2 3 Annual Report 2010 CONTENTS 1. UTair today ................................................................................................................................................. 4 9. Sustainable Development ..................................................................................................................... 38 2. Our achievements ..................................................................................................................................... 8 10. Corporate governance ............................................................................................................................ 44 3. Message of the Chief Executive Officer ................................................................................................. 10 11. Our securities .......................................................................................................................................... 54 4. Main events of 2010 ................................................................................................................................ 12 12. Reference information ............................................................................................................................ 58 5. Our strategic goals ................................................................................................................................. 15 13. Glossary .................................................................................................................................................. 59 6. Where we work ........................................................................................................................................ 16 14. Liability restriction ................................................................................................................................. 60 7. Our work .................................................................................................................................................. 20 15. Attachment: 8. Financial results ...................................................................................................................................... 34 Consolidated statements in accordance with International Financial Reporting Standards (IFRS) .............................................................................. 61 4 5 Annual Report 2010 We are the world’s no. 1 helicopter company based on fleet size THE WORLD’S NO. 1 HELICOPTER COMPANY and lift capacity of rotary-wing >300 HELICOPTERS OF ALL CLASSES aircraft inventories. The UTair fleet has over 300 helicopters of all classes, including 26 Mil-26Т heavy helicopters that are capable of carrying payloads of up to 20 tons internally and on external sling loads. We are a major supplier of aviation services for the United Nations, >20 YEARS OF having successfully provided SUCCESSFUL COOPERATION WITH THE UN air-transportation support of UTAIR TODAY Peacekeeping missions since 1991. The UTair Group is comprised of companies operating aircraft as well as providing aircraft repair and maintenance, staff training, flight service support and the sale of air carriage services. UTair Aviation Joint- We have our own aviation training Stock Company is the nucleus of the UTair Group companies. center with the necessary AVIATION TRAINING equipment and qualified teachers AND RETRAINING CENTER and instructors to provide training, Based on 2010 results, we hold retraining and practical exercises 2ND PLACE the second place in terms of for aircraft specialists. Training is IN TERMS OF PASSENGER OPERATION passenger operation volume on provided to over 20,000 persons domestic routes, and are among annually. VOLUME ON DOMESTIC ROUTES the top four leading Russian airlines based on the number of passengers transported by Our catering services unit is one of the major Russian passenger domestic and international 108 AIRLINES ARE CUSTOMERS airlines. catering producers, and is among OF UTAIR-CATERING SERVICES the most rapidly-developing UTair In 2010, UTair aircraft performed units. more than 220 regular passenger >220 flights daily on more than 180 REGULAR PASSENGER FLIGHTS routes in Russia, to CIS countries and Asia. 6 7 Annual Report 2010 The aircraft fleet upgrade and modernization strategy planned by the company in the 2010-2015 timeframe will allow us to improve the quality of service and develop promising new routes, including European routes. 166 aircraft* Medium-range Boeing 757-200 4 337 helicopters* Boeing 737-800 5 Boeing 737-400/500 28 Тu-154М 21 Heavy Мil-26Т 26 Short-range Мil-10К 5 ТU-134 28 Bombardier CRJ-200 15 Regional Medium ATR 72-200/500 9 Мil-171/Мil-8АМТ 52 ATR 42-300 14 Мil-8МТВ 67 YAK-40 5 Мil-8Т (P, PS) 166 АN-24 25 Мil-2 3 L 410 2 Ка-32 5 Cargo Light АN-74 3 Eurocopter AS-350/355 5 АN-26 4 Eurocopter BO-105 4 VIP air services Robinson R-44 4 Gulfstream IV/V-SP 2 Bombardier Сhallenger 300 1 * All aircraft of the UTair Companies Group, including leased aircraft. Information as of August 1, 2011. 8 9 Annual Report 2010 OUR ACHIEVEMENTS 2010 2009 In 2010, UTair marked many achievements, and can be rightfully proud of the excellent results of our 328,238 employee team. flight hours During 2010, UTair aircraft logged a total of more than 328,238 flight 2010 hours, which was an all-time high 5.1 million 2009 in the company’s history. 261,505 328,238 passengers Operational flight time, hours 2010 In 2010, UTair aircraft transported a record number of passengers: US$ 1.462 mln 2009 over 5 million persons, which revenue exceeded the 2009 indicators by 3,695,661 5,147,436 39.3%. Number of passengers transported Based on the 2010 results, we 2010 increased the revenue from our main lines of business to a record level of US$ 1.462 mln, exceeding 1,056,105 1,461,957 2009 8,981,000 the 2009 level by 38%. th. Pkm Revenue, mln US$ Based on the results of 2010 250 2010 passenger turnover, the airline US$ 205 mln 14.50 grew by 51% when compared to EBITDA 14.04% 200 14.00 2009, amounting to 8,981,417.1 5,939.4 8,981.4 14% EBITDA margin 13.50 th. pkm. 150 2009 Passenger turnover, million passenger-kilometers 13.00 UTair demonstrated its excellent 100 12.20% 12.50 2010 efficiency in 2010, which was 12.00 reflected in the growth of EBIDTA 50 19, 248.2 11.50 to US$ 205 mln; the EBITDA 129 205 tons of cargo 2009 margin grew by 1.84 percentage 0 11.00 EBITDA , mln US$ EBITDA margin % points compared to 2009. In 2010, our company’s aircraft transported almost 20,000 tons These impressive results are due primarily to the work and dedication of the UTair team’s 12,000 employees, of cargo and mail, which is an whose concerted actions allowed the company to implement a full range of measures aimed at optimizing increase of 38.2% when compared 13,927.6 19,249.2 and expanding the route network, expanding the company’s geographic presence in the global and Russian to the results of 2009. helicopter operating markets, resulting in a significant increase in flight frequencies (over 220 regular flights a Cargo transported, tons day) and passenger flight load factors (78.2% occupancy of passenger seats) performed by UTair Aviation, and an increase in the volume of helicopter operations (flight hours increased by 23%). 10 11 Annual Report 2010 MESSAGE FROM THE CHIEF EXECUTIVE OFFICER 2010 was a landmark year occupied a clear leadership started servicing UTair Aviation requirements. The airline intends specialists working to fulfill delivery of 20 lightweight AS350 in the development of the UTair position based on the number flights in the spring. to buy 24 aircraft of this type, with contracts abroad. B3 and AS355 NP helicopters. Group’s business. Our success of passengers transported on In addition, UTair significantly deliveries to UTair beginning in UTair South Africa participated On behalf of the Board of was built on the framework of domestic routes. increased its Boeing aircraft fleet. 2013-2014. in fulfilling the contract for fire- Directors, the Executive Board fleet modernization, an expansion Active development of Five Boeing 737-400s were added, In 2010, a number of strategic fighting duties in Turkey. Another and the Employees, I would like to of geographical presence, and UTair’s route network continued and the airline started flying Boeing tasks for UTair Aviation’s helicopter subsidiary, UTair India, received express sincere gratitude to the further improvement of the according to the market 757-200s with a capacity of 228 business were successfully its operator certificate, paving shareholders and investors, whose company’s structure. UTair requirements: in 2010 more passengers. This type of aircraft is implemented. The volume of the way to promising markets in trust helped us to demonstrate confirmed its status as a major than 30 new regular flights were used by the airline on routes with helicopter operations increased Southeast Asia. such consistent growth rates. global helicopter operator and a launched. Today the map of UTair high passenger potential, primarily and their geographic presence An unprecedentedly large New business development leading airline in the CIS and Baltic flights covers the territory in which on international flights connecting was expanded due to activities in contract for the delivery of 40 new tasks in 2011 already are set republics. 90% of the Russian population Moscow, Saint Petersburg and the following promising regions: Mil-171 helicopters to UTair from and target further achievements. Thanks to the concerted