Presentation at the China Travel Sky Airline Conference, Guangzhou, September 2010

1. To represent, lead and serve the airline industry
Changing business realitiesChanging business realities
of airline industryof airline industry
Guido Gianasso
China Travel Sky 2010 Airline Conference
Guangzhou, 1st December 2010
航空领域的现况改变航空领域的现况改变

2. Markets almost back on trackMarkets almost back on track
市场几乎回到正规市场几乎回到正规
Source: IATA
International air freight and passenger volumes
seasonally adjusted
160
180
200
220
240
260
2005 2006 2007 2008 2009 2010
RPK,billions
9
10
11
12
13
14
FTK,billions
FTK
RPK

3. Air cargo gains share from trade reboundAir cargo gains share from trade rebound
空运从贸易复苏中获益空运从贸易复苏中获益
World trade in goods and air FTKs
Source: Netherlands CPB and IATA
8
9
10
11
12
13
14
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
BillionFTKs
90
100
110
120
130
140
150
160
170
indexofworldtrade,2000=100
International FTKs
(left scale)
World goods trade
volumes
(right scale)
Source: IATA, Netherlands CPB

4. Business travel revives premium businessBusiness travel revives premium business
商务出行推动两舱收益商务出行推动两舱收益
Busines confidence and premium travel growth
55
65
75
85
95
105
115
2006 2007 2008 2009 2010
Confidenceindex
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
%changeoveryear
Premium travel
(right scale)
Business
confidence
(left scale)
Source: IATA, Haver

5. Geography mattersGeography matters 地理因素地理因素
Source: IATA
Growth in passenger numbers by market
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
2006 2007 2008 2009 2010
Changeoveryear
Middle-East - Asia
Within Asia
North & Mid
Pacific
Within- Europe
North Atlantic

6. Growth of Chinese Aviation IndustryGrowth of Chinese Aviation Industry
中国航空业的发展中国航空业的发展
Source: IATA
1400480AircraftsAircrafts
5.7 M1.6 MDomestic seatsDomestic seats
per weekper week
2010201020002000

7. But there is much more potentialBut there is much more potential
更大的发展潜力更大的发展潜力
Source: IATA
3.00.3Seats perSeats per
personperson
300 M1.300 MPopulationPopulation
USUSCHINACHINA

8. Some regions back in profit, some notSome regions back in profit, some not
部分地区已开始盈利部分地区已开始盈利
Source: ICAO, IATA
Airline net profits by region
-6
-4
-2
0
2
4
6
Europe Asia-Pacific N America L America Middle east Africa
US$billion
2009 2010 2011

9. Industry profits see good cyclical upturnIndustry profits see good cyclical upturn
行业利润呈循环上升趋势行业利润呈循环上升趋势
Global commercial airline profitability
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010F
2011F
%revenues
-20
-15
-10
-5
0
5
10
15
20
US$billion
Net losses
(right scale)
EBIT margin (left scale)
Source: ICAO, IATA

10. ChallengesChallenges 挑战挑战
 Fuel price is raising
 from 24 % to 26 % of operating costs
 Unused capacity
 Wide body utilization 7.8% down
1400 aircrafts to be received in 2010
 Cost of labor / Trade Unions issues

11. Fares turning up but so are fuel pricesFares turning up but so are fuel prices
票价和油价上涨票价和油价上涨
Source: IATA and Platts
Average international fares and jet kerosene prices
300
320
340
360
380
400
420
2006 2007 2008 2009 2010
US$perone-wayfare
100
150
200
250
300
350
400
450
UScentspergallon
Jet kerosene price
(right scale)
Average one-way
international fare
(left scale)

12. Capacity starting to outpace demandCapacity starting to outpace demand
承载量承载量//运力开始超过需求运力开始超过需求
International air travel and capacity
seasonally adjusted
185
195
205
215
225
235
245
255
265
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
RPKbillion
250
260
270
280
290
300
310
320
330
ASKbillion
ASKs
(right scale)
RPKs
(left scale)
Source: IATA

13. To sum upTo sum up…… 总结以上内容总结以上内容
 Strong cyclical rebound in travel
 Airlines still financially fragile
 Some potential upside to travel demand
 Potential downside look larger

14. IATA and CHINAIATA and CHINA –– areas of cooperationareas of cooperation
国际航协与中国国际航协与中国-- 合作领域合作领域
 Simplifying the business (Bar coded, Boarding
passes) => target is 100 % at yearend (China is at 43%)
 E-freight (Tianjin is the only airport in the e-freight
program)
 Air China has five FAST TRAVEL projects
 Environment – the targets are:
1.5% improvement of fuel efficiency annually up to
2020)
Carbon neutral growth from 2020
Cutting emissions in half by 2050, compared to 2005

15. IATA in CIATA in CHINAHINA -- a Human Resources perspectivea Human Resources perspective
从人力资源的角度看国际航协在中国从人力资源的角度看国际航协在中国
 Office established in 1994 (3 employees)
 Now Regional Office with 90 employees from 5
countries
 Chinese employees are the second national group
in IATA
 IATA training activities in China grow
 In 2007 IATA launches the IATA INTERCULTURAL
LEADERSHIP ENGAGEMENT and DEVELOPMENT
(I.LEAD) Program in Beijing

16. Building the winning coalition: I.LEADBuilding the winning coalition: I.LEAD
打造胜利的团队打造胜利的团队

17. To represent, lead and serve the airline industry