FROM THE HEART OF EURASIA

ANNUAL REPORT 2015 Table of Contents AIR ASTANA AT A GLANCE 2 HIGHLIGHTS OF 2015 4 5-YEAR FINANCIAL AND OPERATIONAL HIGHLIGHTS 6 KEY EVENTS OF 2015 8 OUR NETWORK 10 OUR FLEET 14 STRATEGIC ACHIEVEMENTS AND OUTLOOK 20 STRATEGIC ACHIEVEMENTS IN 2015 21 STRATEGIC GOALS FOR 2016 22 LETTER FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS 24 LETTER FROM THE PRESIDENT & CEO 26 OUR COMPETITIVE ADVANTAGES 32 MANAGEMENT REPORT 40 STRATEGIC AND COMMERCIAL PLANNING 40 SAFETY 42 FLIGHT OPERATIONS 45 ENGINEERING AND MAINTENANCE 46 IN-FLIGHT SERVICES 48 GROUND SERVICES 49 MARKETING AND SALES 51 IT AND E-BUSINESS 54 RISK MANAGEMENT 60 SUSTAINABILITY REPORT 68 OUR PEOPLE 68 OUR COMMUNITIES 71 OUR ENVIRONMENT 72 CORPORATE STRUCTURE 74 MANAGEMENT TEAM 75 CORPORATE GOVERNANCE REPORT 84 INTRODUCTION AND KEY PRINCIPLES 84 GOVERNANCE BODIES AND SHAREHOLDERS 85 GENERAL MEETING OF SHAREHOLDERS 86 BOARD OF DIRECTORS 88 COMMITTEES OF THE BOARD OF DIRECTORS 96 INTERNAL AUDIT SERVICE 104 CORPORATE SECRETARY 106 DIVIDEND POLICY 107 FINANCIAL CALENDAR FOR 2016 108 EXTERNAL AUDITOR 109 FINANCIAL REPORTING 114 GLOSSARY 169 REPRESENTATIVE OFFICES 172 CONTACTS 176

1 ANNUAL REPORT 2015

OUR MISSION OUR VALUES

From the Heart of Eurasia we are building one of the finest airlines in the world Hospitable

We treat every person with whom we come into AIR ASTANA OUR GOALS contact, customer or colleague, as a guest We are warm, friendly and tactful, always willing to help AT A GLANCE ƒ We implement the highest safety standards ƒ We are and must be the most reliable airline in Efficient the region with the highest standards of customer service We are professional people who produce high quality results with knowledge and style We ABOUT AIR ASTANA ƒ We profitably grow and improve our fleet, route maximise our skills and use our time efficiently network and product Air Astana, the flagship carrier of Kazakhstan, is a fast-growing international airline with a Active world-class track record of safety and technical expertise. We are a joint venture between the ƒ We work to the highest standards of integrity Sovereign Wealth Fund “Samruk-Kazyna” (51%) and the UK’s BAE Systems (49%). We are a full and business ethics We anticipate and respond to the needs of member of the International Air Transport Association (IATA) and the first Kazakhstani carrier ƒ We recruit, appraise and reward staff based on customers and colleagues We do things to the very to have Part 145 certification to perform aircraft maintenance from the European Aviation Safety merit and enable them to develop to their maximum best of our ability and are always looking for ways Agency (EASA). We are an IATA Operational Safety Audit (IOSA) accredited airline. Air Astana potential to improve has achieved a 4-star Skytrax rating for four consecutive years and we were the first carrier in ƒ We are a socially responsible organisation Eastern Europe and the CIS to achieve this rating. In 2015, we were named the Airline Market Reliable Leader of the Year at the 41st annual Air Transport World Awards. ƒ We are a global ambassador for Kazakhstan We produce reliable and consistent quality in all of our activities We always keep our promises

Trustworthy

We are honest people who never compromise our integrity Customers and colleagues can trust us

2 3 ANNUALГОДОВО ЙREPORT ОТЧЕТ 2015

REVENUE ($MN) & EBITDAR (%) NET PROFIT ($MN) & DIVIDEND PAYOUT HIGHLIGHTS OF 2015 1,000 25% 80 60% 50% 800 20% 60 FINANCIAL HIGHLIGHTS 600 40% 15% 40 30% 400 20% 10% 20 200 10% REVENUES OPERATING EXPENSES - 5% 0 0% 2011 2012 20132014 2015 2011 2012 2013 2014 2015 US$761.7 million, down 19% US$728.7 million, down 13% year-on-year Revenue EBITDAR% Net Profit Dividend Pay-out % (previous year) year-on-year Operating expenses fell to US$728.7 (for previous year) Revenues stood at US$761.7 million, down million, compared with US$836.3 million from US$934.8 million in 2014, primarily as in 2014, the result of strong cost controls PASSENGERS (’000) FLIGHT HOURS & SEGMENTS (’000) a result of the devaluation of the tenge and reduced local currency costs due to and broader macroeconomic conditions tenge devaluation 2,500 100 2,000 80 1,500 60 OPERATING PROFIT NET PROFIT 1,000 40 US$33.1 million, down 66% year-on-year US$48.7 million, up 151% year-on-year 500 20 - - Operating profit fell to US$33.1 million, Net profit jumped to US$48.7 million, 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 down from US$98.5 million in 2014 compared to US$19.5 million in 2014, due Domestic International Flight Hours Segments to a focus on costs, successful hedging of currency exposure and increased finance income ASK & RPK (MN) ASK DOMESTIC & INTERNATIONAL (MN)

12,000 12,000 10,000 10,000 8,000 8,000 OPERATIONAL HIGHLIGHTS 6,000 6,000 4,000 4,000 2,000 2,000 PASSENGERS CARRIED CAPACITY - - 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 3.86 million, up 2% year-on-year 12.4 billion available seat kilometres, ASK RPK Domestic International We set yet another record, carrying 3.86 up 6% year-on-year million passengers in 2015, 2% higher In 2015, available seat kilometres rose by DOMESTIC RPK (MN) & PLF INTERNATIONAL RPK (MN) & PLF than the 3.77 million carried in 2014, 6% to 12.4 billion, compared with 11.7 despite challenging market conditions billion in 2014 2,750 75% 7,000 69% 2,500 70% 6,000 67% 2,250 5,000 65% PASSENGER LOAD FACTOR CARGO 2,000 60% 4,000 63% 1,750 3,000 61% 63%, down 2% year-on-year 16,639 tonnes 1,500 50% 2,000 59% 1,250 1,000 57% Passenger load capacity stood at 63% in Cargo, baggage and post carriage 1,000 40% - 55% 2015, compared to 65% in 2014 decreased by 12% to 16,639 tonnes in 2015, 2011 2012 20132014 2015 2011 2012 20132014 2015 down from 18,960 tonnes in 2014 Domestic RPK Load Factor International RPK Load Factor

4 5 ANNUAL REPORT 2015

5-YEAR FINANCIAL & OPERATIONAL HIGHLIGHTS

Profit & Loss (‘000) 2011 2012 2013 2014 2015 Operating costs % of total 2011 2012 2013 2014 2015

Total revenue 772,883 875,075 966,904 934,780 761,747 Fuel 25% 31% 31% 30% 23% Domestic 298,511 332,746 346,137 317,132 244,466 Employees & crew 18% 16% 15% 16% 16% International 459,520 527,075 600,356 597,491 501,920 Engineering 12% 9% 9% 9% 13% Other 14,852 15,254 20,411 20,157 15,361 Handling 12% 12% 13% 13% 14% Passenger service 10% 10% 10% 10% 11% Fuel (178,569) (246,820) (280,007) (252,108) (165,263) Selling 8% 6% 5% 5% 5% Employee & crew (126,840) (131,578) (138,566) (130,370) (113,332) Lease & depreciation 11% 11% 12% 14% 15% Other operating costs (398,192) (420,515) (476,117) (453,811) (450,094) Other 4% 4% 3% 3% 3%

Operating Profit 69,282 76,162 72,214 98,491 33,058 Operating margin 9% 9% 7% 11% 4% EBITDAR % of revenues 19 0% 18 3% 18 0% 22 1% 18 1% Profit before tax 77,444 79,221 64,925 27,433 62,294 WC % of revenues 0 9% 9 8% 11 2% 17 3% 24 60% Income tax expense (16,184) (18,145) (13,561) (7,980) (13,553) Net debt/(equity) (61%) 16% 98% 100% 258% Effective tax rate (%) 21% 23% 21% 29% 22% RoE 27% 23% 17% 7% 28% RoIC 34% 22% 12% 13% 6% Net Profit 61,260 61,076 51,364 19,453 48,741 Operating data 2011 2012 2013 2014 2015 EBITDAR 146,857 160,273 173,657 206,863 137,710 Dividends paid 19,398 18,204 21,120 8,517 7,897 Passengers ('000) 3,057 3,245 3,675 3,770 3,862 Pay-out as % previous year Net Income 25% 30% 35% 20% 50% % growth 19% 6% 13% 3% 2% Domestic 1,959 1,986 2,118 2,184 2,281 Balance Sheet (‘000) 2011 2012 2013 2014 2015 International 1,099 1,259 1,557 1,586 1,581 Transit 57 88 185 202 186 Cash & equivalents 32,137 123,527 128,097 185,613 210,723 Inventories 29,151 42,760 55,247 48,890 30,245 Cargo, mail & excess baggage (tonnes) 19,692 22,076 23,810 18,960 16,639 Prepayments 31,776 21,256 49,214 26,254 15,871 Segments 32,221 34,634 38,891 40,218 42,408 Guarantee deposits 1,410 1,585 5,146 1,034 28,398 Passengers per segment 95 94 94 94 91 Trade receivables 35,119 46,322 32,706 42,045 20,880 Flight hours 79,006 84,501 96,344 98,982 104,509 Other 8,356 5,969 13,609 22,029 8,319 Avg sector length (km) 1,906 1,972 2,028 1,906 1,919 Total Current Assets 137,949 241,419 284,019 325,865 314,436 Fleet (avg number of aircraft) 23 6 25 3 26 6 30 4 30 0 Fleet average age (years) 11 2 8 2 6 4 5 5 6 8 Property, plant & equipment 34,101 229,897 562,856 536,737 269,845 Intangible assets 3,152 2,593 2,139 1,388 693 ASK ('000) 8,507,991 9,467,058 11,395,698 11,668,440 12,417,309 Prepayments for long-term assets 68,666 95,053 23,798 11,401 10,351 % growth 14 1% 11 3% 20 4% 2 4% 6 4% Guarantee deposits 17,302 17,601 12,799 10,861 15,398 Domestic 3,086,211 3,279,190 3,548,688 3,709,008 4,172,806 Bank deposits 117,523 - - - - International 5,421,781 6,187,868 7,847,010 7,959,432 8,244,503 Other non-current assets 7,984 - 5,448 3,270 3,031 RPK ('000) 5,828,398 6,397,846 7,452,866 7,549,907 7,779,756 Total Non-Current Assets 248,728 345,144 607,040 563,657 299,318 % growth 14 7% 9 8% 16 5% 1 3% 3 0% Domestic 2,302,900 2,333,928 2,519,159 2,574,602 2,774,454 Loans & financial leases - 28,274 45,752 40,069 40,640 International 3,525,498 4,063,918 4,933,706 4,975,306 5,005,302 Provision for maintenance 16,220 16,712 16,049 6,092 16,496 Trade payables 52,576 53,040 50,129 56,202 36,752 Load factor 69% 68% 65% 65% 63% Deferred revenue 61,075 57,440 63,240 51,818 32,876 Domestic 75% 71% 71% 69% 66% Other 793 280 266 10,300 180 International 65% 66% 63% 63% 61%

Total Current Liabilities 130,664 155,746 175,436 164,481 126,944 RTK ('000) 587,978 651,580 752,922 747,719 761,891 Revenue per Passenger (US$) 253 270 263 248 197 Loans & financial leases - 140,489 382,887 415,358 375,789 Net profit per passenger (US$) 20 19 14 5 13 Provision for maintenance 12,086 4,132 7,098 16,982 31,379 ASK Yield (US¢) 9 1 9 2 8 5 8 0 6 1 Deferred tax liability - 3,515 18,120 23,104 - Operating costs per ASK (US¢) 8 3 8 4 7 9 7 2 5 9 RPK Yield (US ¢) 13 3 13 7 13 0 12 4 9 8 Total Non-current Liabilities 12,086 148,136 408,105 455,444 407,168 Employees (average) 3,358 3,750 4,069 4,356 4,583 Total Equity 243,927 282,681 307,518 269,597 79,642 Working capital (WC) 7,285 85,673 108,583 161,384 187,492 Note: statistical data exclude charter flights Net debt/(net cash) (149,660) 45,236 300,542 269,814 205,706 Invested capital 237,017 463,036 762,962 703,909 403,031 Capital expenditure 13,323 205,326 369,457 109,030 19,804

6 7 ANNUAL REPORT 2015

KEY EVENTS OF 2015

January March June September

The airline becomes the first Kazakhstan airline Air Astana receives the CIS Business Leader Award Air Astana named best airline in Central Asia and Air Astana launches its innovative MyUpgrade to install check-in kiosks, with the first terminals at International Economic Forum of CIS Member India and has 4-Star rating re-affirmed in the annual tool, allowing economy class passengers to bid for installed in Shymkent States held in Moscow Skytrax World Airline Awards business class seats on eligible flights, enhancing We launch our three-times weekly service from their travel experience and creating a new source of Astana to Paris, expanding our Western European revenue for the airline February network August

Air Astana launches its innovative lie-flat Economy We announce a new codeshare agreement with October Sleeper Class product on Boeing 757 services to May Bangkok Airways, linking Air Astana’s passengers Europe with Thailand most renowned beach destinations We re-launched four-times weekly service from We are named Airline Market Leader of the Year at Air Astana opened a training centre for engineers Air Astana became the official airline of Astana Astana to Dubai the 41st Annual Air Transport World Awards, making in Almaty, with certification to EASA P147 standards EXPO-2017, a major international event covering us the youngest airline to ever win such prestigious by both the Kazakhstani and European aviation the theme of Future Energy and expected to attract recognition authorities, and training in 26 disciplines more than 2 million visitors to the nation’s capital December

The European Commission removes Air Astana from a list of airlines limited from operating in the European Union, allowing the airline to expand its European flight network moving forward

8 9 ANNUALГОДОВОЙ REPORT ОТЧЕТ 20152015

OUR NETWORK

Kostanay ASTANA Pavlodar In 2015, we served 21 domestic and 43 international routes, including four Uralsk seasonal ones. In addition, we have code-sharing agreements with Air India, Asiana Airlines, Austrian Airlines, Bangkok Airways, Etihad, KLM and Aktobe Turkish Airlines, as well as interline partnership agreements with more than Karaganda 100 other carriers, allowing passengers to choose from over almost 400 destina- Oskemen tions worldwide. Following the reporting period, in early 2016 we announced Atyrau code-sharing agreements with Air France and Hong Kong Airlines.

Kyzylorda ALMATY Aktau Taraz Shymkent

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5 ANNUAL REPORT 2015

Yekaterinburg Saint Petersburg Оmsk Novosibirsk Moscow Каzan Kostanay ASTANA London Hannover Аmsterdam Кiev Аtyrau Frankfurt ALMATY Paris Aktau Urumqi

Tbilisi Bishkek Tashkent Istanbul Baku Dushanbe Beijing Seoul

Antalya

Dubai Delhi Hong Kong

Current routes Seasonal routes

Bangkok

Ho Chi Minh

Kuala Lumpur

12 13 ANNUALГОДОВОЙ REPORT ОТЧЕТ 20152015

OUR FLEET

Air Astana operates a modern fleet of 30 registered airline and also belong to the IATA Fuel Western-manufactured aircraft and plans to expand Quality Pool (IFQP), a group of airlines that actively this to more than 35 by 2020. Air Astana has a proven share fuel inspection reports and workloads at track record of safety and expertise. We are an IOSA locations worldwide.

BOEING 757 AIRBUS A319 Operates on long haul international and domestic routes Operates on short haul international and domestic routes

Quantity 5 Quantity 1 Cruise speed 870 (km/h) Economy class 150 (seats) Cruise speed 900 (km/h) Economy class 114 (seats) Max. take off weight 115,666 (kg) Business class 16 (seats) Max. take off weight 64,000 (kg) Business class 12 (seats) Range 7,222 (km) Crew 2 (pilot) Range 6,850 (km) Crew 2 (pilot)

BOEING 767 AIRBUS A320 Operates on long haul international and domestic routes Operates on short and medium haul international and domestic routes

Quantity 3 Quantity 8 Cruise speed 850 (km/h) Economy class 190/193 (seats) Cruise speed 870 (km/h) Economy class 132/151 (seats) Max. take off weight 184,612 (kg) Business class 30 (seats) Max. take off weight 77,000 (kg) Business class 16/28 (seats) Range 11,070 (km) Crew 2 (pilot) Range 6,150 (km) Crew 2 (pilot)

EMBRAER 190 AIRBUS A321 Operates on short and medium haul international and domestic routes Operates on short and medium haul international and domestic routes

Quantity 9 Quantity 4 Cruise speed 890 (km/h) Economy class 88 (seats) Cruise speed 870 (km/h) Economy class 147/151 (seats) Max. take off weight 50,300 (kg) Business class 9 (seats) Max. take off weight 89,000 (kg) Business class 28 (seats) Range 4,500 (km) Crew 2 (pilot) Range 5,950 (km) Crew 2 (pilot)

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CHARYN CANYON 16 17 ANNUAL REPORT 2015

Welcome to Kazakhstan!

Kazakhstan is located in the heart of Eurasia. The first acquaintance with our homeland starts on board Air Astana’s aircraft. The country’s image begins with us.

WELCOME ON BOARD AIR ASTANA! 18 ANNUAL REPORT 2015

STRATEGIC ACHIEVEMENTS STRATEGIC ACHIEVEMENTS AND OUTLOOK IN 2015

OUR STRATEGY ƒ We are developing a heavy maintenance Air Astana Freed from all Maintained Our engineering capability with extensive workshop Restrictions on Flying to the EU Skytrax 4-Star Rating ƒ The Strategy of Air Astana for 2011–20 was facilities, enabling us to carry out major aircraft approved by the Shareholders in January 2011 and maintenance in-house, provide a centre of excellence Air Astana saw all restrictions on flying in A key indicator of our world-class service delivery, remains our development roadmap with the five- in the region, and allow us to maintain similar types the European Union lifted and we continued to Air Astana was the first carrier in Eastern Europe and year business plan updated annually of aircraft for other airlines demonstrate that the airline has safety systems the CIS to receive this award in 2012 We won the and procedures fully consistent with international 4-Star rating at the Skytrax World Airline Awards for ƒ We seek to continue to grow profitably, ƒ The Ab-Initio pilot training programme is standards, allowing us to expand our network in a fourth straight year 2015, with the rating based on enhancing our position as the regional leader in creating a pool of a highly qualified and experienced Western Europe passenger experience across business and economy Central Asia Kazakhstani pilots comparable with that of any classes Air Astana was also named Best Airline, major international operator Central Asia and India, and Best Airline Staff Service, ƒ Air Astana operates modern aircraft – notably Made a Decision on Replacing Central Asia and India for the third year running the Embraer E190, the A320 family, the B757 and ƒ Air Astana is at the forefront of human resources the Boeing 757 Fleet We also won Air Transport World airline of the year, the new B767 – and plans to introduce the Boeing and personnel development The Company is underlining our ability to compete on a global level 787 Dreamliner These aircraft provide us with the recognised throughout Kazakhstan and by its own Last year we entered into an agreement to most modern fleet in the region employees as being a first-class employer that acquire 11 Airbus A320 NEO aircraft, for delivery applies best international practices in management beginning in 2016 and through 2019 This purchase Continued Technological ƒ We forecast total passenger traffic to grow to and invests in continual training to develop the will, in part, replace our ageing Boeing 757 fleet, Leadership over 5 8 million passengers in 2020 potential of all of its employees aircraft we use principally on international routes The introduction of the A320 NEO will make our We obtained approval for our Electronic Flight Bag ƒ Air Astana has become the benchmark airline ƒ Air Astana is recognised as having a corporate already young fleet younger, more reliable and system on Boeing and expect to deploy on Boeing in the region, with cutting-edge distribution governance system that meets international best fuel-efficient and Embraer in 2016, enhancing information flow and revenue management systems, web site, practices and seeks to maintain and enhance this and reducing waste Air Astana’s website remained and corporate application and management system the number one e-commerce site in Kazakhstan information systems and we are committed to Development of again in 2015 and we launched a new, more intuitive maintaining this status ƒ The airline has an excellent safety system and Maintenance Capacity booking engine to enhance customer experience record, and it will continue to develop this in all parts and deliver more travel and fare options We also of our business operations During 2015, we maintained a technical dispatch launched check-in kiosks at several Kazakhstani reliability rate of 98% To ensure continued airports using our own, in-house technology leadership we began construction of a new, state- of-the-art Maintenance Centre in Astana allowing us to enhance significantly our in-house maintenance Developed In-house Training capabilities Last year we also obtained EASA Part 145 Base Maintenance approval Last year, we also completed our project to establish a world-class technical training school in Almaty We obtained EASA Part 147 certification and Civil Aviation Committee training approval for the school In the meantime, our Ab-Initio programme prepared its first graduates to receive captain’s stripes in 2016

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STRATEGIC GOALS FOR 2016

Manage the Challenging Maintain EU Flight Develop our Maintenance Base Maintain and Improve Macroeconomic Environment Ban Exemption Service Quality The continued development of our in-house Air Astana has taken a number of measures We will continue to work with European maintenance capacity, through both investment We are committed to keeping and improving to manage the devaluation of the tenge and regulators to ensure our exemption from the ban in facilities and training, makes us both safer and our Skytrax 4-Star rating for a fifth year running in other challenges posed by the macroeconomic on Kazakhstani carriers is maintained We will more cost efficient by reducing the need to send 2016 We rely on continuous training of our front- situation in domestic and CIS markets Hedging also maintain our work with local regulators to aircraft abroad for servicing We plan to complete line personnel and continued investment in our policies represent one immediate measure We achieve, over the longer term, to improve the construction of our new Astana Maintenance facility cabins, inflight entertainment systems, menus have also focused on growing our international compliance of all Kazakhstani carriers so that all hangar in 2016 and other details that make the difference for our transit traffic, successfully growing non-CIS traffic of the country’s airlines will be removed from the customers and plan to launch new routes to Tehran and Ulan black list over the longer term Bator that will drive both direct and transit traffic Continue Fleet Development We have developed products such as Air Astana holidays to grow US-dollar traffic In 2016, we expect to take delivery of the first Airbus A320 series NEO aircraft We are also preparing to take delivery of our first Boeing 787 aircraft by the end of the decade

22 23 ANNUAL REPORT 2015

LETTER FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS

Since the airline’s founding, Air Astana has helped linking Western Europe, Central Asia and East Asia maximising the profitability and sustainability of our drive a revolution in the Kazakhstani aviation market The decision last year by EASA to end restrictions on business over the long term Crucially, we have led this revolution without reliance flights to the European Union represented a major step on subsidies and have financed the purchase of 11 forward, and reflection of our sterling safety record, I believe we have a major role to play in helping new aircraft without recourse to additional state or which, along with the launch of our Astana-Paris route, to fulfil one of President Nursultan Nazarbayev’s 100 shareholders’ funds or guarantees In recent years, expands our ability to develop European direct and Steps Towards a New Nation announced in spring 2015 we have introduced a new generation of modern transit routes These steps acknowledge that, in the face of strong aircraft to domestic and international routes and macroeconomic headwinds and multi-year low market have built an all-jet fleet of 30 aircraft and have Similarly, the increase in frequencies to China, as prices for oil and gas, the country’s future prosperity plans to take additional aircraft deliveries through well as destinations, allows us to further develop the require the acceleration of modernisation It is fitting 2020 to expand our range and number of routes enormous potential of this market Just one example that one of these steps includes the upgrading of the of the market’s scale, the city of Urumqi and Xinjiang country’s civil aviation infrastructure and regulation In addition to advanced Airbus, Boeing and province have a population of approximately 22 million Embraer jet aircraft, we have introduced state-of- people In line with Kazakhstan’s commitment to the-art technology solutions such as the Electronic modernisation and economic diversification, Air Flight Bag for flight crew and Crew Pads for cabin But our success is about more than our success in Astana became a sponsor and the official airline of crew to eliminate waste and ensure more accurate opening and maintaining routes, it is the result of a EXPO-2017 in Astana The theme of the exposition is and safe operations Last year, we also began relentless focus on safety and passenger experience Future Energy and its role in developing a diversified construction of a state-of-the-art maintenance base As flag carrier, we have insisted on a consistent and sustainable economy I believe our participation in Astana, backed by a loan from the European Bank world-class level of customer service on board, on the reflects our commitment to reducing our own impact for Reconstruction and Development, allowing us phone and in our ticket offices, earning the airline an on the environment through new technology, as well to service our own and third-party aircraft year unprecedented 4-Star Skytrax rating for four straight as playing our part in building a more diverse economy round It is also worth noting that our website, re- years launched last year, is Kazakhstan’s single largest The year 2016 promises to be a challenging one due e-commerce site We have also proven to be global innovators, to the macroeconomic situation in our domestic market catching international attention with the launch and the broader CIS I believe we can once again rise Beyond technology, we are also investing in of our unique lie-flat Economy Sleeper product up and overcome these challenges because of the people Our Ab-Initio initiative, a major training launched in 2015 It has proved to be a hit with strength of our organisation and our lean operational programme for local pilots, is due to graduate its passengers and gained the attention of the global model More broadly, I also see that Kazakhstan’s first pilots in 2016 More than 80% of our flight crew aviation industry focused on a fast-growing carrier liberalised economy and position at the heart of Eurasia In 2015, Air Astana delivered another strong are from Kazakhstan and we have developed a from Central Asia will help ensure her long-term prosperity financial and operational performance despite generation of talented and highly qualified flight and considerable external challenges The Company ground crew Our cabin crew training is also world- Our commitment to safety and efficiency also On behalf of the Board of Directors and the boosted profitability while maintaining an class and allows us to deliver passenger experience helped us deliver an 89 9% on-time rating, an shareholders, I would like to thank the entire Air exemplary safety record More broadly, Air Astana that is second-to-none, in three or more languages impressive result given the challenging winter months Astana team for their hard work and the progress remained one of Kazakhstan’s leading, innovation Notably, this high level of service, reliability and safety achieved in 2015 driven companies, strengthening the local economy Aided by these investments in equipment and is accompanied by some of the lowest unit costs of through tax contributions, enabling commerce as people, Air Astana has turned Kazakhstan into an any airline in the world, allowing us to keep our fares Yours faithfully, well as the transfer of technology and best practices aviation hub for Eurasia, with growing transit traffic competitive, even in challenging economic times, and Nurzhan Baidauletov

24 25 ANNUAL REPORT 2015

LETTER FROM THE PRESIDENT & CEO

challenges this year, which I shall discuss in detail negotiated with refineries on a monthly basis, including I referred earlier to unit cost savings Our unit cost below transport to, and storage at, local airports In the past for the year was US¢ 5 9 per Available Seat Kilometre airport monopoly suppliers dictated fuel prices to all (ASK) This makes easily us one of the most cost- Total airline revenue fell by 19% from US$934 8 airlines, often at comparatively highly inflated levels, efficient full service airlines in the world, with unit million in 2014 to US$761 7 million The main reason and this remains the case for foreign airlines operating costs lower even than some well-known Low Cost for this was, of course, the decision in August by the to Kazakhstan, however in 2009, Air Astana persuaded Airlines, notwithstanding the greater complexity and Kazakhstan Central Bank to allow the Kazakh tenge the government to allow direct negotiations with structural cost of operating a multi-class multi-fleet to free float, as opposed to its previous policy of refineries Our fuel management team has taken full airline However, cost savings alone cannot drive long- maintaining a fixed exchange rate to the US dollar, advantage of this to negotiate very competitive prices term success in an industry where cost increases, be through direct intervention in currency markets from both Kazakhstan and regional refineries, and our they airport, navigation, staff, fuel, aircraft or capital, where necessary Whilst there is no question that success in 2015 owes much to their excellent work are inevitable Regional economic weakness is a fact this was the correct decision, in light of oil price of life and likely to remain so for some time, therefore and neighbouring country currency weakness (in In terms of both operations and service levels, it is essential that we develop what we call our particular that of the Russian ruble), the fact that it 2015 was another successful year Punctuality “extended home market” to generate more transit happened so late in the recessionary cycle probably improved to 89 9%, our highest ever Having joined business through our Astana and Almaty hubs If we exaggerated the downside effect on the tenge, which the Association of Asia Pacific Airlines (AAPA) in are able to leverage our low cost base to profitably at one point more than halved in value Air Astana late 2014, it was interesting to record our first full- generate more network business, our relative generates more than 60% of its sales in tenge and year punctuality comparison with many of the finest dependence on regional markets will be reduced therefore dollar-denominated revenue unavoidably airlines in the world, and I am pleased to say that Air Redesign and redevelopment of the route and fleet suffered an immediate and steep fall This was Astana ranked third, just behind Singapore Airlines structure are therefore orders of the day for 2016 and exacerbated by a fall in demand, caused by market and Japan Airlines At the Skytrax Global Airline if we get these right, whilst maintaining our core uncertainty and reduced relative spending power of Service Awards at the Paris Air Show in June, we strengths of high operational and service standards, Kazakhstan residents travelling overseas were awarded “Best Airline, Central Asia and India” our future will be bright indeed and “Best Staff Service, Central Asia and India” for the Revenue loss was largely mitigated by a drop in fourth and third consecutive years respectively We I would like to conclude as ever by thanking unit cost, principally a result of lower tenge costs, successfully launched new flights between Astana customers, shareholders, partners in government, approximately 30% of the total, and reduced jet fuel and Paris, Seoul, Bangkok and Tbilisi, and increased and of course my colleagues, for their usual bills Fuel for all airlines represents the single greatest frequencies on many domestic and regional routes dependable support In October, I marked ten expense, typically between 25% and 40% depending At the Paris Air Show we announced the acquisition of years in this job, though I am far from being the on the prevailing price, and is considered a US dollar 11 Airbus NEO aircraft for delivery between 2016 and longest-serving member of the management Bottom line figures of a profit after tax of US$48 7 cost given the pricing currency of its source commodity 2020, including a fleet A321 Long Range NEOs, which team, let alone of the wider airline It is this rock- million and net margin of 6% reveal a substantial In most countries to which Air Astana flies, fuel and will replace the Boeing 757s in 2019 The first A320 solid stability that is the absolute foundation of recovery from 2014, for which the corresponding oil prices are directly linked through a fixed formula, NEO will be delivered in September 2016 and will Air Astana’s success figures were US$19 5 million, and 2% respectively however this is not the case in Kazakhstan and much be powered by PW1100G geared turbofan engines, Notwithstanding a mid-year change in currency of the CIS Although Kazakhstan represents 70% of which we expect will save up to 12% of CO2 emissions Yours faithfully, hedging policy, the performance reflects the fact our fuel uplift, because there is no formal oil price/ in comparison with the present A320 Classics Peter Foster that the airline was able to rise to some significant fuel price linkage, contracts have to be individually

26 27 ANNUAL REPORT 2015

28 29 KAYINDY LAKE ANNUAL REPORT 2015

Kazakhstan is a country of unique natural phenomena that surprise the traveler with their beauty and incredible combinations. These are mountain peaks covered with ice, at the foot of which apple gardens lie; these are the clear, smooth waters of mountain lakes framed by spiny rocks; these are vast deserts with hot burning sun in the afternoon and a cold chilled air at night.

Air Astana hopes you enjoy every moment of the flight with our hospitable service.

AIR ASTANA HAS THE BEST AIRLINE 30 STAFF SERVICE IN CENTRAL ASIA AND INDIA ANNUAL REPORT 2015

CIS markets, including Russia and Ukraine Slow Chinese authorities allowing us to increase traffic OUR COMPETITIVE ADVANTAGES growth in Russia, for instance, has hit transit rights and points traffic from Kyrgyzstan, Tajikistan and Uzbekistan Our geographical location allows for connecting as there are fewer expatriate workers going to flows between Asia and Europe using our narrow Russia from these countries body fleet at both ends while any Asian or European Nonetheless, over the longer term, the CIS carrier would need to operate the same route on In 2015, we delivered another year of growth in passenger numbers despite economic retains enormous growth potential, with Airbus wide-bodied aircraft This provides Air Astana headwinds, while significantly enhancing profitability and investing in the future of our forecasting 4 9% average annual RPK growth over with a structural and unbeatable competitive cost business. We delivered solid results despite powerful macroeconomic headwinds in the the next two decades in the CIS In the meantime, advantage Kazakhstani and broader CIS markets thanks to our competitive advantages. China and the broader Asia-Pacific region are In 2015, we saw an overall decline in key drivers of the global aviation market Airbus international transit traffic numbers, the result Our key competitive advantages remain our highly efficient operations, including a young fleet forecasts 5 7% average annual RPK growth in the of external factors, namely the slowdown in the and growing technical base, as well as the ability to tap the huge potential of our Extended Home Asia-Pacific region through 2034 Europe, another Russian and other CIS economies However, if we Market to develop new passenger flows. We believe we have only just begun to develop the key market for us, is forecast to deliver 3 6% exclude CIS traffic, we saw international transit potential of geographic position at the heart of Central Asia. growth traffic grow year-on-year, driven by new traffic flows in the second half of the year In particular, transit traffic to China grew 11% year-on-year Total Our Extended Home Market transit traffic grew 1% year-on-year, a resilient result in challenging conditions Efficient Cost Structure 5-YEAR RPK & PLF - Reflecting the enormous growth potential of INTERNATIONAL & DOMESTIC our region, our Extended Home Market strategy, For an airline, costs are either fixed (i e launched in 2011, has focused on targeting Our People and Service Offering aircraft, overheads), variable based on load factor the underserved and fast-growing markets of (passenger and cargo volumes), or variable based Central Asia, southern Russia, the Caucasus and Despite our low unit costs, we are an 9,000 80% on utilisation (number of flights and distance Northwest China, a region encompassing around international leader in customer service delivery flown) Service-level based variable costs are 8,000 70% 75 million people The strategy is built on the ideal We have continued to grow our headcount as an harder to adjust and represent about 78% of 7,000 60% geographic location of Kazakhstan in the heart of organisation in the face of tough macroeconomic 6,000 total variable costs A relentless focus on cost 50% Central Asia, providing both direct flights and a conditions, because we continue to grow as a efficiency, without sacrificing service quality, has 5,000 growing transit traffic business Company, serving record passenger numbers and 40% allowed us to maintain and enhance profitability 4,000 For instance, Urumqi and surrounding Xinjiang expanding internationally We had more than in a challenging macroeconomic environment 3,000 30% a relatively small province in Western China has 4,600 employees at the end of 2015 In 2015, Air Astana recorded operating costs 2,000 20% a population of around 20 million, with Astana Since day 1, we have invested in our people per available seat kilometre (ASK) of US¢5 9, providing an ideal transit hub to destinations in the to deliver a world-class level of service on the 1,000 10% down from US¢7 2 in 2014 Revenue per revenue CIS and Western Europe Last year we strengthened ground and in the air In 2015, following an audit, - 0% passenger kilometre (RPK) yield stood at US¢9 8, 2011 2012 20132014 2015 our Chinese business with an agreement with the we retained our 4-Star Skytrax rating, underlining down from US¢12 4 a year earlier The airline’s passenger load factor (PLF), which RPK Domestic (mn) RPK International (mn) has remained relatively steady over the past five PLF Domestic % PLF International % 5YEAR GROWTH IN DOMESTIC, INTERNATIONAL & TRANSIT PASSENGERS '000 years, was 63% (66% on domestic routes and Source: Company 61% on international routes) compared to IATA’s estimate of 80 6% for the worldwide industry 2,500 2,277 in 2015 Our effective cost controls translate to 2,118 2,188 1,986 a much lower break-even load factor, a level at long-term growth potential In the short to 2,000 1,959 which many of our international peers could not medium term, the aviation market tracks the 1,557 1,609 1,580 sustain their profitability economic growth rate of countries and regions 1,500 Air Astana uses the PROS Revenue Management in which an airline operates According to IATA, 1,259 1,099 System, which allows us to dynamically adjust worldwide spending on aviation stood at US$742 pricing and capacity based on demand and billion in 2015, equal to 0 97% of global GDP 1,000 the fares offered by competitors This data Passenger departures grew 6 5% and revenue 539 619 625 and analytics driven tool helps ensure that we passenger kilometres (RPKs) grew by 6 7% 500 305 348 maximise revenues, and not just load factors Over the longer term, the market is expected to deliver growth, with Airbus predicting an average - annual growth rate in global passenger numbers 2011 2012 2013 2014 2015 Our Marketplace of 4 6% through 2034 and growth in RPKs in Transit International Domestic emerging markets of 5 8% over the same period We operate in a global marketplace This global In the short term, our major challenge is slower Source: Company; Transit includes domestic-to-international and international-to-international market is cyclical but nonetheless demonstrates growth in our domestic market and the largest passengers utilising Almaty and Astana airports

32 33 ANNUAL REPORT 2015

our reputation as an airline delivering service to AIR ASTANA AVERAGE FLEET SIZE & flight crew we are training for three basic types European Top 30 airline rating stood at 99 39%, the highest international standards In addition, AVERAGE AGE 2011 15 of aircraft Air Astana’s Boeing 787 order will see the World Fleet reached 99 37% Air Astana has pioneered the HEART programme, its first delivery towards the end of this decade In As we operate flight segments of more than a unique project that clearly outlines clearly 2015, we entered into an agreement to acquire 11 2,000 kilometres, a central challenge is to ensure understood values that should govern the actions 35.0 Airbus A320 NEO aircraft, for delivery beginning in access to maintenance facilities and spare parts at 30.4 30.0 of every employee and be reflected daily in their 2016 and through 2019 This purchase will, in part, distant airports As demonstrated by our Technical 30.0 25.4 26.6 interactions with customers and colleagues, 25.0 23.6 replace our Boeing 757 aircraft – the oldest in our Dispatch Reliability ratings over the past five years, creating one of the best airlines in the world 20.0 fleet with an average age of around 17 years we have consistently lived up to this challenge We have been pioneers in training a new Our fleet age compares favourably with airlines We have made significant investments in both 15.0 11.2 generation of Kazakhstani pilots, through our 8.2 globally and with those that fly in the CIS and our facilities and training to strengthen our local Ab-initio training programme, which is due 10.0 6.4 5.5 6.8 extended home market In particular, it is almost maintenance capabilities This reduces the need to to graduate its first captains in 2016 We have 5.0 half the average fleet age of major CIS operators, send aircraft abroad for repairs and maintenance also invested consistently in training technical 0.0 which averages 12 0 years, and low below the In 2015, we began construction of a maintenance 2011 2012 2013 2014 2015 personnel, hand-in-hand with investment in new average for airlines operating in our international hangar in Astana Due for completion in 2016, technical facilities These investments mean we Fleet average age (years) and domestic markets, which averages 10 8 years* the hangar will provide us with year-round have world-class technical crew to look after our Fleet size (average aircraft) A young fleet, which uses fuel more efficiently, maintenance capability, especially important aircraft, helping us reduce delays and the need to contributes to our reduced carbon footprint and given the harsh winters in the region In addition, send aircraft abroad for servicing Source: Company lower operating and maintenance costs last year we obtained EASA Part 147 certification and Kazakhstan Civil Aviation Committee approval The sheer geographic scale of our domestic for a new, world-class technical training school, Our Young and Efficient Fleet market and low population density – Kazakhstan Our Technical Base allowing us to develop a new generation of skilled has 17 million people but is roughly the size of engineers certified to work on our aircraft Air Astana has a fleet of 30 jet aircraft and, Western Europe – requires aircraft that are not We operate in a country where all airlines, thanks to continued investment, one of the large but have sufficient range In order to operate except for Air Astana, are banned from flying youngest and greenest fleets in the industry Our profitably we need to carefully align capacity by in the EU due to deficiencies in the national Return on Investment fleet includes four different aircraft types suited aircraft type on every route safety oversight system In 2015, the European to our route network and passenger volumes, We currently have four basic aircraft types: Commission removed us from a list of airlines While the global airline industry has seen many with capacity ranging between 97 and 223 seats Boeing 757, Boeing 767, Airbus A320 family (319, restricted from operating in the EU At all times, examples of highly subsidised and unprofitable and suited for the unique aspects of each of our 320, 321), and Embraer 190 The Boeing 757 and Air Astana is committed to demonstrating the airlines, Air Astana’s competitive advantages have markets 767 have a common flight deck, so in terms of highest standards of safety, while developing a helped it grow rapidly and deliver consistent long- world-class domestic infrastructure for aircraft term returns on investment for shareholders and maintenance contributions to the state budget AVERAGE FLEET AGE COMPARISON Our 98% Technical Dispatch Reliability rate in Importantly, we have been able to finance our 2015, in line with our result in 2014, demonstrates aircraft leases and purchases without recourse to the efficiency of our Engineering and Maintenance state support The latest example is our Astana and Ground Services, as well as the reliability of maintenance facility, which we are financing in 25.0 our young fleet In addition, last year, Airbus rated part through a loan from the European Bank for Air Astana as the leader on Operational Reliability Research and Development, a respected multilateral 20.0 for the Airbus Fleet, with a rating 99 67% The institution, as well as our own funds Air Astana has proved profitable for its 15.0 *Source: Airfleets com shareholders, paying out more than US$110 million to shareholders in dividends, including 50% of 10.0 2014 profits, while still retaining sufficient funds to TECHNICAL DISPATCH RELIABILITY finance future growth In 2015, we delivered a 6% return on invested capital (ROIC), compared to the 5.0 industry average of 8 3%, according to IATA 98 98 98 100 96 97 The Government of Kazakhstan, while owning our 0.0 90 majority shareholder, has had the additional benefit of s a ot S7 AT fl

ay tax revenues from our consistently profitable company

KLM 80 tana SC ssiya

Etihad We contributed approximately US$345 million to the Arabia Asiana As Bek Air Bek Belavia Ro Airlines fthans 70 Airlines Ae ro budget since we started to operate in 2002 Lu Ai r Ai r 60

rkish Airlines rkish 50 British Airw British Tu China Southern erbaijan Airlines erbaijan

Austrian Airlines Austrian 2011 2012 2013 2014 2015 Az Uzbekistan Ukraine Int'l Airlines Ukraine Int'l

urkmenistan Technical Dispatch Reliability T

Source: Airfleets net; Company Latest available data Source: Company

34 35 ANNUAL REPORT 2015

ASSYTURGEN 36 37 ANNUAL REPORT 2015

Only with a bird’s eye view one can appreciate the natural wealth of our country. During the flight over Kazakhstan, the incredible glorious views amazing in their diversity will be brought to your attention!

Air Astana is the official air carrier of Astana EXPO-2017

AIR ASTANA: THE OFFICIAL CARRIER OF EXPO2017 38 ANNUAL REPORT 2015

We are currently developing plans for the fell, while domestic and international RPK rose replacement of our Boeing 757 fleet, based on the slightly year-on-year in absolute terms MANAGEMENT REPORT market forecast to 2030 As part of the strategy to profitably grow the transit As we continue to develop our fleet, we welcome the traffic on our network, in 2015 we signed an agreement STRATEGIC AND COMMERCIAL PLANNING decision by the Eurasian Economic Union extending the for upgrading the PROS revenue management system period for waiving customs duties for the importation to the next Origin and Destination level Thus, we of aircraft for another eight years are investing in the new Network Planning tool, as well as the Origin and Destination based revenue Overview Network Development management system to maximise our opportunities Business Planning for future growth Air Astana’s corporate governance structure, based The lifting of all restrictions on EU flights in December on the best international practices, serves as the 2015 was a major long-term development for the airline We review our business plan on an annual basis foundation of our strategic decision-making and daily and opens further development of European routes in line with the 10-year strategy approved by the Corporate Development activities The airline’s 10-year strategy through 2020 On the local front, we saw the emergence of a Shareholders Our latest five-year business plan for was developed and approved in 2011 The core areas new local airline operating turboprop aircraft and the period 2016-2020 was developed to provide an The Corporate Development function provides outlined in the strategy are: to enhance our position the growth of domestic operations by the other up-to-date reference point for moving the airline into support to the Corporate Secretary in working regularly as the regional leader in Central Asia and the CIS by two carriers We welcome additional competition the future with our Board of Directors and shareholders, as well as striving for excellence in safety and service; network in the domestic market and we expect to compete The current plan takes into account the developing the Company more widely, to improve the compliance development with the focus on short- and medium- successfully on the basis of superior service and economic conditions and the market slowdown process and enhance corporate governance in line with range markets, as well as developing niche long- competitive fares matching our product that followed the devaluation in February 2014 and international best practices haul routes; sound investment and fleet decisions, Our network has grown rapidly in the past five free-float of the national currency in August 2015 In Our key values in terms of corporate governance investing in technology, maintenance capabilities and years The number of international departures from connection with these economic developments, we are transparency, legality, ethical behaviour, and development of human capital Astana has grown from 20 to 65 over this time have had to review our plans regarding the future fleet responsibility to our stakeholders, including our By 2015, many strategic objectives have been Last year was another growth year, despite difficult We will continue discussions with the lessors and employees, partners, customers and society reached including fleet upgrades and financing, market conditions In 2015, we implemented Network aircraft manufacturers on new aircraft deliveries, with network development, engineering and maintenance Planning software to help us better plan to reach the goal of securing the best deals for the airline workshops, starting the construction of our own attractive new markets and plan connections as our Outlook for 2016 maintenance facility in Astana and implementing the network becomes larger and more complex Ab-initio training programme for pilots Three of the During the year we opened several key routes, Revenue Management Key plans and outlook for the Strategic and most critical issues identified in the strategy have including: Astana-Paris, Astana-Seoul, Astana-Tbilisi Commercial Planning department include: now been resolved – first, all restrictions on operating and Astana-Dubai (replacing the Astana-Abu Dhabi As a rule, there is a strong correlation between Air flights over the territory of EU have been lifted; route), Astana-Taraz, Astana-Uralsk and Almaty - Uralsk Astana’s passenger growth and Kazakhstan’s GDP, ƒ Manage the impact of tenge volatility and second, our fares, including for domestic flights have We increased frequencies on several routes: which grew by 1 2% in 2015* Air Astana experienced economic slowdown been deregulated; and third, the waiver from the Astana-Beijing, Astana-Omsk, Astana-Bishkek, 2% passenger growth in 2015, similar to 3% in 2014, customs duties for the aircraft importation has been Almaty-Baku, Astana-St Petersburg, Astana-Antalya slower than rates of 13% in 2013 and 9% in 2012 ƒ Expansion in 2016: opening of Tehran and extended Overall, the strategy’s medium growth and Astana-Urumqi Our ability to continue to thrive in objectively difficult Ulan Bator routes represents the opening of scenario has been realised during the last five years market conditions is a low cost base comparable to two significant economies for both direct and In the time since we developed our strategy, we many of the most efficient low-cost carriers Again in international transit traffic have reviewed our mission and objectives, and have Fleet Portfolio 2015, one of the key factors affecting the airline was implemented the HEART values communication the macroeconomic situation, namely the slowdown in ƒ We foresee a continued focus on increasing both programme across the Company We are now more We have built one of the youngest fleets in the Kazakhstan’s economic growth and the government’s frequencies and number of destinations in China as mature and are ready to take on new challenges for industry in recent years Out of the 30 aircraft in the decision to permit the free-float of the tenge, which an important priority our future development In the course of 2016, we fleet, 21 were delivered brand new between April 2011 has increased exchange-rate volatility Similarly, are planning to update the long-term strategy of the and July 2014 Some 11 are owned via finance lease slowdowns in China and Russia, both key trading ƒ We expect continued single-digit passenger airline, in view of the current market developments and 19 on operating leases In 2015, in line with our partners, also affected Air Astana’s Extended Home growth, with emphasis on international and transit and opportunities existing aircraft acquisition schedule, no additional Market traffic and increasing yield In line with the Company’s strategy, the five-year aircraft were delivered, which proved to be the right Despite this objectively difficult macroeconomic business planning cycle is run on an annual basis to decision given the market slow down following the situation, however, we were able to increase ƒ We plan to take delivery of our first Airbus A320 give our stakeholders a clear and up-to-date view on devaluation of our local currency and low oil prices total passenger numbers and maximise capacity NEO aircraft the level of planned activities, financial projections affecting the Kazakhstani economy utilisation Along with the above-mentioned and capital investments However, we have used this break in adding growth in passenger numbers, due primarily to the ƒ We will implement two major projects for Alongside with the Strategy and Business capacity to plan for the future During the year, we increased contribution of international passengers, upgrading the network planning and revenue Planning activities the key functions of the Strategic signed a contract for the delivery of 11 Airbus 320 NEO passenger load remained virtually unchanged at management systems and Commercial Planning Department include aircraft, for delivery beginning in 2016 and through 63% Revenue passenger kilometres (RPK) yields Fleet Planning and Aircraft Portfolio Management, 2019 These aircraft are primarily replacing our existing ƒ We plan to review our long-term strategy for the Network and Schedule Planning, Revenue fleet, including part of our Boeing 757, in line with our *Source: Agency of Statistics of the Republic of next 10 years and develop strategic recommendations Management and Corporate Development long-term growth strategy Kazakhstan for our future growth

40 41 ANNUAL REPORT 2015

continues to support these important safety appropriate screening equipment was subsequently SAFETY improvement initiatives installed, regular cargo operations resumed

Overview management process to address safety hazards, Compliance Accident Prevention Programme perform root cause analysis and promote a safety (to Standards) Monitoring Compliance with good safety standards remains culture within its organisation The air carrier has The airline accident prevention programme aims the foundation of safe operations within Air demonstrated ability to manage changes in the Our compliance monitoring evaluates to detect and mitigate operational risks that still Astana, as reaffirmed by the Corporate Safety scope and the volume of its activities in a safe implementation of Air Astana’s documented occur occasionally despite our effective, consistent Compliance department Compliance as a minimum and efficient manner Moreover, Air Astana has standards for airworthiness and for flight, ground, compliance with good standards and is increasingly non-negotiable requirement is supported and ensured that the oversight of its fleet is performed cabin and maintenance operations as well as striving to improve resilience to dangers that could monitored by an integrated Safety Management in accordance with the applicable international aviation security with the intent of promoting safe lead to accidents System (SMS) that has designed and implemented safety standards” and compliant operations Air Astana standards Effective risk mitigation requires a safety culture comprehensive processes to identify, analyse and combine applicable regulatory requirements and alignment between the airline industry, the state mitigate hazards While we nurture safety performance and best international practices and the airline’s own culture which is achieved via During the fifth and most recent IATA Operational take pride in our staff that oversaw 3 86 million The internal compliance-monitoring programmes the Human Factors programmes in all operations Safety Audit (IOSA) renewal audit in May 2015, Air passengers fly safely in 2015, Air Astana is acutely are complimented by membership and active departments Furthermore, in order to improve Astana once again demonstrated compliance with aware that a historically positive safety record does participation in IATA safety and quality audit safety, the airline’s first Line Operational Safety global safety standards (IOSA Standards Manual not provide immunity from possible accidents We programmes, reflecting our commitment to perform Audit (LOSA) was launched in cooperation with Flight Rev 8) by successfully passing the audit without consider complacency to be a threat to efficient, safe to the highest standards These include: (IATA) Safety Operations in late December 2015 LOSA is a process any negative findings or adverse observations operations and believe continuous improvement is Audit for Ground Operations (ISAGO), Fuel (IFQP) and of observations of scheduled flights by trained (Air related to SMS The next IOSA renewal audit will be vital to meeting the safety standards and effectively De/Anti-Icing (DAQCP) quality pools as well as three Astana) line pilots under supervision of contracted conducted in May 2017 managing risks IOSA auditors In 2015, two Air Astana employees specialists in order to collect and utilise safety Air Astana was the first airline to undergo a qualified as auditors for ISAGO, one as a lead-auditor, data on environmental conditions, operational European Union Third Country Operator (TCO) and another as a DAQCP auditor Air Astana’s fuel complexity and flight crew performance The report, certification audit by EASA (October 2015) The Regulatory Oversight quality auditors managed the acceptable resolution expected in May 2016, will aim to identify threats audit was completed without any negative findings of IFQP findings at a regional airport, enabling the to operational safety, pinpoint and minimise risks and certification was issued on 11 December 2015 Air Astana’s compliance with appropriate resumption of fuel uplift at that location and potential causes of such threats, as well as to The airline also expanded its European Aviation standards of safety and security is first of all Consistent compliance to acceptable standards implement measures in managing the human error Safety Agency (EASA) EASA Part-145 Maintenance monitored by the Department of Civil Aviation (DCA) for airport services including rescue fire fighting, aspects of residual risk Organisation approval held since 2002 by receiving of Aruba, which is the responsible government bird strike prevention, dangerous goods control, Our established hazard identification processes EASA Part-147 Maintenance Training Organisation oversight authority, along with the Kazakhstan Civil foreign object debris and ramp damage, along with include safety reporting, Flight Data Monitoring authorisation in 2015 Aviation Committee Other regulatory authorities security, remains challenging due to regulatory (FDM), auditing, data analysis and implementation The European Commission (EC) imposed provide specific authorisations for operations oversight, airports resource allocations priorities, as of findings from international research The FDM restrictions on our operations in 2009 due to the approvals or line maintenance of aircraft provided well as process management (including training) programme monitored 98 6% of all flights in 2015, ICAO report having found safety oversight by the by Air Astana as listed in the registry of that country Air Astana follows a collaborative approach with the identifying, quantifying, assessing and mitigating Kazakhstan regulatory agency to be inadequate The In the past year, Air Astana has also undergone intent of fostering positive working relationships potential operational risks restrictions were lifted in 2015 with substantiation 107 random ramp inspections by regulators at and developing best practices that are beneficial for As a result of FDM and in line with the provided in the “Official Journal of the EU” dated destinations outside Kazakhstan Forty-three all involved Unfortunately, the goodwill expressed international experience, considerable attention 10 December 2015, including the following points: of the inspections were conducted by European has not always been mutual, and Air Astana was is paid to flight path management, while landing Civil Aviation Conference states under the SAFA compelled to terminate operations at one airport in from unstable approaches is closely monitored ƒ Air Astana’s AOC was renewed in April 2015 and programme, boasting a 72% reduction in negative May 2015 due to the unacceptable state of rescue despite having been reduced in the interim to what IOSA re-certification issued one month after findings per inspection since 2010 and fire fighting capabilities While the Airport is considered a reasonably practicable low level Regulatory Reform: In May 2015, the President Operating Certificate was renewed, the airline The number of registered safety reports in 2015 is ƒ The airline provides regular updates on of Kazakhstan announced a 100-step programme assessed the risk assessment and took the decision comparable with those in 2014 and the freedom to operations, training and maintenance activities for institutional reform in Kazakhstan Step 68 not to continue operations there Air Astana resumed report errors and mistakes without fear of sanctions outlines the intent to “Improve the effectiveness operations to Uralsk airport in January 2015 after remain a challenge ƒ The EASA audit Part TCO was passed without of the state air transport management to increase runway deficiencies that had caused termination of The difficulty of frankly accepting and correcting any negative findings and Air Astana “was found attractiveness of air transit through Kazakhstan operations in 2011, were resolved mistakes that could endanger life remains pronounced to be well-staffed and effectively managed by a Activities of the Civil Aviation Committee will Security monitoring procedures in cooperation in regulatory and associated organisations A competent international management team, paired be focused on the model of the UK civil aviation with station managers continue to operate as before continued (and unusually) positive factor has proved with local personnel The organisation developed a authority and the European aviation safety and was expanded in January 2015 though the to be the emergent ability of those enforcing legal strong and credible safety culture ” agency ” In support of that ambitious programme, introduction of on-going monitoring of passenger oversight to differentiate the significance of safety a memorandum of understanding between screening procedures by selected staff The threats more competently, including officially ƒ At the Air Safety Committee of 24 November Kazakhstan and the UK was signed with a view compliance audit, which was implemented in concert recommending the appropriate risk management 2015 “Air Astana provided evidence that it to assisting in the effective implementation of with the local AVSEC department led to an embargo measures of rescue fire fighting services, and, at the has established a stable and effective safety relevant safety standards in Kazakhstan Air Astana on cargo from an airport for most of 2015; after the same time also reducing inappropriate pressure on

42 43 ANNUAL REPORT 2015

airline safety performance by, for instance, advising Practice” with support of AIRBUS and IATA The aim the regulator not to sanction or support inappropriate was to share knowledge and experience related to FLIGHT OPERATIONS police questioning of the crew accidents and incidents, SMS implementation and risk In 2015, the airline conducted 51 safety management Kazakh airlines (Air Astana, Qazaq Air, investigations: 29 were internal and the remaining Prime Aviation) were joined by representatives from Overview component of our preparations for the delivery of 22 were related to ICAO Annex 13 incident Russia, Ukraine, France, Spain, Kyrgyzstan, Bulgaria, Boeing 787 aircraft in 2019 prevention investigations on behalf of the National Italy and Aruba with speakers from DGAC (France), UK Last year was a busy and successful one for Flight Investigation agency The four departmental safety (ISASI and ex BA), UAE (Gulf Air) and Spain (IATA) Operations We made major strides in implementing action groups met monthly, as did the Flight Data the Electronic Flight Bag (EFB) project across our Organisational change Review Group and Fatigue Risk meetings The fleet and related automated document processes Aviation Safety Review Board, chaired by the Outlook for 2016 designed to deliver an integrated and automated In 2015, we continued to implement adjustments responsible manager and attended by operations inflight and ground-based document control system in the organisation of the Flight Operations department heads, met eleven times to review The outlook and key plans for the Corporate Safety We believe the result will improve efficiency and department to maximise efficiency Last year, we operational safety risks Safety Performance Compliance department in 2016 include: reduce cost in our operations, as well as enhancing focused on Training as well as consolidating the Indicators (SPIs) and action plans continue to be safety by streamlining reporting Notably, as the Standards department The goal of these changes reviewed quarterly The intended introduction ƒ Safety: Maintaining our record of zero accidents result of our broader efficiency drive, we enhanced is to ensure we can continue to deliver first-rate of leading as well as positive indicators did not pilot productivity in terms of flying hours by 31% training for all of our crewmembers as well as materialise in 2015 and will remain a challenge to ƒ Auditing: Establishing performance auditing and between 2012-2015 enhance standardisation through clear policies and implement in 2016 training necessary auditors Implementing LOSA In the meantime, we invested in training systems procedures To stay abreast of international developments, results effectively in conjunction with flight path designed to deliver the next generation of pilots Last year, we also continued to reshape the the airline continues its contribution to international management who will help the airline grow through the end of Operations Organisation Our priority here is to forums Examples thereof include: the decade and beyond We are looking forward to ensure we have the right structures in place to ƒ Database: Improving safety and compliance upgrading the first pilots from our Ab-Initio training effectively manage our continued expansion, ƒ Participation in international safety databases database and data analysis programme in 2016 including new aircraft deliveries through the end of like STEADES, GDDB and FDX; the current decade ƒ Establishing an in-house safety programme and ƒ Departmental staff presentations at 7 auditing training Automation international safety seminars; Training ƒ Improving departmental human factors such as During 2015, Flight Operations continued ƒ Taking part in ICAO-EU regional experts safety fatigue and risk management to implement new technology to automate With a fleet of 30 aircraft, which is planned team (IE-REST) activities for flight data analysis and operations After launching the Electronic Flight to increase in the coming years, continuous SMS workgroup (FDG); ƒ Supporting CAC in establishing EASA standards Bag project in 2014, and achieving regulatory development in the training system is critical to and strengthening safety oversight approval for trials, last year we were able to support our continued expansion Last year, we ƒ IATA Quality Pools participation as discussed achieve paperless operations on Airbus aircraft trained 55 new pilots, including 30 cadets, 23 earlier; ƒ Investigations: Qualifying Corporate Safety and move to final stages of paperless operations expatriates and two local pilots Pilot training Compliance auditors as safety investigators on Boeing and Embraer involved initial cadet, simulator conversion and ƒ Membership in ISASI and the Flight Safety In addition, we introduced a new documentation line training Foundation; ƒ Collaborating with selected airports to improve control process that links to the EFB system The Last year, we continued to work with international safety services provision new system allows us to integrate our ground- aviation partners on basic and simulator training ƒ Membership in the Association of Asia Pacific based document system with airborne systems We continued to develop our programmes to reflect Airlines (AAPA) workgroups Risk mitigation remains our priority for 2016 This makes documentation automatically best practices and developments in the global The risks, as observed within the industry on the accessible and will help us improve our reporting aviation industry, while also focusing on unique international level, include anything from flight processes features of Air Astana operations Safety Education path management to reinforcing security of flights These gains in automation go hand-in-hand with We continued our Ab-Initio pilot training and airspace, as well as airport services that affect a continuing drive to simplify our documentation programme, a long-term project to create a Our investment in training continues: more safety and security Regulatory oversight by the system The objective of this measure is to support pool of highly skilled pilots from Kazakhstan than 22 staff members undertook formal state where operations are conducted would our front-line operations personnel by providing The programme is designed to train pilots to auditing, investigations or safety management require a significant improvement to support the them with clear policies and procedures Our goal is international standards and more than 200 training in 2015 The Corporate Safety Compliance airline’s expansion plans into the U S and Japan to have in place electronic processes that enable all candidates have already passed through the Department reviewed and amended internal (subject to finalisation due to provision of required required operational documentation from briefing system Two flight schools provide training under safety education and promotion programmes in resources) The airline has received significant to post-flight reporting to work through a single, the programme: Atlantic Flight Training in Cork, compliance with international standards and best recognition in the past year for, inter alia, its safety combined interface Ireland; and Flight Training Europe in Jerez, Spain practices SMS awareness training for new hires as of operations performance We recognise the We see the development of integrated, Upon graduation, cadets earn an EASA Licence well as on-going staff training has been mandated importance of protecting the still foundation, still paperless documentation systems as a way to We seek to continually improve the Ab-Initio to selected departments “fresh”, laid in our efforts in striving for excellence ensure regulatory compliance, improve efficiency programme Last year, our Training department and On 28-29 October 2015 in Almaty, Air Astana hosted by refusing to allow complacency threaten the and facilitate the flow of information around the Human Resources department reviewed our cadet a regional seminar “Proactive Safety: from Theory to safety of our operations Company We see this project as an important selection processes We also engaged the European

44 45 ANNUAL REPORT 2015

Pilot Selection and Training (EPST) organisation, an On-time Performance operational reliability, with a rating of 99 67% The Part 145 maintenance approval to include Base international leader in Ab-Initio training, to aid us in European top-30 airline rating stood at 99 39% and Maintenance This allows us to carry out many the selection process the world fleet reached 99 37% larger and more complicated non-routine tasks in The Ab-Initio programme represents a The airline delivered another excellent on-time house Our major maintenance checks continue to significant investment for the airline, but one we performance in 2015, despite challenging weather be outsourced in Europe and China with 14 C-Checks believe is worthwhile The investment in time and conditions during the winter months The airline uses Major projects being accomplished this year resources is creating a new generation of highly European and US on-time performance standards skilled Kazakhstani pilots who can support our as a benchmark, as well as fellow members of the In 2015, following several months of preparation, long-term growth Association of Asian Pacific Airlines we launched construction of our maintenance Other key developments Last year, our 89 9% on-time performance hangar in Astana, with completion due in 2016 compared favourably to our benchmark peers The hangar is designed with an interior area of We appointed a new, dedicated Cabin Interior Standards This excellent result was a team effort, with our 5663m2 on a 13 5-hectare site, with warehouse Manager to look after the cosmetic appearance colleagues in Engineering and Maintenance, Inflight and garage units of our aircraft interiors and exterior livery, which Last year, we continued to develop our Standards and the Ground Operations department When completed, the hangar will provide are key elements of our brand identity We also Department We see standardisation as a key This is an area that requires continuous focus and us with year-round maintenance capability in appointed a Power Plant manager to bring in- component of safety and efficiency is central to providing a high quality service to our Astana, especially important as the capital city house outsourced engine maintenance We carried out a project to set out common customers To that end we carry out weekly reviews has harsh winters We expect that having our Our Line Engineering Department in Astana standards for Type Rated Inspectors (TRIs) and of performance with a root-cause analysis of delays own maintenance hangar in Astana will deliver along with Technical Stores were relocated to new Type Rated Examiners (TREs) This involved This allows us to address the underlying issues and significant cost savings and boost operational and greatly improved facilities identifying the specific competencies and skills minimise or eliminate delays efficiency The Engineering Sales Department, in required of our pilots and implementing a new We believe the financial backing of the project conjunction with the IT department, launched our performance measuring process We also provided by the European Bank for Reconstruction and new sales website, highlighting our continued additional training for our TRIs and TREs as well Outlook for 2016 Development, a multilateral financial institution, commitment to increasing ancillary revenue by as the launch of a new database A primary goal underlines the importance of the hangar project, providing services for third party customers of the project is to provide a continuing feedback The outlook and key plans for the Flight Operations not just for Air Astana, but for the country’s Finally, a major effort to improve our operational mechanism allowing us to identify trends and department in 2016 include: aviation sector as a whole Among other long-term efficiency was achieved when we completed a four- ensure appropriate responses in the training benefits for the capital, we expect the hangar to year Process Approach project Each departmental process ƒ Continue to safely improve our operational foster new engineering talent based in Astana process was evaluated, assessed, improved and performance and deliver a consistent and reliable Last year, we also completed our project to formalised in the form of standard flow charts product establish a world-class technical training school These are now available electronically to all staff Regulatory developments in Almaty by obtaining EASA Part 147 certification by the means of an interactive programme ƒ Continue to develop our paperless operations and Civil Aviation Committee training approval, In 2015, Flight Operations participated in the and introduce electronic reporting after the completion of an extensive audit process IOSA audit process for the fifth time We also In September, some 12 students successfully Outlook for 2016 hosted representatives from EASA in October, who ƒ Continued market-leading on-time performance completed the first six-week training course on the completed an EASA Third Country Operators (TCO) Airbus A320 The students received internationally The outlook and key plans for the Engineering audit The airline completed both audits successfully, ƒ First promotions to captain from cadets who recognised EASA certificates and Maintenance Department in 2016 include: and Air Astana renewed its IOSA approval joined the first Ab-Initio training programme in 2008 ƒ Completion of the Astana hangar Audits and certification ƒ Development of web-based data and We maintain our aircraft in accordance with documentation process system the requirements of EASA Part 145 regulations, ENGINEERING AND MAINTENANCE as well as those of the Aruban Department of ƒ Training certifying staff for introduction of the Civil Aviation (DCA) and the local Civil Aviation Airbus A320 NEO Committee (CAC), all of whom routinely perform Overview We made major progress on several long-term detailed audits of our processes and procedures ƒ In-house technical training introduction for the projects, including a new maintenance hangar in In addition, in 2015, we successfully completed Airbus A320 NEO Air Astana’s Engineering and Maintenance Astana, representing the largest single investment the IATA Operations and Safety Audit (IOSA) and Department is committed to ensuring the highest in facilities by the airline, as well as obtaining key the Third Country Operators (TCO) audit ƒ Launch of Engineering Ab initio programme standard of flight safety as well as increasing certifications that improve our ability to maintain In 2015, we achieved a technical dispatch reliability the efficiency of aircraft maintenance Looking our aircraft and train our people, while also rate of over 98% and continued to expand our ƒ Continuing Part 66 licence training scheme back, 2015 was a challenging year, primarily due passing several important audits maintenance capabilities in the workshop to include to the macroeconomic environment, but also We believe it is a reflection of our relentless overhaul of brake units, cargo nets and oxygen a breakthrough year on several fronts for the work that Airbus published data in 2015 showing charging In a major expansion of our maintenance department Air Astana as the world fleet leader for Airbus capabilities, we obtained an extension of our EASA

46 47 ANNUAL REPORT 2015

are able to introduce themselves to business passengers and to empower each team member to IN-FLIGHT SERVICES class passengers by name and see their Nomad make the right decision on the spot frequent flyer status, etc While our cabin crew were instrumental in Overview passengers The launch of the sleeper economy delivering another Skytrax 4-Star rating in 2015, Outlook for 2016 product on selected routes was a genuine innovation we understand this requires continuous work to At Air Astana, we believe that delivering world- and a big hit among passengers, allowing passengers maintain and enhance our service offering Other plans and outlook for the In-flight Services class in-flight service is crucial to our mission of to buy a lie-flat sleeping experience in economy class We have continued to develop our coaching department include: building one of the finest airlines in the world on long-haul flights In addition, an iPad 2, business programme to provide cabin crew with assistance and Last year we again overcame the challenging class amenity kit and specially developed sleeper training in real time on-board We restructured the ƒ Launch of Back to Basics Programme macroeconomic environment to deliver consistent economy meal are provided coaching programme in 2015 to make it more targeted improvements for our passengers Our efforts were In addition, we upgraded our in-flight and efficient and all our inflight coaches underwent ƒ Continued audit of catering with focus on recognised last year as we received 4-star Skytrax entertainment (IFE) iPad Air 2 units, allowing us specifically tailored training this year to redefine and creativity and refinement in both presentation and rating for the fourth year in a row, ranking us to double our entertainment offering for business- enhance their roles We also published our Cabin taste among the world’s top airlines class passengers We were pleased to invite Crew Service manual, which incorporates all aspects In 2015, we continued to dedicate significant prominent Kazakhstani film critic Oleg Boretskiy of on-board service This is crucial when it comes to ƒ JC and YC tableware replacement resources in training our on-board staff to deliver to help select films and write articles for our IFE consistently delivering a high standard of service the consistently high level service that is the product In line with our mission as Kazakhstan’s In addition, we developed a ‘Back to Basics’ ƒ New innovative on-board safety video hallmark of the Air Astana passenger experience flag carrier, we also enhanced our Kazakh language campaign in the latter part of 2015, to be launched in Last year, we held more than 135 training courses, film and audio content in cooperation with the 2016 The programme represents a major overhaul ƒ Implementation of both IFE streaming and On- with more than 1,000 attendees among in-flight WikiBilim foundation of our initial and recurrent customer service training board Connectivity projects staff In addition, we continued to invest in our Other product enhancements included the for cabin crew and is designed to re-focus our crew aircraft cabins, in-flight entertainment systems, introduction of new adult amenity kits for long-haul on the basic tools when building a rapport with our ƒ Arrival of our first A320 NEO catering and on-board product to enhance the and medium-haul flights, and new children’s kits inflight experience for 3-6 year-olds and 7-11 year-olds We also started distributing comfort neck pillows to all our business class passengers on our A320 fleet on night flights Skytrax Award to ensure additional comfort Fresh flowers in our business class lavatories are also a new touch along Preparing for the Skytrax audit was an important with soothing take-off and landing music part of our work last year Air Astana was the first During the year, we continued to improve GROUND SERVICES airline in Eastern Europe and the CIS to receive this our menu offering, including training staff on award back in 2012 and maintaining and enhancing presentation Among other measures we introduced our score each year is important for both our a comprehensive catering check program including Overview passenger and baggage tracking is also a feature internal benchmarks and our overall brand as it plating appraisal, tasting and caterer feedback to of the system and it produces specific reports for places us alongside leading global airlines look at where refinements and cost savings can be The goal of the Ground Services team is to deliver every single flight The system allows ramp agents To prepare for our Skytrax Audit, the In-flight made Along with a revision of our menu offering a continuous improvement of services make our to provide the system with real-time updates and Services department launched the Skytrax Project in Shanyrak, our Astana Business class lounge, we passengers’ journey as comfortable as possible managers to take appropriate and timely actions We analysed the previous report and went also revised the majority of our on-board menu by ensuring an efficient and hassle-free airport to resolve any issues that arise The system was department by department to see where we could We concentrated on a mix of local, regional and experience on departure, arrival and transit We developed in-house and was recognised as ‘Best IT improve In particular, each of our 1,150-cabin crew international cuisines with a wider variety of colours perform this task in dozens of airports worldwide Business Product’ by Samruk-Kazyna attended a Skytrax training forum to prepare each and textures for visual appeal We also enhanced Last year, the successful IATA Operational Safety In February 2015, Air Astana became the first and every one for the audit our canapé offering by introducing a choice on our Audit in May reflected the quality and safety focus of airline in Kazakhstan to install self check-in kiosks We retained our 4-Star overall rating and long haul routes New wines and meal garnishes our ground operations Similarly, the re-affirmation The hardware and software for the kiosks was improved scores in many areas The additional were also rolled out throughout the year of our Skytrax 4-Star rating demonstrated the developed in-house Some seven kiosks were training for our staff not only helped ensure we strength of our customer service provision We are installed in Astana, Almaty and Shymkent The retained our score but also provided an opportunity also proud of role in helping to deliver a record on- kiosks proved an instant success and more than 500 to strengthen our overall service offering through Cabin Crew Performance, time performance of 89 9% in 2015, the best result passengers use them each day further training and attention to detail We are Training and Development in Air Astana’s history During the year we completed development of proud of our continued progress in the ratings mobile check-in systems, allowing passengers to each year despite a very tough cost environment With the launch of our CrewPads, cabin crew check-in online using a smartphone or other internet- reporting is now completed using our Integrated Innovation enabled device The system will send the passenger Quality and Safety Management System The new a virtual boarding pass with a bar code that can be On-board Experience crewpads are also compatible with Amadeus, The airline successfully deployed a major scanned during security and boarding procedures, which gives our crew access to important new system, Station Hub Control, in Almaty and eliminating the need for a paper boarding pass The In 2015, we continued to enhance the on- passenger data This enables them to deal with Astana The system allows us to monitor the flow system was successfully tested in Almaty and we board experience for both business and economy on-board issues more effectively and crews of passengers and baggage in real time Transfer are technically ready to implement the system We

48 49 ANNUAL REPORT 2015

are currently in discussions with regulators to amend Astana The new schedule optimises staff numbers MARKETING AND SALES rules currently requiring a physical boarding pass based on the workload and the number of flights at Also last year, the Ground Services department any given time, rather than spreading workers over developed a new procedure for priority boarding shifts with varying workloads We have also sought of business class passengers and gold and silver to implement an 8-hour schedule for the majority of Overview New routes Nomad cardholders at Almaty, Astana and Atyrau employees working with the passengers to improve The new procedure enables high-margin passengers both performance and staff morale In 2015, we overcame many external challenges The launch of the Paris-Astana route was a to board the aircraft without queuing As part of the preparations for the Skytrax audit to deliver strong underlying traffic transit growth, major development marking a milestone The In October 2015, we launched the ‘KConnect’ in September, all Ground Services employees as well as launch innovative new products, such as new European route coincides with the lifting of product for transit passengers It provides completed additional training on standards, the Economy Sleeper and MyUpgrade that enhance restrictions on new routes by the EU and we now passengers with easy to understand transit services and passenger handling during the period passenger experience and attract incremental have 13 weekly flights between the Western EU information for Almaty and Astana In addition, we from July to September revenue Collaborating closely with the IT and Astana We supported the new route with the also implemented a new design for boarding passes Department, we re-launched the corporate website launch of a new French-language website in November 2015 The new boarding pass matches with a vastly more intuitive user interface We also see strong potential for Paris driving the global trends and has the same design for both Outlook for 2016 We were particularly effective in counteracting international transit traffic For instance, Chinese classes of travel a decline in transit traffic caused by falling traffic tour operators can send travellers from Urumqi in Key plans and outlook for the Ground Services between CIS destinations We believe the increase Western China to Paris via Astana department include: in frequencies in Western Europe and China in Equipment particular resulting in increased connectivity will ƒ Launch of the mobile check-in project continue to have a positive impact on our business Transit traffic At the end of 2015, we took delivery of two new, in 2016 and beyond The innovative use of Air Astana state-of-the-art de-icing machines at Astana and ƒ Continued construction of the de-icing station in Holidays and other packages have provided a way Air Astana continues to look actively to develop Almaty The machines use ‘Force Air System’ equipment Astana to support revenue amid deep external challenges international transit traffic Total international This system is more efficient, reducing de-icing, and transit passenger numbers dropped 7 9% year-on- uses less fluid, delivering significant cost savings In ƒ Implementing the second phase of centralised year However, this drop was almost exclusively addition, we are currently building a new de-icing load-control procedures to simplify procedures and New products accounted for by a sharp decline in CIS transit traffic station in Astana, the first of its kind in Kazakhstan calculate revenue load in advance Excluding this external factor, international transit We believe this investment will significantly improve In February, Air Astana launched the new Economy traffic grew 21% year-on-year, thanks largely to turnaround time and reduce costs ƒ Deploy additional check-in kiosks in Astana Sleeper product, an in-house innovation It was new traffic flows in the second half of the year designed to monetise the unrealised potential of A reflection of our success in developing new ƒ Enact a single standard code for excess baggage empty seats in Economy class on B757-200 operated transit traffic, Air Astana sold over 600 different Our People and invitation coupon to business lounges international routes by turning three seats into a origin and destinations last year China is single, premium lie-flat sleeper seat, with ample important driver in this traffic and we were able In an important move to raise productivity ƒ The mobile boarding product will be space, an IFE iPad and specially presented meal to negotiate a substantial increase in traffic rights within our current headcount, we overhauled implemented for regional airports and this unique The Marketing and Sales department drove the to accommodate our future growth rate over the work schedules for Ground Services employees product will not depend on the communications marketing campaign, which included print, radio, medium term, and number of points from two to and implemented the new system in Almaty and networks of the airport outdoor, online and social campaigns in Europe, five Frequencies also increased from Astana to Asia and Kazakhstan The launch of the product was London, also driving traffic timed with the launch of the Paris launch campaign Air Astana Holidays provides ground content, The product proved immediately commercially such as hotels and transfers, to facilitate network successful and, importantly, generated considerable sales where no flight connection is available In buzz in the international media, building awareness 2015, Air Astana Holidays sold over 1,000 room of the Air Astana brand in Europe and Asia and nights, which would not have occurred without enhancing our image as an innovative company the program Last year, this was targeted at Asian In September, we launched MyUpgrade, a system markets, while in 2016 we are aiming at other allowing existing economy class passengers to bid overseas markets that have more significant for a business-class upgrade Passengers receive outbound demand a pre-travel email encouraging them to go to In addition, the implementation of a Stopover the online platform bid The system is designed Hotel Paid by Carrier (STHPC) programme is to generate incremental revenue from existing designed to encourage group traffic to flow via passengers as well as expand our presence in the Kazakhstan The devaluation of the tenge has made affluent leisure traveller segment this programme viable, as the underlying fare is

50 51 ANNUAL REPORT 2015

sold in dollars and local costs are denominated in Last year, responding to member feedback, we ƒ Maintain market share on domestic flights ƒ Unlock the potential from Urumqi across the the local currency launched the introduction of “the Wave of Change” within Kazakhstan network by getting morning slots to connect with to enhance benefits for Nomad Club members the EU wave from Astana These include online awards and upgrades and ƒ Focus on increase of market share above fair Sales trends validity extension for accumulated points Next year, share on point to point flows ƒ Develop codeshare cooperation with key EU we plan launch new Diamond Nomad Club status for carriers Ticket sales commission for international flights our most frequent flyers, with exclusive benefits as ƒ Reduce the reliance on sales in Kazakhstan and was withdrawn in 2011 and replaced with the a guaranteed seat on any flight continue to develop sales overseas through increase ƒ Renegotiate expiring GDS contracts for special transaction fee model of agency distribution In The efforts in the Call Centre are focused around of market share and growth of transit traffic conditions 2015, this was extended to ticket sales for domestic an improving service, recognition of Nomad flights This initiative was implemented for ticket Club members (through an in-house developed ƒ Launch new routes between Almaty – Tehran ƒ Groom management trainees sales from the beginning of 2016 and we expect to software identifying the customer calling) and and Astana – Ulan Bator, highly potential market and see lower prices for the consumer, with projected driving customer loyalty an underserved market respectively ƒ In view of declining markets, intensify efforts savings of US$5 million to avoid growth of carriers distorting competitive Notably, sales in the US are now a significant ƒ Intensify marketing activities, social media and market practices through predatory pricing financed contributor, being the fifth largest point of sale Website website around the markets identified as focus through subsidies despite the fact that Air Astana does not operate markets for O&D growth to the US However, online agents issuing tickets Growing internet sales helped counteract the within the US billing system has stimulated this impact of devaluation Last year’s launch of the new market We expect this market to develop in 2016 website, also incorporating HEART values, provided with greater online activity a truly intuitive user interface that vastly improves China followed by India, Ukraine and future new the usability of the site and the ease of buying routes remain the key sources for international traffic tickets through the re-engineered booking engine This is of particular importance when the market in The site provides opportunities for the passenger Kazakhstan is expected to remain challenging over to choose among a range of fares, encouraging the short to medium term passengers to upsell to the next fare level The improvement in web interface usability includes intuitive form filling for registered Nomad Customer service Club members and use of cookies to recall preferences Despite difficult macroeconomic conditions, we saw In 2015, the implementation of the HEART an increase year-on-year on revenue in tenge terms programme at our call centre and ticketing offices was from website bookings and expect the new booking a key development We carried out regular review engine will have a significant impact in 2016 and coaching of our call centre staff in line with HEART values to deliver on behalf of our customers Along with improved software, this means greeting our Outlook for 2016 Nomad Club members by name and having a record of customer interactions instantly at hand Other plans and outlook for the Marketing and In addition, we have implemented a new, online Sales department include: questionnaire targeted to our Nomad Club members in place of paper forms As a result, the response rate ƒ Continue to identify what the customer values, has increased dramatically, as well as the quality of improve customer service and experience to build feedback from our customers loyalty The feedback from passengers assessed by the Customer Relations team was a key driver to ƒ Grow total passenger numbers and fare volumes, seek opportunities for the company to improve with focus on key markets in the revised Extended identifying what counts for the Customer throughout Home Market with focus on China, the Indian the Air Astana experience subcontinent and Ukraine

52 53 ANNUAL REPORT 2015

IT AND E-BUSINESS the implementation of an upgraded, origin/ ƒ New and cost effective systems for learning destination-based revenue management management and recruitment management will system, involving major changes to the revenue replace the existing out-dated systems management, inventory, and global distribution Overview It offers a wide range of services, including online systems The goal of this major project is ƒ A new document management system will be bookings and check-in, information about flight arrivals improving the revenue from connecting traffic, implemented across the whole organisation, and a In 2015, Air Astana continued implementing its and departures, verification of reservation details and allowing us to offer more competitive fares for catering management system developed in-house is strategies in providing a competitive advantage to much more Air Astana initiated an online system that transit passengers and, consequently, delivering to be deployed on-site as well the business, improving customer service, reducing allows bidding for upgrading to business class, and this improved revenue for the airline costs and enhancing operational efficiency through proved to be very attractive to the passengers In addition, the outlook and key plans for the IT ƒ In order to improve ground-handling operations, our IT and e-Business initiatives, in line with the In addition, an online system has been developed and e-Business department in 2016 include: handheld devices will be provided for boarding five-year plan for its business The airline maintains in-house for the Nomad Club members, allowing and a Microsoft Windows 10 application will be a talented team of around 50, including developers them to use their points and upgrade to business ƒ Another major project is the implementation developed covering all the applications that are and support staff class In 2015, Air Astana released the latest version of a new crew management system, which is currently available on Android and Apple platforms Again last year, in-house developments played a of online booking engine with an attractive design expected to result in significant reduction of the major role and our ability to build custom solutions and a significantly improved user-friendly interface operational costs ƒ New releases will be deployed for the in-house is one of our major competitive advantages The For those who purchase tickets from the call centre, developed Emergency Response System, Sales Hub Control system is a major project carried out in the non-card alternative online payment channels ƒ We are deploying an employee appraisal system Management System, Station Control System and 2015 The system allows us to monitor and control have been increased from one to three after the successful pilot development in 2015 Crew Appraisal System the ground handling services of Air Astana flights The number of new visits to Air Astana corporate in real time at every stage and delivers significant website grew by 31% in 2015 The number of unique ƒ The management of the Frequent Flyer system is ƒ Data warehouse infrastructure capabilities will be efficiency gains No other airline in the CIS region is visitors soared by 42% (from 1,901,255 to 2,709,720) scheduled to undergo an upgrade and/or a migration improved, along with Wi-Fi facilities, disaster recovery currently using such a system which indicates the growing popularity of the to the new platform capabilities, network infrastructure and telephony Another example of a successful in-house solution website The online web check-in tool is available in 2012 is the Crew Pad solution The application is for all airports in the Air Astana network The Air ƒ A new system was implemented to provide Call ƒ The IT department also plans to be heavily an important automation breakthrough, offering Astana mobile application is virtually a pocket travel Centre agents with real-time data on passenger involved in the project implementation of Internet near real-time information on passengers, seating assistant with features such as ticket purchase, history, frequent-flyer status and other data to and Wi-Fi streaming on board and passenger requests, and many functions such check-in for Air Astana flights, Air Astana ticket office better serve passengers as submitting reports, conducting crew performance locator, arrivals and departures status, live chat for ƒ Air Astana also plans to expand the air to reviews and providing operational guidelines Few reservations, Nomad Club activity details and claims/ ƒ The Enterprise Resource Planning system is ground communications network jointly with airlines in the world are yet using this technical solution redemption of Nomad Club points for ticket purchases due for upgrading Rockwell Collins and most use more costly off-the-shelf products It also features information on fares and fare rules, A new staff travel system was also developed dangerous goods restrictions, baggage allowance internally The system simplifies the booking details, excess baggage rates, passenger code of process and is adaptive to any mobile device conduct and travel restrictions for expectant mothers Enhancements were made to the sales management system, the technical supplies management system, the emergency response system and the IT Infrastructure station control system Several new business systems were also Good IT infrastructure facilities are needed in implemented in 2015 A business system tool was order to support any successful business Significant introduced to support strategic decision-making in improvements were achieved within the data network planning A new electronic documentation communication channels without incurring any archive was implemented for the Engineering additional costs The software platform that department A real time flight tracking system also handles user requests, remote user support, went online last year The Hyperion budgeting and change management and asset management was planning system was upgraded to a new version also enhanced Several updates of the departure Several enhancements were made to the Enterprise control system were also made in 2015 Self-service Resource Planning (ERP) system kiosks, designed and assembled in-house, using our hardware and software, were deployed in Almaty, Astana and Shymkent Website and e-Commerce

The Air Astana corporate website has been one of Outlook for 2016 the major lines of communication with our customers and a main channel for direct sales, making us The most important project and largest Kazakhstan’s largest single e-commerce platform investment for 2016 for the department is

54 55 ANNUAL REPORT 2015

56 57 KATONKARAGAY ANNUAL REPORT 2015

Air Astana is the official carrier of the professional cycling team ASTANA PRO TEAM, which has become a subject of national pride in Kazakhstan.

Free as wild horses, fast and easy as the wind of the steppes, they gain victories for our country!

AIRКАРАЧИНГИЛЬКА ASРАЧTANAИНГ ИISЛ ЬTHE OFFICIAL CARRIER 58 OF ASTANA PRO TEAM CYCLING TEAM ANNUAL REPORT 2015

Name Description Mitigation RISK MANAGEMENT Risk of fuel Air Astana is exposed to the high volatility of For fuel sourced locally, the airline negotiates prices price increase fuel prices and related costs Higher fuel prices on a competitive basis with Kazakhstani suppliers will result in higher overall expenses and, via conclusion of stable contracts consequently, increase the probability of an Moreover, Air Astana maintains on-going adverse impact on the company’s profitability negotiations with suppliers regarding price This could be reflected in the increased reductions One important aspect is the constant ticket price and loss of customers Air Astana monitoring of alternative suppliers in the market for uses around 295 thousand tonnes of jet fuel domestic and international stations Furthermore, annually Fuel is a major cost item, making Air Astana maintains an on-going cooperation up over 23% of operating expenses Hence, with government and legal authorities (CRNM, volatility in the fuel prices can have a material Antimonopoly agency, etc ) regarding price control impact on its bottom line For fuel bought outside Kazakhstan, the price risk is Air Astana operates in a highly regulated and purpose of effective allocation of resources and partly hedged using financial derivatives in the oil and petroleum market under the guidance of the commercially competitive environment and, similar organisation of internal processes in order to develop Fuel Hedging Policy Air Astana’s standard market to other airlines, is exposed to a wide range of necessary levels of infrastructure for operative instruments for fuel hedging are being used only for insurance means The main purpose of fuel operational, strategic, compliance and financial risks monitoring of risks and responses to them hedging is to reduce cost volatility and provide which are mitigated via the established corporate risk Air Astana focuses on proactive decision making, protection against higher fuel prices management system utilising key risk indicators, which are based on Air Astana also applies a fuel surcharge on domestic and international routes where the Air Astana is committed to maintaining its external and internal information used by the Company doesn’t face restrictions as additional efficient corporate risk management system, having Company in course of its operations tool of risk reduction Regulation of the surcharge established the risk management function at the Below is a list of some primary risks to Air Astana’s depends on fuel prices and market conditions To reduce overall consumption of fuel the Company Company’s management level and continuously operations that have been identified by management implements new technologies such as winglets integrating the leading risk management practices This list is in no way exhaustive, as any future on aircraft and conducts pilot training specifically in the industry Risk appetite statements are unforeseen events and/or factors that might arise dedicated to effective fuel consumption communicated to Company management for the could negatively affect the Company’s performance Currency risk Air Astana’s reporting currency is Kazakhstani Air Astana takes a number of measures to reduce tenge (KZT), meaning that earnings and net the impact of currency risk, for instance the assets are affected by any foreign exchange placement of free funds on deposit in foreign volatility currency, as well as consistently trying to increase The economic condition and situation around the share of revenues in foreign currencies national currency creates considerable and reduce the proportion of imports in overall difficulties for Air Astana in achieving positive purchases financial goals, as the Company receives 74% of In order to eliminate an accounting mismatch and its revenues in KZT, while 64% of its expenses smooth out the devaluation effect on the P&L, are denominated in foreign currency Air Astana applies the cash flow hedge of foreign In addition, the Company has debt liabilities currency risk The effect of the hedge policy is denominated in foreign currency, as well as to show unrealised gains/losses on hedging Name Description Mitigation a number of cross currency risks due to the instruments in other comprehensive income jurisdictions of the operating business including whereas only the realised portion of the gain/loss Risk of Air Astana is exposed to high impact Air Astana maintains an integrated safety, security non-KZT revenues, fuel costs, spare parts, would be reclassified from equity reserve to P&L aircraft loss losses that may be incurred in the event of and quality management system, including maintenance and aviation insurance costs and aviation aircraft damage or aviation accident The regular safety forums and training sessions as well accident resulting effects from such events would as audits of policies, procedures and processes have an adverse impact on financial and designed to maximise the safety of passengers operational performance due to product and staff The processes compliment the Counterparty/ As part of its operations, Air Astana has To minimise the risk exposure, Air Astana has damage, personnel and customer death/ functional training and quality control procedures credit risk counterparties – such as ticket sales agents, taken preventive measures which have been injury, third party liability, loss of confidence established in all departments suppliers of goods and services, banks and developed by the Company based on the credit by the customers, unwanted media attention Regular independent assessments from financial institutions – in several countries risk management methods, including: affecting the Company’s reputation, and court Regulatory authorities including EASA, DCA Should any of these parties experience fines and material financial costs, such as Aruba and CAC Kazakhstan as well as industry any business issues affecting their ability ƒ Calculating and setting limits on deposits with increases in insurance premiums and security assessments (IOSA) gauge Air Astana’s compliance to meet financial obligations, or cease to commercial banks where free funds are stored; costs with international safety standards through operate altogether, an adverse effect on ƒ Establishing bank guarantees with ticket sales appropriate safety resources and effective the company’s financial and operational management performance could be sustained agents; Additionally, Air Astana maintains comprehensive ƒ Increasing the volume of internet and direct insurance coverage, which includes aircraft sales in order to reduce exposure to agents and insurance, passenger liability insurance, compulsory insurance of employees and other intermediaries; aviation risks-related insurance according to the ƒ Diversifying supply channels; best practice and industry standards ƒ In the event of aviation accident (or incident), an Improving control over suppliers and emergency response centre is established in order assessment of their credibility to ensure swift actions and to coordinate with any ƒ Air Astana continuously monitors the external authorities financial situation of counterparties and sets financial limits in order to ensure the efficiency of the risk management

60 61 ANNUAL REPORT 2015

Name Description Mitigation INSURANCE Risk of Air Astana’s operational performance and In order to mitigate the risk, Air Astana continually insufficient flight planning depends on many factors – one reviews salary and working conditions for local number of being the ability to retain a sufficient number pilots (changes in salary scheme, state/Company qualified of qualified pilots Loss/shortage of pilots pension project, etc ), and introduced the Ab-initio Insurance is one of the main response tools within policies to reduce the financial risk of damage pilots can lead either to employing more expensive programme in 2008, which has proved successful the risk management system, enabling Air Astana to property, interruption to business and general expat pilots to fill the gaps in the schedule This provides a depth of resources to meet the to transfer parts of risk(s) to other counterparties by liability, as well as to cover employees for accidents or may result in sub optimal schedule Company’s continuing needs Air Astana also performance Competition for qualified recruits direct entry pilots from the domestic paying an advance premium The Company applies and medical expenses The types of policies with personnel is intense, and the loss of pilots market and contractors from the international consistently high standards to ensure the quality different levels of coverage are: without adequate replacement or the inability labour markets and transparency of insurance companies when to attract new pilots could affect Company’s Engaging highly qualified staff is central to performance providing safe, reliable and high quality service arranging the coverage The types of maintained ƒ Medical insurance for employees Air Astana is focused on conducting regular insurance coverage distinguish between the aviation reviews of job conditions, high quality training and non-aviation risks: ƒ Directors, officers and corporate liability insurance and staff development to meet its qualitative and quantitative human resources targets ƒ Property insurance Aviation insurance ƒ Comprehensive vehicle insurance Air Astana commits substantial resources to Risk of non- Product and service consistency and Air Astana offers extensive training programmes maintaining insurance coverage for its flight ƒ Compulsory insurance for employees covering provision of maintenance of quality are the keys to aimed at maintaining a high level of cabin operations, thus placing aviation risks in the world’s accidents on the job high quality ensuring customer satisfaction and meeting crew skills Along with training, the in-flight leading insurance markets through internationally in-flight their expectations department has been restructured in the way that services and Failure to provide high quality in-flight infuses more control mechanisms into the cabin reputable brokers The types of policies it obtains, ƒ Commercial general liability insurance (public reduction of services might lead to the damage of crew’s working routines The Quality & Standards involving different levels of coverage, are: liability) Skytrax rating reputation along with the loss of customers division regularly monitors customer satisfaction and also can bring about the reduction of through various procedures (e g , feedback from the Skytrax rating A decline in the level of passengers via on-board coaches) and issues 1 Aviation Hull, Total Loss Only and Spares All Risks ƒ Insurance of civil liability to customs authorities quality, whether through a single event or standards for the cabin crew for maintaining and Airline Liability including Passenger Liability a series of events, may adversely impact high quality services The Performance division is ƒ the Company’s customer relationship and its constantly working with the cabin crew in order to 2 Aircraft Hull and Spare Engine Deductible Loss of Pilot’s license insurance market position, and may ultimately adversely sustain the required motivation and performance 3 Aviation Hull and Spares “War and Allied Perils” impact profitability according to the set standards The Operations 4 Aviation War, Hijacking and Other Perils Excess Not all risks can be insured or transferred to third division supports handling of the day-to-day issues, allowing cabin crew to concentrate on their Liability parties Given that the risks are by nature divided main duties – provision of high level of on-board to internal and external ones, the monitoring and services effective control over internal uninsured risks is the The Product and Catering division ensures the Non-aviation insurance supply of provisions on board In order to provide responsibility of the risk owners The external risks a more comfortable flying experience, IFSs are beyond the Company’s control and represent the are equipped with the crewpads containing all Apart from the aviation insurance coverage, Air greatest challenge; therefore, management focuses on essential information necessary for the flight, e g , detailed passenger information, food preferences, Astana regularly purchases non-aviation insurance their identification and treats them with great caution etc – all in order to personalise the service both for the J-class passengers and Nomad Club Members, thereby increasing passenger loyalty

Risk of Air Astana’s revenue streams are highly Air Astana’s management regularly reviews deterioration sensitive to the economic conditions of the revenue forecasts and takes appropriate steps, in economic local, regional and international markets including optimisation of the route network, conditions in which the airline operates In particular, monthly monitoring of network results, and loss of any deterioration in the global and/or the implementing innovations, strong cost controls revenue Kazakhstani economy may cause a drop in and on-going cost reduction initiatives At the demand for the services, affecting tourism same time, the Company focuses on investment in and business travel The volatility of the fleet expansion and modernisation, improvement financial and commodities markets can cause of in-flight services to meet high standards and devaluation of domestic currency and may the establishment of effective business processes drive up the price of fuel During such periods, it may also prove difficult to obtain acceptable financing terms for new aircraft

62 63 ANNUAL REPORT 2015

ZHETYSU 64 65 ANNUAL REPORT 2015

Children are the flowers of our life! Only happy kids, bold and bright as the poppies on the spring steppe will make a happy future for our country.

Air Astana cherishes children and creates favourable conditions of flight to any destination and for any duration, turning it into an amazing adventure.

AIR ASTANA  WITH CARE FOR CHILDREN 66 ANNUAL REPORT 2015

students, third - among Business professionals In Training and Development addition, we ranked fourth – among Engineering/ SUSTAINABILITY REPORT Science students, fifth – among Engineering/ In 2015, we reviewed our management training Science professionals; sixth – among IT students; programmes in line with HEART values and and seventh – among IT professionals OUR PEOPLE focused on communication as a fundamental During the year, we published advertisements or skill for managers critical for the success of any earned articles in leading Kazakhstani newspapers, team As a result, we developed and launched magazines and websites about career opportunities Overview Updating Appraisals two new training programmes, “Communicating at Air Astana We also dedicated a new section to for Results” and “Building High Performance our corporate website, “History of Success,” which One of Air Astana’s strategic goals is to attract, Our existing employee appraisal system dated Teams”, developed in conjunction with Wendy talks about recruitment, growth opportunities evaluate and compensate employees according to back nearly a decade, a very long time in a young Shanken Cavendish These courses are amongst and shares some of our many success stories of merit and provide each member of our team with company such as ours So we were pleased to launch the first ones of the revised Management Training people reaching their full potential at the Company the ability to reach their full potential Last year, the new system, developed in 2014, and based on curriculum based on HEART values and new Finally, we also brought in school children from we continued to develop the HEART (Hospitable, HEART values that we believe is more relevant for competency model Nazarbayev Intellectual School with a maths and Efficient, Active, Reliable and Trustworthy) the Company and each employee, giving them a physics bent to the Company to show them how programme to meet this strategic goal as well as clear set of shared competencies that transcend their future could look and plant a seed of interest provide practical value for every employee any particular set of skills, which, of course remain Recruitment in an aviation career While macroeconomic conditions remained vitally important difficult last year, Air Astana must recruit and retain In 2015, despite difficult macroeconomic conditions, a range of highly skilled employees and, as a result, the Company created 21 net new jobs Including HR Business Partnership continues to closely monitor and invest in employee Heart Awards replacements for turnover and maternity, a total of branding We also maintained a continued focus on 595 new people joined Air Astana For the year, total We developed a new structure last year for automation of business processes to achieve better In 2015, we held the first annual Heart Awards to employee turnover stood at 9% Indeed, we continue three departmental business partners who are outcomes, as well as a firm focus on occupational recognise the Company’s outstanding employees The to seek talented pilots, air and ground crew able to work closely with their department For health and safety, where continued improvements 20 winners were selected on the basis of 360-degree Therefore reviewed the process for recruiting HR, this structure allows us to carry out internal are no excuse for complacency feedback forms filled out by all of our employees cabin crew and pilots as part of the Ab-initio communications more effectively, help spread and selecting from a shortlist of 120 nominations programme to ensure prompt training for new best practices through departments and involve The voting used a methodology developed by recruits As part of our goal to recruit people with line managers in executing change We have New Competencies Model international consultancy firm SHL based on the the right skills to become great pilots, we held been able to transform these partners into HEART values model This rigorous methodology open-door days in April and October for our Ab consultants, who can give advice, regardless of Last year, we centralised our efforts on HEART demonstrates to all employees, winners and voters Initio pilot training programme in seven cities in their specialty, in career advances, workplace and developed a new model of competencies alike, that the award is truly fair and objective Kazakhstan: Almaty, Astana, Karaganda, Aktobe, norms and regulations, managerial development in line with our HEART Values that serve as the The conduct of the 20 winners best reflected Pavlodar, Ust-Kamenogorsk and Shymkent Some and performance management foundation for employee appraisals, the HEART HEART values both in and out of the workplace All 600 people took part in the events Awards and training programmes To ensure 120 nominees received recognition in the form of pins We also continued our successful programme of objective understanding of the requirements, in the shape of a heart, while the 20 winners won internships with our ground services staff in Almaty Automating processes we developed indicators for each competency, trips with their families to Antalya at the Company’s and Astana Some 33 trainees were selected to outlining employee conduct that is independent of expense We are pleased to say that we very much take part and 11 were subsequently hired Last year was one of optimisation and automation their seniority or place in the reporting chain plan to make the awards a tradition of internal processes New reporting and functions were added to the existing ERP system and we Employer Branding expanded to module for employee self-service Creating applications for changing the staffing H - HOSPITALITY E - EFFICIENCY A - ACTION R - RELIABILITY T - TRUST To attract and retain top talent, Air Astana seeks allows you to track the history of a particular post, Attitude toward Business processes Anticipation of Consistency in Adherence to work to be an employer of choice in Kazakhstan In 2015, the formation of an output sheet saves time and clients and and continual changes and ability achieving results and the Company we were identified as one of the most attractive allows automatic differentiation according to post colleagues improvement to adapt to change employers in Kazakhstan, the survey was carried In addition, the Company transitioned to the out by international company Universum in automated development of the organisational Interpersonal Work management Problem solving Meeting Code of Business cooperation with HeadHunter Kazakhstan portal structure in the Ingentis system, the main relationships (one’s own and of and decision- deadlines Ethics and culture Universum surveys annually over 1 million students advantage of which is speed building the subordinates) making of fairness in 55 countries worldwide More than 10,000 organisational structure, its precision and ability (impartiality) Kazakhstani students and professionals were to build it according to grades We also began polled, based on a unique methodology based on work on introducing electronic document flow, External Ability to clearly Innovation and Punctuality and around 40 attributes Air Astana achieved the top with the transition planned for 2016-2017 This appearance and express one’s creativity attendance seven positions in all eight categories In particular, work has already had a positive impact on the HR self-presentation thoughts in writing we won first place among Humanity students function as they reduce various risks, as well as and speaking and professionals; second place among Business help us with our Company’s environmental goals

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Strengthening the Heart. Annual Employee compensation OUR COMMUNITIES Management Conference and benefits

A key event last year was the annual management We are proud to say that, despite the objective At Air Astana, we are committed to the principles We were also proud to work with the Mercy conference, this year themed “Strengthening the macroeconomic situation in our home market and of good corporate citizenship We are committed Fund to transport child cancer survivors to Heart” Speeches at the conference were focused on many others in our region, we did not reduce the to giving back to the communities where we live participate in the Game of Winners Universal the Company’s internal goals, linked to such factors salary or package of benefits offered to employees and work As Kazakhstan’s flag carrier, we feel a Children’s Games Kazakhstani kids took five as the macroeconomic situation in the country and last year In December, all our employees received particular duty to lead by example Since 2001, medals at the games wider region Importantly, however, the priority an annual Year End bonus In addition, we expanded we have focused in particular on children’s health, Last year we also continued to support the Ayala was placed on cutting costs, which Air Astana has our contracts with health clubs to provide gym supporting our veterans and fostering Kazakhstani Charity Foundation in its “Breathe Life” project already effectively done, making it one of the memberships and international culture both at home and abroad Under the project, the foundation uses funds to lowest cost unit carriers Rather, the focus was on In addition, the Company has done a lot of Our approach to philanthropy mirrors our approach provide infectious disease clinics with resuscitation new opportunities and strategic directions preparatory work this year to get approval of the to our commercial business and is governed by our equipment for children We placed collection boxes The interactive part of the conference was a case Board of Directors for the implementation of the Community Investment policy that sets out standards for the foundation at Air Astana ticket offices in study focused on studying a situation that had taken Corporate Pension Plan for all employees based in for efficiency and transparency for all of our work in Almaty, Astana and Atyrau and gathered donations place at one of the world’s largest automakers in 2015 Kazakhstan to supplement the existing government this area We initiate and support programmes that totalling more than KZT 1 7 million and received widespread coverage Participants were scheme This is a major benefit, which is being are proven to be effective and deliver the maximum Also last year, Air Astana organised a trip and asked to develop an action plan for rehabilitating the implemented in Kazakhstan for the first time The impact The airline’s employees at all levels are also provided free round-trip tickets to Astana for brand and to share it with the others As result of benefit is planned for implementation in 2016 engaged with our communities, and volunteer work hearing impaired children from the Meirim School the case study, conference participants concurred provides yet another source of job satisfaction in Taraz The students were able to enjoy a two- that organisational culture requires constant day visit in the capital and take part in a cooking attention, requiring the participation of all players, Outlook for 2016 competition organised by the airline and the Ayala as well as transparency in both internal and external Supporting Our Veterans Charity Foundation communications The outlook and key plans for the HR department Among other efforts, we worked with a Medical in 2016 include: Every year since our founding, on the eve of Fund to provide wheelchairs to disable children Victory Day (9 May), we have honoured Kazakhstani Also, to celebrate the Day of Knowledge, Air Astana Occupational Health and Safety ƒ Continued work on HEART Values to make veterans of World War II In addition, throughout the and the Shugyla Fund donated 50 stationery sets them more effective and relevant and integrated reporting period, Air Astana has provided veterans to children from low-income families In another Our commitment to world-class safety in the air into our training with free transportation to visit old comrades or initiative volunteers distributed strollers, books, means a commitment to occupational wealth We family in Kazakhstan and throughout the CIS Some toys and clothing from the forgotten luggage continued our work to maintain world-class health ƒ Our document flow system is expected to go 2,100 free tickets were issued warehouse to needy families and safety certification for our workplaces In March, live in 2016 Air Astana also celebrated our veterans with a we held an in-house tender among our employees special concert to mark the 70th anniversary of the to conduct the internal audit according to OHSAS ƒ We will continue to perfect our appraisal end of World War II at the Kasteyev Kazakh State Support for Culture 18001:2007 ahead of a planned third-party audit We system, introducing changes to align the annual Museum of arts Our employees performed some of selected 19 out of 60 candidates, and they undertook appraisal with staff, such as aircrew, who are the famous songs and dances of the 1940s We all A major sponsorship project in 2015 and certification training for the standard In April, OHSAS appraised on a daily basis presented gifts to thank our heroes continuing in 2016 is our cooperation with EXPO-2017 auditors surveyed nearly 70 facilities, including four Also last year we undertook the renovation of the in Astana We are a partner and the exclusive Official subcontractor organisations ƒ We will complete a technical and financial apartment of Colonel Vassily Zhovty, a famed fighter Air Carrier of this major international exhibition As result of this work, Air Astana passed the feasibility assessment for the Air Astana Academy pilot and war veteran who marked his 94th birthday As part of our partnership, we plan to connect our OHSAS 18001:2007 in June, carried out by third party – an exciting project to leverage our brand through last year online reservation system to the official website of BSI The auditor had no negative comments Notably, a stand-alone institution EXPO-2017 (www expo2017astana com) in addition to Almaty, the audit was carried out in We are also running joint publicity efforts for the Astana, Atyrau and Aktau We remain vigilant on ƒ Our enhanced OSHAS monitoring and training Working with Children exhibition and last year one of our Embraer 190 jets the issue and since the beginning of 2015 have had programme is to expand to all remain Kazakhstan became the first of 30 aircraft in our fleet to carry the a regularly meeting OHSAS working group covering stations (Uralsk, Pavlodar, Ust-Kamenogorsk, Last year we continued our long-standing Astana EXPO-2017 logo on its fuselage In addition, workplace safety issues, reviewing incidents and Karaganda, Shymkent, Taraz, Aktobe, Kyzylorda relationship with the Mercy Fund Miloserdiye, which all arriving and transit passengers at Astana airport monitoring conditions on the ground and Kostanai) helps ill children locate and take advantage specialist will be given free vouchers that can be exchanged Despite the excellent results, we are never medical care abroad Last year, we provided 130 for tickets to the exhibition complacent on this issue, and carried further, planned ƒ We have received board approval to launch our children and their parents with complimentary air Among other cultural initiatives, the airline monitoring of workplace safety in 43 facilities during Corporate Pension Plan, an important mechanism tickets allowing them to travel to receive treatment sponsored a multimedia exhibition of French the second half of the year We also continue develop for retaining talent at medical facilities outside of Kazakhstan expressionists We also sponsored a media summit our system for notification of workplace incidents and injuries and continued to held one-day workshops for ƒ We plan to improve our package of voluntary employees to learn first aid (95 people took part) and supplementary medical insurance benefits for our further training for managers (70 took part) flight crew in 2016

70 71 ANNUAL REPORT 2015

OUR ENVIRONMENT One of the most important ways in which Air subcontractors who work with chemical products Astana reduces its environmental impact is by at airports take mandatory annual training on maintaining a young and fuel-efficient fleet In 2015, environmental protection Air Astana uses Clariant the average operating age of our 30-plane fleet fluid for de-icing, which is recognised worldwide At Air Astana, we are acutely aware of our In addition, in October 2013, the ICAO Assembly was 6 8 years Of these, 21 aircraft were supplied to for being safe for people and the environment responsibility towards society and future generations agreed a deadline for introducing a global market- the airline between April 2011 and June 2014 from All of our de-icing and anti-icing procedures meet and our duty to take care of the environment We based mechanism addressing international aviation leading global aircraft manufacturers international aviation regulations and requirements, continue to work across our business to reduce carbon emissions by 2016 and applying it by 2020 Our fleet renewal process has included the such as EU OPS-1, as well as the standards and emissions and waste generation, the main components While these goals appear ambitious, new complete replacement of our Fokker-50 turboprop recommended practices published by IATA, ICAO, of our environmental footprint Our actions in these generation airplanes and engines together with fleet with Embraer-190 jet aircraft, as well as the EASA, FAA, Transport Canada, AEA and SAE In 2015, areas are guided by domestic legislation, industry improved flight management by airlines, air traffic introduction of new Airbus A320/A321 and Boeing we acquired two new de-icing vehicles using highly standards and global best practices control and airports, combine to make these goals 767-300ER obtained directly from the manufacturer efficient technology that substantially reduces the fully achievable Moreover, these steps should also We also have an on-going programme to reduce consumption of de-icing fluid help reduce air and noise pollution near airports, weight on our aircraft to reduce fuel consumption and Progress in 2015 two additional externalities of the aviation business emissions Examples include using lighter facilities We estimate that 99% of Air Astana’s carbon for on-board services and moving to paperless Reducing waste In 2015, in line with Kazakhstani legislation, we emissions come from the combustion of aviation documentation through systems such as the Electronic generation developed a series of plans and programmes for fuel, and the rest from secondary sources such Flight Bag for pilots and Crew Pad for cabin crew addressing our impact on the local environment, as motor vehicles and ground fleet and facilities As a result of these measures, we have achieved While reducing CO2 emissions is a critical part of including: While the International Air Transport Association a steady reduction in recent years in emissions as Air Astana’s environmental policy, another priority (IATA) has calculated that the airline industry is measured by tCO2 per average seat kilometre (ASK) across all areas of our business is reducing waste ƒ Project for establishing limits for pollutants in a minimal contributor to global environmental In line with local legislation, the airline’s pollutant generation and promoting recycling where possible Almaty and Astana pollution, we are committed to reducing our emissions in Almaty in 2015 amounted to around One example is the use of e-tickets and online ƒ Programme for waste management carbon footprint 17 6 tonnes, compared to an established limit of registration, which reduces the amount of paper ƒ Programme for environmental oversight Like other airlines, Air Astana seeks to reduce 32 1 tonnes Emissions in Astana amounted to 8 9 tickets We are also looking to introduce our mobile ƒ Action plan for protecting the environment emissions through three main methods: tonnes, compared to a limit of 16 tonnes boarding product in 2016 In addition, we continue to reduce the overall volume of printed material, In 2015, Air Astana spent nearly KZT40 million ƒ Operating more fuel-efficient aircraft and current IT initiatives are designed to create on environmental measures, in addition to broader ƒ Modifying the current fleet Efficient Routing paper-free systems throughout the business investments in modern equipment and aircraft ƒ Flying more efficiently Looking ahead, we are considering procurement that are more efficient and less polluting Key Air Astana is also trying to lower unit fuel policies that will introduce sustainability criteria environmental measures include: A fourth method is seeking alternative or more consumption through “green” flight crew decisions for products and services carbon-efficient fuels while recognising that such on flight planning, flight speed, take-off and landing Last year, we launched a programme to collect ƒ Improved technical servicing of fuel equipment alternatives are not available or commercially viable trajectories and weight of fuel on board Pilot decisions and recycle waste paper and household batteries to reduce emissions from this source at present are supported by advanced systems to ensure safety Between April and the end of December, we ƒ Care for land adjacent to our facilities Air Astana also participates in the EU Emissions is the overriding factor when decisions are made collected more than 20 tonnes of waste paper ƒ Separate collection and processing of hazardous Trading System (EU-ETS) and its emissions monitoring In addition to upgrading and improving the and five tonnes of batteries We see this initiative waste plan was approved by the German Emissions Trading aerodynamics of its aircraft, Air Astana is also as a way to increase consciousness of recycling ƒ Regular measurement of pollutants Authority Verification covered the following: reducing emissions by flying the shortest routes We among our employees and Kazakhstani society have improved our flight planning system, which more widely The airline maintains contracts with specialised ƒ Completeness of flight and emissions data and optimises flights and hence cuts fuel use In addition, each month our station managers companies that remove and process industrial compliance with data from Air Traffic Control (ATC), collect information about the amount of loaded food waste All potentially harmful waste is sorted and compiled by the European Organisation for the and the number of transported passengers The stored separately Safety of Air Navigation (EUROCONTROL) De-icing analysis of this information allows more effective ƒ Consistency between reported data and planning for catering and minimises waste We documented volumes Aircraft de-icing and anti-icing have a significant take a similar approach to provision flights with Our Carbon Footprint ƒ Consistency between aggregated fuel impact on the environment Our employees and equipment and other supplies consumption and purchase records According to IATA, the global airline industry is estimated to produce less than 2% of worldwide The EU-ETS included flights to and from non- manmade CO2 emissions While the industry is European Economic Area (EEA) countries from 2012, not a major contributor to carbon emissions, it has but suspended the enforcement on flights to and set ambitious goals for the years ahead, such as from non-EU countries in April 2013 Until the ICAO improving fuel efficiency by 1 5% per year until global mechanism is introduced in 2016, under 2020, achieving carbon neutral growth after 2020 interim law this legislation has also been amended and lowering lower emission levels to 50% of 2005 so that only emissions from flights within the EEA levels by 2050 apply under the EU-ETS

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CORPORATE STRUCTURE MANAGEMENT TEAM

Peter Foster Ibrahim Canliel President & CEO Senior Vice President, Marketing and Sales PRESIDENT Peter entered the airline industry immediately and CEO after graduating from Cambridge University in Ibrahim started his career in tourism, where 1982, as a management trainee of John Swire he was active in several roles over nine years, and Sons (HK), the owner of Cathay Pacific ending as a manager of a major tour operator Airways (CPA) From 1982–99, he served in various in Turkey In 1998, he joined KLM, and after a management and senior management positions brief appointment in the Middle East, he took a Corporate with CPA in Hong Kong, Asia, Australia and Europe, Planning and Corporate regional management role for Central Asia and the Finance Safety and Quality and participated in business management training Commercial Communications Caucasus In 2003, he joined Air Astana, working Assurance at INSEAD, France In 1999, he left CPA to head in the Commercial Planning, Marketing and Sales the rehabilitation team of Philippine Airlines departments Ibrahim holds a bachelor’s degree From 2002 to 2005, he served as Chief Executive in Economics from Marmara University and an Officer of Royal Brunei Airlines, before becoming MBA from Bosphorus University, and speaks Management President of Air Astana five languages During his employment with Air Engineering and Human Resources Accounts & Risk Operations Astana, he served as a board member of the Maintenance & Administration Management Alma Aliguzhinova European Business Association of Kazakhstan Senior Vice President, Strategic between 2005 and 2008 and Commercial Planning Gerhard Coetzee Alma was among the first employees to join Air Senior Vice President, IT & e-Business In-flight Services Ground Services In-flight Magazine Astana before the start of commercial operations Corporate Safety Compliance at its initial stage of development in 2001 She began as Corporate Development Manager Gerhard started his career as an Air Force before progressing to the position of Corporate navigator and is a qualified Accident Investigator Development Director, Vice President, Planning, with qualifications in (Aviation) Safety Programme and her current position, Senior Vice President, Government, management from various institutions including Sales and Strategic and Commercial Planning Alma is a Legal Regulatory Affairs Procurement University of Southern California He holds a Marketing Bolashak alumnus and holds an MBA from East and Security Bachelor’s degree in Commerce and an Honours Carolina University, US degree in Transport Economics from University of South Africa He has been actively involved Yerbol Ospanov in flight safety for the past 25 years including as Senior Vice President, Government, Staff Officer Flight Safety in the South African Air Fuel Regulatory Affairs and Security Force and Managing Consultant with BAE Systems Management Yerbol brings with him over 35 years of Anthony Regan unique experience and education in the aviation Senior Vice President, Operations industry In 1985, he earned an aviation business management qualification, following graduation Anthony has over 35 years of experience in from the Officers Training faculty of the Civil aviation He was Head of Flight Operations and OPS Aviation Academy in Leningrad, Russia In 2002, he post holder at Air France/KLM subsidiary Cityjet obtained a Bachelor of Law degree from the law from 2001 to 2012, where he was responsible for school of Kazakh National University Since 1992, all aspects of Flight and Cabin operations Prior to he has served as Chief Pilot for the fleet of the that, he was a Director at Parc Aviation His early President of the Republic of Kazakhstan Yerbol career was as a pilot with the Irish Air Corps where joined Air Astana in 2005 and is currently a Senior he held a number of operational appointments, Vice President as well as a pilot-instructor on including Chief Flying Instructor retiring with the Boeing 757/767s He holds FAA ATPL and Transport rank of Commandant He holds a current JAA and Canada ATPL certificates following flight training FAA Air Transport Pilot Licence He is a graduate at the Sheffield School of Aeronautics (Florida, US) of University College Dublin in Mathematics and and Canadian Airlines (Vancouver, Canada) Mathematical Physics

74 75 ANNUAL REPORT 2015

and Transport divisions Under her leadership, a joining Air Astana, she worked as part of the Financial Analyst From June 2012 to January 2014 she John Wainwright transparent system of recruitment and corporate delegation of the European Commission covering was a Head of Management Accounts Since January Senior Vice President, training was created and a performance evaluation Kazakhstan, Kyrgyzstan and Tajikistan She holds 2014, she has held the position of the Vice President Engineering Group and reward system was introduced Yevgeniya a master’s degree in International Relations Bella Management Accounts and Risk Management regularly participates in professional conferences has attended numerous training activities abroad John has over 35 years of aircraft maintenance and congresses as an expert, moderator and Russel Ellis experience, both in Base and Line maintenance He speaker She has numerous diplomas and certificates Dilyara Kunkhozhayeva Vice President, Operations Control was educated in the United Kingdom and trained in management and personnel management Vice President, Procurement at the Royal Aircraft Establishment, Bedford After Russel has nearly three decades of aviation spending almost 20 years working for Britannia Galina Umarova Dilyara joined Air Astana in early 2006 as experience, and he held several senior management Airways, he moved to South East Asia, working for Vice President, Fuel Management Financial Analyst She holds a Bachelor’s and positions in airlines in South Africa and the Middle Royal Brunei Airlines in Brunei, Vietnam and Nepal a Master’s degree in Business Administration East before joining Air Astana in 2007 His early When he left Brunei to immigrate to Australia, he Galina has extensive experience in the airline and Accounting from KIMEP (Almaty), where experience was in the military, where he qualified held the position of Head of Maintenance John industry Before joining Air Astana, she was Director she majored in management and finance After as a navigator and instructor He holds an MBA from joined Air Astana in 2006 as the Maintenance of Finance at Astana International Airport JSC Galina graduating, she worked at Ernst and Young the University of Liverpool, UK He is responsible for Manager He is a holder of an EASA B1 and C graduated from Aktobe State University named after and KIMEP in Almaty After becoming Head of the day-to-day operational control of the airline and category Maintenance Engineers License K Zhubanov and holds a master’s degree in Public Management Accounts in 2008, Dilyara was emergency response readiness Administration from KIMEP in Almaty appointed Director of Procurement in June 2012 Alima Zamanbekova and became Vice President, Procurement, in 2013 Richard Ledger Chief Accountant Aidar Kashkarbayev Vice President, Worldwide Sales Vice President, Legal Affairs Mergali Alzhanov Alima joined the airline in mid-2003 as Chief Vice President, Flight Operations Richard joined Air Astana in March 2006 as Regional Accountant Prior to joining Air Astana, she held Aidar has over 15 years of experience in General Manager for the EU, US and Canada Based in Chief Accountant positions in the oil industry Alima jurisprudence He started practicing law at the Mergali has extensive experience in the aviation London, he was primarily responsible for the creation graduated from the Institute of Foreign Languages Ministry of Foreign Affairs of the Republic of industry Educated at Aktobe Civil Aviation Flight of a sales network throughout the region Before (English faculty) and from Kazakh State Academy Kazakhstan in 1993 Prior to joining Air Astana, Aidar School in 1980, he began his career as a co-pilot joining Air Astana, he worked in corporate sales for of Management, specialising in Accounting and worked for Denton Wilde Sapte law firm and KPMG on the Yak-40 in the Kokchetav aviation squadron, Singapore Airlines in London for five years, before Audit She is a Certified Accountant and a member He also worked as a manager of the legal department and in 1991, he transferred to the Almaty squadron becoming Sales and Marketing Manager, UK, at Royal of the Chamber of Professional Accountants at Karachaganak Petroleum Operating B V based in After working for several airlines, Mergali joined Brunei Airlines in January 2005 Richard started his Karachaganak oilfield, Western Kazakhstan Aidar Air Astana in 2004 as a captain on Boeing 757s travel industry career in 1993, after graduating from Michael McDonagh graduated from Kazakh National University and Lancaster University with a MA in Travel and Tourism, Senior Financial Adviser completed a study placement at Southern Illinois Aiman Tileubayeva and from the University of London (UCL) with a BA in University, US, under the visiting scholar programme Vice President, Geography Richard relocated to Almaty in February Michael has over 40 years of aviation experience, Network and Revenue 2009, assuming the position of Director Sales having started his career at Aer Lingus where Chamindra Lenawa Management Worldwide and in January 2014 was promoted to Vice he held various financial management positions Vice President, IT and e-Business President, Worldwide Sales including secondment on overseas airline Aiman joined Air Astana in November 2003 as management contracts, mainly in Africa He left Aer Chamindra is an IT professional with management Commercial Planning Manager, responsible for Margaret Phelan Lingus in 1994 and, before joining Air Astana, he experience at three national carriers and initially joined schedule and network planning Before that, she Vice President, In-Flight participated in various airline financial management Air Astana as Manager, IT Business Systems He then worked at Air Kazakhstan for five years Aiman Service Delivery and consultancy projects in Africa, Canada, the held the position of Director of IT and e-Business graduated from the Kazakh National University Caribbean, South America and Eastern Europe He Chamindra holds a Master’s Degree in Business and has a PhD in Applied Mathematics She Margaret has nearly two decades of experience is a graduate of University College Dublin with a Administration and a Bachelor of Science Degree was appointed Director, Network and Revenue in the aviation industry Educated at the College of Bachelor of Commerce Degree He is a member of in Electronics and Telecommunication Engineering Management, at Air Astana in February 2009, Commerce Ireland, Margaret held the positions of the Chartered Institute of Logistics and Transport Further, he is a certified PMP (Project Management and became Vice President Network and Revenue Head of Cabin Crew Training and Standards and Professional, PMI – US) and a Chartered Information Management in January 2013 Head of Cabin Services while at the Air France/KLM Yevgeniya Ni Technology Professional of British Computer Society subsidiary CityJet from 1995-2012 Margaret has also Vice President, Chamindra holds certifications in different IT domains Aizhan Omar completed a number of EU OPS, management and HR and Administration and is a professional in airline reservations, ticketing, Vice President, instructor training courses departure control systems and business operations Management Accounts Yevgeniya is a graduate of Karaganda State and Risk Management Grigoriy Zyryanov University named after E A Buketov and holds Bella Tormysheva Director, Commercial Engineering diplomas in foreign languages and law She joined Vice President, Aizhan is a graduate of Taraz State University Air Astana in October 2002, as Executive Assistant Corporate Communications named after M Kh Dulaty and holds Diploma in Grigoriy entered the airline industry immediately to the President Since September 2005, she has International Economic Relations, also she holds an after graduating from the Civil Aviation Academy been the head of the HR Department, which also Bella has over 15 years of experience in public MBA from KIMEP (Almaty) with major in management of Kazakhstan in 2001, as a Senior Engineer and oversees the Health and Safety, Administration relations, information and cultural activity Before and finance She joined Air Astana in August 2006 as Technologist at Aircraft Repair Plant 405 He then

76 77 ANNUAL REPORT 2015

served as Deputy Chief of Production Planning a co-pilot in the Fokker 50 fleet and progressed in career as an aircraft engineering apprentice in and Control Department at Air Kazakhstan, before the flight operations management team from co- Rafael Taizhanov the Royal Air Force, followed by several years becoming Maintenance Programme Engineer in the pilot to chief pilot In 2013 Marat was appointed as Director, Commercial Planning supporting military fast jet aircraft Later, Keith Maintenance Planning department of Air Astana Director, Flight Operations Support became a licensed aircraft engineer and gained in 2004 Later, he was promoted to Maintenance Rafael was among the first employees to join a vast experience of commercial aircraft He has Planning Manager In 2010, Grigoriy was responsible Adriaan Jan Meijer Air Astana at its initial stage of development His taken assignments all over the world, including for launching Air Astana’s Base Maintenance team, Director, Standards career in aviation began in 1998 in the scheduling Chile, Alaska, Belgium, Saudi Arabia, China and as well as obtaining EASA certification for its department of Air Kazakhstan Rafael graduated New Zealand Previously, as a member of the DHL workshops in April 2011 He was appointed Director Adriaan commenced his career as a pilot with distinction from the Physics Department of management team, he supported their aircraft of Commercial Engineering in April 2012 to oversee at KLM Cityhopper in 1978, initially as a first the Kazakh State University He holds a SMART fleet and helped to launch two new airlines based the technical aspects of fleet management officer on the DC-9 and later as a captain on the MBA Diploma from the Samruk-Kazyna Corporate in the UK and Germany Keith joined Air Astana in Fokker 50, later becoming a training captain and University and IATA diploma in Sales and Marketing November 2013 as Engineering Manager Azamat Ospanov standardisation officer, before progressing to the He was appointed as Director, Commercial Planning Director, Engineering rank of Chief Pilot He moved to the Boeing fleet at Air Astana in 2014 Alexandr Neboga Finance and Materials with KLM and flew the Boeing 767 as a training Director, Ground Services Management captain On retiring from KLM he became Director Serik Rys-uly of Operations at Dutchbird, who were operating Director, Sales CIS Alexandr graduated from Eurasian National Azamat studied economy, accounting and B757 and A320 aircraft, where he implemented University with a degree in International Relations audit at Suleyman Demirel University He started ETOPS and CATIIIB operations in addition to acting Serik has worked at Air Astana since 2009 when and started his career at Air Astana in 2005 working his professional career with Ernst and Young and as the JAR-EU Operations Postholder for operations he joined the Sales Department team in Kazakhstan as a ground handling agent in the Ground Services became an experienced audit manager with KPMG Apart from his wide-ranging training, operational After the opening of the Almaty-Tashkent route department Alexandr has held various positions Azamat joined Air Astana in April 2009 as a finance and standards experience, he has worked with IATA in 2010, he became the head of Air Astana’s with high levels of responsibility throughout his manager specialising in accounting and finance as Deputy Director Flight Operations and Head of representative office in Uzbekistan From 2013 to career at the airline and he has held management processes As a senior finance manager, he was the Safety and was a Member of the ICAO panel who 2014, Serik was the head of the sales department positions from 2010 Alexandr has managed head of airline-specific revenue accounting and was implemented the ICAO fuel SARP and Extended in the Russian Federation Before Serik joined Air the airline’s branch at the Almaty airport since responsible for the banking and treasury functions Diversion Time Operations (EDTO) Adriaan is also Astana, he worked at Talgo Kazakhstan and Prime 2013 He also completed a Management Training In January 2013, Azamat was appointed Director of a medical doctor Aviation airlines He graduated from Kazakh State Program at Cranfield University, United Kingdom the Finance department within the Engineering and Academy of Management with a specialisation in He was appointed as Director Ground Services in Maintenance group Filippos Siakkas International Economic Relations January 2016 Director, Operational Training Timur Yakupov Zhanar Zhailauova Zhanar Bimendina Director, National Development Prior to joining Air Astana, Filippos was a Director, Sales Asia Director, Human Resources Training Postholder at Olympic Air, responsible Timur is an aeronautical engineer with more than for managing all activities related to crew initial Zhanar began her career in the airline in May Zhanar joined Air Astana as a Procurement 20 years of experience After receiving a classic and recurrent training and for the integration of 2006 as a sales specialist for the EU, US and Specialist in 2003 with previous experience in HR aviation education in the former Soviet Union, he cadet pilots into the company He has also held Canada As a certified English translator with a of Intercontinental Hotel In 2005 she moved to began his career as a mechanic for aerobatic aircraft a number of management positions in the area degree from the Eurasian National University, HR department as Senior HR Adviser She holds He served in the army as an infantry weapons of Flight Operations Support including the Director she continued her education from 2004 to 2005 Diplomas in English, Finance and Legal In 2012, specialist in military transport aviation He continued of Flight Standards Filippos started his career in and took special tourism courses at the London she obtained an IATA Diploma in Human Capital his career in Kazakhstan as a technician for the Tu-154, 1989, joining Olympic Airways as a first officer Academy of Professional Training From 2006 to Management and further mastered the maintenance of the main During his career as a pilot, he has flown B737, 2014, she held various management positions in types of passenger and cargo aircraft in the former A300 B4, A300-600 as a First Officer and B737, the company’s representative offices in the UK Igor Segedin Soviet Union Timur has worked in Air Astana since its A320 as a Captain before progressing to Pilot and UAE, including sales manager for Kazakhstan Chief Pilot creation, having started as a shift supervisor He holds Instructor and Examiner and Central Asia, Regional General Manager for an engineering licence and can service more than 11 the Middle East and India, and Director of the Igor has extensive experience in aviation After types of aircraft and their modifications Aigul Omurzakova booking and sales department In 2015, she was graduating with honours from Aktobe High Civil Director, Business Planning appointed Sales Director for Asia Zhanar has an Aviation School in 1991, he was assigned as a First Marat Sekerbekov and Fleet Portfolio IATA diploma in revenue management Officer of Tupolev 134s at Almaty flight division He Director, Flight Operations Support joined Air Astana in 2002, initially as first officer, then Aigul joined Air Astana in 2004 as Junior Revenue Keith Wardle he flew as a captain and a flight instructor of Boeing Marat has worked in the aviation industry for Accountant From 2005, Aigul held the position of Director, Engineering 737NG In 2006, after successful type rating training more than 30 years with various Kazakhstani Deputy Head of Revenue Accounts She holds a on Airbus, he was assigned as a Chief Instructor of and international airlines After graduating from Bachelor’s degree in Business Administration and Keith has 30 years of aviation engineering Airbus 320 fleet where he was closely involved in Kirovograd Flight Academy of the National Aviation Accounting from KIMEP (Almaty) with major in experience He studied at Kingston University, the development and establishment of this new University of Ukraine, he began his career with the accounting and management She was appointed London, UK and gained an honour’s degree in fleet for the airline After 11 years with Air Astana, USSR’s Aeroflot In 1994, he entered the Kazakhstani as Director, Business Planning and Fleet Portfolio Aircraft Engineering and a master’s degree in Igor rose from First Officer to Senior Manager of airline industry In 2005, Marat joined Air Astana as in January 2014 Professional Engineering He began his aviation Flight Training In 2013, he was appointed Chief Pilot

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TABANKARAGAY 80 81 ANNUAL REPORT 2015

Kazakhstan is a dynamically developing country with a unique pattern of economic development.

Air Astana is the hallmark of Kazakhstan and the Company’s success is of special importance for the country.

AIR ASTANA IS A DYNAMICALLY 82 DEVELOPING KAZAKHSTANI COMPANY ANNUAL REPORT 2015

CORPORATE GOVERNANCE REPORT GOVERNANCE BODIES AND SHAREHOLDERS INTRODUCTION AND KEY PRINCIPLES GOVERNANCE BODIES Introduction decisions It undertakes to distribute information about its activities to interested parties and ensure timely At Air Astana, we view best practices in corporate disclosure to shareholders and interested parties of governance as playing a crucial role in running our reliable information about the Company This includes company efficiently Such an approach reduces the cost information about our financial situation, results of of raising capital, and contributes to the strong reputation activities, ownership and management structure and trust enjoyed among all of our stakeholders In General Meeting of Shareholders addition, as Kazakhstan’s flagship carrier, we believe The Company and its employees must behave we are a standard bearer for world-class corporate legally and ethically: Air Astana and all of its employees governance in our home country We are committed to adhere to the legislation of the Republic of Kazakhstan meeting the highest corporate governance standards Relations among the shareholders and members of the Internal Audit Service Board of Directors Corporate Secretary through the continual improvement of our corporate Board of Directors and Executive Body will be based on governance system, for which we have established mutual trust, respect, accountability and control fundamental principles outlined in this report Air Astana must maintain an effective dividend policy: With respect to dividends, we follow the rules Our Key Principles of Nomination and Corporate Social set forth in legislation and our internal regulations We Audit Strategic Planning Corporate Governance Remuneration Responsibility seek to ensure a simple and transparent mechanism Committee Committee Shareholders’ rights and interests must be for setting the amount of dividends and terms of Committee Committee protected: We pledge to protect and respect the rights their payment Our dividend policy will be sufficiently and interests of all shareholders as stipulated by law transparent and available to shareholders, potential We are committed to efficient management, asset investors and the general public of Kazakhstan President & CEO growth, financial stability and profitability The Company must maintain effective human The Board of Directors must manage effectively: In resources policies: We are committed to protecting the exercising its duties, the Board of Directors undertakes rights of our employees as stipulated by legislation and to ensure that the interests of all shareholders are engaging with them to solve social issues and manage fully observed, its own deliberations and actions are working conditions Shareholders carried out openly, and it takes responsibility for the Air Astana is committed to protecting the Company’s actions Sovereign Wealth Fund “Samruk-Kazyna” JSC BAE Systems (Kazakhstan) Limited owns 49% of environment: In our day-to-day operations and long- owns 51% of Air Astana Air Astana The Executive Body must fulfil its role effectively: term strategy, we are committed to environmentally sustainable growth We follow the principles of Responsible for the day-to-day management of Samruk-Kazyna was created on 3 November 2008 BAE Systems (Kazakhstan) Limited, a subsidiary maximum environmental friendliness and a rational the Company, the Executive Body is tasked with through a presidential decree of the Republic of of British corporation BAE Systems plc, is engaged attitude to the environment, as prescribed by legislation implementing strategy while always adhering to Kazakhstan (dated 13 October 2008) and a government in the development, delivery and support of and according to generally accepted business standards integrity, honesty, rationality, prudence and regularity decree of the Republic of Kazakhstan (dated 17 advanced defence, security and aerospace systems October 2008) to improve the competitiveness of on land, at sea, in the air, and in space Policy for settling corporate conflicts and conflicts The Company must conduct its activities the national economy and mitigate external risks to of interest: All employees will behave in a way that independently: Air Astana will conduct its activities in domestic economic growth the best interests of its shareholders and in accordance prevents conflicts of interest involving either themselves (or related parties) or others If corporate conflicts arise, with the provisions of the Corporate Governance Code, Registered address: Registered address: those involved will find a way to settle them amicably provided that it is in compliance with the Charter Block B, 8 Kunayev street PO Box 87 to ensure the effective protection of both shareholders’ At all times, the Company will conduct its activities 010000, Astana Warwick House rights and the reputation of Air Astana independently Kazakhstan Farnborough Aerospace Centre Farnborough Principle of responsibility: The Company will Information about activities must be disclosed Hampshire recognise and respect the rights of all interested in a transparent and objective manner: Air Astana GU14 6YU parties and strive to cooperate with them to further is committed to providing shareholders with the United Kingdom necessary information required to make informed development and ensure financial sustainability

84 85 ANNUAL REPORT 2015

GENERAL MEETING OF SHAREHOLDERS ƒ Approval of the decision on entering by the Bank of Kazakhstan JSC for the issue of Letters of Company into a major transaction on extension of Credit on an unsecured basis the operating lease agreement for one Airbus A319 type aircraft Deciding on increasing the Company’s ƒ Approval of the decision on entering by the liabilities by an amount of more than $5,000,000 Company into a major transaction with Natixis Air Astana’s senior corporate governance body is the General Meeting of Shareholders. It makes in connection with entering by the Company into for the issue of the Letters of Credit on secured decisions on all key issues concerning the Company’s business. The legislation of the Republic of a major transaction on extension of the operating (cash collateral) basis Deciding on increasing the Kazakhstan, Air Astana’s Charter and other internal documents define the functions and regulate lease agreement for one Airbus A319 type aircraft Company’s liabilities by an amount of more than US$5,000,000 in connection with entering by the the activities of the General Meeting of Shareholders. ƒ Approval of decisions on entering by the Company into a major transaction for the issue of Company into Lease Novation and Amendment Letters of Credit on a secured (cash collateral) basis Agreements in relation of one Embraer 190-100LR aircraft and one Airbus A320-200 aircraft ƒ Deciding on increasing the Company’s liabilities by an amount of more than US$5,000,000 in Responsibilities ƒ Election of the members of the Board of Directors ƒ Approval of the decisions on entering by the connection with entering by the Company into a of the Company Company into major transactions with JSC Citibank transaction with Citibank Kazakhstan JSC on the The General Meeting of Shareholders has Kazakhstan and JSC AB Bank of China Kazakhstan for issue of Letters of Credit and bank guarantees exclusive responsibility, without limitation, for the ƒ Approval of the amount and terms of remuneration the issue of Letters of Credit on an unsecured basis following matters: and compensations to the Independent Directors of Deciding on increasing the Company’s liabilities by ƒ Approval of the decisions on entering by the the Company an amount constituting 10% or more of the equity Company into major transactions with Air Lease ƒ Election of members of the Board of Directors, as capital of the Company or an amount of more than Corporation and AerCap Holdings N V on operating well as determination of the number of directors and ƒ Approval of the amount and terms of US$5,000,000 in connection with entering by the lease of Airbus А320 NEO/А320-200 NEO/А321- their terms in office remuneration and compensations to the President Company into major transactions 200 NEO/A321 NEO-LR type aircraft Deciding on of the Company increasing the Company’s liabilities by an amount ƒ Election, determination of the term in office and ƒ Amending the decision of the General Meeting constituting 10% or more of the equity capital of dismissal of the President, Vice President for Flight ƒ Approval of the amount of the annual bonus of Stockholders of the Company dated 30 January the Company in connection with entering by the Operations and Vice President for Engineering and payment to the President of the Company following 2015 in relation to entering into the Amendment Company into major transactions on operating lease Maintenance the results of work for the year 2014 Agreement with JSC Citibank Kazakhstan for the of aircraft increase of the facility ƒ Approval of the long-term development strategy ƒ Approval of the amendments to the Regulations ƒ Amending the decisions of the General Meeting of the Nomination and Remuneration, Strategic ƒ Approval of the decisions on entering by of Stockholders of the Company dated 15 June 2015 ƒ Approval of the short-term and medium-term Planning, Audit and Corporate Social Responsibility the Company into major transactions on the in relation to the major transactions with Air Lease business plans (development plan and annual budget) Committees of the Board of Directors of the Company procurement of jet fuel for ramp refuelling with CJSC Corporation on operating lease of Airbus A320 NEO TZK Sheremetyevo (Moscow Airport, the Russian and Airbus A321 NEO-LR or A320 NEO types aircraft ƒ Approval of the annual financial reports ƒ Approval of the amendment to the Dividend Federation), Air BP Limited (Frankfurt-on-the Main Policy Regulations of the Company Airport, Germany), Chevron Products Company, a ƒ Approval of the decisions on entering by the ƒ Approval of major and interested-party division of Chevron U S A Inc (Bangkok Airport, Company into major transactions with Consortium of transactions, as well as other transactions requiring ƒ Consideration of claims of the Shareholders against Thailand), Petrol Ofisi A S (Istanbul Airport, the STS Genpodriad LLC and Migalit LLP represented by the approval of the General Meeting of Shareholders the actions of the Company and its officers for 2014 Republic of Turkey) and Petronas Dagangan Berhad the branch office of STS Genpodriad LLC in Astana in accordance with the law BHD (Kuala Lumpur Airport, Malaysia) Deciding on for the purchase of works on construction of the increasing the Company’s liabilities by an amount of Aviation Technical Centre of the Company at Astana ƒ Purchase or financial lease of any aircraft Financial and Operational Activity more than US$5,000,000 in connection with entering International Airport, with the European Bank of by the Company into major transactions Reconstruction and Development for the financing ƒ Approval of the annual report of the Company of the construction of the Aviation Technical Centre Issues considered at the General for 2014 ƒ Approval of the decisions on entering by the of the Company at Astana International Airport Meetings of Shareholders in 2015 Company into major transactions with the group and Embraer Aviation International SAS-EAI for ƒ Approval of the annual financial statements of of banks Deutsche Bank AG, Natixis and The Royal the purchase of components and spare parts lease In 2015, 10 General Meetings of Shareholders were the Company for 2014 Bank of Scotland Plc for the issue of Letters of Credit, services and access to the spare parts pool with held, and the following issues were considered: as well as with Lukoil OJSC and Gazpromneft-Aero regard to the Embraer EJET family Embraer 190 ƒ Approval of the procedure for distribution of CJSC for the procurement of jet fuel Deciding on type aircraft Deciding on increasing the Company’s Governance and Remuneration the net income of the Company for the year 2014, increasing the Company’s liabilities by an amount of liabilities by an amount of more than US$5,000,000 deciding on payment of dividends on common stocks more than US$5,000,000 in connection with entering or an amount constituting 10% or more of the equity ƒ Deciding on the determination of the and approval of the amount of the dividend for the by the Company into major transactions capital of the Company in connection with entering composition and terms of office of the Nomination year 2014 per one common stock of the Company by the Company into major transactions and Remuneration, Strategic Planning, Audit and ƒ Amending the decision of the General Meeting Corporate Social Responsibility Committees of the ƒ Entering into an operating lease for one Airbus of Stockholders of the Company dated 19 December ƒ Approval of the decisions on entering by Board of Directors of the Company A319 type aircraft 2014 in relation to the major transaction with Halyk the Company into major transactions with Citi

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International Limited for the issue of Stand-By of Credit on secured (cash collateral) basis and 1986-1988 – Processing Engineer of Ekibastuz Station, David has worked for BAE Systems for more than Letters of Credit on secured (cash collateral) basis procurement of jet fuel Duty Officer at Ekibastuz Station (Tselinnaya Railways) 25 years He is a qualified accountant (ACMA) and and Gazpromneft-Aero CJSC and Petrosun LLP on is Finance Director of BAE Systems International the procurement of jet fuel Deciding on increasing ƒ Approval of the decision on entering by the Members of the Board of Directors Operating Group He has held a number of senior the Company’s liabilities by an amount of more Company into the Lease Novation and Amendment finance posts across BAE Systems UK businesses, than US$5,000,000 or an amount constituting 10% Agreement in relation to one Boeing 757-200 Aircraft Marat Urazbekov including in the Land, Maritime and Air sectors (or more of the equity capital of the Company in between the Company (as the Lessee), Pegasus Marat Urazbekov joined the Board of Directors David is a Board Member of the BAE Systems Main connection with entering by the Company into Aviation V, LLC (as the Original Lessor) and Aircraft of Air Astana in January 2014 He is a member of Pension Scheme and MBDA (European Missile major transactions for the issue of Stand-By Letters Solutions 700 LLC (as the New Lessor) Strategic Planning and Corporate Social Responsibility Company) Committees He has a distinguished career spanning David completed his professional CIMA about 30 years of experience in the Kazakhstani qualifications at Southampton Solent University transportation industry He is currently Deputy Chief in 1987 and started his accounting career as a Director for Asset Management of the Sovereign trainee accountant with Plessey Naval Systems in Wealth Fund “Samruk-Kazyna”, a post he has held since Addlestone, Surrey 2014 Prior to this, he was Director of the Transport Professional experience: BOARD OF DIRECTORS Asset Management Department of the Samruk-Kazyna National Fund from 2008 to 2014 Prior to this, he 2012–2014 – Finance Director, BAE Systems worked for 14 years in the Ministry of Transport of the International Operating Group Republic of Kazakhstan in a variety of senior roles He 2008–2011 – Finance Director, BAE Systems began his professional career in the railway sector Military Air and Information The Board of Directors is the governing body of Air Astana responsible for developing the Professional experience: 2004–2007 – Finance and Commercial Director, Company’s strategy, general management of its activities and overseeing the activity of the BAE Systems Submarines Executive Body. The Board of Directors performs its functions in accordance with the Charter, 2014 to present – Deputy Head of the Asset 2000–2003 – Finance Director, BAE Systems the Corporate Governance Code and other internal Company documents. Management Department of the Sovereign Wealth Maritime Operations Fund “Samruk-Kazyna” 1998–1999 – Finance Director, Vickers Shipbuilding The Board of Directors consists of six members elected by the General Meeting of Shareholders, 2008 to 2014 – Director of the Transport Asset and Engineering Ltd with two members nominated by the Sovereign Wealth Fund “Samruk-Kazyna”, two members Management Department of the Sovereign Wealth 1995–1997 – Finance Director, GEC Marconi nominated by BAE Systems and two independent directors. Fund “Samruk-Kazyna” AsuteClass Ltd 2006 to 2008 – Chairman of the Railway Committee of the Ministry of Transport and Communications 2005 to 2006 – Deputy Chairman of the Railway Alan Fraser Committee of the Ministry of Transport and Alan Fraser joined the Board of Directors of Composition of the Board of 2008-2014 – Managing Director of the Sovereign Communications Air Astana in January 2015 He is a member Directors as at 31 December 2015 Wealth Fund “Samruk-Kazyna” 2004 to 2005 – Director of Railway Transportation of the Strategic Planning and Corporate Social 2006-2008 – Director of Transport Asset Department of the Ministry of Transport Responsibility Committees A veteran financial and Management of Samruk Holding JSC 1997 to 2003 – Deputy Director of Railway operational executive, he has worked for many Chairman of the Board of Directors 2004-2006 – Chairman of the Rail Transportation Department of the Ministry of years in BAE Systems companies, heading up the Communications Committee of the Ministry of Transport Regional Aircraft division for more than a decade Nurzhan Baidauletov Transport and Communications of the Republic of 1994 to 1997 – Division Head, Railway Nurzhan Baidauletov has been the Chairman of Kazakhstan Transportation Department of the Ministry of Professional experience: the Board of Directors of Air Astana since 2008 He 2003-2004 – Deputy Minister of Transport and Transport 2002—2014 – Managing Director, BAE Systems is a member of the Nomination and Remuneration Communications of the Republic of Kazakhstan 1991 to 1994 – Chief Engineer, Arys Locomotive Regional Aircraft Committee He is currently Chief Director for Asset 1998-2003 – Head of the Rail Transport Depot of Almaty Railways 1999—2002 – Strategy & Business Development Management of the Sovereign Wealth Fund “Samruk- Department of the Ministry of Transport and 1989 to 1991 – Senior Adviser, Arys City Committee Director, BAE Systems Regional Aircraft Kazyna” Since 2012, he has been the Chairman Communications of the Republic of Kazakhstan of People’s Deputies 1999—1999 – Director, Merger Finance, BAE of the Board of Directors at National Company 1997-1998 – Head of Akmolinskaya Railways, 1986 to 1989 – Master, Senior Master, Chief Systems Kazakhstan Temir Zholy JSC, and since May 2012, the Kazakhstan Temir Zholy Technologist, Arys Locomotive Depot of Almaty 1998—1999 – Managing Director, Heckler and Chairman of the Board of Directors of Kazakhtelecom 1997 – Deputy Head of Akmolinskaya Railways, Railways Koch GmbH JSC His distinguished career in the Kazakhstan Head of Pavlodar Branch of Railways 1995—1997 – Financial Director and Strategy transportation industry spans about three decades 1996-1997 – First Deputy Head of the Pavlodar Director, Royal Ordnance Plc Mr Baidauletov is a recipient of the Kurmet Medal Branch of Tselinnaya Railways David Cole 1989—1995 – Financial Director, British 1990-1996 – Head of Pavlodar Station David Cole has been a member of the Board Aerospace Civil Aircraft Division 1989-1990 – Deputy Head of the Transportation of Directors since March 2013 He is a member of 1984—1989 – Financial Accountant, British Professional experience: Department of the Pavlodar Branch of Tselinnaya Nomination and Remuneration Committee Aerospace Civil Aircraft Division 2014 to present – Chief Director for Asset Railways Management of the Sovereign Wealth Fund 1988-1989 – Chief Engineer of Pavlodar-North “Samruk-Kazyna” Station, Pavlodar

88 89 ANNUAL REPORT 2015

Independent Director of the Corporate Social Responsibility Committee ƒ Provide preliminary approval and submit the ƒ Approval of Teheran, Iran, as the Company’s new and a member of the Audit and the Nomination and short-term and medium-term business plans (the flight destination outside Kazakhstan Dmitriy Larionov Remuneration Committees Lord Hesketh has had a development plan and annual budget) for final approval Dmitriy Larionov has been an Independent long and distinguished career in public service and by the General Meeting of Shareholders, as well as any Financial and Operational Activity Director since 2008 He is Chairman of the Audit, international business In 1997, he was invested as a amendments to it, including capital expenditure not Nomination and Remuneration, and Strategic Knight Commander of the British Empire provided for in previously approved business plans ƒ Preliminary approval of the annual financial Planning Committees and a member of the Corporate statements of the Company for 2014 Social Responsibility Committee He is a leading Professional experience: expert on accountancy and financial reporting Participation of the members ƒ Consideration of the report on the preliminary 1993-2010 – Non-Executive Deputy Chairman, of the Board of Directors in results of financial and operational activity Babcock International meetings in presentia in 2015 (implementation of the budget and development plan) Professional experience: 1994-2007 – Chairman, British Mediterranean of the Company for 12 months of 2014 2015 to present – Consultant, Centre for Financial Airways Reporting Reform, World Bank 2004-2005 – Treasurer, the Conservative Party In 2015, the Board of Directors held 15 meetings, including four meetings in presentia. 2015 to present – Independent Director of 1991-1993 – Government Chief Whip in the House National Company Kazakhstan Engineering of Lords, Privy Councillor Name Participation Participation in Participation in Participation in in meeting by meetings by voting meetings via decision-making, % 2013 to present – Independent Director of the 1991-1993 – Captain of the Honourable Corps, presence in person in absentia conference call National Company Astana EXPO-2017 Gentlemen at Arms Nurzhan Baidauletov 4 100% 2009 to present – member of the Consultative 1990-1991 – Minister of Industry, Department of Board on Accounting and Auditing under the Trade and Industry Marat Urazbekov 2 2 100% Ministry of Finance of the Republic of Kazakhstan 2008 to 2015 – Independent Director of David Cole 3 1 100% Kazakhtelecom Responsibilities of 2008-2010 – member of the Developing the Board of Directors Alan Fraser 4 100% Nations Committee, International Federation of Accountants The competence of the Board of Directors includes, Dmitriy Larionov 4 100% 2005 to 2015 – Partner, BDO Kazakhstan Audit without limitation, the following actions: 2005 and 2012 – Consultant to the World Bank Lord Thomas 4 100% 2003-2010 – Deputy Chair, member of the ƒ Determine Air Astana’s development priorities, Alexander Hesketh Board, Chamber of Professional Accountants of the preliminarily approve and propose the long-term Republic of Kazakhstan development strategy for approval by the General 2004-2005 – Local Accounting Expert, Regional Meeting of Shareholders ƒ Consideration of the annual report of the Financial Sector Development Project, Asian Issues considered by the President of the Company on the results of financial Development Bank ƒ Provide preliminary approval of the annual Board of Directors in 2015 and operational activities of the Company for 2014 2001-2004 – Consultant in Accounting, financial statements Accounting Reform Department, USAID Enterprise In 2015 the Board of Directors considered the ƒ Proposals to the Annual General Meeting of Development Project, Pragma Corporation ƒ Submit matters for consideration and resolution following issues: Stockholders of the Company on the procedure for 1999-2001 – Lecturer in Accounting, Kazakhstan by the General Meeting of Shareholders pursuant to distribution of the net income of the Company for Institute of Management, Economics and Strategic the law and/or the Charter Strategic Development 2014 and the amount of the dividend for 2014 per one Research (KIMEP) common stock of the Company 2013 – Harvard Business School, Executive ƒ Approve internal regulatory documents, including ƒ Consideration of the report on implementation Education Coursework in Corporate Governance procedures for the sale and/or subscription of of the strategy and major investment projects of the ƒ Consideration of the report on the status of the 2015 – Diploma in Company Direction (Dip IOD), securities, except where this is under the purview of Company Company’s deposits placed as at 31 December 2014 the Institute of Directors, UK the President for the purposes of running the business 2013 – Certificate in Company Direction (Cert ƒ Consideration of the report of the President of the ƒ Approval of the Cash Management Policy of the IoD), the Institute of Directors, UK ƒ Decide on entering into major transactions in the Company on implementation of the major investment Company 2013 – Certified Corporate Governance Director manner prescribed by legislation and the Charter projects of the Company Approval of the project of (CCGD), the Kazakhstani Independent Directors construction of the Aviation Technical Centre of the ƒ Consideration of the report of the President Association ƒ Elect and decide on the termination of an Company at Astana International Airport of the Company on the results of financial and agreement with the Company’s registrar operational activity (implementation of the budget Independent Director ƒ Preliminary approval of the Business Plan and development plan) of the Company for three ƒ Define procedures for the work of the Internal Audit (Development Plan) of the Company for 2016-2020 months of 2015 Lord Thomas Alexander Service (IAS), determine the remuneration of IAS staff Hesketh based on recommendations by the President, award ƒ Consideration of the issue of continued ƒ Consideration of the report of the President of the bonuses to IAS staff based on recommendations by the development of Extended Home Market Strategy of Company on the results of financial and operational Lord Thomas Alexander Hesketh has been an Audit Committee and the President, and approve the the Company activities of the Company for seven months of 2015 Independent Director since 2007 He is the Chairman qualification requirements for IAS employees

90 91 ANNUAL REPORT 2015

ƒ Consideration of the report on the results of the Republic of Turkey) and Petronas Dagangan Berhad Company’s liabilities by an amount of more than ƒ Approval of the amendments to the Annual Audit financial and operational activity (implementation of BHD (Kuala Lumpur Airport, Malaysia) Preliminary US$5,000,000 in connection with entering by the Plan of the Internal Audit Service of the Company for the budget and development plan) of the Company deciding on increasing the Company’s liabilities by an Company into major transaction 2015 for 10 months of 2015 amount of more than US$5,000,000 in connection with entering by the Company into major transactions ƒ Proposal of the President of the Company ƒ Approval of the Annual Audit Plan of the Internal ƒ Approval of the decisions of the President of the for selecting a bank to arrange financing of the Audit Service of the Company for 2016 Company on opening of bank accounts (corporate and ƒ Deciding on entering by the Company into major construction of the Aviation Technical Centre of the deposit) in JSC Capital Bank Kazakhstan, JSC RBK Bank transactions with the group of banks Deutsche Bank Company at Astana International Airport ƒ Consideration of the report of the Head of the and JSC Qazaq Banki AG, Natixis and The Royal Bank of Scotland Plc for Internal Audit Service of the Company on the activity the issue of Letters of Credit, as well as with Lukoil ƒ Deciding on entering by the Company into major of the Internal Audit Service of the Company for the ƒ Approval of the decisions of the President of the OJSC and Gazpromneft-Aero CJSC for the procurement transactions with Consortium of STS Genpodriad LLC first quarter of 2015 Company to open bank accounts at banking group of jet fuel Preliminary deciding on increasing the and Migalit LLP represented by the branch office Deutsche Bank AG, Natixis and Tsesnabank Company’s liabilities by an amount of more than of STS Genpodriad LLC in Astana for the purchase ƒ Performance evaluation of the Internal Audit US$5,000,000 in connection with entering by the of works on construction of the Aviation Technical Service of the Company for the first quarter of 2015 ƒ Consideration of the quarterly report on the status Company into major transactions Centre of the Company at Astana International of the Company’s deposits placed as at 31 March 2015 Airport and the European Bank of Reconstruction ƒ Consideration of the report on the status of Consideration of the issue of placement of surplus and ƒ Deciding on entering by the Company into a major and Development for financing of the construction execution of the Action Plan for Implementation of operating cash of the Company in second-tier banks transaction with Natixis for the issue of the Letters of of the Aviation Technical Centre of the Company at the Strategic Plan of the Internal Audit Service of the Credit on a secured (cash collateral) basis Preliminary Astana International Airport Preliminary deciding on Company for the first half of 2015 ƒ Consideration of the quarterly report on the status deciding on increasing the Company’s liabilities by an increasing the Company’s liabilities by an amount of of the Company’s deposits placed as at 30 June 2015 amount of more than US$5,000,000 in connection with more than US$5,000,000 or an amount constituting ƒ Consideration of the report on the activity of the entering by the Company into a major transaction 10% or more of the equity capital of the Company in Internal Audit Service of the Company for the second ƒ Consideration of the quarterly report on the status connection with entering by the Company into major quarter of 2015 of the Company’s deposits placed as at 30 September ƒ Preliminary deciding on increasing the Company’s transactions 2015 liabilities by an amount of more than US$5,000,000 ƒ Performance evaluation of the Internal Audit in connection with entering by the Company into a ƒ Deciding on entering by the Company into Service of the Company for the second quarter of ƒ Preliminary approval of the Annual Budget of the transaction with JSC Citibank Kazakhstan on the issue major transactions with Citi International Limited 2015 Company for 2016 of Letters of Credit and bank guarantees for the issue of Stand-By Letters of Credit on secured (cash collateral) basis and Gazpromneft- ƒ Consideration of the report on the activity of the ƒ Amending the decision of the Board of Directors ƒ Transfer of the roles of Lender, National agent, Aero CJSC and Petrosun LLP for the procurement Internal Audit Service of the Company for the third of the Company dated 19 November 2014 in relation ECA Facility Agent from Royal Bank of Scotland to of jet fuel Preliminary deciding on increasing quarter of 2015 to the major transaction with Halyk Bank of the third parties in ECA guaranteed transaction in the Company’s liabilities by an amount of more Kazakhstan JSC for the issue of the Letters of Credit on respect of two Airbus A321 aircraft and one Airbus than US$5,000,000 or an amount constituting 10% ƒ Performance evaluation of the Internal Audit an unsecured basis A320 aircraft or more of the equity capital of the Company in Service of the Company for the third quarter of 2015 connection with entering by the Company into ƒ Deciding on entering by the Company into major ƒ Deciding on entering by the Company into major transactions ƒ Consideration of the issue of conducting an transactions with JSC Citibank Kazakhstan and JSC AB major transactions with Air Lease Corporation and external assessment of the activity of the Internal Bank of China Kazakhstan for the issue of the Letters AerCap Holdings N V on operating lease of Airbus ƒ Deciding on entering by the Company into the Audit Service of the Company in 2016 of Credit on an unsecured basis Preliminary deciding А320 NEO/ А320-200 NEO/А321-200 NEO/ A321 NEO- Lease Novation and Amendment Agreement in on increasing the Company’s liabilities by an amount LR type aircraft Preliminary deciding on increasing relation to one Boeing 757-200 Aircraft ƒ Approval of the Budget of the Internal Audit constituting 10% or more of the equity capital of the the Company’s liabilities by an amount constituting Service of the Company for 2016 Company or an amount of more than US$5,000,000 in 10% or more of the equity capital of the Company in ƒ Approval of the Cash Management Policy of the connection with entering by the Company into major connection with entering by the Company into major Company ƒ Consideration of the report of the Head of transactions transactions on operating lease of aircraft the Internal Audit Service of the Company on the Internal Control and Audit evaluation of the effectiveness of the internal ƒ Amending the decision of the Board of Directors ƒ Amending the decisions of the Board of Directors control system of the Company of the Company dated 9 January 2015 in relation to of the Company dated 15 May 2015 in relation to the ƒ Consideration of the report on the status of entering into the Amendment Agreement with JSC major transactions with Air Lease Corporation on execution of the Action Plan for Implementation of ƒ Approval of the Quality Assurance and Citibank Kazakhstan JSC to increase the facility operating lease of Airbus A320 NEO and Airbus A321 the Strategic Plan of the Internal Audit Service of the Improvement Program of Internal Audit in the NEO-LR or A320 NEO types aircraft Company for the second half of 2014 Company ƒ Deciding on entering by the Company into major transactions on the procurement of jet fuel for ramp ƒ Deciding on entering by the Company into major ƒ Consideration of the annual report on the activity ƒ Approval of the Audit Map of the Internal Audit refuelling with CJSC TZK Sheremetyevo (Moscow Airport, transaction with Embraer Aviation International of the Internal Audit Service of the Company for 2014 Service of the Company the Russian Federation), Air BP Limited (Frankfurt- SAS-EAI on the purchase of components and spare on-the Main Airport, Germany), Chevron Products parts lease services and access to the spare parts ƒ Performance evaluation of the Internal Audit ƒ Approval of the amended Methodology on Company, a division of Chevron U S A Inc (Bangkok pool with regard to Embraer EJET family Embraer 190 Service of the Company for the fourth quarter of evaluation of effectiveness of the internal control Airport, Thailand), Petrol Ofisi A S (Istanbul Airport, type aircraft Preliminary deciding on increasing the 2014 system of the Company

92 93 ANNUAL REPORT 2015

ƒ Approval of the Methodological guidelines for Strategic Planning, Audit and Corporate Social ƒ Approval of the Policy in the field of occupational (Chairman of the Management Board), Deputy Chief organization of internal audit in the Company Responsibility Committees of the Board of Directors health and safety and environmental protection Executive Officer, or Chief Accountant of another of the Company management system of the Company legal entity for no more than one year before its Risk Management forced liquidation or forced redemption of shares, ƒ Consideration of the report of the corporate social ƒ Approval of the plan of work and the schedule or of another legal entity recognised as bankrupt ƒ Approval of the updated Risk Register, Key Risk responsibility of the Company for 2014 of the meetings of the Board of Directors of the and put into temporary closure; this requirement is Register and Risk Map of the Company for the first Company for 2016 applied for a five-year period following the date of half of 2015 Consideration of the report on realised ƒ Approval of the amended plan of work and the forced liquidation, forced redemption of shares, or a risks of the Company schedule of the meetings of the Board of Directors of ƒ Consideration of the report on the status of the legal entity being recognised as bankrupt and put the Company for 2015 implementation of the decisions of the Board of into temporary closure ƒ Approval of the updated Risk Register, Key Risk Directors of the Company for the period December Register and Risk Map of the Company for the second ƒ Review of the amount and terms of remuneration 2014 - August 2015 Qualification requirements for independent half of 2015 Approval of the Risk Appetite of the and compensation for the President of the Company members of the Board of Directors include: Company Consideration of the report on realized risks ƒ Consideration of the issue of performing “Gap- of the Company ƒ Preliminary approval of the amendments to the Analysis” against the new Corporate Governance ƒ Compliance with the definition of independent Regulations of the Nomination and Remuneration, Code of Sovereign Wealth Fund “Samruk-Kazyna” director as set out by the Law of the Republic ƒ Consideration of the operational safety review Strategic Planning, Audit and Corporate Social Assessment of transparency and effectiveness of of Kazakhstan “On Joint-Stock Companies”: an of the Company for the previous 12 months (as at 31 Responsibility Committees of the Board of Directors the processes of disclosure of information on the independent director is a member of the Board of December 2014) and update on regulatory situation of the Company Company’s activities Directors who is not affiliated with the company with regards to the ICAO and EU Aviation Safety and has not been affiliated with it for three Committee ƒ Deciding on the 2014 Special Bonus payment ƒ Approval of the Community Investment Policy years preceding his or her election (except as an to the employees of the Company Determination of the Company Approval of the Community independent director); is not affiliated with any ƒ Consideration of the Operational Safety Review of the amount of the 2014 Special Bonus payment Investment Manual of the Company affiliates; is not subordinated to any officers of the of the Company for the previous 12 months (as at to the employees of the Company whose company or its affiliates; is not a civil servant; is not 31 March 2015) Update on regulatory situation with remuneration shall be determined by the Board of ƒ Approval of an amendment to the Regulations an auditor of the company; and was not its auditor regards to the ICAO and EU Aviation Safety Committee the Directors of the Company of the Representative Office of the Company in the for three years preceding election Russian Federation ƒ Consideration of the Operational Safety Review of ƒ Determination of the amount of the 2015 Year End ƒ Advanced educational qualifications, preferably the Company for the previous 12 months (as at 31 July Bonus payment to the employees of the Company in a field directly related to Air Astana’s primary 2015) Update on regulatory situation with regards to whose remuneration shall be determined by the Selection criteria for business activities the ICAO and EU Aviation Safety Committee Board of the Directors of the Company the Board of Directors ƒ At least five years of leadership experience, ƒ Consideration of the operational safety review ƒ Annual review of remuneration and proposals for Air Astana has established the following criteria preferably in a field directly related to Air Astana’s of the Company for the previous 12 months (as the 2016 salaries of the employees of the Company for nominees and members of the Board of Directors: primary business activities at 31 October 2015) and update on regulatory whose remuneration shall be determined by the situation with regards to the ICAO and EU Aviation Board of Directors of the Company ƒ Nominees and members of the Board of Directors Safety Committee may be of any citizenship and nationality Remuneration of members ƒ Annual approval of the remuneration system of the Board of Directors Governance and Remuneration and provision of incentives and the scheme of labour ƒ Candidates for election as directors should and the Executive Body remuneration of the Company’s employees have the appropriate work experience, knowledge, ƒ Consideration of the Succession Plan for the Senior qualifications, track record of achievements and Directors who represent the shareholders do not Management of the Company ƒ Annual approval of the procedure for and an impeccable reputation in both the industry receive remuneration for their work Independent terms of compensation of expenses to the and broader business world, required for the directors are remunerated, and the General Meeting ƒ Consideration of the report on the activities of the Company’s employees travelling on business, performance of their duties and contribution to of Shareholders determines the amount based on Board of Directors of the Company and the Committees the standards of eligibility to the Company the effective work of the Board of Directors in the the recommendations of the Board of Directors and of the Board of Directors of the Company for 2014 cars and standard areas to accommodate the interests of Air Astana and its shareholders the Nomination and Remuneration Committee The administrative personnel of the Company, the General Meeting of Shareholders also determines ƒ Recommendations to the General Stockholders’ limits of reimbursable expenses at the Company’s The members of the Board of Directors should not: the amount paid to the Executive Body, based Meeting of the Company with respect to the annual expense when granting to employees the right on the recommendations of the Nomination and bonus payment to the President of the Company to use mobile communication and the limits of ƒ Have any current convictions under the law Remuneration Committee following the results of work for the year 2014 representation expenditures In 2015, the total remuneration paid to ƒ Be a person who previously served as Chairman independent directors and the Executive Body stood ƒ Consideration of the proposals on amending the ƒ Approval of the Defined Contribution Corporate of the Board of Directors, Chief Executive Officer at KZT 52,135 thousand, including taxes Dividend Policy of the Company Pension Scheme of the Company

ƒ Preliminary determination of the composition and ƒ Consideration of the report on corporate social terms of office of the Nomination and Remuneration, responsibility of the Company for 2015

94 95 ANNUAL REPORT 2015

COMMITTEES OF THE BOARD OF DIRECTORS ƒ Consideration of the report of the President of the ƒ Consideration of the issue of conducting a “Gap- Company on the results of financial and operational Analysis” against the new Corporate Governance activities of the Company for seven months of 2015 Code of Sovereign Wealth Fund “Samruk-Kazyna”

ƒ Consideration of the report on the results of ƒ Recommendations with regard to the update The Board of Directors has established Committees that have the responsibility for oversight over financial and operational activity (implementation of on the position of the Company on the issue of specific issues relevant to the company in order to analyse them and to present proposals to the the budget and development plan) of the Company performing a gap-analysis of compliance of the full Board of Directors for approval. In 2015, the four Committees were: the Strategic Planning for 10 months of 2015 current practice with the Corporate Governance Code (the new Code) of Sovereign Wealth Fund Committee, the Nomination and Remuneration Committee, the Audit Committee and the ƒ Consideration of the plan of work and the “Samruk-Kazyna” Corporate Social Responsibility Committee. schedule of the meetings of the Board of Directors of the Company for 2016 ƒ Consideration of the report on transparency and the processes of disclosure of information on the ƒ Approval of the plan of work of the Strategic Company’s activities Planning Committee for 2016 STRATEGIC PLANNING COMMITTEE view of changes in the economic, political, social ƒ Consideration of the issue of continued development and competitive environment ƒ Consideration of the Annual Budget of the of Extended Home Market Strategy of the Company The Strategic Planning Committee has been Company for 2016 created to assist the effective performance of the ƒ Developing recommendations for the Board ƒ Recommendations to the Stockholders of the Board of Directors and develop recommendations to of Directors to improve the effectiveness of ƒ Consideration of the report of the President Company with regards to approval of the Business the Board regarding issues of strategic development the Company’s long-term performance and of the Company on implementation of the major Plan (Development Plan) of the Company for The committee was created in October 2012 competitiveness in the aviation transportation market investment projects of the Company 2015–2019

Composition of the Strategic Planning Committee: Issues considered by the Strategic Planning ƒ Recommendations with regard to amending the ƒ Consideration of the Business Plan (Development Committee in 2015 Dividend Policy Regulations of the Company Plan) of the Company for 2016–2020 ƒ Chairman: Dmitriy Larionov (independent director) In 2015, the Strategic Planning Committee considered ƒ Members: Marat Urazbekov (member of the and made decisions on the following issues: Participation of the members of the Strategic Board of Directors) Planning Committee in meetings in presentia Alan Fraser (member of the Board of Directors) ƒ Consideration of the report of the management in 2015 of the Company on the preliminary results of Responsibilities of the Strategic Planning financial and operational activity (implementation In 2015, the Strategic Planning Committee held Committee of the budget and development plan) of the five meetings in presentia Company for 12 months of 2014 The responsibilities of the Strategic Planning Committee include: ƒ Consideration of the annual report of the Name Participation in meetings and decision-making, % President of the Company on the results of financial Dmitriy Larionov 100% ƒ Developing recommendations for the Board of and operational activities of the Company for 2014 Directors for determining priority areas of business Marat Urazbekov 100% activity and development for Air Astana ƒ Consideration of the report of the management Alan Fraser 100% of the Company on implementation of the strategy ƒ Developing recommendations for the Board of and major investment projects of the Company Directors regarding the preliminary approval and potential amendments to the Company’s long-term ƒ Recommendations with regard to the procedure development strategy for distribution of the net income of the Company for 2014 and the amount of the dividend for 2014 per ƒ Reviewing the management report on the one common stock of the Company implementation of the long-term development strategy and the medium-term business plan ƒ Consideration of the amended plan of work (development plan), as well as the achievements of and the schedule of the meetings of the Board of strategic key performance indicator targets Directors of the Company for 2015

ƒ Developing recommendations for the Board of ƒ Consideration of the report of the President Directors on corporate governance issues of the Company on the results of financial and operational activity (implementation of the budget ƒ Developing recommendations for the Board of and development plan) of the Company for three Directors for reviewing the Company’s strategy in months of 2015

96 97 ANNUAL REPORT 2015

ƒ Making recommendations regarding the annual ƒ Recommendations with regards to the payment ƒ Approval of the plan of work of the Nomination NOMINATION AND individual remuneration of members of the Board of the 2015 Year End Bonus to the employees of the and Remuneration Committee for 2016 REMUNERATION COMMITTEE of Directors, the Executive Body, the head of the Company whose remuneration shall be determined IAS, the Corporate Secretary and other employees by the Board of Directors of the Company ƒ Recommendations with regards to the candidates The Nomination and Remuneration Committee whose remuneration shall be agreed by the Board to the members of the Board of Directors of the develops recommendations for the Board of of Directors or shareholders ƒ Proposals with regard to review of the Company and the amount and terms of remuneration Directors regarding the recruitment and selection remuneration and determination of the 2016 and compensations to the Independent Directors of of members of the Board of Directors, Executive ƒ Making proposals to the Board of Directors salaries of the employees of the Company whose the Company Body, head of the IAS, Corporate Secretary and regarding changing the remuneration of members remuneration shall be determined by the Board of other employees whose appointment requires the of the Board of Directors, the Executive Body, the Directors of the Company approval of the Board of Directors or shareholders head of the IAS, the Corporate Secretary and other The Committee also makes recommendations employees whose remuneration shall be agreed by Participation of the members of the regarding the remuneration of those employees the Board of Directors or shareholders Nomination and Remuneration Committee in meetings in presentia in 2015 The Committee was formed in October 2012 ƒ Considering payment of remuneration through the merger of the previously separate following the results of the year to employees In 2015, the Nomination and Remuneration Nomination and Remuneration Committees whose remuneration shall be agreed by the Board Committee held four meetings, including three of Directors or shareholders meetings in presentia Composition of the Nomination and Remuneration Committee: ƒ Conducting comparative analysis of salary Name Participation in meetings and decision-making, % levels and remuneration policies for members of ƒ Chairman: Dmitriy Larionov (independent director) the Board of Directors, the Executive Body, the Dmitriy Larionov 100% head of the IAS, the Corporate Secretary and other ƒ Members: Lord Thomas Alexander Hesketh employees whose remuneration shall be agreed by Lord Thomas Alexander Hesketh 100% (independent director) the Board of Directors or shareholders Nurzhan Baidauletov 100% Nurzhan Baidauletov (Chairman of the Board of Directors) Issues considered by the Nomination and David Cole 100% David Cole (member of the Board of Directors) Remuneration Committee in 2015

Responsibilities of the Nomination and In 2015, the Nomination and Remuneration Remuneration Committee Committee considered and made decisions on the following issues: The following issues fall within the competence of the Nomination and Remuneration Committee: ƒ Recommendations in respect of changing the amount and terms of remuneration and ƒ Developing qualification requirements for compensation to the President of the Company candidates for independent directors, the Executive Body, the Corporate Secretary, and the head and ƒ Recommendations with regards to the issue of employees of the IAS the 2014 Special Bonus to the Company’s employees

ƒ Making recommendations for electing or ƒ Recommendations with regards to nominating candidates for independent directors, determination of the amount of the annual bonus the Executive Body, the Corporate Secretary, and payment to the President of the Company following the head and employees of the IAS the results of work for the year 2014

ƒ Developing the succession planning policy ƒ Recommendations with regards to approval of for members of the Board of Directors and its the operational plan for continuity of the Company Committees, the Executive Body, the Corporate Secretary and the head and employees of the IAS ƒ Preliminary approval of the Regulations of the Labour Remuneration System of the Company ƒ Providing recommendations on the policy and structure for remunerating members of the Board ƒ Preliminary approval of the Defined Contribution of Directors, the Executive Body, the head of the Corporate Pension Scheme of the Company IAS, the Corporate Secretary and other employees whose remuneration shall be agreed by the Board ƒ Consideration of the Succession Plan for Senior of Directors or shareholders Managers of the Company

98 99 ANNUAL REPORT 2015

AUDIT COMMITTEE approval of the annual financial statements of the the Internal Audit Service of the Company for the ƒ Preliminary approval of the amount of the Company for 2014 second quarter of 2015 2015 Year End Bonus to the Head and employees The Audit Committee reports to the Board of of the Internal Audit Service of the Company Directors, which grants the committee certain ƒ Consideration of the Management Letter ƒ Hearing of the report of the Head of the Internal authorities It helps to support the Board of following the results of the audit of the annual Audit Service of the Company on the status of ƒ Preliminary approval of the amount of the Directors in supervising the Company’s financial and financial statements of the Company for 2014 execution of the Action Plan for Implementation 2016 salaries of the Head and Employees of the economic activities; the reliability and efficiency of of the Strategic Plan of the Internal Audit Service Internal Audit Service of the Company the internal control and risk management system; ƒ The External Auditor’s update on the results of the Company for the first half of 2015 the implementation of corporate governance of the review of the interim condensed financial Risk Management documents; the independence of the external and information of the Company for the six-month ƒ Performance evaluation of the Internal Audit internal audit process; and compliance with the ended 30 June 2015 Service of the Company for the second quarter ƒ Preliminary approval of the updated Risk laws and regulations of the Republic of Kazakhstan of 2015 Register, Key Risk Register and Risk Map of the The Audit Committee was created in March 2008 ƒ The External Auditor’s update on the status of Company for the first half of 2015 Consideration the audit of the annual financial statements of ƒ Hearing of the report on the activity of the of the report on realized risks of the Company Composition of the Audit Committee: the Company for 2015 Internal Audit Service of the Company for the third quarter of 2015 ƒ Preliminary approval of the updated Risk ƒ Chairman: Dmitriy Larionov (independent Internal Audit Register, Key Risk Register and Risk Map of the director) ƒ Performance evaluation of the Internal Audit Company for the second half of 2015 Preliminary ƒ Consideration of the report of the Head of Service of the Company for the third quarter of approval of the Risk Appetite of the Company ƒ Member: Lord Thomas Alexander Hesketh the Internal Audit Service of the Company on 2015 Consideration of the report on realized risks of (independent director) the status of execution of the Action Plan for the Company Implementation of the Strategic Plan of the ƒ Preliminary approval of the issue of conducting Responsibilities of the Audit Committee Internal Audit Service of the Company for the an external performance assessment of the ƒ Update on the foreign exchange/fuel hedging second half of 2014 Internal Audit Service of the Company in 2016 issues and current situation with fuel purchases The following issues fall within the competence of the Audit Committee: ƒ Consideration of the annual report of the Head ƒ Preliminary approval of the Budget of the Other issues of the Internal Audit Service of the Company on Internal Audit Service of the Company for 2016 ƒ Developing recommendations for the Board of the activity of the Internal Audit Service of the ƒ Consideration of the report on the status of Directors on the appointment and change of the Company for 2014 ƒ Preliminary approval of the Annual Audit Plan of the Company’s deposits placed as at 31 December external auditor; determining the amount paid the Internal Audit Service of the Company for 2016 2014 to the external auditor; evaluating the quality ƒ Performance evaluation of the Internal Audit of services rendered by the external auditor; Service of the Company for the fourth quarter of ƒ Approval of the annual plan of work of the ƒ Consideration of the quarterly report on and obtaining related services from the external 2014 Audit Committee for 2016 the status of the Company’s deposits placed as auditor at 31 March 2015 Consideration of the issue of ƒ Preliminary approval of the amount of the ƒ Proposal of the Head of the Internal Audit placement of surplus and operating cash of the ƒ Developing recommendations for the Board of 2014 Special Bonus to the Head and employees of Service of the Company on staff changes Company in second-tier banks Directors on the appointment and dismissal of the the Internal Audit Service of the Company head of the Internal Audit Service (IAS) ƒ Hearing of the report of the Head of the ƒ Consideration of the quarterly report on the ƒ Preliminary approval of the amendments to Internal Audit Service of the Company on the status of the Company’s deposits placed as at 30 ƒ Holding meetings with external and internal the Annual Audit Plan of the Internal Audit Service evaluation of the effectiveness of the internal June 2015 auditors without the presence of members of Air of the Company for 2015 control system of the Company Astana’s management ƒ Consideration of the quarterly report on the ƒ Hearing of the report of the Head of the Internal ƒ Preliminary approval of the Methodological status of the Company’s deposits placed as at 30 ƒ Investigating any issues under the supervision Audit Service of the Company on the activity of guidelines for organisation of internal audit in the September 2015 of the Committee the Internal Audit Service of the Company for the Company first quarter of 2015 ƒ Recommendations on approval of the Issues considered by the Audit Committee ƒ Preliminary approval of the Audit Map of the Cash Management Policy of the Company and in 2015: ƒ Performance evaluation of the Internal Audit Internal Audit Service of the Company preliminary approval of the Cash Management Service of the Company for the first quarter of Policy of the Company In 2015, the Audit Committee considered and 2015 ƒ Preliminary approval of the amended made decisions on the following issues: Methodology on evaluation of effectiveness of ƒ Hearing of the report on the status of litigations ƒ Update on the activities of the Internal Audit the internal control system of the Company and results of state inspections and audits Financial statements Service of the Company in the second quarter of 2015 ƒ Preliminary approval of the Quality Assurance ƒ Consideration of the issue of conducting ƒ Recommendations to the Board of Directors ƒ Hearing of the report of the Head of the Internal and Improvement Program of Internal Audit in the a “Gap-Analysis” against the new Corporate of the Company with regards to the preliminary Audit Service of the Company on the activity of Company Governance Code of JSC Samruk-Kazyna

100 101 ANNUAL REPORT 2015

ƒ Consideration of the issue of assessment ƒ Preliminary approval of the use of related CORPORATE SOCIAL ƒ Making recommendations to the Board of Directors of performance of the Chief Accountant of the services rendered by the External Auditor of the RESPONSIBILITY COMMITTEE regarding the approval of internal documentation Company conducted by JSC Samruk-Kazyna Company covering social and charitable policies The Corporate Social Responsibility Committee was ƒ Consideration of the issue of implementation ƒ Consideration of the issue of conducting a established to assist the effective performance of the ƒ Consideration of major CSR risks and plans for of the target model of treasury function proposed complex analysis of the activity of the Company Board of Directors and to develop recommendations mitigating their impact by JSC Samruk-Kazyna for the years 2012-2014 by JSC Samruk-Kazyna to the board regarding issues of social responsibility, with engagement of consulting services including occupational safety, health and ƒ Making recommendations to the Board of Directors environmental protection The Committee was created regarding the approval of Company social responsibility Participation of the members of the Audit in October 2012 and sustainability report Committee in meetings in presentia in 2015 Composition of the Corporate Social Responsibility Issue considered by the Corporate Social In 2015, the Audit Committee held six meetings Committee: Responsibility Committee in 2015 in presentia ƒ Chairman: Lord Thomas Alexander Hesketh (independent director) In 2015, the Corporate Social Responsibility Committee Name Participation in meetings and decision-making, % considered and made decisions on the following issues: ƒ Members: Dmitriy Larionov (independent director) Dmitriy Larionov 100% Marat Urazbekov (member of the Board of Directors) ƒ Consideration of the report on the Corporate Social Lord Thomas Alexander Hesketh 100% Alan Fraser (member of the Board of Directors) Responsibility of the Company for 2014

Responsibilities of the Corporate Social ƒ Approval of the annual plan of work of the Corporate Responsibility Committee Social Responsibility Committee for 2015

The responsibilities of the Corporate Social ƒ Consideration of the report on the Corporate Social Responsibility Committee include: Responsibility of the Company for 2015

ƒ Developing recommendations for the Board of ƒ Approval of the plan of work of the Corporate Social Directors regarding the Company’s corporate social Responsibility Committee for 2016 responsibility strategy and analysing the effectiveness of its implementation ƒ Consideration of the Community Investment Policy of the Company Consideration of the Community ƒ Developing policies and taking action in the areas Investment Manual of the Company of occupational health and safety, social responsibility and environmental protection ƒ Consideration of the Policy for the Occupational Health and Safety and Environmental Protection ƒ Monitoring the Company’s performance in management system of the Company the areas of occupational health and safety, social responsibility and environmental protection in line ƒ Consideration of the Defined Contribution Corporate with relevant legislation and regulations Pension Scheme of the Company

Participation of the members of the Corporate Social Responsibility Committee in meetings in presentia in 2015

In 2015, the Corporate Social Responsibility Committee held three meetings in presentia

Name Participation in meetings and decision-making, %

Lord Thomas Alexander Hesketh 100%

Dmitriy Larionov 100%

Marat Urazbekov 100%

Alan Fraser 100%

102 103 ANNUAL REPORT 2015

control, risk management, corporate governance the Company that provide assurance and consulting INTERNAL AUDIT SERVICE and organisation of internal audit function services

13) Conducting unplanned audit engagement 17) Other functions assigned to the Service within The mission of the Internal Audit Service is to 2) Evaluation of adequacy and effectiveness of the limits of its competence provide assistance to the Board of Directors and the Company’s internal control system 14) Monitoring over implementation of the the President in performing their duties to achieve external auditor’s recommendations As a result of the evaluations and audits the strategic goals of the Company through the 3) Evaluation of the Company’s corporate it conducts, the Service issues appropriate provision of independent and objective assurance governance system 15) Follow-up oversight over implementation of recommendations (including those directed to and consulting activity designed to add value and recommendations issued by the Service improvement of internal control system, risk improve the effectiveness of the following areas: 4) Evaluation of fraud risk and effectiveness of management system, processes and principles of fraud risk management in the Company* 16) Exchange of information and coordination of activity) and comments on any issues within the ƒ Risk management activity with other internal and external parties of limits of its competence 5) Evaluation of completeness of implementation ƒ Internal control and efficiency of the risk management methodologies and risk management procedures in the Company ƒ Corporate governance processes 6) Evaluation of corporate governance system The Service is a Corporate Body that provides the including implementation and compliance of organisation and implementation of internal audit accepted corporate governance principles with in the Company and reporting directly to the Board ethical standards and values of the Company of Directors The Audit Committee carries out the HEAD OF THE SERVICE supervision of the Service’s functions 7) Audit of the Company’s information systems (this includes an assessment of whether the The present head of the Service is Valentina Khegay information technology governance of the Company Valentina Khegay in accounting field as Chief Accountant and Chief She was appointed by a resolution passed at a General supports its strategies and objectives) Financial Officer In 1996 she started practicing audit Meeting of Shareholders on 7 December 2007 Valentina joined Air Astana in 2006 having Prior to Air Astana she worked at KPMG Since 2002 8) Evaluation of the design, implementation and more than 20 years of experience in audit and Valentina has been a certified auditor and a full effectiveness of the organisation’s ethics-related accounting Valentina graduated from the Institute member of Chamber of auditors of the Republic of Objectives and functions objectives, programmes, and activities of National Economy in Almaty and holds a PhD Kazakhstan She also holds professional accountant degree in Economics After graduating, she worked and professional internal auditor certificates The Service according to the objectives imposed 9) Verification of compliance with the legislation on it performs the following functions in a of the Republic of Kazakhstan, international prescribed manner: agreements, the Company’s internal documents and implementation of instructions of authorized bodies, 1) Evaluation of the adequacy and effectiveness of resolutions of the Company’s bodies and evaluation internal controls in corporate governance, operational of systems developed to follow these requirements (production and financial) activity of the Company and its information systems with regards to: 10) Evaluation of adequacy of the measures applied by the Company’s structural divisions to ensure ƒ Achievement of the Company’s strategic achievement of the Performance objectives within the objectives framework of the strategic objectives of the Company

ƒ Reliability and completeness of information on 11) Development of internal documents governing the Company’s activity the Service activity in accordance with the Standards and decisions/recommendations of the General ƒ Efficiency and effectiveness of the Company’s Meeting of Stockholders activity and adopted programmes 12) Provision of consulting services to the Board ƒ Rationality and efficiency of use of the Company’s of Directors, Executive body, structural bodies of the resources and methods (means) of safeguarding the Company regarding improvement of the internal Company’s assets *Identification and investigation of fraud cases are not ƒ Compliance of established control systems with a primary function of the Service Service staff may be the requirements of legislation, normative documents, brought into the investigation of fraud cases as consultants internal documents and resolutions of authorised or observers and do not bear responsibility for management bodies and bodies of the Company (compliance control) decisions made as a result of the investigation

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CORPORATE SECRETARY DIVIDEND POLICY

The position of Corporate Secretary was Yelena Kondachkova At Air Astana, we have developed our dividend According to the policy, Air Astana allocates 30% established through a resolution of the Board policy in accordance with the legislation of of net income, as calculated in accordance with of Directors on 6 December 2007 The Corporate The current Corporate Secretary, Yelena Kazakhstan, our Charter and our internal International Financial Reporting Standards (IFRS), Secretary plays a key role in facilitating an open Kondachkova, has been with Air Astana since its documents It defines a transparent process for unless otherwise decided by the General Meeting dialog among the Company’s different governing early days and has worked as a specialist and determining both the size of the dividend and the of Shareholders There are 17,000 common shares, a bodies and ensuring their adherence to legislative manager in the Strategic Planning Department conditions under which it is paid, while seeking number that has remained unchanged throughout the and company requirements In 2011, she was one of the first graduates to to achieve the appropriate balance between years, as presented below The Corporate Secretary ensures that the rights complete a certification programme for corporate returning value to shareholders and financing of all shareholders are observed, shareholder secretaries of companies within the Samruk- Air Astana’s continued growth In our view, this communications are given due consideration Kazyna holding helps to ensure both short-term and long-term by the relevant body and any dispute involving returns on investment for shareholders shareholders’ rights are resolved The Corporate Secretary’s duties also include ensuring a proper flow of information among the 2011 2012 2013 2014 2015 2016 Board of Directors and its Committees and the KZT per share* 167,064 158,504 187,496 91,930 102,525 182,871 Executive Body, as well as facilitating the orientation process for new Directors The Board of Directors is Previous Year Net Profit (KZT ‘000) 11,360,369 8,981,894 9,106,980 7,814,029 3,485,835 10,362,678 responsible for the appointment and dismissal of the Corporate Secretary Previous Year Net Profit (US$ ‘000) 77,116 61,260 61,076 51,364 19,453 48,741 Dividend pay-out ratio 25% 30% 35% 20% 50% 30%**

*Dividend amount is calculated on the basis of and paid out of the profits of the previous year. **The Annual General Shareholders’ Meeting held on 3 June 2016 decided to allocate an additional 20% of the net income of the Company for 2015 (KZT 2 billion) for further distribution to shareholders, subject to a decision of a General Meeting of the Shareholders of the Company.

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FINANCIAL CALENDAR FOR 2016

Event Date Report from the President & CEO on implementation of the Company’s strategy 11 February Report of the Head of the Internal Audit Service (IAS) of the Company on its activity for 2015 11 February Status of execution of the Action Plan for implementation of the Strategic Plan of the IAS for 2H15 11 February Performance evaluation of the IAS for 4Q15, based on KPIs (key performance indicators) 11 February EXTERNAL AUDITOR INDEPENDENT REGISTRAR Hearing the report on the operational safety of the Company 11 February Issue of independent auditor’s report on financial statements for 2015 29 February Air Astana engages an external auditor to Integrated Securities Registrar maintains Publication of financial statements for 2015 on the Company’s website March ensure that its accounting practices are in line with the shareholders’ register of Air Astana The international financial reporting standards, are Integrated Securities Registrar was established Annual report from the President & CEO on the Company’s financial and operational results for 2015 12 May transparent and are independently verified on 1 December 2011 by the National Bank of the Preliminary approval of financial statements for 2015 by the Board of Directors 12 May Republic of Kazakhstan (its sole founder) and Report of the Head of the IAS on its activity in 1Q16 12 May As a result of an open tender held on 3 December registered on 11 January 2012 by the Ministry of 2013 for the services of auditing the annual Justice of Almaty Its main activity is providing Report “Review of effectiveness of internal control system of the Company” 12 May financial statements and reviewing the interim shareholder registry services Performance evaluation of the IAS for 1Q16, based on KPIs (key performance indicators) 12 May financial statements for the years 2014-2016, Air Proposals of the Board of Directors to the Annual General Meeting of Shareholders on the procedure for 12 May Astana signed a contract with KPMG Audit LLP for Contact information: distribution of the net profit of Air Astana JSC for 2015 and the amount of the dividend for 2015 per one the purchase of the services of auditing financial common share of the Company statements for the years concluding 31 December Integrated Securities Registrar Hearing the report on the operational safety of the Company 12 May 2014, 2015 and 2016, prepared in accordance with 141 Abylai Khan Ave , Annual General Meeting of Shareholders 30 May IFRS; and auditing the interim financial statements Almaty, 050000, Kazakhstan for the six months concluding 30 June 2014, 2015 Tel: +7 (727) 272 47 60 Approval of financial statements for 2015 by the Annual General Meeting of Shareholders 30 May and 2016, prepared in accordance with IAS 34 www tisr kz Annual Report of Air Astana JSC for 2015 30 May Decision on payment and approval of the amount of the dividend per common share for 2015 by the 30 May Since its creation, the audit of Air Astana’s financial Annual General Meeting of Shareholders statements has been provided by the following audit Announcement of dividends for 2015 June firms: Ernst & Young Kazakhstan LLP (2002-2003), KPMG Janat LLP (2004-2006) and Deloitte LLP (2007-2013) Publication of the financial statements for 1H16 on the Company’s website August Approval of the Company’s Risk Register, Key Risk Register and Risk Map for 1H16 22 September The cost of services provided by the external Consideration of the report on the Company’s realised risks for 1H16 22 September auditors is available on the website at www procurement airastana com Report of the Head of the IAS on its activity in 2Q16 22 September Status of execution of the Action Plan for implementation of the Strategic Plan of the IAS for 1H16 22 September Contact information: Performance evaluation of the IAS for 2Q16, based on KPIs (key performance indicators) 22 September KPMG Audit LLP Dostyk Avenue 180, Approval of the IAS’ budget for 2017 22 September Almaty, 050051, Kazakhstan Hearing the report on the operational safety of the Company 22 September Tel: +7 (727) 298 0898 Approval of the Company’s Risk Register, Key Risk Register and Risk Map for 2H16 08 December Fax: +7 (727) 298 0708 www kpmg com Consideration of the report on the Company’s realised risks for 2H16 08 December Approval of the Company’s risk appetite 08 December Report of the Head of the IAS on its activity in 3Q16 08 December Performance evaluation of the IAS for 3Q16, based on KPIs (key performance indicators) 08 December Hearing the report on the operational safety of the Company 08 December Approval of the Board of Directors’ work plan for 2017 08 December Approval of the IAS Annual Audit Plan for 2017 08 December Preliminary approval of the Company’s five-year business plan for 2017-21 08 December Preliminary approval of the Company’s budget for 2017 08 December

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110 111 KARATAU ANNUAL REPORT 2015

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AIR ASTANA  INCREASED COMFORT OF LONGHAUL FLIGHTS 112 WITH ECONOMY SLEEPER CLASS ANNUAL REPORT 2015

FINANCIAL REPORTING

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GLOSSARY

ASK – Available Seat Kilometres This is a measure at different components of operating costs to of available capacity, and it takes into consideration analyse route profitability aircraft passenger capacity and distance travelled It can be used to measure total capacity of an airline, or EASA (Part 66) – The EASA’s standard can be used for the industry, specific aircraft, routes requirements for certifying aircraft crew and regions served It is not a perfect metric, as longer distance flights tend to have lower revenues and costs EASA (Part 145) – The EASA’s standard per unit, as there are costs that are incurred once per requirements for airlines that maintain aircraft flight, however long the flight (landing fees, handling and components fees, etc ) Revenues can be skewed by the amount of business compared to economy travellers on a flight, EASA (Part 147) – The EASA’s standard which can vary by route, or even with seasonality requirements for a company that provides However imperfect, it is a widely available metric and theoretical and practical training for operating allows for comparisons through time and with peers staff

ASK Yield – The ASK yield is a revenue metric EBITDAR – Earnings Before Interest, Tax, based on available capacity that takes revenue Depreciation, Amortisation and Rental costs This divided by ASK It is usually measured in US is essentially the cash margin before costs of cents per kilometre for comparability If it is ownership or rental of aircraft This is a margin being compared to costs per ASK, total revenues that can be used to compare airlines that have may be used Different components of revenue different proportions of owned aircraft relative to may be excluded (fuel surcharges, cargo and aircraft under operational leases It can also be mail revenues, excess baggage fees, and other used to compare performance of a single airline ancillary revenues) when comparing specific where the proportion of owned aircraft is changing, routes between airlines, or when analysing the such as Air Astana We calculate it by taking composition of revenues Operating Profit and adding back Depreciation and Amortisation and Fixed Operating Lease Charges Block hours – This is the amount of time that This latest number is found in the notes to the the aircraft is operating, including all times from financial statements In 2014, EBITDAR was revised when it leaves the gate (or parking location), to due to reclassification of “Ad-hoc lease of engines when it reaches its gate at destination (or parking and rotable spare parts” and the effect of years location) prior to 2014 is not material Fixed Operating Lease Charges now only includes “Fixed lease charges of Capital expenditures – This is the investment aircraft and engine” in Property Plant and Equipment (PP&E) In the 5-Year Financial & Operational Highlights table, EDTO (Extended Diversion Time Operation) - Any we have included the additions to PP&E and the operation by an aeroplane with two or more turbine transfers to PP&E from note 9 of the Audited engines where the diversion time to an en-route Financial Statements, so it is a gross number that alternate aerodrome is greater than the threshold does not net out disposals or currency translation time established by the State of the Operator differences European Aviation Safety Agency (EASA) – Code-share agreement – Aviation business The agency is responsible for developing all flight arrangement, whereby two or more airlines share safety regulations for independent confirmation the same flights One is an operator that sells or submission to the European Commission (or tickets for its own operating flights, while the Parliament/Council) and performing inspections other(s) is a marketing partner that sells seats on to determine compliance with them the flights of operator FAA (Federal Aviation Administration) – The Cost per ASK – The cost per ASK is the Federal Aviation Administration is the national operating cost per ASK, expressed as US cents per aviation authority of the United States of America ASK Internally, airline management also looks An agency of the United States Department of

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Transportation, it has authority to regulate and (debt and financial leases), less cash and cash called RoAE, to be clear about the use of Average Segments – This is a technical name for flights, oversee all aspects of civil aviation in the U S equivalents Net Cash is when the Cash and cash Equity as the nominator It is known as a geared though if a passenger has a flight that stops at an equivalents exceed the financial liabilities ratio, as it does not take into consideration the intermediate point, this counts as more than one Financial lease – A financial lease is a form of capital structure of a company, only the equity segment long-term debt that finances the acquisition of an Net Debt/Equity ratio – This is the ratio of net asset At the end of a financial lease there is usually debt to shareholder equity It is sometimes taken RoIC – Return on Invested Capital This is a Skytrax – Skytrax is an internationally recognised an option to buy the aircraft for a nominal value, as as a metric of the risk of a company’s balance measure of returns on the whole capital structure consulting company that specialises in analysing the lease payments amount to more than the value sheet structure, and clearly companies with of the company that is needed for the business services provided by airlines and airports It of the aircraft Air Astana started to buy aircraft of higher Net Debt/Equity ratios can have higher, but It divides the Operating Profit by the Average was formed in 1989 and provides independent its own in 2012, and these have been financed with more volatile returns to shareholders The metric Invested Capital during the year By using information on more than 210 airlines and 65 financial leases can be more challenging to interpret for airlines, Operating Profit as the numerator, it makes it an airports based on various passenger surveys as Operating Leases are not included, but often operational efficiency metric that is agnostic on Flight hours – This is the amount of time that represent long-term commitments by the airline the funding of the operational invested capital – Working Capital – This is a measure of the aircraft actually spend in the air debt or equity It is sometimes calculated on a post short-term assets and liabilities that are necessary Operating lease – An operating lease is tax basis, by applying the company effective tax to operate the business The key elements that IATA Operational Safety Audit (IOSA) – IOSA essentially a rental agreement Normally the rate to the Operating Profit We have presented the management can influence are usually Trade covers the following functional areas of an airline: lease payments over the term of the lease are standard pre-tax measure Airlines do not account Receivables, Trade Payables and Inventories At company management, flight operations, flight less than the value of the aircraft, and there is no Operating Leases as part of their liabilities under airlines, Deferred Revenues is also an important control and monitoring, aircraft maintenance, option to buy the aircraft at the end of the lease IFRS accounting, or in their Invested Capital Some element, as it mostly represents tickets sold, and on-board operations, aircraft ground operations, period Historically, Air Astana’s fleet comprised airlines present RoIC adjusted for an estimate of paid for or that have not been used We have used cargo transportation, and flight safety only of aircraft under operational leases until the the implicit liability of the operating leases, this is the standard metric, which is to take Current Assets end of 2011 not based on current IFRS standards and subtract Current Liabilities International Air Transport Association (IATA) – The IATA was formed in 1945 to develop PLF – Passenger Load Factor It is the percentage cooperation between airlines and provide safe, of seats filled on a per kilometre flown basis It secure and efficient flights to passengers is calculated by taking the Revenue Passenger Kilometres (RPK) divided by the Available Seat International Civil Aviation Organisation (ICAO) Kilometres (ASK) Airlines measure things on an – The ICAO was founded in 1944 under the Chicago RPK and ASK basis to be able to compare efficiency Convention on International Civil Aviation A specialised of flights with different distance travelled and agency of the United Nations, it is responsible for seating capacity One can then analyse revenues setting international standards, recommended and costs on this same basis practices and rules in technical, economic and legal areas of international civil aviation RPK – Revenue Passenger Kilometres This is a measure of paying passenger utilisation of Invested Capital – The Invested Capital can be the ASK So it takes the number of passengers calculated by looking at the working capital and multiplied by the distance travelled in kilometres fixed assets required for the business net of the Like ASK, it can be measured for an airline, for cash and cash equivalents, or by looking at the net the industry, for specific aircraft types, for specific debt and equity of the company For Air Astana routes, or regions served we have calculated Invested Capital through the assets and net working capital net of cash RPK Yield – This is a similar measure to ASK Yield It is a revenue metric based on RPK and Joint Aviation Authorities (JAA) – The JAA measures revenues in terms of utilised capacity unites the civil aviation regulatory authorities of numerous European states that develop and RTK – Revenue Tonne Kilometres This is a implement common safety regulatory standards measure of weight capacity utilisation It takes and procedures the tonnes carried multiplied by the distance travelled in kilometres This is a useful measure Kazakhstan Civil Aviation Committee (CAC) – when comparing airlines with significant cargo The CAC is the official regulator of the civil aviation volumes, and is sometimes the metric used for sector in Kazakhstan It is under the authority of fuel consumption the Ministry of Investment and Development of the Republic of Kazakhstan RoE – Return on Equity is a percentage-based measure of shareholder returns It takes the net Net Debt or Net Cash – This is the long and profit for a specific year, divided by the average short-term financial liabilities of the company shareholder equity during that year It is sometimes

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REPRESENTATIVE OFFICES

Hyatt Regency Bishkek Hotel St Petersburg CIS Tel: +996 (312) 900 886 Air Astana Representative Check-in Desk ASIA AND MIDDLE Fax: +996 (312) 900 682 Pulkovo 2 International Terminal Departure Hall EAST AZERBAIJAN Airport Ticket Office Tel: +7 981 846 25 44 Air Astana Ticket Desk at Check-in Desk Opening time: three hours before scheduled time of Baku International Terminal, Departure Hall departure CHINA Air Astana City Office Tel: +996 (312) 906 906 Caspian Plaza 1, 1st Floor Opening time: three hours before scheduled time of Virtrans agency Beijing C Cabbarli, 44 departure 8H office, 48 Ulitsa Babushin Air Astana Beijing, Office 517, 50 Liangmaqiao Road AZ 1065, Baku St Petersburg Chaoyang District, Beijing, 100016 PRC Tel: +994 12 497 49 96 Tel: +7 (812) 362 78 59 (Kempinski Hotel, Beijing Lufthansa Centre) RUSSIA Tel: +7 (812) 560 10 52 Tel: +86 106 4651030, 64665067 Tel: +7 (812) 568 17 35 GEORGIA Moscow Opening hours: 09:00 to 20:00, Mon to Sun Ticket Sales Office Hong Kong Tbilisi Tverskaya metro station Room 2503, 25th Floor, Caroline Centre City Ticket Office 1/2 Bldg B Gnezdnikovsky Pereulok Yekaterinburg 28 Yun Ping Road, Causeway Bay 34 Chavchavadze Ave “Gnezdnikovsky” Business Centre Koltsovo International Airport Hong Kong 5th floor, Pixel Building Tel: +7 (495) 287 70 08/09 Terminal A Tel: +852 2830 4860 Tbilisi, Georgia Tel: +7 912 657 90 80 Fax: +852 2504 2945 Tel: +995 322 514 999 Sheremetyevo Ticket Office E-mail: tbs sales@airastana com Sheremetyevo International Airport Terminal E, Departure Hall TAJIKISTAN Urumqi Airport Office Tel: +7 (495) 229 34 94 City ticketing office Tbilisi International Airport (TBS) Opening hours: Dushanbe 19th Floor Office S, Guanghui Zhongtian Square Air Astana Check-in Desk 07:00 – 13:00, Mon to Sun Air Astana 165 North Xinhua Str , Urumqi, Xinjiang, China International Terminal, Departure Hall 14:00 – 19:00, Mon to Sun SAS Business Centre, 1st Floor Tel: +86 991 2822987 / 2822983 E-mail: tbs airport@airastana com 20:00 – 24:00, Mon to Sun Ayni Street 24A Fax: +86 991 2822943 Opening time: three hours before scheduled time of Tel: +992 37 601 8200 departure Room 3B-28, Terminal 3 Novosibirsk Urumqi International Airport Tolmachevo International Airport UZBEKISTAN Xinshi district, Yingbing Street 46 KYRGYZSTAN Airport Ticket Office Tel: +86 991 3800466 Air Astana Ticket Desk at Check-in Desk Tashkent Fax: +86 991 3800465 Bishkek International Terminal, Departure Hall Air Astana Air Astana City Office Tel: +7 383 216 98 21 4a Afrosiab Street, Mirobad District 191 Abdrakhmanov Str , 720011 +7 963 947 70 84 100031, Tashkent Tel: +998 (71) 140 30 02

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INDIA THAILAND EUROPE TURKEY Delhi Bangkok Istanbul Delhi City Office 140/18 ITF Tower, 11th Floor, Silom Road FRANCE Air Astana Istanbul City Office 207, 2nd Floor, N-1, BMC House Suriyawongse, Bangrak, Bangkok 10500 Cumhuriyet Str 61/1, Bingul Han, Elmadag, Sisli Middle Circle, Connaught Place Tel: +662 634 2552-4 Paris Istanbul New Delhi 110001 Fax: +662 235 8283 Air Astana c/o Discover The World Marketing Tel: +90 212 343 49 60/61 Tel: +91 11 41521425, 23711225 82, rue Taitbout Fax: +90 212 343 49 63 Fax: +91 11 2371126 75009 Paris Opening hours: 08 00 – 18 00 UNITED ARAB EMIRATES Tel: + 33 1 70 64 46 77 Istanbul Airport Office Delhi Airport Office Fax: +33 1 58 22 20 10 Atatürk Airport International Terminal Room 44, Office Level 4 Abu Dhabi E-mail: Sales: PAR sales@airastana com Departure Level Indira Gandhi International Airport Abu Dhabi International Airport Reservation: PAR reservations@airastana com Tel: +90 212 465 53 93 Terminal 3 Terminal 1 Fax: +90 212 465 53 92 New Delhi 110037 1st Floor, Office 2209 Opening time: three hours before scheduled time of Tel: +91 11 49639960 Tel: +971 2 5052089 GERMANY departure Fax: +91 11 49639960 Fax: +971 2 5052088 Air Astana Abu Dhabi City Office Frankfurt Istanbul Airport Office Al ain Tower, Hamdan Street Air Astana Atatürk Airport International Terminal MALAYSIA PO Box 111441, Abu Dhabi, UAE c/o Aviareps AG Departure Level Tel: +9712 674 4488 Kaiserstrasse 77, 60329 Frankfurt am Main Tel: +90 212 465 53 93 Kuala Lumpur Fax: +9712 672 2366 Tel: +49 (0) 69 770 673 015 Fax: +90 212 465 53 92 Global Alliance Travel Services Sdn Bhd Direct: +9712 674 1179 Opening time: three hours before scheduled time of Suite 1502, Level 15, Central Plaza departure 34 Jalan Sultan Ismail NETHERLANDS 50250 Kuala Lumpur, Malaysia Dubai Tel: +603 2144 1571 Air Astana Dubai City Office Amsterdam UNITED KINGDOM Fax: +603 2148 9033 Dnata Travel Centre Airport Ticket Office Sheikh Zayed Road, Ground Floor Air Agencies Ticket Desk London Dubai, United Arab Emirates Terminal 3, Departure Hall Air Astana Ticketing Office SOUTH KOREA Tel: +9714 3166572 Phone: +31 20 316 1945 /19 46 52, Grosvenor Gardens Fax: +9714 3211059 Opening hours: 08:00–16:00, Mon to Fri London SW1W 0AU Seoul 08:00–15:00, Sat to Sun Tel: +44 20 7333 0196 Air Astana Seoul 17:00–20:00, Mon 3rd Floor, Donghwa B/D, 58-7 VIETNAM E-mail: ticketdesk spl@airagencies nl Seosomun-Dong, Chung-Ku, Seoul Tel: +82 (0)2 3788 0170 Ho Chi Minh City +82 (0)2 3788 0211 Vietway Aviation 39B Truong Son St Tan Binh Dist Ho Chi Minh City, Vietnam Tel: + 848 35474218 Fax: +848 35474217

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CONTACTS

REGISTERED ADDRESS OF AIR ASTANA JSC 4a Zakarpatskaya Street Almaty 050039 Kazakhstan Tel: + 7 (727) 258 41 35 Fax: + 7 (727) 259 87 01

24-HOUR CALL CENTRES Tel: +7 (727) 2444477 (Almaty) +7 (7172) 584477 (Astana)

NOMAD CLUB FREQUENT FLYER PROGRAMME Tel: +7 (727) 244 5530 Fax: +7 (727) 259 8701 nomadclub@airastana com

OFFICIAL WEBSITE OF AIR ASTANA www airastana com

FOLLOW US ON facebook com/AirAstana twitter com/airastana instagram: air_astana_official

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