a strong team ANNUAL REPORT 2017

Transcription

1 a strong team ANNUAL REPORT 2017

2 content 04 BOARD OF DIRECTORS 05 LUXAIR S.A. SHAREHOLDING 06 CHAIRMAN S LETTER 08 CEO S LETTER 10 BUSINESS REVIEW 10 Luxair Luxembourg Airlines 14 LuxairTours 18 LuxairServices 22 LuxairCARGO 26 Performance at a glance 30 EXECUTIVE COMMITTEE 34 FINANCIAL REVIEW 34 Consolidated assets 36 Consolidated liabilities 38 Consolidated income statement 39 Financial performance at a glance 42 CORPORATE SOCIAL RESPONSIBILITY 50 Social Report 52 Key performance indicators Any reproduction, either partial or total, is strictly prohibited without mentioning LuxairGroup as source of information.

3 4 5 board of directors luxair s.a. shareholding PAUL HELMINGER FRANÇOISE THOMA The share capital of Luxair S.A. amounts to 13,750,000 EUR and is represented by 110,000 shares held by the shareholders. Chairman of the Board of Directors Vice-Chairman of the Board of Directors, Chief Executive Officer, Banque et Caisse d Epargne de l Etat Etat du Grand-Duché de Luxembourg 39.05% Banque et Caisse d Epargne de l Etat 21.81% Banque Internationale à Luxembourg 13.14% Delfin 13% MICHÈLE EISENBARTH* GASTON STRONCK* TOM WEISGERBER Luxair 10% Member Member Member Luxair Finance 2.86% Ambassador, Director of European affairs and International economic relations, Ministry of Foreign Affairs *Since 22 September 2017 Ambassador, Director of European affairs and International economic relations, Ministry of Foreign Affairs *Until 22 September 2017 First Government Advisor, Ministry of Sustainable development and Infrastructure Others 0.14% MICHEL BIREL Member HUGUES DELCOURT Member GIOVANNI GIALLOMBARDO Member MAIN COMPANIES IN WHICH LUXAIR HOLDS A PARTICIPATION Deputy Chief Executive Officer, Banque et Caisse d Epargne de l Etat Chief Executive Officer, Chairman of the Executive Committee, Banque Internationale à Luxembourg Member of the Management Board, Delfin, Member of the Management Board, Unicredit Luxembourg Cargolux Airlines International 35.1% Luxfuel 40% Euro Moselle Loisirs 35% PATRICK STREFF HELDER DE OLIVEIRA BORGES MARC ZAFRA Member Member Member LuxairGroup personnel representative LuxairGroup personnel representative LuxairGroup personnel representative MAX NILLES MICHEL FOLMER* GWENN VANWEDDINGEN* Government Commissioner for Luxair S.A. Secretary of the Board of Directors of Luxair S.A. Secretary of the Board of Directors of Luxair S.A. Conseiller, Chargé de Direction Ministry of Sustainable development and Infrastructure General Secretary LuxairGroup *Until 01 December 2017 General Secretary LuxairGroup *Since 01 December 2017

4 6 7 CHAIRMAN S LETTER Fully facing our responsibilities Despite challenging forecasts, 2017 turned out to be a good year for LuxairGroup, and what is good for LuxairGroup is not only good for the company as a whole, but also for the staff, their families, the businesses served and worked with, the country and the Greater Region. LuxairGroup is a major driver in Luxembourg s economy and shoulders even more responsibility than that of the welfare and safety of our passengers and the care of our cargo as huge a responsibility as that is. The group is also responsible for the livelihoods of 2,900 employees and has impact on an additional 3,000 people s lives whose jobs indirectly depend on it. LuxairGroup takes that responsibility seriously, and although the overall trend in the aviation industry and in the local and international economic environment has been encouraging and continued growth is expected, it cannot afford to switch to cruise control and ride on its previous accomplishments. In 2017, after all, Air Berlin and Monarch Airlines went bankrupt and Alitalia nearly went bankrupt and is now under special management. Knowing that the future can be as turbulent as the weather, the company owes it to its employees, its passengers, its stakeholders and everyone whose livelihoods are impacted by LuxairGroup s activities to always fly higher and to continually strive to become even better at what it does so well. And LuxairGroup is doing it well, thanks largely to the commitment of the company s staff and to good planning and smart investments in training, technology, infrastructure and people. It s actually remarkable that a small player could compete with the big guys, and yet Luxair Luxembourg Airlines continues to attract new customers who insist on good quality at a fair price; LuxairTours is flourishing despite facing tough competition as it goes into its 50 th anniversary in 2018; LuxairCARGO had a record year despite the cargo business being volatile, and LuxairServices had a record year and remains the only handling service at Luxembourg airport, although another service provider holds a licence for operating at Luxembourg Airport and others might be awarded licences in the future. These are achievements to be justly proud of, and 2018 presents opportunities to build on them, to reach new customers and to retain our market shares. It will be challenging, with uncertainties like the effects of Brexit, geopolitical concerns and increasing competition, but LuxairGroup has always risen to challenges in the past, and it will continue to rise to them in the future. A memorable line from the Ron Howard film Apollo 13 is Failure is not an option. That s applicable to LuxairGroup as well. We must succeed because we not only carry passengers and cargo, we carry great responsibility for our employees, our shareholders, Luxembourg and the Greater Region. Failure is not an option PAUL HELMINGER Chairman of the Board of Directors

5 8 9 CEO S LETTER Responsible, resilient and ready! A more positive international economic situation, greater geopolitical stability and lower fuel costs helped make 2017 a successful year for the LuxairGroup, but more than any other particular factor, our success can be attributed to one thing our people. Working in some 250 diverse jobs, our people are our greatest asset, and their commitment, sense of responsibility and passion can be credited for our enduring success. Because we know how valuable our people are, we want them to know it too. We offer excellent working conditions, competitive salaries, career opportunities, continuous training, job security and on-the-job safety. We want them to stay with us, grow with us and to help us to build the future. And their hard work and dedication have made it possible for us to offer our employees more since January 2015, we have been able to create 273 permanent positions, including 156 jobs for LuxairCARGO alone. After a promising start in 2018, 150 additional permanent positions will be created by July and if this positive business trend continues, another 100 permanent positions will be added in several stages by the end of the year. A strong team will help us both to cope with increasing business and with increasing challenges. Although the number of passengers rose by 6% for the year in 2017 and the load factor rose by 2%, increasingly difficult competition makes it impossible to predict if that growth is sustainable. In 2015, budget airlines ran 17 weekly flights from Luxembourg to 5 destinations. Less than 3 years later, they are flying 60 weekly flights to 15 different destinations. Yet Luxair Luxembourg Airlines remains competitive and continues to offer an excellent product at a fair price. We adapted our flight times, increased the number of rotations, provide full assistance in case of disruptions and refuse to lower our standards for quality, safety, comfort and customer service. LuxairTours, our tour operator, which defines itself by its quality and comfort, is doing extremely well despite heavy competition from larger operators and low-cost companies. In 2017, the number of LuxairTours passengers rose by 9% in a business that remains fragile due to political instability in some of the main destinations. In 2018, LuxairTours celebrates its 50 th anniversary and looks forward to continued success as it expands its offers and reaches new customers. LuxairServices also had an exceptional year in 2017, assisting 20% more passengers at the airport and handling 48,800 flights with seamless and top quality service. Many of these passengers enjoyed some of the record number of 2,14 million meals prepared with local and quality products by our in-house Luxair Catering service. The care and attention given to the smallest of details not only elevates travel to pleasure, but also reassures our customers that they are in good hands. LuxairCARGO too, had a extraordinary year, setting a new record of handling 940,000 tons, which soundly beat the previous record of 896,000 tons set back in This reflects a 14% growth in 2017, and the strength of our cargo business continues to place Luxembourg on the map as one of the major cargo handling platforms in Europe. With solid growth in all four business units, LuxairGroup s 2017 results reflected 7% growth in net turnover, and an increase of 3,1 million EUR in operating results compared to will be a tough act to follow, but 2018 is off to a promising start, although the aviation industry is always dependent on fluctuating factors like fuel prices, the world economy and the geopolitical situation, and is also greatly impacted by fierce and unrelenting competition. LuxairGroup has invested in its employees with more permanent positions, new training opportunities including a new simulator, in internal and external communication tools like new websites and publications, in new technologies and digitalisation, in its infrastructure including an ecological purpose-built headquarters and environmentally-sound e-stations and e-vehicles. In short, it has invested in its future. Just as seamless, stressfree travel requires forethought and planning, navigating LuxairGroup toward future growth and enduring success requires implementing sustainable strategies that ensure its long-term business continuity. As always, we ll continue to focus on our customers and on our people. Our dedication to them has served us well and allowed us to enjoy stability and growth. At LuxairGroup, we have more than high expectations for the future, we have the responsibility to others to realise them. A strong Team can cope with increasing challenges ADRIEN NEY President, Chief Executive Officer

6 10 11 LEVEL-HEADED AN EYE ON YOUR NEEDS ALWAYS WITH A SMILE MONICA MENDES Luxair Luxembourg Airlines Flight attendant Age 39 since LuxairGroup

7 12 13 Luxair Luxembourg Airlines connecting ON TRACK DESPITE STIFF Competition outlook 2018 Luxair Luxembourg Airlines saw strong growth in 2017, with a 6% increase in passengers resulting from its business strategy of stimulating interest in entry fare offers or promotions, which represented 64% of the point-to-point tickets sold. This progression was possible with a very slight increase in capacity (+2% seats and +0.5% flights). Seat load factor increased by 2 points for the combined fleet, to reach 64%. An 11 th Bombardier Q-400 joined the fleet too late in the year to significantly add to the 2017 business results. The turnover for 2017 grew by 6% from 2016, solid proof that the unitary revenue could be stabilised. This factor, together with the increase in the number of passengers, resulted in a better financial performance compared to Luxair Luxembourg Airlines received its IOSA certification for the 7 th time in 2017 and became one of the first airlines to set up a centralised load control, for even greater efficiency. Via an innovative IT system, flows could be optimised and the number of parties involved in this complex operation could be limited, positively influencing reactivity, punctuality and reducing fuel costs. Other investments were also made to strengthen the airline s position for the future. Because taking excellent care of our passengers is one of our core concerns and values, an Operation Disruption Centre has been set up to keep the airline and passengers abreast of any delays, deviations, airport closures or other incidents. 1 million EUR was invested in a Cabin Emergency Evacuation Trainer to ensure that Luxair crew are expertly trained and can provide the high quality service Luxair stands for. Luxair Luxembourg Airlines will continue to strengthen its role as a regional player and is already serving the Saarbrucken-Berlin route with 18 weekly flights. A new fleet analysis is planned for end 2018, a year during which low-budget competition is expected to result in increased seat availability and decreased yields. Although we are prepared, operations could be affected by the refurbishment of the runway at Luxembourg airport. Despite predicted growth in Europe, (+2.1% estimated, compared to +2.4% in 2017), 2018 is expected to be challenging due to continued uncertainties which erode client confidence: Brexit, volatile worldwide stock markets, the future evolution of interest rate in the USA and in Europe, the availability and price of raw materials and numerous geopolitical concerns. Added to that, Luxair will be negatively impacted by the significant increase in the destinations offered from Luxembourg by budget airlines. Destination business barometer We could build on the successes/achievements of the previous years by adding capacity on several routes like Dublin and Copenhagen. New opportunities have been taken to help us to develop our regional presence and to strengthen our presence elsewhere too, mainly in Italy. Learning from the best Crew members now receive their first aid training from Luxembourg Air Rescue, the air rescue specialists.

8 14 15 LOOKING OUT FOR OUR CUSTOMERS LISTENING TO OUR CLIENTS GIVING GOOD ADVICE GIANNI SACCO LuxairTours Sales Manager Belgium Age 37 since LuxairGroup

9 16 17 LuxairTours carefree Prepared to face forward! outlook 2018 LuxairTours has always been customer-oriented and its new website, launched in 2017, reflects that. The user-friendly site features all the variety of our different products as well as new concepts such as the recently introduced You by LuxairTours product. It also showcases destinations that had fallen out of favour in recent years due to geopolitical reasons but that are resurging in popularity again as customer confidence returned, positively impacting business results. There were 9% more passengers taking off from Luxembourg in 2017 compared to 2016, and the number of vacation packages sold rose by 6%. So-called flight only tickets also saw a significant increase. Declines were registered in some areas, such as charter business, yet overall, the number of flights as well as the number of passengers increased. At 74.5%, seat load factor was slightly below that of 2016, but the 2017 turnover was 7% higher and profits rose by 5 million EUR over the 2016 total. LuxairTours celebrates its 50 th anniversary this year and has good expectations for new products and destinations already added or to be added in 2018, like Braĉ (Croatia), Enfidha (Tunisia), Côte d Azur Nice and Reykjavik. Increased service to Faro and Sal Boavista is also expected to yield positive results. The situation remains fragile as numerous factors could negatively impact business, namely geopolitical turmoil and strong competition from budget operators entering the leisure market. But with a half a century s experience, excellent products and a skilled and dedicated team, the forecast for 2018 is cautiously optimistic. An anniversary worth celebrating! Only a few years after its creation, Luxair Luxembourg Airlines started to serve holiday destinations. This 1 st May 2018, LuxairTours will celebrate its 50 th anniversary with its clients by offering a vast variety of special offers and unbeatable deals throughout the year. New user-friendly website launched The new LuxairTours site went online in July An attractive design and an intuitive and user-friendly interface allow a clear navigation. The dynamic system offers to our clients a performant booking tool.

10 18 19 GOOD SERVICE FROM FIRST GLANCE HOW CAN WE HELP YOU? WE WELCOME YOU WITH A SMILE ROMINA DJUROVIC LuxairServices Check-in agent Age 22 since LuxairGroup

11 20 21 LuxairServices allrounder Proven Excellence LuxairServices received its first certification by the IATA Safety Audit for Ground Operations (ISAGO) in 2017, confirming the safety, quality and efficiency of the airport services it provides at Luxembourg Airport. Other certifications such as DAQCP were also rewarded or renewed. After 9 years of disuse, Findel airport reopened Terminal B in response to increased traffic, reducing congestion at Terminal A. With 3,6 million passengers registered in 2017 without a hitch, the number of passengers has actually doubled in the last 6 years, but the rapid growth has not diminished punctuality or efficiency was the second year in a row that the performance of LuxairServices was recognised by client airlines by being given an award, an honest and unbiased vote of satisfaction. Compared to 2016, passenger numbers increased by 20%, aircraft movements by 8%. outlook 2018 LuxairServices is redesigning processes and tools and investing in new technologies to sustain rapid growth of airport activities while maintaining its high quality standards. Its Ground Handling 4.0 project, the implementation of IT tablets on apron and a new real-time daily human resources management tool are prime examples. A much more visible improvement for clients will be the changes to the VIP Lounge, which will be redesigned and extended in A taste of first class Just as Luxair airline is proud to serve as Luxembourg s national carrier, Luxair catering is proud to serve quality regional products that elevate often maligned airplane food to first class all the way. We put the same care and attention into our onboard fare as we do every detail of our services, and it s appreciated. In 2017, some 2,139,000 passengers enjoyed fine food prepared from local and carefully sourced products no GMOs, no processed foods, no short-cuts. To cope with increased traffic, LuxairServices recruited and trained new colleagues and investments of some 2 million EUR allow LuxairServices to maintain its high quality standards and to be ready to handle continued growth in the future. In 2017, the turnover reached with third party customers increased by 13%. This catering is not only served on all Luxair and LuxairTours flights, but is increasingly solicited by a vast majority of commercial, VIP and Cargo airline companies transiting via Luxembourg Airport. Our loving attention and hard work paid off with a 6% increase in our catering business from 2016, which was as satisfying as the meals we serve onboard, representing a 15% increase over 2016.

12 22 23 CLEAR-HEADED CONSTANT ATTENTION OUR ACHIEVEMENTS SPEAK FOR THEMSELVES GOERGES QUARENTA ROCHA LuxairCARGO Chauffeur Age 36 since LuxairGroup

13 24 25 LuxairCARGO eff iciency Well established and focused outlook 2018 In 2017, LuxairCARGO could again confirm its 6 th place among the best European cargo hubs. Close to 940,000 tons were handled, beating the long-held record set in Due mainly to the increases in volumes of our main clients, we saw a 14% increase overall. Our clients value our professionalism, diversity, skills and flexibility to adapt. The tonnage handled was the consequence of long-term and regular investments in infrastructure and new technologies like a new cutting-edge operating system, a new fast lane and truck slot system, the new Reachstacker vehicle for handling and transporting heavy and oversized cargo containers, and the increase of stockage system capacities also saw the implementation of the cargo cockpit a quality management system software that improves daily operations by centralising quality-related documents in one single tool. These increases in business demand resulted in a need for additional staff. LuxairCARGO was already well established as a major employer in the region, known for regular recruitment. Young people just starting out and others with less job experience could also turn to LuxairCARGO to receive job training and security within the LuxairGroup, often finding their way and growing with the company throughout their careers. 156 new permanent positions were created in the last 3 years alone. Up to 250 new permanent contracts are expected to be created in 2018 in addition to 100 fixed-term contracts. The year closed with a profit that was double that of Turnover increased by 13% and the number of rotations rose by 13% as well. Given the continued growth in 2017, the total tonnage was expected to level out in 2018, but the positive trend has continued. LuxairCARGO is prepared for continued growth, having made the right investments in infrastructure with long-term vision that gives it the capacity to work even more efficiently for years to come.

14 26 27 performance at a glance Luxair Luxembourg Airlines Fleet Bombardier Q-400 December December Boeing December December Boeing December December December December December LuxairTours LuxairCARGO LuxairTours top 3 Passengers Flights Top Luxair destinations ,068 flights have been operated on behalf of LuxairTours and 646,192 passengers were transported (+4% compared to 2016). LuxairTours flight occupancy rates decreased slightly from 76.6% in 2016 to 74.5%. Record volumes handled by LuxairCARGO reached 940,000 tons compared to 822,000 in 2016, approaching the volume of 900,000 tons handled in The number of aircraft movements increased by 13% to reach 6,605. Canary Islands Continental Spain & Portugal Balearic Islands The total number of passengers transported by Luxair** in 2017 is 1,933,340 which represents a 5% increase compared to Luxair operated 28,592 flights** compared to 28,136 the previous year. 1. London City 2. Paris 3. Munich 4. Vienna 5. Porto Greater Region player The geographic distribution of LuxairTours sales has remained relatively stable:» France 28%» Luxembourg 26%» Germany 13% *» Belgium 9% At a glance Passengers Luxair*** 1,933,340 1,837,456 1,814,749 Revenue Passengers-km (RPK) (mio)*** 2,150 2,049 1,971 Load Factor 71.60% 71.60% 72.80% Number of meals served (catering) 2,138,558 2,006,008 1,984,518 Number of passengers assisted at Luxembourg airport 3,600,000 3,000,000 2,690,000 Number of block hours (for entire Luxair fleet) 51,052 49,091 48,825 Freight handled (tons) 940, , ,096 Personnel (on average) 2,658 2, *based on sales points and excluding grouped seat reservations and ad hoc charter **including regular, leisure and ad hoc charter flights ***the total includes charter flights operated by Luxair Luxembourg Airlines

15 28 29 FOCUSED ON EACH DETAIL INFALLIBLE INSTINCT A TASTE OF PASSION XAVIER THOLEY LuxairServices Chef de cuisine Age 38 since LuxairGroup

16 30 31 Executive committee MARC GERGES ADRIEN NEY President, Chief Executive Officer MARTIN ISLER LAURENT JOSSART Executive Vice-President Cargo Handling ALBERTO KUNKEL MARC SCHROEDER Executive Vice-President Finance GWENN VANWEDDINGEN General Secretary Vice-President Marketing & Corporate Communication DOMINIQUE HEMMER Vice-President Human Resources JEAN-LOUIS WILLEMS Vice-President IT Services & Solutions Executive Vice-President Airline Executive Vice-President Tour Operating & Sales

17 32 33 PROUD TO BE PART OF IT A RESPONSIBLE AND CARING ENVIRONMENT OPEN DIALOGUE JOSY GAGLIARDI LuxairTours Group sales Age 34 since LuxairGroup

18 34 35 Consolidated Assets Consolidated assets LuxairGroup (expressed in euros) A. Subscripted capital unpaid 0 0 I. Subscripted capital not called 0 0 II. Subscripted capital called but not paid 0 0 D. Current assets 263,370, ,451,012 I. Stocks 1,097, , Raw materials and consumables 653, , Work and contracts in progress Finished goods and goods for resale 443, ,776 Goodwill of first consolidation 0 260, Payments on account 0 0 II. Debtors 47,624,433 38,192,886 B. Formation expenses Trade debtors 23,305,374 17,795,748 a. becoming due and payable after less than one year 23,305,374 17,795,748 C. Fixed assets 505,607, ,873,801 I. Intangible assets Costs of research and development 0 0 b. becoming due and payable after more than one year Amounts owned by affiliated undertakings 0 0 a. becoming due and payable after less than one year Concessions, patents, licences and similar rights and assets if they were trade marks a. acquired for valuable consideration and need not to be shown under C.I b. becoming due and payable after more than one year 0 0 Amounts owned by affiliated undertakings with which the company is linked by virtue of participating interests 13,851,424 13,530,220 b. created by the undertaking itself 0 0 a. becoming due and payable after less than one year 13,851,424 13,530, Goodwill, to the extend that it was acquired for valuable consideration Payments on account and intangible fixed assets under development 0 0 II. Tangible assets 291,139, ,745, Land and buildings 38,454,829 28,914, Plant and machinery 243,344, ,484, Other fixtures and fittings, tools and equipment 8,735,522 5,288, Payments on account and tangible assets in course of construction 604,974 14,057,354 III. Financial assets 214,467, ,127, Shares in affiliated undertakings Loans to affiliated undertakings Shares in undertakings with which the company is linked by virtue of participating interests 214,099, ,760, Loans to undertakings with which the company is linked by virtue of participating interests Investments held as fixed assets 137, , Loans and claims held as fixed assets 230, ,177 b. becoming due and payable after more than one year Other debtors 10,467,635 6,866,918 a. becoming due and payable after less than one year 10,467,635 6,866,918 b. becoming due and payable after more than one year 0 0 III. Securities and other financial instruments 58,829,122 64,403, Shares in affiliated undertakings and in undertakings with which the company is linked by virtue of participating interests Own shares or own corporate units 4,713,596 4,713, Other investments 54,115,526 59,689,439 IV. Cash at bank and in hand 155,819, ,890,419 E. Prepayments 7,100,375 6,369,208 Total (Assets) 776,078, ,954,439

19 36 37 Consolidated Liabilities Consolidated liabilities LuxairGroup (expressed in euros) A. Capital and reserves 400,880, ,473,481 I. Subscripted capital 13,750,000 13,750,000 II. Shared premium and similar premiums 0 0 III. Revaluation reserves 0 0 IV. Reserves 360,694, ,768, Legal reserve 1,375,000 1,375, Reserve for own shares 4,713,596 4,713, Reserve provided for by the articles of association Other reserves 305,542, ,495,169 a. other available reserves 233,012, ,012,994 b. other non available reserves 72,529,200 68,482, Consolidated reserve 40,112,894 78,233, Negative goodwill 8,951,183 8,951,183 V. Profit or loss brought forward 13,807,426 13,448,325 VI. Result for the financial year 44,138,999-3,196,827 VII. Interim dividends 0 0 VIII. Investment subsides 0 0 IX. Currency translation reserve -31,510,716-60,296,260 i. becoming due and payable after less than one year 0 0 ii. becoming due and payable after more than one year Amounts owned to credit institutions 132,515, ,513,739 a. becoming due and payable after less than one year 24,540,727 25,511,999 b. becoming due and payable after more than one year 107,975, ,001, Payments received on account of orders in so far they are not shown separately as deductible from stocks 0 0 a. becoming due and payable after less than one year 0 0 b. becoming due and payable after more than one year Trade creditors 56,275,645 56,205,028 a. becoming due and payable after less than one year 56,275,645 56,205,028 b. becoming due and payable after more than one year Bills of exchange payable 0 0 a. becoming due and payable after less than one year 0 0 b. becoming due and payable after more than one year Amounts owned to affiliated undertakings 0 0 a. becoming due and payable after less than one year 0 0 b. becoming due and payable after more than one year Amounts owned to undertakings with which the company is linked by virtue of participating interests 57,938 86,593 a. becoming due and payable after less than one year 57,938 86,593 b. becoming due and payable after more than one year 0 0 B. Provisions 134,576, ,349, Provisions for pensions and similar obligations 2,187,841 2,245, Provisions for taxation Other provisions 132,388, ,104, Other creditors 21,630,912 21,587,346 a. Tax 8,789,357 8,776,616 b. Social security 5,505,064 5,356,835 c. Other debts 7,336,491 7,453,895 i. becoming due and payable after less than one year 7,336,491 7,453,895 C. Non subordinated debts 210,480, ,392,706 ii. becoming due and payable after more than one year Debenture loans 0 0 a. Convertible loans 0 0 D. Deferred income 30,140,859 31,739,040 i. becoming due and payable after less than one year 0 0 ii. becoming due and payable after more than one year 0 0 Total (Liabilities) 776,078, ,954,439 b. Non convertible loans 0 0

20 38 39 Consolidated income statement f inancial performance at a glance Consolidated income statement (expressed in euros) Net turnover 535,396, ,905, Change in inventories of finished goods and of work and contracts in progress 0 3. Fixed assets under development 0 4. Other operating income 39,113,849 45,779, Raw materials and consumables and other operating charges 348,804, ,386,555 a. Raw materials and consumables 4,892,489 4,573,622 b. Other operating charges 343,912, ,812, Staff costs 175,647, ,324,708 a. Wages and salaries 150,299, ,563,885 b. Social security costs 21,282,080 20,016,968 i) Social security costs related to pensions 11,371,627 10,682,149 ii) Other social security costs 9,910,453 9,334,819 c. Other staff costs 4,065,800 3,743, Value adjustments 48,319,993 45,629,493 a. on formation expenses and on tangible and intangible fixed assets 47,258,406 45,081,791 b. on elements of current assets 1,061, , Other operating charges 504,804 8,722, Income from financial fixed assets 0 0 a. derived from affiliated undertakings 0 0 b. other income from participating interests Income from financial current assets 3,909 0 a. derived from affiliated undertakings 0 0 b. other income 3, Other income and other financial income 8,991,329 8,486,783 a. derived from affiliated undertakings 0 11,178 b. other interest receivable and similar income 8,991,329 8,475, Share of corporate losses in equity 38,878,519-4,966, Value adjustments and fair value adjustments on financial fixed assets 0 43, Interest payable and similar charges 4,650,570 5,644,409 a. concerning affiliated undertaking 0 0 b. other interests and similar charges 4,650,570 5,644, Tax on profit or loss 913, , Profit before tax 43,543,168-2,873, Other taxes not included in the previous caption -595, , Profit for the financial year 44,138,999-3,196,827 Financial summary (company accounts, not consolidated) Turnover (million ) 535, , ,435 Operating result (million ) 2,043-1,057 5,578 Net result (million ) 9,458 4,406 9,692 Net profit ratio 1.77% 0.88% 1.92% Balance sheet total (million ) 565, , ,348 Capital & reserves (million ) 348, , ,782 Capital & reserves / Balance sheet total 62% 61% 61% Return of equity 2.71% 1.30% 2.90%

21 40 41 TOGETHER WE ARE STRONG CHASING THE SAME AIM SHARING VALUES SYA TANHAI LuxairServices Load master Age 34 since LuxairGroup

22 42 43 corporate social responsibility Caring about business means caring in general! Caring about our business is inseparable from caring about our employees, others, and the environment. LuxairGroup is a financially sound company and good financial results are of importance, especially as they support the Greater Region s economic development. But equally important are things that are difficult to put a value on service to the community, goodwill, and helping to protect vulnerable populations, animals and the environment. We believe that business is more than doing good on the balance sheets, it s also about doing good in general. That s why our company will continue to actively work to give back in many ways, and not only in ways that turn a profit. Caring for our team LuxairGroup prides itself on putting its customers first, but the company s cornerstone is its employees, and great care is taken that employees feel valued and secure and are given every opportunity to grow along with the company. As the company s business grew, we were able to create more permanent positions in 2017, with very competitive salaries and excellent benefits. Up to 250 new permanent contracts are expected to be created in 2018 at LuxairCARGO if positive trends continue. LuxairGroup reaches out to the community and makes a career with our company a viable option for young people and for others who are eager to gain work experience. We have been partnering for many years with local high schools looking for new talent and providing training, specifically for check-in agents and aircraft technicians, but we also visit and host exchanges with schools throughout the country and the Greater Region and we regularly participate in events like Unicareers, Moovijob and Jobdag. The Concours Logistique, organised thanks to a cooperation between LuxairCARGO and the Bonnevoie and Lallange technical high schools, also gives apprentices and students the chance to gain experience with us and receive expert advise on their career options and opportunities. People already employed with us find plenty of opportunities for training and growth, and in 2017, we implemented a new online CV service that allows employees to fine-tune their profiles and maximise their in-house career opportunities. Our internal publication Flightplan was newly revamped to become Com In in 2017, and the new title reflects the welcoming, inclusive atmosphere for which LuxairGroup is known. This publication complements the new intranet information platform that was also developed in Both new channels provide information about the company, give insights into the LuxairGroup community and above all, aim at valuing people, their work and their importance. A network of Internal Correspondents, representing the different Business Units and departments, collaborate on this project to help broaden the reach of the information being shared. But that works both ways not only do they help spread the company news within their respective departments, they also inform the internal information sources about interesting news and issues that are worth sharing with the rest of the company. Team spirit at LuxairGroup is boosted by the many fun social activities our employees can take part in. The team that plays together stays together! LuxairGroup has its own football club, F.C. Luxair, and both group and individual sport initiatives are encouraged and valued. Some of these efforts, like the Luxair running team for the ING Marathon keeps our employees fit and fabulous. But it s not all work, or working out some social activities are about relaxation and fun. LuxairGroup regularly organises afterwork activities and trips for staff members and their families, which builds a sense of togetherness and boosts employee satisfaction. LuxairGroup s success is its employees success too, and good results are shared by everyone in various ways, including enticing offers at the staff shop, good deals on catering and special travel fares. Caring for others Each April, the LuxairGroup actively raises funds for the Luxembourg Red Cross to help support their vital humanitarian actions. During what s become our Mois du Don, or Donation Month, our cabin crew collects donations on-board Luxair flights and the entire LuxairGroup team works to raise awareness through their own networks and social media platforms. This close partnership between LuxairGroup and Luxembourg s Red Cross has strengthened over the years, to our mutual benefit. All LuxairTours animation leaders, for example, receive expert first-aid training from the Red Cross, so they are ready to provide assistance at all our destinations if necessary. Because our business depends greatly on travel and tourism, LuxairGroup supports the local chapter of the non-profit global network End Child Prostitution and Trafficking (ECPAT), that works to end the sexual exploitation of children. It focuses on halting the online sexual exploitation of children, the trafficking of children for sexual purposes and the sexual exploitation of children in the travel and tourism. We signed the ECPAT Code of Conduct for the Protection of Children from Sexual Exploitation in Travel and Tourism and are committed to implementing it into our daily operations in the following ways: by establishing an ethical policy regarding the commercial sexual exploitation of children by training personnel in the country of origin and travel destinations by introducing a clause in contracts with suppliers, stating the common repudiation of commercial sexual exploitation by providing appropriate and sufficient information to customers by providing information to key persons at the destination by reporting annually We take this commitment to heart, as shown through our actions. To raise awareness among its employees and provide advice about how to prevent and to react in case of suspected child abuse, LuxairGroup organised a train the

23 44 45 LuxairGroup priorities trainer session for animation coaches and destination managers so as to enable them to provide their respective teams with all the appropriate tools and responses. Actions initiated by ECPAT Luxembourg were publicised on LuxairGroup s Intranet page and employees were encouraged to take part on a voluntary basis. Luxair continued to relay ECPAT Luxembourg s actions and campaigns against the sexual exploitation of children in travel and tourism throughout the year. The current awareness campaign is still fully integrated in the in-flight entertainment programme shown on all flights equipped with screens, to raise awareness and encourage people to report suspect cases. This in-flight announcement was developed as part of the Don t look away project, in consortium with several European ECPAT groups and co-funded by the European Union ( ECPAT s awareness campaign and actions are also regularly promoted in Luxair s inflight magazine Flydoscope and every year since 2010, LuxairTours has hosted ECPAT Luxembourg at the national travel and tourism fair Vakanz. Since last winter, the Code s logo appears in LuxairTours main travel brochure. LuxairGroup also regularly supports charity actions initiated by its main partners, Caritas and Croix-Rouge. Through the Croix-Rouge Buttek (social groceries) initiative, and the Centre national de Collecte et de Tri both operated daily by Spëndchen asbl, LuxairGroup reaches out to the growing number of people in Luxembourg affected by poverty. In the same way, LuxairGroup provides support to Stëmm vun der Strooss, taking care of homeless people. Caring for animals As a member of the International Air Transport Association, LuxairGroup also signed a declaration to reduce the illegal trafficking of wildlife. We work to raise awareness and can inform enforcement authorities about any suspicious shipments in order to help halt the illegal trade of ivory, rhino horn, reptiles and other exotic animals and animal products. Besides caring about wild animals, LuxairGroup also takes excellent care of the animals handled by LuxairCARGO. Particular attention is given to our Animal Station, located in a very quiet, specially arranged and heated area of our Cargocenter. Furthermore the Animal and Groom Stations are located as close as possible to where the animals are loaded and unloaded, in order to reduce the distance they have to be transported on ground, and therefore to reduce their stress levels. Investments have been made in further developing our Animal Station and specifically our Pig Station. Animals are housed in a clean and spacious area and treated with respect and care during their stay with us after all they are guests and passengers too! Caring for the environment LuxairGroup does its utmost to reduce its ecological footprint by fighting fuel waste in part by having more e-car fill-up stations, more electric vehicles and more gas cars. LuxairGroup headquarters moved from Findel to Munsbach in 2017, and into a newly constructed environmentally sound building. Even small things count, like recycling our PCs! OUR CUSTOMERS The customer is king LuxairGroup is a service-oriented business that puts its customers first. The comfort and safety of our passengers and the great care and responsible handling of our cargo are our biggest responsibilities. Being cared for includes being on time and enjoying stress-free, pleasant travel conditions and seamless transitions, both for passengers and cargo. OUR STAFF Employees are our greatest asset Employees are the LuxairGroup we are people, serving people, and human values of respect and fairness are upheld to the highest degrees. Communication channels are always open and employees are shown in many ways, including through very competitive salaries and comprehensive benefits, that they are valued. Their wellbeing and safety are also paramount to LuxairGroup. OUR REGION We serve Luxembourg and the Greater Region LuxairGroup is a major driver of the local and regional economy and impacts it in many ways. Business professionals depend on timely flights to meetings and appointments, a myriad of businesses depend on punctual deliveries and transport. Besides the LuxairGroup s 2,900 direct employees, it s estimated that at least 3,000 people s livelihoods are indirectly affected by our business. OUR PLANET Protecting the environment comes naturally Increasingly, businesses and individuals must take action and assume responsibility for the environment. The LuxairGroup has improved operational procedures wherever possible to help safeguard natural resources, and even moved headquarters in 2017 to a purposebuilt eco-friendly structure. Other measures include progressively including more e-vehicles on the ground and perfectly maintaining and updating our air fleet so that our aircraft runs not only safely but as cleanly and efficiently as possible. The fleet is perfectly maintained to run as cleanly as possible and procedures are constantly adapted in order to reduce fuel consumption.

24 46 47 luxairgroup supports the un global compact By publishing this report, LuxairGroup would like to officially renew its support for the following ten principles in the Global Compact, relating to human rights, labour rights, the environment and anti-corruption: Human rights labour rights environment anti-corruption 01 Businesses should support and respect the protection of internationally proclaimed human rights in their sphere of influence; and 03 Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; 07 Businesses should support a precautionary approach to environmental challenges; 10 Businesses should work against corruption in all its forms, including extortion and bribery. 02 Make sure they are not complicit in human rights abuses. 04 The elimination of all forms of forced and compulsory labour; 08 Undertake initiatives to promote greater environmental responsibility; and 05 The effective abolition of child labour; and 09 Encourage the development and diffusion of environmentally friendly technologies. 06 The elimination of discrimination in respect of employment and occupation.

25 48 49 FACING THE FUTURE CONTINIOUS STRIVE FOR IMPROVEMENT WE HAVE A VOICE ADRIEN RENAULT LuxairCARGO Security Agent Age 28 since LuxairGroup

26 50 51 people who make up luxairgroup Nationalities LUX 30% FR 26% PT 22% GER 9% BE 4% Country of residence OTHER 9% LUX 60% 24 % 692 Distribution 12% Management 88% 48% Flight crew 52% 21% Ground staff 79% 86% Interns 14% 0% Apprentices 100% 76 % 2,136 Seniority YEARS % FR 24.5% GER 11.8% BE 3.3% OTHER 0.4% % % Unpaid leave 27 Parental leave, maternity leave, unpaid leave Maternity leave 45 Effective total 200 Parental leave 99 Part-time parental leave % % % % % % Average age AGE <20 0.3% % % % % % 538 Leaving and joining the company Hirings Departures Internships Fixed-term / seasonal contracts Permanent contracts Apprenticeships Total Active LuxairGroup staff members Permanent contracts 2,508 Fixed-term contracts 301 Apprenticeships 12 Internships 7 Total 2, % % % % % 2

27 52 53 key performance indicators Corporate Governance Progression Voluntary Commitments to general CSR-related schemes Environmental programs Sustainability is part of the LuxairGroup s general strategy. Because sustainable development is a long-term process, LuxairGroup decided to support several social initiatives on a voluntary basis and to report annually on their progress. In this regards, LuxairGroup supports the Global Compact s 10 ethical principles related to human rights, the environment and anti-corruption and adheres to The Code, a tourism industry-driven initiative aiming at protecting children s rights within the context of travel and tourism. Regarding more specific environmental efforts, LuxairGroup has joined the MyEnergy program with its airfreight handling activities and has committed to reducing CO 2 emissions by the end of 2016 and applied for the Lean & Green certification through which candidates commit to reducing their CO 2 emission sources by at least 20% over 5 years thanks to strict waste management procedures, all LuxairGroup sites are certified as being compliant to the SuperDrecksKëscht, a national waste management certification. LuxairGroup has also signed an in-house Environmental Charter. Social commitments Progression Number of partnerships established with non-governmental organisations As a major player in the Grand-Duchy of Luxembourg and the Greater Region, the Group feels compelled to support societal causes. With this in mind, LuxairGroup has chosen to help 4 NGO well-established locally and/or related to travel-industry activities, namely Croix-Rouge, Caritas, Stëmm vun der Strooss and ECPAT. LuxairGroup has integrated these partnerships in daily activities. In addition to standard financial support, LuxairGroup provides logistic support whenever possible such as preferential conditions for travelling, for instance and regularly contributes to increase their visibility via its different communication channels. LuxairGroup voluntarily chose to support a restricted number of organisations to enable concrete and efficient commitment. Human Resources Management Progression Number of work-related accidents, resulting in days off work, medical treatment, professional illnesses, total or partial disability or death ,24% Average number of hours of training per staff member 41, ,39% Percentage of female staff members holding a top management position 9% 6% +50,00% Percentage of female staff members holding a managerial position 13% 16% -18,75% Number of staff members with disabilities ,00% Number of people, whose jobs have been adapted due to a particular situation (e.g. health ) ,94% Environmental management Progression Percentage of disabled members of staff or having been re-assigned or reclassified compared to the total number of active staff members 4% 4% -11,63% Fuel consumption for ground vehicles (in liters) 887, , % Percentage of staff members living in Luxembourg 60% 62% -3,23% Waste produced by the company (in tons) 2,745 2, % Energy consumption (in kwh) 14,817,946 14,962, % Water consumption (in m3) 67,888 69, % CO 2 Emissions in (in kg) 227,693, ,247, % Making a big impact requires making many little steps in the right direction. In addition to maintaining our modern fleet to run as efficiently as possible, switching to e-vehicles and installing more e-stations, LuxairGroup looks at all its activities with a view of making environmentally-sound improvements. The catering service has cut down on household waste, for example, and incandescent lightbulbs have been replaced throughout our company with energy-saving LED lights. Our new headquarters made of wood and using the newest technologies is made to be as environmentally friendly as possible. More women than ever hold upper management positions, and in 2017, more females joined what has traditionally been a male-dominated field of cargo handling. LuxairGroup is an equal opportunity employer and collaborates with local schools and social organisations to provide employment opportunities to those eager to gain experience. The very nature of the LuxairGroups business involves movement, and none of the business sectors remain static. Constantly changing regulations and procedures and new infrastructure and tools mean that staff members require continual training. It s not a burden but an opportunity to keep staff members up to date and to hone their skills. It is also a considerable investment, like for the new simulator for the flight crew to ensure that they are well trained to provide excellent service at all times. Just as we want our crew to keep our customers safe and happy, we also keep our employees safe with stringent safety regulations. Despite business and the number of employees increasing in 2017, the number of work accidents actually decreased. This is particularly significant in a business where moving heavy cargo and doing maintenance is routine the bulk of our staff are physically active at work, not doing paperwork.

28 The strength of the team is each individual member. The strength of each member is the team.

29 Publisher Luxair S.A. Design plan K Photography 101 Studios Printed on FSC certified paper