constitutes a manageable risk. The Group‘s largest customer
generated less than 10% of consolidated sales in 2008.
Financial risks
Liquidity risks
The Group is faced with liquidity risks if its existing liquidity or corresponding credit lines do not cover its
payment obligations. All funds available to the Group – demand deposits at banks, interest-bearing monthly
time deposits, as well as disposable credit lines – are sufficient to cover operating activities. Hence we consider
the Group‘s liquidity risk to be manageable both at this time and in the foreseeable future.
Currency risks
A currency risk is present, in particular, when receivables or liabilities are denominated in a currency other
than the Group‘s functional currency. Most operational business is carried out in US dollars, though some
takes place in euros, British pounds or Canadian dollars. In contrast, other expenses are essentially incurred
in euros, British pounds and Canadian dollars. This structure results in a dollar surplus which must be
exchanged for euros and pounds over the course of the year. To the extent possible, the latent currency risk
arising from this is countered with derivatives (hedging instruments) during the financial year.
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