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S7 Airlines’ Operating Results for 2007: Number of Passengers of S7 Airlines Reached 5.7 Million People in 2007

30.01.2008

The positive dynamics of all of S7 Airlines’ production indicators and the airline’s use of an Oracle E-Business Suite to manage its corporate finances for the first time made it possible to achieve high financial results in 2007. According to preliminary data, S7 Airlines’ income during the reporting period increased from the previous year by 24% to more than30 bn rubles(not counting VAT), while EBITDA reached 2.8 bn rubles, and the Debt/EBITDA ratio fell to 3.6 (according to Russian Accounting Standards). The airline’s debut bond issuance in the amount of 2.3 bn rubles was successfully completed in July 2007, and S7 Airlines made a payout of the first coupon on the bonds in the amount of 122 million rubles on 22 January 2008.

In 2007 S7 Airlines continued to implement a strategic program to renew its air fleet that will run until 2013. Several large-scale contracts with the world’s leading manufacturers of civilian aircraft—Boeing and Airbus—on the purchase of more than 50 new airplanes were concluded as part of the program, including:

    »  25 Airbus A320s with deliveries beginning in 2009,
    »  10 Boeing 737-800s with deliveries beginning in 2010, and
    »  15 Boeing 787 Dreamlinerswith deliveries beginning in 2014. S7 Airlines will be the first Russian purchaser of these ultra-modern airplanes.

Operational leasing accords were also concluded with ILFC on 4 new Airbus A320 airplanes to be delivered in the first half of 2008.

S7 Airlines’ fleet added 10 Airbus A319 airliners during 2007, bringing the total to 66 long-distance airliners at the end of the year, of which 30 were foreign-made (5 Airbus A310-200s, 2 Airbus A310-300s, 16 Airbus A319s, 5 Boeing 737-500s, 2 Boeing 737-400s) and 36 Russian-made (9 Il-86s, 27 Tu-154Ms). The airline’s total flying hours increased by 16% in 2007 to more than 141,600 hours. Flying hours on foreign-made planes increased by 28% to 75,300 hours. More than 66.2 thousand hours were flown on Russian-made aircraft in 2007, up 4% from 2006.

Among the main events 2007 were successful completion of the full procedure of the international audit for conformity to operating safety standards and the inclusion of the airline in the registry of operators of the IOSA (IATA Operational Safety Audit), the beginning of large-scale use of electronic tickets, the most advanced air travel ticketing technology, and subsequent increase in electronic sales. In November 2007, S7 Airlines began to offer on its website www.S7.rua new system for electronic ticket sales called SITA Airfare Shop, which makes it possible to substantially simplify the purchase of airline tickets over the Internet, leading to a substantial increase in the percentage of total sales of airline tickets through the S7 Airlines website. In December 2007, more than 15% of the tickets sold were e-tickets, and 10% of all tickets were sold over the Internet.

In 2007 the airline continued to expand its route network: 25 new regular flights were added, including 6 international ones. Regular flights began from Moscow to Ashgabat, Vladivostok, Innsbruck, Chisinau, Nadym, St. Petersburg, Semipalatisnk, Ufa and Khabarovsk, as well as Bratsk (via Irkutsk) and Chita (via Novosibirsk).

The route networks of other S7 Airlines hub airports also continued to grow. A route was added from Novosibirsk to Khabarovsk, flights were added from Samara to Sochi and Yakutsk and Petropavlovsk-Kamchatsky. From Perm, regular flights were added to Anapa, Dushanbe, Yerevan, Krasnodar, Sochi and Irkutsk (via Novosibirsk). For the first time, aircraft began to be based in Sochi and Khabarovsk. From Sochi, regular flights were added to St. Petersburg and Istanbul, and from Khabarovsk to Magadan, Petropavlovsk-Kamchatsky and Yuzhno-Sakhalinsk.

S7 Airlines is Russia’s largest domestic airline and one of the world’s top 50 airlines in this segment. In 2007 the company received an official notification from the IATAabout the inclusion of the airline in the registry of operators of the IOSA (IATA Operational Safety Audit) and became Russia’s second airline to successfully pass the full procedure of the international audit for conformity to operating safety standards.

S7 Airlines is one of Russia’s most stable airlines. It actively uses the latest achievements of the industry worldwide in the servicing of passengers and is actively expanding its service.


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