Annual Report
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Annual Report 2012 www.atlantic.fo Company Information P/F Atlantic Airways Vágar Airport FO-380 Sørvágur Faroe Islands Tel + 298 34 10 00 Fax +298 34 10 01 Established 1987 Reg. no. 1223 VAT Number 379778 Domicile municipality: Sørvágur Website: www.atlantic.fo Email: [email protected] Share Stock Exchange: VMF Market on NASDAQ OMX Iceland & NASDAQ OMX Copenhagen ISIN code FO 0000000062 Share Capital DKK 103.500.000 No. of Shares 1.035.000 Board of directors Kaj Johannesen, Chairman Jens Wittrup Willumsen, Deputy Chairman Tezz Tordsdotter Ohlsson Bjarni Askham Bjarnason Ingi S. Joensen Olaf S. Poulsen Management Magni Arge, CEO Marius Davidsen, CFO Joen Remmer, COO Auditor P/F NOTA, State Authorized Public Accountants Annual Report 2012 Page 2 Atlantic Airways in Brief Our origin, mission, vision, business and strategy Atlantic Airways was established in order to develop the Faroese airline industry and airline services, and through this establish a competent aviation environment in the Faroe Islands. Since the company’s establishment in 1987 it has grown from a small company with one aircraft and limited capabilities to a company, which operates several aircraft and helicopters. At year-end 2012 Atlantic Airways had 172 full-time equivalent employees, and operated 4 aircraft and 2 helicopters. Our mission is to transport people and cargo by air with the Faroe Islands as our cornerstone. Our vision is to enable the Faroese people to travel the world, providing the best possible service and to remain the preferred airline carrier in the Faroe Islands. In line with our mission and vision statement, Atlantic Airways strives to provide the Faroe Islands with safe, commercially viable, diverse, and competitive air travel to the rest of the world. Internationally, it is our strategy to be competitive in niche markets outside the Faroe Islands, while as a company to remain flexible and responsive to changes and opportunities at all times. In line with this, Atlantic Airways also prioritizes to be a valued and respected member of our local society creating value, competences and jobs to the Faroese community. Our corporate culture places emphasis on safety, quality, punctuality, customers, profitability and qualified employees. The history of Atlantic Airways in brief Atlantic Airways was formed in 1987 shortly after the Faroese government finalized negotiations with the Danish government to allow a Faroese operator to provide air services in competition with Danish operators, who previously had monopoly on this service. Atlantic Airways has continually developed airline travel to and from the Faroe Islands since the first operation in 1988 on 28 March. The number of departures to Copenhagen has increased to four per day during high season, and the company offers flight connections both morning and evening. Since 1995 the company has established flight connections to the neighboring countries Iceland, Norway and UK. This continued development has increased passenger numbers at the Vágar Airport from around 90,000 to more than 200,000 per year. Additionally, the company has been at the forefront in promoting the Faroe Islands abroad as a tourist destination, as well as in developing local tourism. Since 1995, the company has developed helicopter services in the Faroe Islands with Visual Flight Rule (VFR) operations to be able to perform demanding Search and Rescue (SAR) operations as well as off-shore operations. Atlantic Airways has from day one focused on qualifying the work force in the Faroe Islands to conduct a range of jobs within the aviation industry. Atlantic Airways has trained hundreds of people as engineers, pilots, stewardesses as well as other jobs within the field of aviation. Today, Atlantic Airways is among the largest companies in the Faroe Islands. However, the Faroese home market is relatively small, and the company therefore also has a strategic interest in providing services outside the Faroe Islands based on profitability and relevance to Atlantic Airways’ core competences. On this background, the company has entered the European market to widen its operations beyond the limited Faroese market. The company has performed well in open market competition and has been involved in air logistic projects in various European countries, servicing renowned companies such as Bristow Helicopters, SAS, Blue 1, Air Greenland, British Airways and Aker Stord. In 2012 the European Regions Airline Association (ERA) has commended Atlantic Airways with the Airline of the Year 2012/2013 bronze Award. The nomination was partly thanks to the groundbreaking introduction of the RNP AR navigational aid system on the company’s new Airbus A319, and partly because of the genuine regional service that the company provides to the remote Faroe Islands on an ongoing basis. Annual Report 2012 Page 3 Table of Contents Page General Company Information ..................................................................................................................................... 2 Atlantic Airways in Brief ................................................................................................................................ 3 Letter from the Chairman and the CEO .......................................................................................................... 5 Fourth Quarter 2012 in brief ........................................................................................................................... 7 The year 2012 in brief ..................................................................................................................................... 7 Financial highlights and key ratios ................................................................................................................. 8 Management’s Review Management’s Review ................................................................................................................................... 9 Operational Review ........................................................................................................................................ 12 Financial Review ............................................................................................................................................ 22 Events after the End of the Financial Year ..................................................................................................... 25 Outlook for 2013 ............................................................................................................................................. 26 Ownership ....................................................................................................................................................... 28 Corporate Governance .................................................................................................................................... 31 Risk Management ........................................................................................................................................... 40 Knowledge and Human resources .................................................................................................................. 41 Corporate social responsibility ....................................................................................................................... 42 Financial Calendar 2013 ................................................................................................................................. 46 Statement and Report Management’s Statement ................................................................................................................................ 48 Independent Auditors’ Report......................................................................................................................... 49 Annual Accounts Income Statement ........................................................................................................................................... 50 Statement of comprehensive income ............................................................................................................. 51 Balance Sheet .................................................................................................................................................. 52 Statement of Changes in Equity ...................................................................................................................... 54 Cash flow Statement ....................................................................................................................................... 55 Overview of Notes .......................................................................................................................................... 56 Notes ............................................................................................................................................................... 57 Stock Exchange Announcements Stock Exchange Announcements .................................................................................................................... 87 Definitions Definitions ...................................................................................................................................................... 88 Annual Report 2012 Page 4 Letter from the Chairman and the CEO One year ago we expressed that Atlantic Airways would face new and unprecedented challenges in 2012, as the airline was set to take delivery of a brand new