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Chief Executive’s review

Club World cabin & customers

We have had a similar improvement in satisfaction with the new Club World cabin, now rolled out to all our Boeing 747s and over half of our Boeing 777 fleet. We expect our new two by two seat configuration in Club Europe to be equally well received.

Getting the right balance

So our work right now is all about getting the right balance between necessary short-term action to weather the storm, and sensible long-term planning and investment for the future.

For instance, we believe we can cut costs and boost efficiency while continuing to improve customer service significantly.

Over the last year we reduced our manpower equivalents (MPE) by some 1,750, including 478 managers who elected to take voluntary severance. There will be further headcount reductions this coming year and we have said that there will be no increases in basic pay rates.

These vital short-term changes are also part of a radical three-year change programme – Compete 2012. This programme is an excellent example of the long-term measures we are taking to make sure we perform at our peak.

Despite an increase in underlying non-fuel costs of some 3.7 per cent in the first half of 2008/09, our response to the economic decline in the second half resulted in a full year increase of only 0.3 per cent.

As a result of sensible advanced planning, we already have in place significant financing for the new Airbus A380 and the Boeing 787 aircraft that will join our fleet and transform our operations from 2012. We will also continue to invest in our lounges, a new in-flight entertainment system, cabin upgrades across our longhaul fleet and premium service training.

We are continuing to innovate. Our decision to buy two Airbus A318s and launch a 32-seat all-premium service from London City to New York is groundbreaking. Our OpenSkies subsidiary, flying premium services to New York from Paris and Amsterdam, is another example of great innovation, and customer feedback has been excellent.

We are continuing to build our network with new and important destinations, such as Hyderabad added last year and resuming flights to Riyadh and Jeddah starting in this summer’s schedule.

These investments are the sort of carefully considered initiatives we must make, even in these challenging times, to sustain our business.

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