Building Air Bridges www.volga-dnepr.com Annual Report 2012-2013 Twitter: @volgadneprgroup Facebook: www.facebook.com/VolgaDneprGroup We learn, YouTube: www.youtube.com/user/VolgaDneprGroup so we develop...

Scheduled operations

Moscow, Head Office Shanghai, China 121614, Russia Room 3104-3105, Shanghai Maxdo Centre, Ul. Krylatskaya, d. 17, Bldg. 4 8 Xing Yi Road, Shanghai, Tel .: +7 495 786 2613 P.R. China 200336 Fax: +7 495 755 6581 Tel .: + 86 21 5208 0011 E-mail: info@airbridgecargo.com Fax: + 86 21 5208 0508 E-mail: [email protected] Frankfurt, Germany Shanghai Pudong Airport Cargo Terminal Room 338, 168 Suhang Rd. Shanghai Pudong Cargo City South, Geb. 534 / 6th floor, Intl. Airport, Shanghai 201202, PRC 60549 Frankfurt am Main Tel .: + 86 21 6835 2120 Tel .: +49 6963 809 7100 Fax: + 86 021 6835 2119 Fax: +49 6963 809 7101 E-mail: [email protected] E-mail: [email protected]

Beijing, China Munich, Germany Room 2006B, Air China Plaza, Frachtstrasse, Frachtgebaude, Modul B, Raum 319 36 Xiaoyun Road D-85356 Munchen-Flughafen Chaoyang District, Beijing P.R.C. 100027 Tel .: +49 89 2000531 - 0 Tel .: + 86 10 8447 5936/37/38 Fax: +49 89 2000531 - 99 Fax: + 86 10 8447 5935 E-mail: [email protected] E-mail: [email protected]

Amsterdam, The Netherlands Hong Kong, China AirBridgeCargo Airlines LLC AirBridgeCargo Hong Kong Limited Anchoragelaan 40, 1118 LD Schiphol AirBridgeCargo Hong Kong Limited Tel .: +31 20 654 9030 Room 536A, 5 / F., South Office Block, Fax: +31 20 654 9044 Super Terminal One, Chek lap Kok, HK Intl Airport E-mail: [email protected] Tel .: + 852 2215 3928 Fax: + 852 2215 3878 E-mail: [email protected] Chicago, United States 11417 W Irving Park Road, Franklin Park, IL 60131 Tel .: +1 773 800-2361 Tokyo, Japan E-mail: [email protected] AirBridgeCargo Tokyo [email protected] Onarimon Yusen Bldg 11F 3-23-5 Nishi-Shinbashi, Minato-ku, Tokyo 105-0003 Tel .: + 81 3 5777 4025 Beijing, China Fax: + 81 3 5777 4026 E-mail: [email protected] Room 239, BGS Cargo Building, Capital International Airport, Beijing 100621 Tel .: + 86 10 6459 0533 Seoul, Korea Fax: + 86 10 6459 0535 11F, Seong-u Bldg., Dohwa-dong, Mapo-gu, E-mail: [email protected] Seoul 121-715, Korea Tel .: +82 2 712 5803 Fax: +82 2 712 5801 E-mail: [email protected] Table of contents

Company Profile 2 Global Company 4 Key Performance Indicators 6 Aircraft Fleet 10

Strategy Management team 16 Letter from Management 18 Mission, general goal & values 20 Code of ethics 23

Business Overview Main events 24 Cargo supermarket: 38 – Charter operations 40 – Scheduled operations 50 – Supporting businesses 58 Flight safety 70 Volga-Dnepr’s cargo supermarket in action 72

Social Responsibility Social Responsibility & Personnel Development 76 Social Responsibility & Professional Development 78 Corporate University 83 Ecology 84

Volga-Dnepr Group Follow this link website to download the report in PDF http://www.volga-dnepr.com/ http://www.volga-dnepr.com/ investor_relations/annual_report/ 2 ABOUT VOLGA-DNEPR GROUP ABOUT VOLGA-DNEPR GROUP 3

Company Profile

The Group comprises two of the leading global air cargo industry companies – Volga-Dnepr Airlines and AirBridgeCargo Airlines. Volga-Dnepr Airlines specializes in air cargo charter 400,000 3,300 transportation of outsize and super-heavy cargoes using a fleet of tons of cargo per year international employees work for Antonov An-124-100 Ruslan and Ilyushin IL-76TD-90VD freighter Volga-Dnepr Group companies worldwide aircraft. AirBridgeCargo Airlines provides scheduled cargo services connecting the largest trade hubs in Europe, Asia and the U.S., using 52.2% a modern Boeing 747 freighter fleet. AirBridgeCargo Airlines also share of the world market for 30% An-124-100 cargo operations share of the cargo market incorporates Atran Cargo Airlines. on major routes to Russia

Charter operations Scheduled operations

AirBridgeCargo Airlines Atran Cargo Airlines Volga-Dnepr Airlines One of the fastest growing scheduled air Became part of Volga-Dnepr Group The world’s leading airline for the transportation of outsize cargo carriers in the world. Its international in 2011 and performs scheduled and heavy cargo and operator of the largest fleet of unique route network connects customers international freight transportation using Antonov An-124-100 'Ruslan' freight aircraft. Also the moving goods from Asia to Europe and smaller cargo capacity Boeing 737- company performs charter operations with modernised the United States via Russia. One of the 400F aircraft. Atran is the only operator IL-76TD-90VD freighters, supporting the requirements of the largest operators of Boeing 747 freighters. of this type of cargo aircraft in Russia. airline’s leading industrial, transport and logistics customers Its customers include many of the world’s all over the world. leading logistics and industrial companies.

VOLGA-DNEPR LEAZING Supporting Volga-Dnepr Technics Volga-Trucks Volga-Dnepr-Leasing NIC Insurance Company businesses Group of Companies Founded in 2008, the group provides aircraft Established in 1997, Volga-Trucks performs Volga-Dnepr-Leasing was established in NIC Insurance Company was established in Maintenance, Repair and Overhaul (MRO) road cargo transportation enabling the 2004 to implement the programme for the 1995. It provides reliable insurance coverage services for Antonov, Ilyushin, Boeing Group to extend its comprehensive range of construction and modernisation of the for the Volga-Dnepr Group aircraft fleet, and and Airbus aircraft. The group includes services to include door-to-door deliveries. Group’s Ilyushin IL-76 fleet to the upgraded also offers non-aviation insurance services. Volga-Dnepr Technics Moscow, Volga- Volga-Trucks is a licensed customs carrier, IL-76TD-90VD version. The new generation It is the 8th largest provider of aviation risk Dnepr Technics Ulyanovsk and VDT GmbH performing road cargo transportation by IL-76TD-90VD is approved by ICAO for insurance in Russia. (Germany), and cooperates with VD Gulf in internal customs transit. global air operations having successfully the Middle East. demonstrated its compliance with international noise and emissions standards.

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 VOLGA-DNEPR GROUP 4 ABOUT VOLGA-DNEPR GROUP ABOUT VOLGA-DNEPR GROUP 5

Global Company

We have been operating in the global air cargo market for nearly 25 years. Since 1990, our company has developed from being a small business into a strong global brand and a trusted partner for international cargo transportation and logistics. 90,000 1,200 4,000,000 Today, we perform flights to all the major business and industrial centres in the world. flights operated airports in 190 countries tons of cargo safely since 1990 around the world have delivered since 1990 Our air bridges provide secure and reliable connections linking North America and welcomed flights by the South America, Asia, Europe, the Middle East and Australia. Group’s airlines

Volga-Dnepr Group’s headquarters .. is located in Moscow, Russia Malmo Ekaterinburg Krasnoyarsk Amsterdam Moscow Stansted Leipzig Ulyanovsk Liege Cologne Novosibirsk Frankfurt am Main Paris Khabarovsk Munich Milan Chicago Zaragoza Beijing (Saragossa) Seoul New York Zhengzhou Chengdu Tokyo Dallas Shanghai Houston 9 20 Fujairah Sharjah representative offices countries on 5 Hong Kong worldwide continents comprised by agency network

Volga-Dnepr Group representative offices Main MRO centres

23 154 AirBridgeCargo scheduled flights Atran Cargo Airlines destinations in the U.S., scheduled flights route network Europe and Asia per week Charter operations As of 30/06/2014

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 6 ABOUT VOLGA-DNEPR GROUP ABOUT VOLGA-DNEPR GROUP 7

Volga-Dnepr Group’s performance indicators

2009 2010 2011 2012 2013 The company’s performance indicators represent a clear reflection of its strategy. Its business model is focused on providing customers with a unique ‘cargo supermarket’ choice of transportation Sales volume, mn USD solutions to meet all of their global requirements. Different types of aircraft from super-heavy to Charter operations 865 905.2 899.7 785.2 724.1 smaller freighters perform both scheduled cargo and air charter operations. Scheduled operations 369 672.7 767.5 808.6 852.0 The resulting balanced business model ensures the Group’s stability even during the most Other income 11.7 9.4 18 23.9 30.7 challenging economic and market conditions, as its broad service offering often means a reduction Total income 1245.8 1587.4 1685.2 1617.7 1606.8 in one market segment is supplemented by strong growth in another. Cargo turnover, thou t/km Charter operations 481,108 499,292 384,472 345,700.2 268,068 Sales volumes Scheduled operations 1,318,652 2,057,883 2,372,145 2,383,654 2,607,400 Total cargo turnover 1,799,760 2,447,175 2,756,617 2,729,354.2 2,884,973 Charter operations Scheduled operations Total income Cargo carried, t in 2013 in 2013 in 2013 Charter operations 83,894 85,372 62,618 65,929.2 53,857 Scheduled operations 149,109 240,220 285,028 307,648 350,864 724.1 852.0 1,606.8 Total cargo carried 233,003 325,592 347,646 373,577.2 404,650 mn USD mn USD mn USD Fleet (as of the year end) An-124-100 10 10 10 10 10

IL-76TD-90VD 2 3 4 5 5 Charter operations Scheduled operations Total income mn USD mn USD mn USD Boeing 747 7 11 11 11 12 905.2 899.7 Boeing 737 - - - 2 2 865.0 852.0 1,685.2 785.2 808.6 1,587.4 1,617.6 1,606.8 724.1 767.5 An-12 - - 3 3 3 672.7 1,245.8 Staff Group of companies 2,649 2,878 3,270 3,498 3,283 369.0

2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 10 ABOUT VOLGA-DNEPR GROUP ABOUT VOLGA-DNEPR GROUP 11

Aircraft Fleet

136 t 10 6 payload capacity 120 t Antonov An-124-100 Ruslan maximum payload Boeing 747-8F The world’s largest series-produced civil The new generation cargo aircraft with 8,130 km aviation cargo aircraft with unique load improved operating efficiency, offering a flying range

characteristics and freight compartment 6.4x4.4x36.5m 16% increase in payload and extended size. freight compartment size flying range. 59.7 m Maximum load length

116 t

5 7 payload capacity 50 t Boeing 747-400F/ERF IL-76TD-90VD maximum payload One of the world’s most reliable and The modernised and upgraded version of one modern cargo aircraft. Nose and side 9,200 km of the most successful and popular aircraft loading doors enhance the aircraft's flying range 3.4x3.45x20 m in the worldwide air cargo industry. Approved efficiency and increase its cargo carrying freight compartment size by ICAO for global flight operations, potential. 53.1 m having demonstrated its compliance with Maximum load length international noise and emissions standards.

In 2013, as part of the project to modernise the unique An-124-100 ramp transport aircraft, Volga-Dnepr Group approved the terms of reference for the upgraded An-124-115M version. 2 Boeing 737-400F 19 t International partnerships with leading Russian and international developers are being established to payload capacity commence implementation of the programme of design, adaptation and certification of the Group’s fleet of The highly capable cargo version of the Boeing 737-400, perfectly suited to the An-124-100 aircraft to the improved An-124-115M modification. provision of services on feeder routes. 3,850 km flying range

Fleet size as of 30.06.2014

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 12 STRATEGY STRATEGY 13

9 countries 5 continents

3,300 people One multinational team

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 14 STRATEGY STRATEGY 15 In 24 years 150 global customers 90,000 flights 4,000,000 tons of cargo transported 1,200 airports served 190 countries all over the world

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 16 STRATEGY STRATEGY 17

Management team

Alexey Isaikin Sergey Shklyanik Victor Tolmachev Tatyana Arslanova Sergey Pedan Wolfgang Meier President Senior Vice President Technical Director Vice President, Strategic Management Vice President, Economics and Vice President, Marketing and Development Volga-Dnepr Group Volga-Dnepr Group Volga-Dnepr Group Volga-Dnepr Group Finance Management Volga-Dnepr Group Volga-Dnepr Group

Dmitry Obsharov Valery Gabriel Alexander Bashkov Denis Ilin Evgeniy Borisov Evgeniy Kochetov Vice President, Organization Development Vice President, Modernisation and New Aircraft Executive President Executive President General Director General Director Volga-Dnepr Group Volga-Dnepr Group Volga-Dnepr Airlines AirBridgeCargo Airlines Atran Cargo Airlines Volga-Dnepr Technics

Vladimir Zubkov Alexander Eremin Andrey Pakhomov Alexander Rodionov Dennis Gliznoutsa Vice President, Relations with International Vice President, Assets Management Group Fleet Development Director General Director Vice President, Charter Business Development Organisations Volga-Dnepr Group Volga-Dnepr-Leasing NIC Insurance Company Volga-Dnepr Airlines Volga-Dnepr Group

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 18 STRATEGY STRATEGY 19

Letter from Management

Our confident outlook for the future is based on the Group’s unique We never forget the people we Our business is attuned to today’s are working for. We create new dynamic business environment, experience of global air cargo operations and the repeatedly proven opportunities for our customers and, working not only to respond to new in doing so, build a stronger future for market needs but to also provide ability of the company’s employees to solve the most complex our employees. The basic element of services and solutions that our 30% tasks, even in the most challenging situations. ­ Volga-Dnepr’s corporate philosophy customers can use to generate more share of the air cargo market on the is to ensure that everything we do is growth opportunities. Today, we are main routes to Russia Volga-Dnepr’s managers and employees have the expertise, focused on producing benefits for our developing as a diversified Group, customers. uniting our cargo charter and steadily- knowledge and skills to respond to every challenge and opportunity growing scheduled cargo businesses using the Group’s own resources alongside its partnerships Since its establishment, Volga-Dnepr alongside the support of our MRO and has been one of the leading charter insurance businesses, providing our with customers and suppliers. For more than two decades, carriers of large and outsize cargo in customers with the most complete 400,000 the global market. In 2012-2013 the range of high quality services. tons of cargo transported by the the company has demonstrated its ability and willingness to company has maintained this position, Group’s companies in 2013 anticipate changes in the global transportation market and the new and this stability allows it to remain in In shaping the company’s future the top 15 cargo airlines in the world. strategy, we clearly understand that in requirements of its customers. the current tough economic conditions In the context of the current excess companies will only be successful supply of luggage capacities of and continue to grow their customer In 2012-2013, Volga-Dnepr identified increasingly diversified choice of Throughout its growth and passenger aircraft, the reduction bases if they manage their businesses and implemented solutions to solutions. Volga-Dnepr has named diversification, the Group has stayed of interest rates amid increasing intelligently and adapt their business maintain its sustainability and this as its global ‘cargo supermarket’ true to the core values established at shortage of professional staff within models to the current market realities. business development despite the concept. The components of this the time of its formation: commitment complex political and macroeconomic serious challenges to airlines and concept are quite simple: utilising to safety, eagerness to continually conditions, we have been able to industry as a whole by the troubled the skills of the best professionals in improve the solutions we offer to our find new growth drivers and meet world economy. the industry, the best cargo aircraft, customers, and an open and honest the requirements of our customers. operating a customer-oriented approach to assessing business This allows us to look forward with Volga-Dnepr combines the best industry professionals, the best cargo and flexible business model, and a opportunities and challenges, and to Our future is still based on a simple confidence. aircraft, and a customer-oriented and flexible business model with a concept – to do what we do best: clear mission and strong corporate the decisions we make. strong corporate culture that supports the Group’s ambitions and values. delivering global air cargo logistics culture based on our core values and services that offer customers an ambitions.

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 20 STRATEGY STRATEGY 21

Strategy

Mission We build reliable air bridges for our partners all over the world. With our contribution, we change the idea of air logistics using our unique capabilities. We are confident that we will achieve our goals, facilitating the success of each employee, which leads to the company’s success. Volga-Dnepr Charter Scheduled MRO Group operations operations

Volga-Dnepr is a Cargo Supermarket in action. World leader in the air cargo The leader of the Russian The company provides a Goals professional organisation, An established open business charter operations market. scheduled air cargo market, competitive benefit in maintaining for dynamically developing structure contributes to the and one of the 10 leaders of the the continuing airworthiness of within the top three development and preservation worldwide air cargo industry. the Volga-Dnepr fleet, and ranks leaders of the worldwide of the Group’s knowledge among the top 10 global aircraft and competencies. MRO service providers in terms air cargo industry and of sales. is an attractive asset for 2020 potential investors.

Volga-Dnepr is a The Group’s management system The company is an integrator The group of cargo airlines ranks The group of cargo airlines, ranks Goals professional organisation is the key element in achieving in the segment of heavy and among the five leaders of the among the five leaders of the for and the leader of the leadership in the global air oversized cargo using the best worldwide air cargo market and worldwide air cargo market, and worldwide air cargo cargo industry by means of a cargo aircraft. sets the industry standard. sets the industry standard. balance between the interests of industry. shareholders, employees, partners 2030 and society.

VALUES Work Health Safety Development Honesty

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 22 SUSTAINABLESTRATEGY DEVELOPMENT STRATEGY 23

Our Values Code of Business Ethics

Development Safety Volga-Dnepr Group’s Code of Business Ethics is at the heart of Leadership Responsibility its business. Employees and contractors embrace the business We do what we can do best. We lead by example, with a positive and proactive We recognise our responsibility to create a con- attitude to our work that we instill into the next generation of our business leaders. sistently safe working and business environment ethics set out in the Code to improve the transparency of internal to protect the long-term future of the company. This embraces the safety of our employees, processes and to ensure the efficient and professional operation Uniqueness customers and partners and the security of our We are constantly seeking ways to improve the unique services we offer through the business. of the Group. development of our people, technologies and equipment.

Forward Looking Safe working conditions and The Code of Business Ethics was adopted In 2012, every Volga-Dnepr Group The group of companies established a new ­accident prevention by the Volga-Dnepr Group of companies in employee participated in Code of Business Ethics Committee, composed of senior We work at the heart of a changing world and in a dynamic industrial climate. By 2012 to formally identify and communicate Ethics training. management, to create and continuously taking a long-term view, we look to anticipate change before it happens and to We work to ensure we constantly provide safe develop solutions that support our customers through those times of change. We and secure working conditions. This incorporates the values and principles of the Group’s improve the mechanism for reacting to aim to learn from every event and to identify opportunities for growth and develop- continuously improving security standards and business. To successfully develop and The company developed regular training conflict situations involving violations of exceeding customers’ expectations and advance ment, using our ideas and initiative to create new and innovative possibilities for our implement a clear set of ethics, the activities, including introduction seminars ethical standards and business rules. In requests imposed by industry changes. customers. company undertook an 18 month project for new employees. Specialist seminars 2013, the Committee held nine meetings, under the leadership of a newly-recruited looking at methods of identifying fraud adopted more than 40 management ethics officer, who is responsible for and corruption risks were organised decisions and approved the results of eight ensuring that all of the Group’s divisions for employees working in the sales, internal investigations. operate in full compliance with the procurement and finance departments. Health Work Honesty Code of Business Ethics. The entire top An adopted monitoring plan to examine Moral and physical health management of the Group participated in In 2013, a further series of workshops work ethics’ compliance and to consider Transparency and openness the drafting of the new document and the on various topics took place, including further improvements to the standards We believe that spiritually and morally healthy people are best equipped to produce We build open and transparent relationships with Code was implemented across the Group’s ‘Struggling against corporate fraud’, for 2014 involves re-audit of Volga-Dnepr the highest level of work. To support this, we promote and implement a healthy our employees, customers and partners that are businesses with the help of contractors ‘Combating corruption’, and ‘Practical Airlines and Volga-Dnepr Technics, as well lifestyle culture for all of our employees. founded on mutual trust and respect. We do not tolerate duplicity and deception in business. specialising in compliance training. application of Volga-Dnepr Group's Code of as primary audits of AirBridgeCargo Airlines, Financial stability Business Ethics’. Atran Cargo Airlines and foreign offices of Abiding by the Code is obligatory for the Group. We believe that profit is only a measure of the economic health of an organisation, not the sense and purpose of its existence. We do not welcome the achievement all Group employees, board members, The Code also involves the implementation of profit at any cost; we stop any attempt of corruption. We strive to implement consultants, contractors, suppliers and of ‘supporting policies’. Thus, the anti- innovative approaches in the corporate, financial and organisational management other parties acting on behalf of the Volga- corruption policy of the Volga-Dnepr of the company and effectively measure the outcome of the decisions we make. Dnepr Group of companies. Adoption Group of companies was approved in We predict the consequences of decisions made and use international experience to of the Code aims to minimise financial, August 2012; and a policy for gift giving increase the company’s value. reputational and other risks, as well as and hospitality was adopted in September improving the image of the Group with 2013. Environmental concern its customers. It supports the Group’s We strive to preserve the environment by using the latest technologies while carrying compliance with legal requirements, These policies fully meet the requirements out our work and through the continued modernisation of our aircraft fleet. including anti-corruption laws, and of today’s international legislation and improves operational efficiency. business practices in the air transport industry. A special education system was developed by the Group to provide training in support In order to control the fulfillment of the of the Code of Ethics, with particular Code’s requirements, the Volga-Dnepr Our values emphasis on staff involved in the financial Group of companies has been carrying We are committed to the Group’s Code of Business Ethics, introduced in 2012 management, sales, procurement and legal out an annual monitoring programme In 2013, more than 3,200 Volga-Dnepr employees completed training on compliance to our Code of Business Ethics processes. that includes analysis of documents and The Group’s ethics officer is responsible for the implementation of the Code across the Group’s businesses and their processes as well as interviews with staff. subsequent compliance Volga-Dnepr’s Ethics Committee consists of the Group’s top management All strategic decisions by the company are taken in accordance with our core business values

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 24 BUSINESS OVERVIEW BUSINESS OVERVIEW 25 Main events 2012 2013 January March April January April May

Everett, United States New York, United States Moscow, Russia Leipzig-Halle, Germany

AirBridgeCargo became one of Boeing’s first The documentary film ‘Ruslan that united the AirBridgeCargo, Russia’s largest air cargo carrier, Volga-Dnepr Technics GmbH opened a wheels customers for the new 747-8F. The airline, part of world’ by Alexey Samoletov, commissioned by successfully passed the audit procedures that and brakes repair shop within its aircraft MRO Volga-Dnepr Group, signed a contract with Boeing Volga-Dnepr Group, was shortlisted at the New confirmed its compliance with the International Air hangar complex at Leipzig-Halle Airport. Corporation for the delivery of five 747-8F aircraft York Festivals International Television & Film Transport Association’s Operational Safety Audit with an option for five more. Awards. (IOSA). Sharjah, the United Arab Emirates

Volga-Dnepr Gulf commenced operations in a new 22,000 sq. m. aircraft MRO hangar complex May June August Leipzig-Halle, Germany in Sharjah (UAE). The facility is able to provide Ulyanovsk, Russia maintenance simultaneously for six narrow-body Volga-Dnepr Technics GmbH put into operation a aircraft or two wide-body aircraft, such as Boeing Volga-Dnepr Airlines received certification from new 8,500 sq. m. hangar complex for aircraft MRO, 747 and An-124-100. the International Air Transport Association which is designed to service one An-124 cargo (IATA), confirming its compliance with all IOSA aircraft or one Boeing 747, or up to four Boeing operational and safety requirements for the fourth 737 and Airbus A320 aircraft at one time. time. Moscow, Russia

Moscow, Domodedovo, Russia Volga-Dnepr Group companies are awarded Moscow, Russia prizes in two categories in the annual ‘Wings of A second Boeing 737 freighter enters service with Russia’ air transport industry awards. Volga-Dnepr Volga-Dnepr was voted a runner-up medalist in Atran Cargo Airlines. Group won the ‘Business project in civil aviation the ‘High-Efficiency Russia-Based Organisation of Russia’ category, while Volga-Dnepr Airlines Federal Contest in the nomination category for won the award for ‘Airline of the Year – air cargo ‘Healthy Way of Life at Industrial Organisations. Moscow, Russia Moscow, Russia Vladivostok, Russia carrier on domestic and international routes’ for the seventh consecutive time. Volga-Dnepr Group participated in the organisation Volga-Dnepr Airlines put into operation its fifth Volga-Dnepr Airlines delivered two Mangust patrol Frankfurt, Germany of the Executive Summit of The International Air new IL-76TD-90VD (No.RA-76511). It was boats from Moscow to Vladivostok to ensure Cargo Association (TIACA) in Moscow. During the manufactured at the Tashkent Mechanical the safety of officials participating in the APEC Fraport Cargo Services, the largest handling Summit, special attention was given to the role of Plant under the contract signed in 2007 at the Summit (Asia-Pacific Economic Cooperation). company at Frankfurt Airport, recognised Russian companies in the global air cargo market. International Aviation and Space Salon by AirBridgeCargo Airlines as one of the best air UAC-Transport Aircraft and Volga-Dnepr-Leasing. cargo carriers at the airport for the fourth year in a row.

September November December June July

Moscow, Russia Moscow, Russia Le Bourget, France Ulyanovsk, Russia

Atran Cargo Airlines, part of Volga-Dnepr Group, Volga-Dnepr Airlines was accredited by Russia’s Volga-Dnepr Group signed an agreement with Volga-Dnepr Airlines implemented a new took delivery of a Boeing 737-400SF aircraft. The Federal Space Agency to perform transportation Rockwell Collins, a leading global provider of communications system that allows customers freighter started to perform regular flights from services for space rocket equipment and rocket avionics and information systems, on cooperation to receive information on the status of goods in Moscow (Russia) to Cologne (Germany). fuel components. in the An-124-100 Ruslan modernisation project. transit via SMS-messaging. Update messages are now sent to customers’ e-mail addresses Volga-Dnepr Group, international logistics and mobile devices automatically. The innovation operator SDV and Thales Alenia Space, a leading means customers are quickly informed about the Frankfurt, Germany Leipzig, Germany manufacturer of systems for the space industry, status of their cargo delivery with Volga-Dnepr, renewed their cooperation agreement for the 24 hours a day, 7 days a week without the need Volga-Dnepr Technics opened an aircraft Nagoya, Japan Volga-Dnepr Group commenced operations in a transportation of aerospace equipment until 2016. for an Internet connection. maintenance line station at Frankfurt Airport. new aircraft maintenance complex constructed by Volga-Dnepr Airlines delivered two 28m long Leipzig/Halle Airport. The tenant of the hangar is Boeing 787 Dreamliner wings from Nagoya Volga-Dnepr Technics GmbH. (Japan) to Boeing’s final assembly plant in Everett (USA).

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 26 BUSINESS OVERVIEW BUSINESS OVERVIEW 27

2014 September October November February March April

Seattle, USA Moscow, Sheremetyevo, Russia Milan, Italy Shanghai, China Dallas, USA Leipzig, Germany

AirBridgeCargo Airlines takes delivery of its Volga-Dnepr Technics Moscow starts to providing Frequency of AirBridgeCargo fligths from Milan As part of the Ruslan International Ltd. joint AirBridgeCargo Airlines launches a new route AirBridgeCargo Airlines expands its network with fourth new Boeing 747-8F aircraft. aircraft maintenance for Aeroflot-Russian Airlines to Moscow increased to five per week. venture, Volga Dnepr Airlines transported lift connecting Dallas/Fort Worth-Amsterdam a new weekly flight every Tuesday from Leipzig to at Moscow Sheremetyevo Airport. The contract equipment for the reconstruction of the national Schiphol-Moscow Sheremetyevo. The route Moscow. for line technical maintenance of Boeing 737NG airport of Belarus from Shanghai (China) to Minsk. is served by the airline’s newest Boeing ­747-8 (Next Generation) aircraft also includes support Freighter twice a week on Mondays and of Aeroflot aicraft during flights and other events Paris, France Thursdays. provided by Volga-Dnepr Technics Moscow Leipzig-Halle, Germany Malmo, Sweden qualified experts. Frequency of AirBridgeCargo fligths from Paris to Moscow increased to three per week. The Ruslan SALIS GmbH joint venture passed AirBridgeCargo Airlines launches a new flight a verification re-audit for compliance of its from Malmo to Moscow. The flight from Malmo quality management system to ISO 9001:2008 to Sheremetyevo Airport is operated every standards. Friday and complements the existing services offered on the route by Atran Cargo Airlines' Boeing 737F operation.

December April May June

Moscow, Russia Frankfurt, Germany Munich, Germany

AirBridgeCargo Airlines successfully passes AirBridgeCargo Airlines commences direct flights Munich to Moscow becomes AirBridgeCargo the IATA Operational Safety Audit (IOSA). The from Frankfurt to Chicago, providing European Airlines’ latest route, operated every Friday. certificate and IOSA operator status are valid until customers with direct access to the North The service to Sheremetevo International Airport November 2015. American market. complements Atran Cargo Airlines’ existing weekly flights on the route.

Moscow, Russia Moscow, Russia Leipzig-Halle, Germany AirBridgeCargo Airlines celebrates its 10th Shanghai, China AirBridgeCargo Airlines puts its fifth anniversary. The airline’s first Boeing 747 flight Boeing 747-8F aircraft into operation. Volga-Dnepr Technics GmbH signed a contract was performed from Moscow to Beijing on April AirBridgeCargo Airlines wins the 'Best Cargo with Swiss carrier Darwin Airline for aircraft 23, 2004. Airline' award at the 28th Asian Freight and maintenance at Leipzig-Halle Airport. Supply Chain Awards (AFSCA), established by the authoritative industry media Cargonews Asia.

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Industrial gas equipment transportation project in Papua New Guinea

This project represented arguably the most challenging bespoke loading equipment for the project logistical task in the history of Volga-Dnepr Group. The and leased a special trailer to eliminate the need for a crane to unload the cargo, company was involved in the project from the airport reducing the time required for the loading construction phase in Papua New Guinea to the completion of and unloading operation. an intensive flying programme. Aircraft maintenance was also conducted at the airport in Port Moresby during the project to optimise the efficiency of the Over the five-year period of the project, The major part of transported equipment An-124 operations. the Volga-Dnepr team performed an consisted of single cargo components enormous scope of preparatory works. with an average weight of some 60 tons. The project involved more than 80 The key element of the project was the Volga-Dnepr’s team used their expertise employees of the company, including 28 construction of the new Komo airfield in to guarantee exceptional precision and pilots, 32 technicians and more than 20 the Southern Highlands of Papua New accuracy during the loading and unloading office and management staff. Volga-Dnepr Guinea capable of accepting An-124-100 of each cargo unit. A series of measures representatives spent more than 100 aircraft. Volga-Dnepr’s specialists provided were carried out to minimise the weight of days in Papua New Guinea to ensure the advice on the optimal location for the the empty An-124-100 freighter in order to success of the project. 103 days 6,000 tons of cargo runway and its technical characteristics. take full advantage of the aircraft’s cargo Today, the runway is the biggest in the compartment capacity. country at 3,200 metres in length and 45 flights from Port Moresby metres wide. Volga-Dnepr designed and manufactured 88 Airport

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A series of cargo operations for the Olympic Games in Sochi

Volga-Dnepr Group was an important transport provider supporting the XXII Winter Olympic Games in the Russian city of Sochi, first becoming involved in the initial bid process in 2007. Overall, Volga-Dnepr aircraft performed nearly 50 flights and delivered more than 1,800 tons of cargo.

In 2013-2014, Volga-Dnepr Group In 2009, Volga-Dnepr Group transported companies delivered more than 1,800 94 tons of tunnel drilling equipment tons of cargo to Sochi. By the beginning required for construction of transport of 2014 Volga-Dnepr Group aircraft had infrastructure in Sochi. In 2011, Volga- 47 charter flights performed 47 cargo operations to the Dnepr delivered telecommunications capital of the Winter Olympics 2014. The equipment for test broadcasts of company’s participation in the successful mountain skiing competitions, and in preparations for the Games culminated 2013 the airline carried power plant 1,800 tons of cargo in the Olympic flame being flown over transformers and several mobile gas the city of Ulyanovsk onboard one of turbines to Sochi to provide a back-up the Group’s An-124-100 freighters in source of electricity during the Olympic December 2013. Games in 2014.

Volga Dnepr Group first became involved in the ‘Sochi-2014’ project in 2007. The airline transported a large ice rink and all of its equipment to Guatemala for the final round of presentations by potential host cities. The ice rink was a centrepiece to Sochi’s presence in Guatemala.

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Transportation of Boeing 787 Dreamliner wings

Volga-Dnepr Group transported Boeing 787 Dreamliner wing sections on a “turnkey” basis from Nagoya (Japan) to Seattle (USA).

In 2013, Volga-Dnepr An-124 freighter Bespoke engineering solutions aircraft transported Boeing 787-9 and the extensive use of digital Dreamliner wing sections measuring 28 technologies, combined with the metres in length from Mitsubishi Heavy Industries’ manufacturing site in Japan unique capabilities of the An-124- to Boeing Corporation’s final assembly 100 Ruslan and the professional plant in Everett, USA. To perform these work of all the companies unique transportations an international involved in the project, ensured team of experts from Russia (Volga-Dnepr this high-tech and high value Airlines), the U.S. (Boeing Corporation, cargo was transported safely and Volga-Dnepr Unique Air Cargo), Germany (Broetje Automation GmbH), Japan on-time. (Mitsubishi Heavy Industries) and England (Engineering and Logistics Centre, Volga- Dnepr UK) created a unique tackle system metres – length of the and handling equipment for loading/ Dreamliner wing section unloading of the wings. 28 carried onboard Volga- Dnepr’s An-124 freighter.

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Super-heavy, single cargo piece transportation

In December 2008, Volga-Dnepr Airlines delivered a rotor wheel for the Kambaratinsk ­­HPP-2 The application of the new technology allowed Volga-Dnepr’s experts to allocate hydroelectric power plant onboard one of its An-124-100 freighters from St. Petersburg to the load evenly on the cargo compartment Bishkek. floor of the aircraft and to ensure maximum stability of the cargo throughout the transportation. This technology is cross functional and can be used for In order to perform the transportation, transporting other cargoes. Volga-Dnepr’s experts developed a new technology that involved placing a single piece of super-heavy cargo – weighing 98 tons and measuring 6.25 metres in diameter and 3.5 meters in height – into the freight compartment of the aircraft. The turbine wheel, fixed into a construction tons – cargo weight frame, was placed into the An-124’s cargo 132 with tackle hold using four cranes and a rail-track system. Loading and unloading required the greatest precision as the gap between the loading tackle and the cabin floor was only 30 mm.

The development of the unique loading construction was completed over two months with the participation of Ulyanovsk-based enterprises.

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Humanitarian operations

One of Volga-Dnepr Airlines’ most important activities is the delivery of humanitarian aid supplies and In 2011, Volga-Dnepr donated the services of one of its An-124 aircraft to deliver a equipment on behalf of international organisations such as the United Nations and the Red Cross. mobile ophthalmic clinic to Japan to help Since 1992, the company has delivered urgently-needed aid supplies to eliminate the effects of victims in the aftermath of the devastating disasters all over the world. earthquake and tsunami.

In total, within the framework of these humanitarian programmes, between The unique operating capability of Volga- 2010-2013 Volga-Dnepr performed 44 Dnepr Group’s aircraft fleet enables the flights using its An-124-100 aircraft and company to perform the most complex 58 operations with its IL-76TD-90VD projects for the delivery of large and freighters, transporting 4,000 tons of oversized cargo worldwide. Therefore, humanitarian aid and relief cargoes. its fleet is regularly used to support humanitarian aid missions as part of the recovery process.

In 2010-2013, Volga-Dnepr delivered humanitarian assistance and equipment humanitarian flights to help victims of the earthquake in Haiti, performed since 2010 floods in Pakistan, the largest oil spill 80 in the Gulf of Mexico, the earthquake in Turkey, and provided support to the tons of Philippines under assistance programme humanitarian cargo carried launched after devastating natural 2,500 since 2010 disasters occured in the country.

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Volga-Dnepr global cargo supermarket The main components of the Volga-Dnepr global cargo supermarket: the best industry professionals the best cargo aircraft How do you transport a huge turbine rotor to another continent a customer-oriented flexible business model thousands of miles away in the most cost efficient and timely manner? a mission and a strong corporate culture based on our values and

In order to solve such difficult logistics tasks, the Volga-Dnepr Group of companies has developed the ambitions concept of the global cargo supermarket, providing customers with complex cost-effective logistics services, include everything needed to achieve on-time door-to-door deliveries of even the most complex cargoes.

CUSTOMER

Engineering and Logistics Centre Cargo Supermarket Services

The core element of the global cargo • Charter and scheduled cargo services onboard An-124-100, IL-76TD-90VD, supermarket, Volga-Dnepr's Engineering Boeing 747 and Boeing 737 aircraft; and Logistics Centre coordinates the • Implementation of multimodal transportation schemes involving road, rail and water Charter Engineering and Logistics Scheduled actions of the Group’s companies transport all over the world; operations Centre operations and engaged resources to provide • Technical expertise, consultations on possible methods of delivery, recommendations comprehensive delivery services. The on packaging and transportation, beginning with any step of the cargo’s “life cycle”, Engineering and Logistics Centre works including its design and production; on a 24/7/365 basis. Its control points • Development and production of special shipping units for a specific project; are three main Volga-Dnepr­ offices in • Planning the optimal route from manufacturing plant to the final destination; Russia, the UK and the U.S. A specially • Providing ground equipment at airports for loading/unloading, ground cargo appointed expert is responsible for transportation to/from the airport, including the procurement of all necessary permits; each cargo delivery at all stages of the • Provision of bespoke loading/unloading equipment; integrated logistics solution. The expert • Assistance in customs registration, insurance and warehousing of cargo; Own supporting businesses works in close cooperation with the • Utilising smaller cargo aircraft where possible to maximise the cost efficiency of the customer, providing regular advice and transportation project. updates on the transportation process. Volga-Dnepr-Leasing Volga-Dnepr Technics Volga Trucks NIC Insurance Company

Leasing services Aircraft technical maintenance Large truck fleet Insurance services

24 years Additional resources of experience in air cargo Cross-functional Broad network of destinations operations complementary aircraft fleet and representatives

Railway service Maritime shipping Road transport Smaller cargo capacity aircraft

In-house truck fleet In-house insurance operator Unparalleled technical solutions for transportation Global door-to-door transport and logistics delivery service available 24/7/365 of unique cargo

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Charter cargo operations

One of the key Volga-Dnepr activities is charter cargo operations, performed Partners onboard An-124-100 Ruslan and IL-76TD-90VD transport aircraft.

Over the years, Volga-Dnepr has maintained a leading position in the world’s air transportation market for outsize and extra-heavy cargoes.

The company's customers include the largest industrial, transport and logistics companies. Volga-Dnepr Airlines also regularly participates in international humanitarian and logistics operations.

Charter operations sales Cargo turnover in 2013 Cargo carried in 2013 in 2013

268.0 53.9 724.1 thou t/km thou t mn USD

Charter operations, Cargo turnover, Cargo carried, mn USD thou t/km thou t 905.2 899.7 499.3 85.3 865.0 481.1 83.9 785.2 724.1 384.5 65.9 62.6 345.7 53.9 268.0

2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

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Charter operations geography* *since the establishment of the Company

Unique fleet of heavy cargo aircraft

th Flights to more than Each satellite in ® 4 the world is delivered IATA IOSA Member of the Member of The onboard Volga-Dnepr 60,000 80 10 5 certificate International Air International Air Cargo countries in the world aircraft (a total of 450 tons of cargo annually 10 An-124- 5 IL-76TD- Transport Association Association (TIACA) satellites carried over 100 Ruslan 90VD (IATA) the last 20 years)

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Charter operations

In 2012-2013, Volga-Dnepr Airlines continued to develop charter cargo operations.

Antonov An-124-100 Ilyushin Il-76

Volga-Dnepr is the world’s largest operator Volga-Dnepr Airlines operates a fleet of five Airlines’ share of cargo operations on the of An-124-100 freighter aircraft. In 2012, modernised IL-76TD-90VD freighter aircraft IL-76 market in 2013 amounted to 9% or Volga-Dnepr Airlines transported 65,929.2 An-124-100 Ruslan which comply with the Chapter IV of the 4,415 flight hours. Sales of cargo transport IL-76TD-90VD tons of cargo onboard charter flights, with International Civil Aviation Organisation services using the new IL-76TD-90VD cargo turnover totaling 345,700.2 thousand In 2013, Volga-Dnepr Airlines (ICAO) requirements on noise. With a increased by 19% to USD 86.3 million ton-kilometres. The company’s share of the successfully passed an reduction in the ageing fleet of IL-76 aircraft, compared to 2012, while the same number 4,415 Russian freight transport market amounted 8,321 as well as the introduction of a final ban on of aircraft in the fleet was maintained. audit for compliance with to approximately 7% in terms of traffic and flight hours flights in Europe by old versions of the IL-76 flight hours the requirements of the cargo turnover. In 2013, the development aircraft which do not comply with ICAO’s The sales growth was achieved by the of the charter cargo operations market European Union’s Emissions strict requirements, an increase in traffic inclusion of IL-76TD-90VD aircraft in the was significantly affected by the global Trading System (EU ETS) for onboard the new generation IL-76TD-90VD SALIS programme in 2013, performing economic crisis. The global market for greenhouse gas emissions. is expected over the next 3-4 years. transport services for customers in the oil cargo operations onboard An-124-100 and gas industry, performing flights for aircraft in 2013 amounted to USD 807.2 99% The total market for freight services with humanitarian missions and a sheer increase 98% million, representing a 17% decrease over IL-76-type aircraft in 2013 was estimated in the amount of flight operations. flight punctuality rate the previous year. In 2013 the company was flight punctuality rate at 51,671 flight hours. Volga-Dnepr able to maintain its dominant position with an overall market share of 52.2% or USD 421.2 million.

Number of flights onboard An-124-100 aircraft Number of flights onboard IL-76TD-90VD aircraft Погрузка by region of loading/unloading in 2013 by region of loading/unloading in 2013

Market structure of charter Market structure of charter Market structure of charter Market structure of charter Loading Unloading Loading Unloading cargo operations performed cargo operations performed cargo operations performed cargo operations performed onboard An-124-100 aircraft in 2013 onboard An-124-100 aircraft in 2012 onboard An-124-100 aircraft in 2013 onboard An-124-100 aircraft198 in 2012 177 64 60 188 146 191 95 134 186 14 29 130 63 51 64 52.2% 90 66 17 12 48% 52% 46% 54% 48% 52% 46% 54% 18 110 88 153 Company’s share of the world 17 14 42 market for An-124-100 aircraft 6621 16 charter operations in 2013 310 5 USD, millions USD, millions USD, millions USD, millions Middle East Russia and CIS China 421.2 Volga-Dnepr Airlines 520.9 Volga-Dnepr Airlines 421.2 Volga-Dnepr Airlines 520.9 Volga-Dnepr Airlines Europe North America Latin America Other airlines Other airlines 386.1 Other airlines 446.5 Other airlines 386.1 446.5 India, Far East and Pacific basin Africa Australia

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Customers Industries

Along with Ruslan SALIS, Volga-Dnepr Sales dynamics of air charters The most significant sales growth (78%) commissioned. The centre possesses Airlines’ main customers in 2013 included onboard IL-76TD-90VD, was achieved in the oil and gas industry one of the best operating rooms in The most significant increase million USD With fleet unchanged in 2013, leading companies such as CBI Clough due to the successful implementation of Russia, from which the Group’s freight in sales was achieved from 2 3 4 5 5 sales increased by JV PTE Ltd., Rosoboronexport, Atlas aircraft aircraft aircraft aircraft aircraft the ExxonMobil's international project operations are managed. The centre the provision of services to Air, SDV Group, Boeing Commercial 86.3 to build a gas processing plant in Papua includes a training hall equipped with customers in the oil and gas Airplanes, ExxonMobil, Chapman 74.5 New Guinea, which involved 88 flights Russia’s only An-124-100 flight simulator Freeborn, Maximus Air, TVEL, Space and the transportation of more than with a motion system. 55.9 72.2 19% industry. Systems/Loral and African Minerals. 62% 6,000 tons of cargo. 42.7 65% 65% Volga-Dnepr’s Engineering & Logistics The successful implementation of 44% 68% In the aerospace industry, in cooperation Centre (ELC) continues to play an the Group’s Code of Business Ethics 38% with Boeing Corporation, Broetje increasingly significant role in the +78 % 56% 35% 35% 32% The most significant of these and the company’s development as a Automation GmbH (Germany) and Group’s service offering to customers, socially important business, alongside 2009 2010 2011 2012 2013 Mitsubishi Heavy Industries (Japan), providing integrated solutions and services was the Group’s its extensive experience and expertise in Military segment Volga-Dnepr Airlines performed a unique end-to-end project management for successful participation in aviation logistics, allowed the company Commercial segment operation – the transportation of Boeing transportation of the most complex ExxonMobil’s international to participate in a number of major Overall sales volume 787-9 Dreamliner wings from Nagoya oversized cargoes. Through close international tenders. As a result, the (Japan) to Boeing’s final assembly plant interaction with customers and the project to build a gas company signed agreements with such in Everett (USA). implementation of ELC’s extended production and processing companies as GE, Siemens, and SDV/ portfolio of services, the volume of direct plant in Papua New Guinea. Thales. In 2012, a new four-storey air traffic sales in the total charter flight segment control centre with a total area of 3,760.9 increased by 14% in 2013. sq. m. and a unique IT architecture was

Sales dynamics of air charters onboard An-124-100 in the commercial market segment by industry in 2012-2013, Sales dynamics of IL-76 air cargo charter services in the commercial market segment by industry in 2012-2013, million USD million USD

–6% 2013 2013 150.1 2012 141.8 2012

+78% –47% 79.9 –48% –2% +100% –16% 7,8 44.8 +30% 0% 47.0 –50% 38.4 37.6 +2% –26% +100% +100% 5,8 6,3 +121% +190% 24.4 5,3 +333% 16.5 21.4 5.4 5.4 15.5 15.9 16.1 4,1 3,7 11.9 0.7 1.0 3,2 0,8 1,5 2,3 1,9 0,4 1,7

Aerospace Oil and gas Industrial Power engineering Machinery Wheeled Dangerous Other Humanitarian Car shipping equipment equipment machinery cargo cargoes cargoes Aerospace Oil and gas Humanitarian Dangerous Industrial Other Wheeled Power engineering Live animals cargoes cargoes equipment cargoes machinery equipment

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Antonov An-124-100 Ruslan modernisation project

Volga-Dnepr Group is committed to the long-term future of the unique An-124-100 aircraft it operates.

The key elements of the strategy for International cooperation involving An-124-100 aircraft fleet modernisation component suppliers and engineering are the requirements for reliability and services will contribute to the upgrading efficiency of the upgraded aircraft, which of the aircraft in compliance with the strict 150 tons will be able to carry out cargo operations requirements of the European Aviation 4 people The cargo capacity of the for customers with the same efficiency and Safety Agency (EASA). The crew of the modernised lower costs until 2040. new An-124-150 modification An-124 is reduced from The programme for development of a is 30 tons higher than the With the help of advanced domestic modified D-18T-3M engine to replace the 6 to 4 people maximum payload of the and international technologies, An-124- existing D-18T-3 model is being funded. 100 aircraft will be improved in several An-124-100 stages in order to meet the requirements In order to substantially reduce the paid- of leading member countries of the for time of an An-124-100 on the ground, International Civil Aviation Organisation sophisticated loading/unloading systems 60 people (ICAO) in terms of noise, emissions of have been designed. The team of Volga-Dnepr Group harmful substances, navigation accuracy experts engaged in the An-124 and radio communication. modernisation project already consists of 60 people

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Scheduled cargo operations

AirBridgeCargo Airlines, part of the Volga-Dnepr Group In the market for smaller cargo of companies, performs scheduled cargo services and load capacity aircraft, Volga- operates a modern fleet of Boeing 747 cargo aircraft. Dnepr Group operates Atran Cargo Airlines, which became The airline’s customers include many of the world’s largest part of the Group in 2011. logistics and industrial companies, including Schenker, Atran’s main customers include Panalpina, DHL, Inditex, Dachser, TNT and others. UPS, TNT and the Central Bank of the Russian Federation. The AirBridgeCargo was one of the first operators of Boeing airline operates small capacity 747-8F aircraft and the company’s fleet today includes six An-12 and Boeing 737-400F 747-8F freighters. aircraft.

346,256 6,885 38,000 tons of cargo transported flights total flight hours logged in 2013 in 2013 in 2013

Sales volume, Cargo turnover, Cargo carried, million USD million t/km thou tons 346.0 2,607.4 852.0 307.6 808.6 2,372.1 2,383.6 767.5 285.0 2,057.9 672.7 240.2

1,318.6 149.1 369.0

2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

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Scheduled operations network

ACTIVITIES OVERVIEW 53

.. Malmo Moscow Leipzig Ekaterinburg Amsterdam Krasnoyarsk Frankfurt am Main Novosibirsk Liege Cologne Munich Khabarovsk Paris Milan Zaragoza Chicago Beijing (Saragossa) Seoul Zhengzhou Tokyo Dallas Chengdu Shanghai

Hong Kong

AirBridgeCargo scheduled operations 99.2% route network Atran Cargo Airlines Atran scheduled operations punctuality rate route network

AirBridgeCargo Route network covers is a member of IATA Cargo 2000 5 years 23 13 75% 72% TAPA average fleet age destinations Boeing 747 DAP quality rate average load factor Cool Chain Association in 11 countries cargo aircraft (Delivered As Promised) +1.7 percentage points

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AirBridgeCargo’s market share of key destinations, percentage, 2012-2013 AirBridgeCargo 30% Airlines 25% 20%

15% In 2014, AirBridgeCargo Airlines celebrates its 10-year anniversary in the international scheduled cargo transportation market. The implementation of its development strategy has 10% resulted in consecutive year-on-year growth of AirBridgeCargo's operational activity above the 5% industry average. 0% U.S.- U.S.- Hong Hong Hong Japan and Japan- China- China- China- Europe- Europe- Europe- Europe- Europe- Russia Europe Kong- Kong- Kong- Korea- Europe Russia U.S. Europe Japan and U.S. Russia Hong Kong China Europe Russia U.S. Russia Korea 2012 2013

In 2012, AirBridgeCargo transported One of AirBridgeCargo’s strongest AirBridgeCargo’s route network connects (Delivered As Promised). In late 2013, Cargo transported, tons Best All-Cargo Airline 304,378 tons of cargo, 7% more than in competitive advantages is its young fleet 23 major cities in 11 countries across the the airline also confirmed the compliance 2011. Cargo turnover for the year exceeded of modern aircraft which currently includes world, serving the busiest international of its operations with IATA standards by 2014, Asian Freight and 350,000 2,378,731,000 ton-kilometres. 12 Boeing 747: four Boeing 747-400ERF, cargo channels between Asia, Europe renewing its IOSA (IATA Operational Safety Supply Chain Awards three Boeing 737-400F and five Boeing and the U.S. via Russia. In 2012, Audit) certification. 300,000 2014 In 2013, the airline performed 6,885 747-8F aircraft. The average age of AirBridgeCargo performed its first flight scheduled cargo flights and transported AirBridgeCargo’s fleet is less than five years. across the Arctic flying from Chicago to Following international safety, security 250,000 346,256 tons of cargo, surpassing the 2012 Krasnoyarsk, therefore opening access and quality standards (Cargo 2000, TAPA, result by a further 5%. Its average load In 2012-2013, the company continued its to the major Russia-U.S. transit market, Cool Chain Association) and ensuring an 200,000 employees in factor of 72% in 2013 represented a 1.7% fleet optimisation and expansion strategy. and making it a pioneer among Russian individual approach to the requirements gain over 2012 and surpasses an industry In 2013, AirBridgeCargo introduced two companies. of every customer has enabled 854 8 countries 150,000 average load factor of 45.3%. next generation Boeing 747-8F freighter AirBridgeCargo to establish mutually aircraft into its global route network. The The hub model adopted by AirBridgeCargo beneficial long-term partnerships with its 100,000 In 2012-2013, AirBridgeCargo improved its Boeing 747-8F’s payload capacity is 16% at Moscow Sheremetyevo Airport allows customers. In 2013, the airline’s efforts billion ton-kilometers performance in all major markets. higher than the capacity of its predecessor. the airline to offer customers increased to succeed in key areas of development, 50,000 The new Boeing 747-8F strictly complies frequencies of available flights and satisfy demands of its customers and cargo turnover In 2012, cargo volume on export flights from with environmental laws, including reduced connections, together with the ability to increase the quality of its services resulted +14% 0 2.6 Russia increased by 9% to 2,982 tons while noise levels and a 16% reduction in make rapid cargo deliveries to any point in in a 6% increase in AirBridgeCargo’s 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 imports rose 9% to 69,814 tons. In 2013, carbon dioxide emissions. NOx emissions AirBridgeCargo’s route network within 48 business volume from its top 10 cargo tonnage transported on Southeast do not exceed 52% of the maximum hours, including the time spent on ground customers. Asia, Europe and North America routes allowed by ICAO’s Committee on Aviation operations. This option has been widely increased by 3%, 4% and 8% respectively. Environmental Protection. recognised and used by AirBridgeCargo AirBridgeCargo fleet size, 2004-2013 4.1 346,000 The largest increase was generated by customers across the globe. 8 88 Russian operations. In 2013, AirBridgeCargo tons of cargo transported 4 transported 87,679 tons of import cargo to AirBridgeCargo is constantly working 3 Russia. on improving the quality of its services 11 8 for customers and the reliability of its 15 88 operational performance has enabled it to 1 3 achieve 82% punctuality and 75% DAP 20 4 22 88 24 5 44 3333 2 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Boeing 747-200/300F Boeing 747-400ERF/400F Boeing 747-8F 8 Average age

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Atran Cargo Airlines compensated for by the growth in flights Over its 19 years of operations, Atran has Atran Airlines’ customers include the All-cargo carrier Atran Cargo Airlines became a part of Volga-Dnepr Group in June 2011. Atran performed by the airline’s Boeing 737s consistently demonstrated the highest world’s largest courier company United performs cargo flights with smaller capacity Antonov An-12 and Boeing 737-400F aircraft for (285). level of punctuality which has enabled Parcel Service Inc. (UPS), TNT Express express integrators both in the Russian domestic and international markets as well as charter the company to build mutually beneficial N.V. (TNT), Avial DV in the Russian Far Today, Atran’s route network includes long-term partnerships with the world’s East, and the Central Bank of Russia in flights for major Russian clients. Malmo in Sweden, Liege in Belgium and leading express integrators. In 2012- the European part of Russia. Cologne and Munich in Germany. 2013, Atran’s punctuality rate was 99.2%.

In Russia, the airline operates from Vnukovo and Sheremetyevo airports in Moscow. Logged flight hours for the Atran is the only operator of Boeing 737- Atran’s sales received a significant boost, Atran fleet continued to increase in 2012 400F transport aircraft in Russia. In 2012, gaining 25.2% to $19,336,000 in 2013 and 2013, totaling 2,453 hours in 2012 the airline’s fleet was expanded with compared to $15,049,000 in 2012. and 3,352 hours in 2013. The combined +12.4% +43% 99.2% the addition of two Boeing 737-400s. In number of logged flight hours in 2012- 435 7.4 punctuality 2013, the Atran fleet consisted of three In 2012, the airline performed 387 flights. 2013 increased by 15%. An-12 and two Boeing 737-400 cargo Of this total, 289 flights were operated by 387 +48% aircraft. its An-12 freighters and 98 flights were In 2013, Atran saw its flown cargo 3,352 completed by its Boeing 737s. tonnage increase by 48% to 4,900 tons 4.9 4.90 In 2013, Atran completed the compared to the 3,270 tons transported 2,453 modernisation of its Boeing 737-400SFs, Putting another Boeing 737 into in 2012. 3.27 equipping the aircraft with a new and operation allowed the airline to perform improved Traffic Collision Avoidance 435 flights in 2013, achieving a 12.4% System, TCAS. increase over 2012’s result. A reduction in An-12 flights (150) was significantly Number of Logged Cargo turnover, Cargo tonnage, 2013 completed flights flight hours millions ton/km tons 2012

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Supporting businesses

Supporting businesses secure the reliable and new generation IL-76TD-90VD version, which uninterrupted operating activity of Volga-Dnepr complies with ICAO noise and engine emissions Group companies. regulations.

Volga-Dnepr Group’s subsidiary Volga-Dnepr The NIC insurance company secures reliable Technics has developed a network of aircraft insurance protection of Volga-Dnepr Group Maintenance, Repair & Overhaul (MRO) centres aircraft and also provides its insurance services to serve the Group’s aircraft fleet as well as the to the Group’s employees under its NIC-Life aircraft of other airlines. business.

Established in 1997 as a branch of Volga- Since 2004, Volga-Dnepr Group has operated its Dnepr, Volga-Trucks focuses on road cargo own modern Aviation Training Centre where air transportation, enabling Volga-Dnepr to offer its crews, engineers and technicians of the Group customers an option for direct delivery of their and other Russian and international airlines hone cargo to its final destination. their skills.

Volga-Dnepr-Leasing implemented the project for profound modernisation of the IL-76TD to the

MRO centres in Fleet expansion and modernisation: 9 airports in Eastern and Volga-Dnepr-Leasing Central Europe and the Middle East

Road transport Aviation Insurance services: logistics: Training NIC and NIC-Life Volga-Trucks Centre

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Supporting businesses

Leased hangar facilities

Aircraft MRO hangar complex MRO line station for foreign-made aircraft Types of aircraft serviced: An-124 and IL-76 Types of aircraft serviced: Boeing 747

Saint-Petersburg A-Check maintenance works carried out at Verkhnyaya MRO line stations at three major Moscow Pyshma airports: Sheremetyevo, Vnukovo and Veliky Novgorod Yekaterinburg Domodedovo Perm Krasnoyarsk Bratsk Moscow Types of aircraft serviced: Boeing 737 Ulyanovsk Biysk CL/NG, Boeing 747-400/8, Airbus Kopeysk A319/320/321 Vladimir Nizhny Chelyabinsk Leipzig Novgorod Samara Frankfurt am Main Magnitogorsk Astrakhan Hangar area: 22,000 m2 Hangar area: MRO line station for A, B and C-Check maintenance 8,500 m2 work on Russian and international aircraft Aircraft MRO hangar complex for A, B and C-Check Types of aircraft serviced: Boeing 747-200/300/400, maintenance of Russian and international aircraft A-Check maintenance of foreign aircraft Boeing 737 CL/NG, Airbus A318/319/320/321, IL- carried out at MRO hangar 76TD, IL-76D-90VD, An-24/26/32/74/124-100 Types of aircraft serviced: Boeing 747-200/300/400, Boeing 737 CL/NG, Airbus A318/319/320/321, Il-76TD, Fujairah Types of aircraft serviced: Boeing 747- IL-76D-90VD, An-24/26/32/74/124-100 200/300/400/8, Boeing 737 CL, SAAB 2000 Sharjah A-Check maintenance of foreign aircraft performed at MRO line station

Types of aircraft serviced: Boeing 747- 200/300/400/8, Boeing 737 CL Major MRO centres Major destinations of Volga-Trucks

As of 30.06.2014

MRO Centre in EASA Part-145 2 Certification 40,000 m In 2013, new hangar MRO services for Antonov, 9 airports in Eastern and complexes were launched Ilyushin, Boeing and Airbus Central Europe and the of production facilities in Leipzig, Germany, and aircraft Middle East Sharjah, UAE

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 62 BUSINESS OVERVIEW BUSINESS OVERVIEW 63

MRO services

Volga-Dnepr Technics was established in Volga-Dnepr Technics Ulyanovsk Capabilities of Volga-Dnepr Group MRO centres: 2008 as a provider of MRO services for (Ulyanovsk-Vostochny, Russia) was Russian and foreign-made aircraft. The created on the base of an existing company comprises four main centres: Volga-Dnepr MRO centre that had MRO Centre Airport Boeing Airbus Antonov Ilyushin been operating for over 20 years. In Boeing 747- Boeing 737 Boeing 737 A320 family An-124-100 An-24/26 IL-76 Air Transport Observer Award Volga-Dnepr Technics Moscow the Middle East, Volga-Dnepr Technics’ 200/300/400/8 CL NG (Genx) for MRO services (Moscow, Russia) provides line MRO partner Volga-Dnepr Gulf (Sharjah, of Boeing 747, Boeing 737 and Airbus UAE), provides technical maintenance of Moscow Sheremetyevo (SVO) A320 aircraft and complementary Russian An-124, IL-76, An-24/26/32 and services at three major Moscow airports: An-74 aircraft as well as line technical Domodedovo Sheremetyevo, Domodedovo and maintenance of international Boeing 747, (DME) Vnukovo. In order to service Boeing 747 Boeing 737 CL & NG and Airbus A320 aircraft, Volga-Dnepr Technics maintains aircraft. In Fujairah, the company Vnukovo (VKO) an MRO line station at Yemelyanovo offers technical maintenance and airport in Krasnoyarsk. complementary services for An-24/26 and IL-76 aircraft. Krasnoyarsk Yemelyanovo Volga-Dnepr Technics GmbH (Leipzig- (KJA) Halle, Germany) created on the base of In 2013, Volga-Dnepr Technics’ sales MRO of Antonov, Ilyushin, the Ruslan SALIS MRO station which has volume reached 545,951 thou rubles, Sharjah, UAE Sharjah Inter- Boeing and Airbus aircraft national Airport been in operation since 2006. It performs compared to 497,664 thou in 2012. (SHJ) technical maintenance of Russian An- AirBridgeCargo Airlines, part of Volga- 124-100 and IL-76TD-90VD aircraft as Dnepr Group, remains the main customer Fujairah, Fujairah Inter- UAE national Airport well as foreign-made Boeing 747 and of Volga-Dnepr Technics, responsible for (FJR) Boeing 737CL aircraft. Volga-Dnepr’s 83.7% of the company’s sales in 2012 Leipzig-Halle facilities in Leipzig-Halle Airport are used and 78.5% in 2013. The share of sales Leipzig, Germany (LEJ) for conducting of A-Check maintenance generated by companies outside the for the listed aircraft. In Frankfurt am Group amounted to 16.3% and 21.5% Frankfurt Frankfurt am Main, Volga-Dnepr Group maintains a in 2012 and 2013 respectively. The Main Internation- am Main, al Airport (FRA) certified MRO station for timely technical increased share of sales to non-Group Germany maintenance of Boeing 747 aircraft. companies, both in the combined number of man-hours and sales volume, resulted Only aircraft registered in UAE from the launches of the new hangar complexes in Leipzig, Germany, and Sharjah, UAE. EASA approval to launch an MRO line In 2012, Volga-Dnepr Technics successfully station at Vnukovo airport and to perform implemented mobile hangar technology in A-Check maintenance for new Airbus order to be able to service aircraft engines A320 and Boeing 737NG aircraft at even in difficult weather conditions, and Sheremetyevo airport. In 2012, Volga-Dnepr introduced a new service for washing Technics GmbH received EASA Part-145 aircraft engines at Sheremetyevo Airport. certification, becoming the first Russian In 2012, Volga-Dnepr Technics received company to receive this accreditation on EU territory.

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 64 BUSINESS OVERVIEW BUSINESS OVERVIEW 65

In 2013, Volga-Dnepr Technics companies The launch of hangar complexes in Areas of development got a number of their certifications Leipzig, Germany and Sharjah, UAE, were extended. Volga-Dnepr Technics GmbH’s among the key milestones for the Group EASA Part-145 certification was extended, in 2013. The 8,500 m2 complex in Leipzig EASA Part-145 allowing the company to service Boeing supports the maintenance of An-124, certification 737CL and Boeing 747-8F aircraft, IL-76, Boeing 747, Boeing 737 and Airbus 11.5% including A-Check maintenance of these A320 aircraft. The complex serves aircraft Volga-Dnepr Technics Moscow 92% 96.5% aircraft. Its EASA Part-145 was upgraded from the Volga-Dnepr Group fleet as well to Rating C14. Volga-Dnepr Technics as those of other airlines operated from Prioritised project: Moscow expanded its EASA Part-145 the Leipzig-Halle Airport. In 2013, the construction of a hangar 7.5% MRO centres in certification for the servicing of Boeing Group received permission from Russian 5.3% 737NG aircraft at Domodedovo Airport aviation authorities to service Russian and extended its BDCA EASA Part- equipment in Leipzig, and expanded its 9 airports in Eastern and 145 certification until 2015. In addition, certification for foreign-made aircraft. Central Europe and the Middle Volga-Dnepr Technics GmbH was certified Volga-Dnepr Technics GmbH also signed Technical punctuality of Share of companies unrelated 2013 East by Russian aviation authorities to serve a contract with Swiss company Darwin Volga-Dnepr Technics to Volga-Dnepr Group among 2012 Volga Dnepr Technics Moscow’s Average daily technical delay 2011 An-124-100 and IL-76TD-90VD aircraft. Airline to service SAAB 2000 aircraft at time, hours customers Volga-Dnepr Technics Ulyanovsk plans to Leipzig-Halle. undergo certification in 2015-2016. The 22,000 m2 hangar complex in Sharjah Volga-Dnepr Technics GmbH Volga-Dnepr Gulf upgraded its CAR 145 allows servicing six narrow-body aircraft or certification to A1 rating, which allows it two wide-body Boeing 747 or An-124-100 FAA Certification to service Boeing 747CL, Boeing 747-400, aircraft at a time. It provides MRO services Boeing 737CL and Boeing 737NG aircraft, to Volga-Dnepr Group companies and C-Check of Boeing 737 and Boeing 747 and upgraded its CAR 145 certification other airlines. to D1 rating, together with extending certifications required for servicing Volga-Dnepr Technics’ strategy is aimed Russian aircraft. at further expansion of its range of MRO services as well as continuous Динамика показателя технической пунктуальности «Волга-Днепр Техникс In 2013, Volga-Dnepr Technics increased improvement of the quality of its services. Москва» при обслуживании флота AirBridgeCargo its performance levels for servicing According to an annual Commercial Fleet 92 % 2 AirBridgeCargo’s fleet, most notably & MRO Forecast 2014 prepared by the 96 % 40,000 m improving its technical punctuality from analytic department of Aviation Week & 92% to 96%, while the average daily Space Technology, the global MRO market Volga-Dnepr Gulf of production facilities Volga-Dnepr Technics Ulyanovsk technical delay time decreased from eight in the civil aviation segment is estimated EASA certification, expanding applicable MRO ratings hours in 2012 to 1.8 hours in 2013. at $51.9 billion. In 2014, aircraft line MRO Completion of new hangar construction Динамика доли сторонних заказчиков «Волга-Днепр Техникс Москва» In 2013, Volga-Dnepr Technics Moscow expenses in Eastern Europe, including A-Check and C-Check of Boeing 737 and Airbus A320 (est. 2016) 5,3 % and Aeroflot signed an agreement for Russia, are estimated to amount to aircraft 7,5 % servicing aircraft at Sheremetyevo Airport. $400 million. The total number of aircraft Expanding range of services 11,5 % operated in the region is expected to 2011 2012 2013 exceed 1,400 units by the end of 2014.

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 66 BUSINESS OVERVIEW BUSINESS OVERVIEW 67

NIC and NIC-Life Volga-Trucks insurance companies Volga-Trucks is a subsidiary of Volga-Dnepr Group focused on cargo transportation by road. Insurance services are provided to Volga-Dnepr Group by NIC and NIC-Life. NIC insurance The company was established in 1997. company, established in 1995, secures reliable insurance protection of aviation risks faced by Volga-Dnepr Group’s aircraft fleet, while NIC-Life provides high quality insurance services for the Group’s operating units and employees. Volga-Trucks is a member of the Volga-Trucks’ transport fleet consists of Association of International Road Transport 33 Mercedes-Benz, Volvo and Scania Carriers and an authorised customs vehicles offering a cargo capacity of carrier, which allows it to perform road between 1.5 and 22 tons and used for transportation under customs transit transportation of general and customs NIC is an insurance company and is and the 8th largest in 2013. NIC works regulations. goods. part of Volga-Dnepr Group. It allows the on the international insurance market NIK Group to reduce insurance premiums and has unique experience in insuring In 2012-2013, the company continued to In 2013, the company transported nearly INSURANCE COMPANY and achieve optimal payouts. NIC clients cargo aircraft. NIC has well-established provide its services to AirBridgeCargo and 120,000 tons of cargo in its refrigerated include individuals and legal bodies partnerships with a number of leading 300,000 Volga-Dnepr, performing cargo operations trucks. These vehicles are capable of all Volga-Dnepr Group subsidiaries. international insurance companies, tons of cargo delivered from from Moscow Sheremetyevo Airport to of maintaining a wide range of cargo th According to new requirements set including AIG, GAUM, Lloyd’s, Aspen, cities in Central Russia, the Volga region, temperatures and carry food products, in 2014, the insurance company has Atrium, Partner Re, Allianz and others. Sheremetyevo Airport on 8 and the Southern and Northwestern including frozen goods, beverages and milk largest RAASI member company implemented an internal control system behalf of AirBridgeCargo and regions. In 2012, the company delivered products in all seasons. in order to better manage risks and the In 2013, NIC-Life acted as a provider of based on combined insurance Volga-Dnepr in 2012-2013 over 100,000 tons of cargo,and increased assets of the underwriter. services for life insurance and pension cargo volume to more than 200,000 tons in Volga-Trucks’ list of clients includes Efes premiums insurance for Volga-Dnepr Group 2013. Brewery, SladCo, AlMet, Mars, UAZ, In addition to aviation-related insurance, employees. In 2012 and 2013, NIC-Life TAKATA Rus, Volga Tyre Company, Coca -12.0% NIC also provides corporate insurance to payouts were higher than the payouts of In 2012-2013, the number of completed Cola HBC Eurasia, Pepsi International the Group’s employees. Social packages any other life insurance companies in the cargo operations performed by Volga- Bottlers, Alev, UniMilk, AeroComposite and 524 offered by NIC include voluntary health Volga region, amounting to 23,589,000 Trucks increased from 5,053 in 2012 to other companies. 469 insurance, accident insurance and and 20,989,000 rubles respectively. In more than 5,500 in 2013. In 2013, Volga- professional liability insurance. NIC also 2012, NIC-Life accumulated insurance Trucks revenue rose by 3% year-on-year provides employees with options for premiums amounting to 19,198,000 to 178,243,500 rubles compared to insuring cars, property and liability. rubles. In 2013, this figure was 11,485,000 173,051,900 rubles in 2012. rubles. In 2012, NIC was the 7th largest company in the Russian aviation insurance market, including reinsurance, in terms of the NIC insurance 2013 number of insurance premiums gathered portfolio, among RAASI member companies, million rubles 2012

61.5

44.0

NIC marginal 2013 revenue from services provided to 2012 Volga-Dnepr Group companies, million rubles

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 68 SUSTAINABLE DEVELOPMENT SUSTAINABLE DEVELOPMENT 69

Aviation Aviation English Training Centre Courses

Volga Dnepr Group has operated its own equipment required for aviation rescue Training to develop experts in ICAO Upon finishing the course, all students standardised ICAO scale. Teaching and modern Aviation Training Centre since operations and aviation safety training. standardised Aviation English and radio must undergo qualification tests in order testing are performed by qualified instructors 2004. It is open to Group employees (air Media classes and language rooms fitted courses in various communication terminology in compliance to get their English communications skills that hold international certificates and who crews, engineers, technicians, shipping with audio equipment allow students to aviation disciplines with ICAO international standards is one assessed. The certificates awarded attest are listed as raters/examiners by the Federal management experts and airport services perfect their radio communication skills. 100 of the key activities of the Aviation Training to a certain level of English skills on the Air Transport Agency. experts) and representatives of other Centre. Russian and international airlines looking In 2012, the Aviation Training Centre to maintain and enhance their skills. The offered 100 study programmes, including All courses are developed in compliance centre offers over 100 courses and home six courses in Aviation English. In 2013, with ICAO recommendations (Doc 9835). study programmes, including basic training, the list of training programmes offered at During the training process students are professional development and advanced the centre was augmented with 29 more taught using real radio conversations. training courses for a number of aviation courses, including two new Aviation English Recorded all around the world, these professions. Programmes include training programmes. 3,257 employees conversations between international pilots trips to facilities. The centre currently graduated from the Aviation Training and dispatchers provide excellent training develops programmes for individual In 2012 and 2013, 3,137 and 3,257 Centre in 2013 material for the students. and distant training and uses advanced employees graduated from the Aviation education technologies. Training Centre respectively. 1,650 and 1,440 students successfully completed The Aviation Training Centre features studies in Aviation English in the respective automated training systems, distinguished years. by user-friendliness, mobility and advanced electronic testing systems. These ensure In 2013, the Aviation Training Centre 897 aviation experts that student knowledge is properly successfully renewed its certification until underwent qualification tests in assessed. The centre offers special 2017. English in 2012-2013

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 70 SUSTAINABLE DEVELOPMENT SUSTAINABLE DEVELOPMENT 71

Incident prevention and flight safety assurance

Volga-Dnepr Group maintains the highest level of airworthiness of its aircraft and invests in training In 2013, Volga-Dnepr approved and began implementation its experts to maintain the safe operation and servicing of Russian and international aircraft in of its Aviation Safety System compliance with international standards. project, covering every safety aspect including flight, aviation, environment and employee Volga-Dnepr Group’s airlines undergo audit activities are overseen by a dedicated In 2012, the safety level at Volga-Dnepr was safety. procedures on a regular basis in order to department within the managing company of measured at 1.49 incidents per 1,000 flights, confirm their operational compliance with the Group. The principles for implementation slightly above its 1.11 target level. global aviation industry safety standards. of the Group’s incident prevention policy and In 2012, AirBridgeCargo became an IOSA securing aviation safety are an inherent part In 2013, Volga-Dnepr improved its aviation In 2012, the 3,760.9 m2 four-storey Air operator and was granted an IATA certificate of the conduct code of every Volga-Dnepr safety level to 0.92 incidents per 1,000 flights, Transportation Control Centre began as part of Volga-Dnepr, the only Russian employee and form the basis of the Volga- below the set 1.11 minimum. operation of its unique IT infrastructure. The cargo airline certified by IATA at that time. In Dnepr corporate safety culture. centre has one of the best operating rooms 2013, AirBridgeCargo successfully passed in Russia, from which the Group’s freight the IATA Operational Safety Audit procedure, The Group has its own flight safety operations are managed. The center fully extending its certificate and IOSA operator management system. Flight safety is constantly complies with strict international standards. status until 2015. Volga-Dnepr Group has monitored through a set of special indicators. The Centre's training facilities include the its own inspection crews responsible for only moving An-124-100 flight simulator in ensuring aviation safety and managing incident Russia. prevention measures. Incident prevention

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 72 BUSINESS OVERVIEW BUSINESS OVERVIEW 73

Cargo supermarket in action

Industrial and oil & gas Aviation and equipment space industry

August 2013 December 2012 Volga-Dnepr completes a large-scale Two IL-76TD-90VD flights from Montreal, Canada, to project in Papua New Guinea. Over a Krasnoyarsk, Russia, deliver the Express AM5 and Express 103 day period, 88 An-124-100 Ruslan AM6 satellites that will provide multi-channel satellite television flights were completed, delivering and radio to consumers in Russia as well as providing secure over 6,000 tons of equipment for mobile communications for governmental purposes. ExxonMobil’s new gas production and processing plant near Komo. The majority of shipments were single- piece units with an average weight of 60 tons, which required a high degree of precision during the loading and unloading operations. August 2013 October 2013 See details on p. 28. AirBridgeCargo performs the Volga-Dnepr Airlines completes a delivery of satellite equipment series of flights delivering space onboard one of its Boeing 747- equipment ordered by Astrium GmbH, 400 aircraft from Toulouse in the largest European aerospace France to Krasnoyarsk, Russia. company.

March 2013 Volga-Dnepr performs an express delivery of oil and gas equipment with its IL-76TD-90VD aircraft from Bergen, Norway, to Saint-Johns, Canada, following an urgent request from global logistics company Panalpina.

September 2013 AirBridgeCargo delivers two large containers transporting the multi- December 2012 purpose El-7 Ivolga ground effect Three An-124-100 flights carry vehicle from Moscow to Hong Kong. over 320 tons of gold mining February 2013 The large containers were loaded equipment from Ostrava in the Volga-Dnepr Airlines delivers part of an MC-21 aircraft fuselage within 40 minutes, the standard September 2013 Czech Republic to Nairobi, from Irkutsk to Ramenskoye Airport for testing at the Central timing for common types of cargo. Volga-Dnepr performs two flights from Saint-Petersburg to Bratsk, Russia, Kenya. delivering more than 180 tons of oil and gas equipment for the Talakan Aerohydrodynamic Institute. oilfield.

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 74 BUSINESS OVERVIEW BUSINESS OVERVIEW 75

Sports equipment and vehicles Unique projects

March 2012 August 2012 Sports equipment is delivered from Munich, Germany Mongoose patrol boats used to ensure the safety of officials for athletes taking part in the final phase of the 2011-12 participating in the APEC economic forum are delivered Biathlon World Cup in Khanty-Mansiysk. from Moscow to Vladivostok onboard one of Volga-Dnepr's An-124-100 freighters. TV equipment is also transported to enable Russian TV to broadcast live coverage of the competition.

September 2013 July 2013 AirBridgeCargo delivers AirBridgeCargo delivers 27 34 works of art by Dutch animal ‘stars’ of the famous January 2014 painter Piet Mondrian Nikulin Circus to Tokyo for a Volga-Dnepr delivers video equipment for coverage of the XXII Winter Olympics from Vatry, France to Sochi, Russia. worth €130 million from tour of Japan. Amsterdam, Netherlands to Moscow.

July 2012 When 520kg Atlantic walrus, Sgate-Neseike, the star attraction at the Udmurt Republic zoo needed urgent dental surgery, an AirBridgeCargo Boeing 747 took care of the transportation process to Frankfurt, July 2013 March 2013 For the fifth time in the company’s history, Volga-Dnepr provides organisational support to the International Silk Way Germany. Volga-Dnepr delivers live buffalos for a breeding Rally which took place In Russia between Moscow and Astrakhan on July 5-13. programme onboard an IL-76TD-90VD flight from Edmonton, Canada to Yakutsk, Russia.

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 76 SUSTAINABLESOCIAL RESPONSIBILITY DEVELOPMENT SUSTAINABLESOCIAL RESPONSIBILITY DEVELOPMENT 77

Social responsibility and professional development

OUR VALUES

Health Safety Work

Development Honesty

Professional Ecology development Corporate University of Volga-Dnepr Group

Education Social responsibility Occupational safety Experimental School and health Istochnik

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 78 SOCIAL RESPONSIBILITY SOCIAL RESPONSIBILITY 79

Social responsibility and professional development

Volga-Dnepr Group's corporate culture promotes a healthy lifestyle. The Group has a medical clinic and a sports and fitness complex. Flight personnel undergo a physical examination once a year.

Management talent pool Cooperation with educational institutions Professional Development Personnel Training In 2012-2013, one of the key areas In 2012, in order to attract young Research projects are also being of personnel development was the professionals, arrange internships, conducted in cooperation with partner The priorities of Volga-Dnepr Group’s Volga-Dnepr Group pays great attention 3,871 employees establishment of the management talent provide practical training opportunities universities. personnel policy include: to maintaining the high qualifications and pool. and establish an external personnel professional development of its employees. passed training programmes at reserve, Volga-Dnepr Group launched a In 2013, a ‘Perspective transport 1. providing employees with attractive Training and professional development the Corporate University The Group operates a double-level programme to encourage students and aircraft of the 21st century’ contest working conditions and opportunities for programmes are provided by the Corporate management talent pool, including at the graduates at specialist universities to was launched to attract the attention of in 2012-2013 professional growth; University of the Group. In 2012-2013, 3,871 operating level (7 people) and the long-range pursue employment opportunities within young people and aviation professionals employees successfully passed training level (34 people). The company’s employees the Group. and to encourage them to research 2. engaging highly qualified personnel to programmes at the Corporate University. also complete training under the President’s opportunities in the air transport increase their professional development In 2012, in addition to the curriculum, extra management training programme. Volga-Dnepr Group entered a strategic industry. The competition featured four within the Group; 47 Code of Work Ethics seminars were 129 training partnership with leading universities in the nominations: trends and forecasts of conducted. Ulyanovsk region: Ulyanovsk Higher Civil the global air cargo market, shaping the 3. ensuring effective social policy and Aviation School (UVAUGA), Ulyanovsk technical aspect of the transport aircraft employee protection, including for those in In 2013, in order to supervise the corporate programmes State University (USU) and Ulyanovsk of the 21st century, advanced engines for retirement; education programme, a dedicated were carried out by the Aviation State Technical University (USTU). heavy transport aircraft, and avionics for department was established within the prospective cargo aircraft. Training Centre in 2013 4. increasing workforce productivity to the Group with the goal of strengthening European level by using modern motivation corporate spirit and encouraging a systems. successful management team.

The Group provides its employees with Volga-Dnepr promotes professional The number of unique opportunities for professional growth continuity: in 2013, a new Coaching School Volga-Dnepr Group and career development, and offers a wide was established to provide special training employees working range of training programmes designed to seminars. outside of Russia build the company’s Management reserve, and provides options for corporate and 563 524 advanced training.

Volga-Dnepr employs a highly professional international team. The number of employees working in the overseas offices of the Group’s various divisions amounted to 524 people in 2012 and increased to 563 people in 2013. 2012 2013

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 80 SOCIAL RESPONSIBILITY SOCIAL RESPONSIBILITY 81

Occupational safety Social programmes for The NIC-Life insurance company, part Experimental School Istochnik Promoting healthy lifestyle employees of Volga-Dnepr Group, provides Group’s Volga-Dnepr Group companies work constantly Volga-Dnepr Group’s social programmes personnel with personal insurance One of the key Volga-Dnepr Group social The Group pays special attention to to improve their professional safety systems for employees include a voluntary medical services, including life and pension projects was the establishment of the promoting and maintaining a healthy and support this with personnel training and insurance programme, the provision insurance. experimental secondary school Istochnik. lifestyle. coaching. The Group conducts certification of of vouchers for treatment centres and Projects implemented by The half board school supports pre- workplace conditions, including examination assistance with housing issues. In order Volga-Dnepr Group provides various the Istochnik Author School school, primary, basic and additional In 2012-2013, the Group organised a of flight and aircraft maintenance crews, and to retain key personnel and attract activities for its employees’ children, won gold medals at the New education. Istochnik provides all the number of sporting events, including the undertakes internal audits of professional safety highly qualified young professionals, the including meetings with famous designers, necessary conditions for studying as well Volga-Dnepr Olympics and competitions conditions in all of its divisions. implementation of the Housing for Young competitions and festivals. In 2013, the Time international exhibition as for the creative expression and physical in a variety of sports. Teams from the Professionals programme continued in company held an Aircraft of the Future for inventions and new development of children. The school Group successfully participated in sports 2012-2013. In 2012, 43 Volga-Dnepr competition asking children to dream up technologies in the Young began the certification process under the tournaments at district, municipal, provincial, specialists received the keys to their a futuristic aircraft image by answering International Baccalaureate (IB) programme regional and Russian national levels. In new apartments. In 2013, another 15 the question ‘What will Ruslan and Inventor category. The event which enables the institution to acquire particular, in 2012 Volga-Dnepr athletes employees participated in the programme. Boeing be like when they grow up?’ Later was held in September the status of an international school. were silver medalists in the relay race in 58 employees The apartments are made available by the company arranged an exhibition of 2013 under the auspices of The selected programme – The Diploma Ulyanovsk. In 2013, Volga-Dnepr Airlines’ Volga-Dnepr Airlines under a long-term children's drawings and handicrafts. Programme - is a unique course for high futsal team won the top league in the city received new apartments as part lease and give employees the right to Euroinvent, the global forum school students, who will receive their championship futsal competition and of the Group’s Housing for Young acquire ownership of properties at their of inventors and researchers. International Baccalaureate diploma upon took 1st place in the third inter-regional Specialists programme in 2012-2013. residual value in 3-5 years. graduating from school and will be able futsal tournament in the Volga region, and to enter almost any university in the world 2nd place in the Aviacup 2013 football without entrance examinations. tournament. In 2012 and 2013, the Volga- Dnepr teams finished second and third in the In 2013, Volga-Dnepr School of futsal cup competition organised by Aeroflot. Management specialists began to work with Istochnik students on a project Participation in socially management programme. Their goal is to important industry projects develop the children’s project management skills and encourage students to implement In terms of its social responsibility creative, cultural and socially significant strategy, Volga-Dnepr Group participates initiatives.

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 82 SOCIAL RESPONSIBILITY SOCIAL RESPONSIBILITY 83

Volga-Dnepr Group is a socially responsible business involved in sponsorship and charity programmes and seeks to contribute to the improvement of the social and business climate The Corporate in Russia as well as to a constructive dialogue between business and society. University in projects which play a significant role in power plant, several sets of playground provides talented children with an The main activities of the University include training events were held in 2012. the development of the national aircraft equipment, domestic appliances and other opportunity to perform on stage with the training of managers and professionals engineering and transport industry. These necessary equipment for the boarding professional ensembles and to perform in as well as aviation specialists at the In order to improve the efficiency of the projects include the resumption of serial school. children’s musical programmes throughout Aviation Training Centre. In 2012, within Corporate University, the feedback is production of An-124 Ruslan family aircraft, the entire concert season. the Corporate University, the School of gathered and evaluated on a regular basis. funding the construction of the eco- The Group also runs a campaign with personal assistant, the School of line friendly IL-76TD-90VD, and developing employees responding to children's letters Volga-Dnepr Airlines is member of the manager, the Project management school, In 2012, the Corporate University became land transport infrastructure to support and preparing gifts for them. Also in 2013, board of trustees of the Ulyanovsk Drama and the School of financier and economist the platform through which training cargo hubs and network cargo delivery. Volga-Dnepr Technics GmbH organised a Theatre named after I. A. Goncharov. The operated on a regular basis. In 2013, the programmes were developed to implement The successful implementation of these Magic for Christmas event and presented company also supports the Ulyanovsk University also included the School of the Group’s Code of Work Ethics. The initiatives is not only important for national gifts to patients of the St. Elizabeth hospital Regional Philharmonic and the Museum The Corporate University financier and economist, the School of President of the Group held a series of economic development; it also plays an in Leipzig, Germany. of Fine Arts named after Plastov, as well procurer and the School of mentor. The seminars on the Ethics Code. important social role by providing jobs for as the House of Folk Art and Leisure. of Volga-Dnepr Group has basic training grounds of the Corporate tens of thousands of people and allowing Providing support for war Social projects are carried out not only been successfully developing University are located in Ulyanovsk and Volga-Dnepr Group has been organising them to maintain and develop expert skills. veterans and disabled persons in Russia but also abroad. For example, Moscow. management training programmes in line with global trends in the Volga-Dnepr employees in the United Arab since 2001. Today, training programmes Charity, support of children and Volga-Dnepr Group provides support Emirates provided financial assistance for field of professional training. The The University structure also comprises and seminars, business sessions and vulnerable groups for veterans of the Great Patriotic War. the construction of the Orthodox Church University aims to support and the Knowledge Centre which aims professional conferences are held every In 2012, Volga-Dnepr allocated funds in Sharjah. achieve the strategic objectives to create a single information field, week in Moscow, Ulyanovsk and other In 2012-2013, the Group continued to to the administration of the Zavolzhsky structure experience and preserve unique main Group business locations. The provide support to socially disadvantaged district of Ulyanovsk to stage festive In 2012-2013, Volga-Dnepr Airlines of the Group by continuous knowledge. events involve training and seminars for groups. In the reporting period, Volga-Dnepr events dedicated to the 67th anniversary provided Organisational support to the Silk improvement of its employees’ management teams, project, functional and Group employees took part in various of Victory in the Great Patriotic War. In Way 2013 international rally, performing skills. We strive to ensure In 2012-2013, 3,871 employees passed line managers, as well as the management charity events, including the Prepare addition, the Group regularly provides flights and providing air navigation and training courses at the Corporate University. talent pool. As a result of the work of the Children for School initiative aimed at assistance to Organisations such as the aeronautic support. that more than 70% of the In 2012, in addition to the curriculum, 47 Corporate University, young professionals supporting low income families. It also Ulyanovsk Regional Hospital for War Group’s strategic objectives are seminars on the Code of Work Ethics were have been promoted to key positions in the supported a charity event to raise funds for Veterans, the City Society of Disabled In 2012-2013, Volga-Dnepr also continued implemented with the involvement carried out. In 2013, within the School of Group. the construction of the Spiritual Centre for People, and Regional Gerontology Centre. to sponsor rugby competitions. financier and economist, the School of children and youth on the territory of the of specialists trained at the procurer, the School of personal assistant parish church of St. Nicholas in Ulyanovsk. Support of culture and sports Corporate University and the School of management reserve, For many years, Volga-Dnepr Airlines’ flight activities Volga-Dnepr held 52 training events. 33 service has provided help and patronage for Galina Isaykina children from the Cherdaklinsky orphanage For many years, Volga-Dnepr Group has Director of Corporate Education department 1,199 people Rainbow. In 2013, Volga-Dnepr Group been actively participating in the cultural provided assistance for a boarding school and sporting life of the country. In 2012, were trained in 2013 in the Khabarovsk region after it was badly the company supported the ‘World of damaged by flooding. 772 employees of Childhood’ musical project for gifted the company participated in a campaign to children organised by the Ulyanovsk provide funding for the purchase of a diesel Regional Philharmonic Hall. This project

CORPORATE UNIVERSITY

VOLGA-DNEPR GROUP VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013

ANNUAL REPORT 2012-2013 84 SOCIAL RESPONSIBILITY SUSTAINABLESOCIAL RESPONSIBILITY DEVELOPMENT 85

Ecology

Upgrading and modernisation Taking care of the environment is one of the The Group’s aircraft fleet includes the most important targets of Volga-Dnepr’s upgraded IL-76TD-90VD and modern Boeing of the Volga-Dnepr Airlines, activity and the Group strives to meet the latest 747 freighters, including the latest Boeing 747- AirBridgeCargo Airlines and Atran international environmental standards in order 8F aircraft. These aircraft positively impact the Cargo Airlines' aircraft fleets help to ensure the highest level of environmental overall fuel efficiency of the Group and ensure safety. its compliance with the highest environmental the Group to reduce emissions standards. of harmful substances into the When implementing environment protection atmosphere and minimise noise policy Volga-Dnepr Group adheres to the In 2013, as part of the environmental policy of following principles: the Group, internal regulations were updated pollution. for production and consumption waste • Plan and carry out activities in accordance management, and environmental protection with the requirements of Russian and internal documents were developed, including international legislation for environmental Guidelines for identifying the environmental protection. impact of the Group's activities.

• Use equipment, technologies, materials The Group is constantly working to improve 5 and technological processes that comply energy and environmental efficiency, reduce latest generation with current environmental requirements and pollution and its negative impact on the Boeing 747-8F aircraft provide the potential to reduce harmful effects environment. In 2013, the Group introduced a on the environment. week-by-week system to monitor supply and exhaust ventilation control, as well as a control • Increase awareness of the Group’s system for reducing human impact on the employees of all environmental aspects environment. within the main, supporting and management processes of the Group. During 2013, field measurements of environmental indicators were conducted as • Ensure transparency of environmental a part of industrial environmental monitoring. protection activites for all stakeholders. Environmental quality standards were applied or extended for the airlines of the Group. The • Maintain reliable accounting, analysis Group aims to outperform environmental safety and reporting of the actual environmental standards. In particular, the permitted volume performance of the Group. of waste for Volga-Dnepr Airlines in 2013 was set at 1,218.05 tons (RUB 2,191,392 fee), and • Maintain an effective system of the actual amount of waste was 570.9 tons. environmental management for the ongoing reduction of the Group's negative impact on the environment.

The Group works proactively to improve the environmental efficiency of its fleet. Upgrading and modernisation of the fleets of Volga-Dnepr Airlines, AirBridgeCargo Airlines and Atran Cargo Airlines contributes to the reduction of emissions of harmful substances into the atmosphere and helps to minimise noise pollution levels.

VOLGA-DNEPR GROUP ANNUAL REPORT 2012-2013 Volga-Dnepr Managing Company 17/4 Krylatskaya str. Moscow, Russia 121 614 Tel.: +7 495 755 6850 / 755 7836 Fax +7 495 755 6851 E-mail: [email protected] [email protected]

Charter operations

Ulyanovsk, Russia Tokyo, Japan 14 Karbyshev str Volga-Dnepr Japan Russia, Ulyanovsk, 432072 Rinku-Kaihatsu # 1, Centre building 5F, Tel .: +7 8422 590059 Room # 521 Fax: +7 8422 590142 / 202675 1-2, Goryo bokujyo, Sanrizuka, E-mail: [email protected] Narita, Chiba, Japan 282-0011 Tel .: +81 3 5777 4029 E-mail: [email protected] Stansted, United Kingdom Volga-Dnepr UK Endeavour House, Coopers End Road, Sharjah, United Arab Emirates London-Stansted Airport, Essex, Volga-Dnepr Gulf CM24 1AL, UK Free Zone, Sharjah International Airport, U.A.E. Tel .: +44 1279 661166 Tel .: +9 716 557 0237 Fax: +44 1279 661103 Fax: +9 716 557 0238 E-mail: [email protected] E-mail: [email protected]

Houston (TX), USA Beijing, China Volga-Dnepr Airlines Volga-Dnepr China Town Centre Plaza 2006 Air China Building, 9400 Grogans Mill Rd., Suite 220 36 Xiaoyun road, The Woodlands, Tx 77380 Chaoyang district, Beijing, China 100027 Tel .: +1 832 585 8611 Tel .: +86 10 8447 5502 Fax: +1 832 585 8618 Fax: +86 10 8447 5501 E-mail: [email protected] E-mail: [email protected]

Shanghai, China Volga-Dnepr China Office 3105, Maxdo Centre 8 Xingyi road, Shanghai 200036, PRC Tel .: +86 21 5208 2269 Fax: +86 21 5208 0508 E-mail: [email protected]