2010
ASL Aviation Group Limited Annual Report
Geographical Locations
802 000
Passengers
Passengers p.a.
90 000
Tons of freight p.a.
Freight
45 500
Freight hours p.a.
Yellowknife UK
Afghanistan Lahore Chad
Mumbai
Singapore
Nairobi Entebbe Comoros
Johannesburg
Punta Arenas
Christchurch
Aid & Relief
Haiti
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ASL Aviation Group LImited Annual Report 2010
Contents
Chairman’s Overview
Profile of the Group
4 Report of the Chairman
5 Financial Highlights 6 Report of the Executive
ASL Aviation Group LImited Annual Report 2010
The strong synergies from complementary aviation services within the Group enables us to be unique in the provision of aviation related services to our customers.
Governance Statements and Structure
Other information
9 Corporate governance
12 A brief history of the Group
10 Corporate social responsibility statement
15 Fleet Summary of owned aircraft 17 Current Group fleet
11 Group ownership 12 Organisation
ASL Aviation Group LImited Annual Report 2010
Report of the Chairman
I am delighted to be able to introduce for the first time this annual report. The annual report will enable key stakeholders to obtain a better understanding of the ASL Group and its activities. At its inception in 2008, the ASL Group brought together an exceptional airline group offering superior service across a variety of airline activities and is founded on the strong support of its customer base. Since its formation, ASL has exceeded performance expectations with three solid years of trading results. This performance is more remarkable when taken in the context of the current economic conditions and particular challenges which have faced the aviation industry. The 12 months of 2010 have brought further expansion and change to the ASL business. During 2010, the group operating fleet has grown to approximately 90 aircraft. This was largely through the acquisition of the Safair Group of companies and activities from an Irish lessor.
Furthermore, 2010 saw the commencement, for the first time of full charter dedicated passenger operations within the ASL Group. The addition of two new generation aircraft allows the Group to extend its base of operations beyond Europe. Together the various aviation interests of the ASL Group offer a unique diversity of culture, geographic location, expertise and services. The group is exploring a number of aviation related opportunities for the future and we anticipate the Group will gather further strength from the momentum which has been established to date. Following the recent acquisition, 2011 will be the year for streamlining the ASL Group further, which will create a strong basis for providing even better service to our esteemed customers. Lastly, I would like to thank on behalf of the Board the management team and every individual working for the ASL Group. Their effort during the past year is the basis of the success of the Group.
L Criel Chairman of the board
ASL Aviation Group LImited Annual Report 2010
Financial Highlights
Financial Numbers
Operational Numbers
2010 e000’s
2009 e000’s
Turnover
339,517
292,376
EBITDA
53,405
46,806
EBIT
27,228
25,894
Net profit
14,339
15,356
Total assets
448,197
243,788
Turnover
%m
350
350
340
340
330
330
320
320
310
310
%m
300 290 280
290 280
270
270
260
260
2009
Hours flown
66,566 hrs
45,819 hrs
Passengers carried
802,000
753,000
Reliability
99.5%
99.2 %
Results from operations 30
2010
25
2010
30 2009
20
%m
300 2009
2010
2009
15
25
2010
20
%m
15
10
10
5
5
0
0
ASL Aviation Group LImited Annual Report 2010
2009
2010
Report of the Executive
Highlights for 2010 February 2010
The fleet of A300 aircraft for DHL reached full potential at 14 aircraft
March 2010
First activity of the B737-700 dedicated passenger operations aircraft
April 2010
First passenger operations from Dublin on franchised “EAP by ACL” basis
June 2010
Extended operations of the B737-700 fleet to Johannesburg for FIFA World Cup in South Africa One Hercules aircraft deployed for eight weeks as an integral part of the “Deepwater Horizon clean-up” off the US Gulf coast
September 2010
Finalisation of the agreement for the acquisition of a number of companies from Aergo
ASL Aviation Group LImited Annual Report 2010
Report of the Executive (continued)
The ASL Group (“ASL”) has continued to expand during 2010. During September of 2010, the Group concluded the purchase of a portfolio of aviation assets from Aergo Capital Limited, an Irish aircraft owner and lessor. The transaction included the acquisition of companies in both Ireland and South Africa and comprised both investment in airline operating companies and leased assets. The most recognisable investment is the investment in Safair Operations, a South African airline. Safair will broaden the sphere of operations, adding geographical diversity and expanding the ASL Group’s product. Safair operates, not only within South Africa where it has its headquarters, but worldwide including operations during 2010 in Afghanistan, the Netherlands, Germany and Singapore. Safair is a well known and well respected name within the industry. Its fleet of predominantly Hercules L382G aircraft has been involved largely in the aid and relief market but also in varied activities including support of the Dakar rally, oil spill standby and low level spraying activity, as well as operations in both the Arctic and Antarctic. In addition to the Hercules aircraft, the deal also includes the acquisition of five Boeing B737-800 aircraft, five Airbus A300-B4 and three ATR 72-500 aircraft that will further bolster ASL’s leasing portfolio. The B737’s in particular will add new generation fleet to the aircraft portfolio whilst the ATR‘s and A300 fleets are well known to ASL Group and currently with dependable lessees. ASL Aviation Group and Safair are well known to each other having both previously been subsidiaries of Imperial Holdings, a diversified and listed South African group of companies. This acquisition brings the total number of owned aircraft to 50 and the total number of aircraft to around 90.
The Europe AIRPOST activity was expanded in 2010 with the introduction for the first time of dedicated passenger activities. The expansion was new in that it extended the aircraft base from France to include Ireland, introduced the newer extended range B737700 variety and extended passenger operations to a 24/7 opportunity. This has enabled EAP to offer services to Africa and as far as Comoros Islands and South Africa. The ash cloud caused a significant disruption to the flight schedule making it necessary to delay or divert numerous flights and accommodate passengers at an estimated cost of more than €1 million. La Poste remains Europe AIRPOST’s major customer, accounting for roughly one third of all revenue. Management is currently in the process of extending its contractual arrangements with La Poste on certain routes beyond the contract established when the company was acquired in 2008. Europe AIRPOST has bounced back from the decrease in activity of 2009 with an increase of 7% in the hours flown over 2009. This is a reflection of the improved market and the figures would have been better than in 2008, but for the impact of the ash cloud. Whilst passenger numbers are similar the length of sector flown has increased with the new extended range aircraft increasing the average sector length. Air Contractors Ireland (“ACL”) continues to provide services to the major integrator and postal operators in Europe. Contracted charter activity in support of the FedEx and Swedish Posten networks with ATR’s and the DHL network with A300 type aircraft continued during 2010. The introduction of the A300 fleet on a lease basis to Air Contractors was concluded and up to 14 aircraft were operated for DHL during the year.
The ASL Group continues to operate through its two main European airline operations Air Contractors Ireland and Europe AIRPOST, together with the supplemental aircraft leasing, aircraft spares sales and aircraft maintenance activities.
ASL Aviation Group LImited Annual Report 2010
Report of the Executive (continued)
Market sources indicate a rebound in freight volumes from the lows at the height of the financial crisis and management is optimistic that growth is possible in the short term with these customers.
of the lease fleet with the newly acquired aircraft continues to respect the philosophy of taking leases predominantly with national airlines and ‘blue chip’ customers.
ACL’s performance continues to exceed customers contractual requirements.
The returns of the leasing fleet are largely USD and therefore subject to volatility on translation to Euro.
The Group’s spares trading activity has made a more significant contribution to the net result. This was possible not only from continuing SHORTS trading but well supported by the emerging ATR sales from aircraft breakups and spares packages acquired.
Further growth in the passenger activity within Europe AIRPOST is expected in 2011. The mix of revenues is changing towards roughly only third of revenues from freight, one third from passengers on the quick change aircraft and the last third from dedicated passenger activities.
The Irish based leasing arm of the ASL Group, provides steady and consistent returns from the aircraft leasing activities. During 2010 the balance of the ATR aircraft acquired from Delta at the end of 2009 were placed with Aer Arann, an Irish based regional airline operating the thinner volume short haul connections on a franchise basis for the Irish national carrier Aer Lingus. The aircraft are on three year leases. All the aircraft acquired as part of the Safair acquisition were acquired with existing leases and financing intact. Whilst both the financing and aircraft leases run through to 2012/3, opportunities to extend the lease terms and restructure the financing will be considered ahead of the expiry. The extension
ASL Aviation Group LImited Annual Report 2010
2011 will see the finalisation of an Emissions Trading Scheme and the awarding of credits. The actual impact will only be experienced in 2012, when the scheme becomes effective and the impact will only be reliably determined once the credit allocation is clear. Rising fuel prices remains a concern in spite of the Group’s position to hedge fuel increases with its customers on long term commitments. Political instability in the North African states may impact on passenger movements to those areas to which Europe AIRPOST operates. The ASL Group outlook remains positive and focused on providing aviation solutions to its expanding worldwide customer base.
Governance Statements
Corporate governance statement The ASL Group is committed to risk management practices that assist the directors in the carrying out of their responsibilities. Board of directors
Remuneration committee The Remuneration Committee currently consists of three directors of ASL Group. The committee meets as required during the year to review and approve remuneration matters and the incentive plans of the executives and employees and to determine remuneration of the non executive directors.
The board is currently composed of six members and two nominated alternates. This includes one executive member and the remaining directors are representatives of the shareholders or are included by special invitation.
Following each meeting the chairman of the remuneration committee reports back to the Board of Directors.
The Board of Directors is assisted by two special advisory board committees, an Audit Committee and a Remuneration Committee.
The Chief Executive of ASL, Mr Hugh Flynn is the chairman of the executive committee which consists of key directors of the subsidiary companies and which meets every two weeks to consider the day-to day activities of the companies, manage the aircraft fleet and agree on actions to implement the strategic direction of the Group.
Audit committee Currently the Audit Committee consists of three executive directors of the subsidiary companies and two directors of ASL.
ASL executive committee
In 2010, the Audit Committee assisted the board of directors in order to achieve its supervision and monitoring responsibilities in the broadest sense. The audit committee meets several times a year to assess the results and financial position of the Group, the valuation of its aircraft fleet and to review the audit process and findings. The Group has retained the services of an external accounting firm which reviews and reports on internal audit matters referred to it by the Audit Committee as and when required. Following each meeting the chairman of the Audit Committee reports back to the Board of Directors.
ASL Aviation Group LImited Annual Report 2010
Governance Statements (continued)
Corporate social responsibility statement Safety The Group is fully committed to maintaining and exceeding safety standards. Across the Group, there are various accreditations over and above the required safety standards including ISO 9000 and IOSA accreditations at certain of its airlines to uphold and improve safety standards and ensure compliance with the requirements of the relevant regulatory authorities. Emissions and noise ASL recognises that as a participant in the aviation industry it has a responsibility to minimise emissions. The Group is committed to operating aircraft in the most efficient manner possible and actively engages at all levels to minimise the fuel burn through flight planning and minimising weight. Where possible the Group is modernizing its fleet and replacing older types of aircraft with new more fuel efficient aircraft. The Group’s commitment to more fuel efficient turboprop aircraft through its ATR fleet is further evidence of this strategy.
10 ASL Aviation Group LImited Annual Report 2010
The Group also recognises that in operating into several commercial centres, particularly in Europe, it contributes to noise levels. Pilot training and reduced take off weights contribute towards reducing the amount of noise generated by our aircraft. Employee training and relations The Group incurs significant cost in the training of its personnel both front line aircraft operations staff and also in its support staff. The Group has further committed to sponsor appropriate external training that contributes towards the development of its people. The Group has a mixture of both unionised and non-unionised staff across its respective workforces. Common to both arrangements is a highly effective and complimentary relationship between management and staff that acts to produce a coherent, aligned and motivated labour force.
Group Ownership
Compagnie Maritime Belge
Petercam / 3P Air Freighters
Compagnie Maritime Belge (CMB) is a major Belgian shipping company based in Antwerp. It was founded in 1895 and is listed on the Euronext FTSE.
An aircraft leasing company incorporated in Dublin and is sponsored by Petercam Private Projects (“3P’). 3P is the Private Equity section of Petercam, a leading Brussels based independent financial group.
51%
49%
ASL Aviation Group LImited Annual Report 2010 11
Organisation
Airlines
Support
Leasing
Safair Operations
Air Contractors Engineering
ACL Leasing Aviation & Air
Johannesburg, South Africa
Edinburgh, UK Maintenance Facility
Dublin, Ireland
Air Contractors Ireland Dublin, Ireland
Europe AIRPOST Paris, France
ACL Aviation Support Southend-on-Sea, UK Spares provisioning
Jetworx (28%) Johannesburg, South Africa Maintenance Facility
Passenger & Cargo operations
12 ASL Aviation Group LImited Annual Report 2010
Safair Lease Finance Johannesburg, South Africa
A brief history of the Group
The group has its origins in Airbridge Carriers in the
related interests which were acquired by CMB and 3P
United Kingdom which was formed in 1972, operating
Airfreighters. At the same time an interest was acquired
Argosy aircraft to the Channel Islands. The company was
in Europe AIRPOST and its fleet of Boeing 737 Classic
subsequently acquired by the Hunting Group and renamed.
aircraft operating a combination of postal and passenger
As Hunting Cargo Airlines, the Group operated a number
activities. This prompted the decision to rename the
of Boeing 727 type aircraft in cargo configuration mainly
holding company ASL Aviation Group to co-ordinate the
for DHL. In 1998 the Group was acquired by Safair, a South
different activities under a new identity. In 2010, the Safair
African airline subsidiary of the Imperial Limited Group and
Group was acquired, which includes the leasing and airline
CMB, a Belgian shipping line and renamed Air Contractors.
operations, based in South Africa.
CMB has remained as shareholders until today. Following the restructuring of the services with DHL and the end
2 7 9
of the operation of the B727-200 type ACL acquired an interest in BAC Group Limited. Through this
1
interest it has expanded and upgraded the fleet of turbo-prop cargo aircraft to the modern
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s
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and fuel efficient ATR variety. In 2007, Imperial disposed of all its aviation
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Group History
Purchased by CMB/3P Airfreighters
Acquis it
2007
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ASL Aviation Group LImited Annual Report 2010 13
1998
2004
2004
2008
2009
2010
14 ASL Aviation Group LImited Annual Report 2010
Fleet Summary – owned aircraft as at 31st December 2010
Type
MSN
Country of registration
Year of manufacture
Configuration
A300 - B4
148
Ireland
1981
freighter
A300 - B4
152
Ireland
1981
freighter
A300 - B4
184
Ireland
1982
freighter
A300 - B4
189
Ireland
1982
freighter
A300 - B4
208
Ireland
1982
freighter
A300 - B4
220
Ireland
1982
freighter
A300 - B4
234
Ireland
1983
freighter
A300 - B4
236
Ireland
1983
freighter
A300 - B4
259
Ireland
1983
freighter
A300 - B4
274
Ireland
1983
freighter
B737-300
24387
France
1989
quick change
B737-300
24388
France
1989
quick change
B737-300
24789
France
1990
quick change
B737-300
25124
France
1991
quick change
B737-300
28898
France
1997
quick change
B737-300
29333
France
1998
quick change
B737-300
29336
France
1999
quick change
B737-800
32631
South Africa
2002
passenger
B737-800
32632
South Africa
2002
passenger
B737-800
32633
South Africa
2002
passenger
B737-800
32634
South Africa
2003
passenger
B737-800
32635
South Africa
2003
passenger
Airbus
Boeing
ASL Aviation Group LImited Annual Report 2010 15
Fleet Summary (continued)
Type
MSN
Country of registration
Year of manufacture
Configuration
ATR 72-200
157
Ireland
1989
freighter
ATR 72-200
183
Ireland
1990
freighter
ATR 72-200
210
Ireland
1992
freighter
ATR 72-212
395
Ireland
1994
freighter
ATR 72-212
387
Ireland
1994
passenger
ATR 72-212
405
Ireland
1994
passenger
ATR 72-212
413
Ireland
1994
passenger
ATR 72-500
674
India
2001
passenger
ATR 72-500
679
India
2001
passenger
ATR 72-500
681
India
2001
passenger
ATR 42-500
625
Czech Republic
2004
passenger
ATR 42-500
629
Czech Republic
2004
passenger
ATR 42-500
633
Czech Republic
2005
passenger
ATR 42-500
635
Czech Republic
2005
passenger
ATR 42-500
637
Czech Republic
2005
passenger
ATR 42-500
639
Czech Republic
2005
passenger
ATR 42-300
82
Ireland
1989
freighter
ATR 42-300
115
Ireland
1989
passenger
ATR 42-300
149
Ireland
1989
freighter
Fokker 27
10369
Italy
1969
freighter
Fokker 27
10373
Italy
1969
freighter
Fokker 27
10377
Italy
1969
freighter
Fokker 27
10378
Italy
1969
freighter
L-382
4673
Ireland
1976
standard
L-382
4695
South Africa
1974
standard
L-382
4388
South Africa
1970
standard
49966
South Africa
1983
passenger
ATR
Fokker
Hercules
McDonnell Douglas MD83
16 ASL Aviation Group LImited Annual Report 2010
Group Fleet at May 2011
A unique and adapted fleet dedicated to customer requirements.
Operated fleet
Owned fleet leased out
2 Boeing 737-700
1 MD83
8 Hercules (3 owned)
5 Boeing 737-800
5 ATR 42
4 Fokker F27
11 ATR 72 (4 owned)
6 ATR 72
13 Airbus A300-B4 (9 owned)
10 ATR 42
20 Boeing 737-300 (8 owned)
ASL Aviation Group LImited Annual Report 2010 17
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