There was considered the point on fulfillment of the plan of production and financial-economic activities for 2003 as at the end of June 2003, the forecast for the second half of 2003 at the background of general crisis situation in the world air-transport industry.

According to information of International Air Transport Association (IATA) including most air companies of the world, losses of IATA members in international and home air lines amounted to about 25 billion US dollars during last two years.

In this situation air companies of the world have to reduce carrying capacities, modernize aircraft fleet, improve route networks, establish alliances. The air-transport industry that is the basis of tourism and one of the main employers lost 400,000 workplaces within the campaign on loss minimization and achieving more efficiency.

International analysts note four signs of the world air transport crisis during the last two years:

• negative consequences of the events in the USA on September 11, 2001;
• the world economic recession;
• the war in Iraq;
• SARS.

The aforementioned crisis events couldn’t but influence Aeroflot activity, the integral part of the world air-transport system, though not so dramatically.

In the current situation Aeroflot management took measures on route network modification, aircraft fleet redistribution for flights to the corresponding world regions and made special commercial and management decisions taking into consideration changing demand for air carriages; this enabled minimizing unfavorable consequences of the world crisis events.

Calculations presented to the Board of Directors confirm the evident tendency to improvement of the basic indicators of production and financial-economic activities in June in comparison with the beginning of the year and its financial results accordingly, though the company hasn’t succeeded yet in fulfillment of the approved plans for 2003. At the same time in the first half of 2003 losses are insufficient in comparison with the same period of 2002. Many indicators exceeded the ones of the last year.

Thus, for instance, planned operation income is to amount to 682.52 million US dollars (in the first half of 2002 it was 674.93 million US dollars); operation expenses are to be 673.48 million US dollars accordingly (646.78 million US dollars in the first half of 2002); net income is to amount to 16.82 million US dollars in the first half of 2003 (19.86 million US dollars in the first half of 2002).

In comparison with the first half of 2002 it is planned to achieve the following indicators:

• passenger turnover – 97.9%;
• ton-kilometers – 102.1%;
• carriage of passengers – 102.3%;
• post carriage – 97.3%;
• freight carriage – 109.6%.

The Board of Directors requested the Company’s Board to prepare data on the air company’s results in the first half of 2003, the forecast up to the end of the year and, if necessary, introduce proposals that require the Board of Directors’ decision including issues on possible correction of the budget in order to reduce losses in compliance with the less profit to be obtained.

These issues are to be considered by the Board of Directors at the meeting this July.

During the meeting of the Board of Directors there was expressed anxiety about unreasonable delay of solving problems concerning the construction of a new passenger terminal in Sheremetyevo Airport.

Today the airline company has almost fulfilled the major part of prior work required for the beginning of the terminal construction; significant funds were invested that “don’t work”. The airline company, its partners and, first of all, passengers are interested in significant improvement of the situation with servicing passenger flights in Sheremetyevo Airport as soon as possible.

Together with Aeroflot Russian and foreign organizations and investors are interested in this project realization. The position of the Company’s Board expressed at the meeting is that the obstacle in realization of the project, which Moscow, Russia, airline companies and passengers need so much is, as usual, bureaucratic ambages, other obstacles of the subjective character.

They make certain difficulties in fulfillment of the air company’s development programs.

In this connection the Board of Directors charged to carry out the evaluation of assets Aeroflot invests into the authorized capital stock of the establishing enterprise in order to consider this issue at the next meeting of the Board of Directors and make necessary decisions.

Rather tense Aeroflot Board of Directors’ work plan was approved for the period June, 2003, - May, 2004.

According to the Federal Aviation Rules of Russia it was decided to establish in the Company the post of the Deputy General Director on Flight Safety.

·  Alexander Alexandrovich Koldunov was confirmed as the Deputy General Director – Flight Safety Control Chief.

·  The agenda of Aeroflot Board of Directors’ meetings was also approved. The Board of Directors approved the decision on confirming the appointment of the Board of Directors’ member, the RF President’s Advisor Shaposhnikov Y. I. as the Chairman of Aeroflot Board of Directors’ Committee on Personnel and Bonuses.

·  The member of the Board of Directors, the First Deputy Transportation Minister of the Russian Federation Neradko A. V. was confirmed as the Chairman of Aeroflot Board of Directors’ Committee on Strategy.

·  The member of the Board of Directors, NCH Advisors Inc. Moscow Department Executive Officer Finger G. M. was confirmed as the Chairman of Aeroflot Board of Directors’ Auditing Committee.

Other issues of the Company’s current activity were considered and the corresponding decisions were made.