Aer Arann announces record growth in 2007

Aer Arann, one of Europe’s fastest growing regional airlines, continues to gain momentum in UK, Irish and French markets, generating record numbers in major airports, gaining market share in the UK and successfully initiating its fleet replacement programme with the ATR 72-500 ‘Green Machine’.

The management team is poised for continued growth in 2008, with the following highlights:

• Record growth
• Turnover in excess of €100 million per annum, a 6% increase over 2006
• Passenger numbers in excess of 1.15 million, a 10% increase over 2006
• 600 flights per week across 40 routes in Ireland, UK and France
• Outlook strong: high load factors and continued growth in 2008

New routes - 2007
Aer Arann continued to expand its network at a rapid rate in 2007 with the announcement of six new regional routes from Cardiff, Bristol, Manchester, Newcastle and Birmingham. Fergal Barry, Commercial Director with Aer Arann commented: “Our growth strategy is focused on improving connectivity from the regions whilst providing exemplary customer service. Our new routes have allowed Aer Arann to broaden its customer base from visiting friends and relatives traffic to the wider UK leisure and business customer. Our new routes in 2007 surpassed our expectations and we expect our 2008 new routes to yield similar success.”

Record Traffic
In the year ending December 2007, Aer Arann carried in excess of 1.15m passengers, the highest figure recorded to date and an increase of 9900% from 12,000 passengers in 1999. This is also a considerable achievement given that Aer Arann only commenced regular scheduled traffic in 1998.

In 2007, the Dublin Airport Authority announced that Aer Arann was the third largest operator into Dublin Airport, carrying almost 800,000 passengers through the airport in one year. Aer Arann is now bigger than Air France, SAS, BA, Cityjet, Lufthansa, Delta, Iberia and Continental at Dublin Airport based on official passenger numbers published by the Dublin Airport Authority.

Aer Arann passenger figures reached an all time high in August 2007 where the airline carried 135,000 passengers in one month. The airline achieved an unprecedented 100% load factor for the bank holiday weekend in October 2007 on all our international routes.

In 2007, Aer Arann invested heavily in the UK market with a €1m campaign to raise awareness. Aer Arann’s numbers ex-UK has increased by almost 3% as a percentage of overall sales.

The Galway-London route moved 20% ahead of 2006. Increased passenger demand meant that Aer Arann increased frequency on this route to three flights a day – every day. Galway-London broke the 9,000 per month passenger barrier in August 2007, and is going from strength to strength. The Waterford – London route achieved 9000 passengers per month by the third quarter. The new base in Waterford allowed Aer Arann to offer and improved schedule and new routes in the form of Waterford-Birmingham, which has proved a resounding success.

New fleet
As part of a £128 million investment, Aer Arann welcomed two of the ten ATR 72-500 ordered in May 2006. The new ATR 72-500 is the first of ten new aircraft to be delivered over the next two years. By 2009, all of the Aer Arann fleet will be brand new. The ATR 72-500 offers Aer Arann customers new levels of comfort and efficiency. Several factors combine to make the ATR an environmentally friendly aircraft: lower emissions of CO2 due to reduced fuel burn, 70% lower fuel consumption than a jet on similar routes, and new standards in the industry for quietness. The new aircraft has resulted in much improved customer experience, reliability and operational economics.

New base, new hangar
During May 2007, Aer Arann today announced major expansion from Waterford airport through the opening of a new base with the creation of up to 45 new jobs. This is the fourth base Aer Arann has in Ireland adding to those in Dublin, Cork and Galway.

In June 2007, Aer Arann and Galway Airport announced the creation of 30 new jobs as result of a major expansion at the airport. A new purpose built hangar was built at Galway airport, which will house a new engineering base for Aer Arann. The new hangar and engineering base carries out most of its maintenance requirements for the airline.

Management Team
2007 was marked not only by excellent commercial progress, but also by considerable strengthening of the management teams Aer Arann has been able to attract further high calibre management and staff. These appointments will strengthen the existing team and drive the Company's next phase of growth and planned internationalisation:

Notable appointments over the past year have been:

• Paul Schutz, Finance Director. Previously, Paul held senior finance roles with Ryanair, BWIA, Virgin Express and Eirjet.
• Fergal Barry, Commercial Director - former Finance Director, Aer Arann.
• Mick Conlon, Head of Engineering – former Engineering Manager, Aer Arann, and has held engineering roles in Ryanair, Qantas and the Irish AirCorps.

Ground handling savings
In May 2007, Aer Arann conducted a review of its ground handling operation in Dublin Airport. As a result, Aer Arann decided to transfer its check-in, boarding, dispatch and baggage tracing functions to Sky Handling during June. This resulted in significant cost savings for the airline, while maintaining high standards of service for our customers.

Aer Arann Policy on Green Issues
In 2007, many accusations were levelled against the airline industry and its effects on the environment. Aer Arann is committed to the principles of energy efficiency. In 2007, Aer Arann implemented specific policies, which both counter common industry practice and tackles public perceptions of the aviation industry being a significant contributor to global warming compared to other large polluter:

• Aer Arann believes consumers should have an environmental conscience when choosing how they travel and this will encourage the transport industry to become more environmentally accountable.

• Aircraft emissions are just 3% of EU CO2 emissions, according to EU. Secondly, Regional airlines - passenger airline services which provide services to smaller communities, account for just 12% of carbon dioxide attributed to airline emissions.

• Air taxation is not an effective way to tackle environmental issues, for example, the UK APD. Aer Arann believe that investment in technology by the transport industry is a more productive route, reducing the impact of transport without inhibiting travel

• The ability of regional airlines with turboprop engines, such as Aer Arann, to operate at lower altitudes means the ozone layer and upper atmosphere remain unaffected by them. Flying at lower altitudes also saves fuel and is less harmful to the environment.

For example: from Dublin to Cardiff, the distance is 300 kilometres or 163 nautical miles, Aer Arann’s ATRs consume around 550 kilos of fuel. A jet such as a Boeing 737-800 on the same route uses most of the fuel just for take-off - often using a ton of fuel just to reach cruising level. It takes three Aer Arann flights from Cardiff use the same amount of fuel as a Boeing 737 uses in one flight.

Aer Arann commissions new aircraft livery
To coincide with the arrival of the new aircraft, a new livery was commissioned. Inspired by Celtic rings, or triskels, from the ancient monuments at Newgrange in County Meath, DesignCorp have reinterpreted the traditional patterns and given them a modern and playful twist. The colour scheme incorporates refreshed and updated corporate colours, giving the aircraft a distinctive look.

Charter services
Aer Arann has also seen an increase in its charter services. The airline’s fleet of ATR aircraft of 72 and 50 seater aircraft offer the ideal number of seats for groups. The total number of passengers using Aer Arann's charter services totalled 198,000 in 2007. This includes both charter flights and wet lease flights. Aer Arann's prestigious client list included IRFU, Welsh Rugby Union, Munster, Leinster, Connacht and Rugby, Sunderland Football Club, Kerry GAA, Galway United and the drivers and teams of the Rally Ireland round of the World Rally Championship

Commenting Managing Director Garry Cullen said:

"2007 confirmed our expectations of strong growth, despite increased competition across all routes. Aer Arann's success is grounded on having the right management to maintain our momentum. 2008 will be a very exciting time for the airline, with considerable effort focussed on our franchise routes to Amsterdam Bordeaux, Malaga, and Faro, and extending the Aer Arann footprint into Europe."