Martinair Cargo

Presentation ACI Cargo Subcommittee Meeting

April 2006

Company Confidential 2

Company Confidential 3

Profile

• Part of Martinair Holland NV• KLM and P & O Nedlloyd share 50%• 1994 Cargo Sales separated from Passenger business, 2004

Business Unit Cargo• Cargo generates more than 63% of overall revenue• Ranked 14th on list of largest international airfreight carriers• Unique convertible concept• Tripled in size over the last 10 years.

Historical production

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50,000

100,000

150,000

200,000

250,000

300,000

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

To

nn

ag

e

Tonnage

Company Confidential 4

Fleet

Company Confidential 5

Fleet as per Winter 2004

Boeing 767

Airbus A320

Boeing 747F

MD-11F

Company Confidential 6

Martinair Organization

Business Unit

Cargo

Business Unit

Passenger

Unit

Operations

Corporate

Staff

Company Confidential 7

BU Cargo Organization

Sr. VP Cargo

Cargo Planning

& ControlCargo Sales

Europe Asia Pacific The Americas Africa Industry Affairs

Business

Administration

Strategic

Development

& Marketing

Company Confidential 8

Cargo Sales Organization

Cargo Sales

Europe

(AMS)

Asia Pacific

(HKG)

Africa

(NBO)

The Americas

(BCT)

Industry Affairs

(AMS)

Benelux

(AMS)

Central

Europe (FRA)

Scandinavia

(MMA)

Southern

Europe (CDG)

UK & Ireland

(LHR)

North East Asia

(HKG)

South East Asia

(BKK)

Middle East

(SHJ)

South Pacific

(SYD)

North America

(BCT)

Latin America

(BCT)

C&RM C&RM C&RMKey Account

Management

Key Account

Management

Company Confidential 9

Online destinations

AmsterdamAmsterdam

SeattleSeattle

Los AngelesLos Angeles

GuatemalaGuatemala

LimaLima

SantiagoSantiago

San JoseSan Jose

QuitoQuito

Buenos AiresBuenos Aires

GuadalajaraGuadalajara

HoustonHouston

MiamiMiami

BogotaBogota

AtlantaAtlanta

ChicagoChicago

HarareHarare

JohannesburgJohannesburg

NairobiNairobiKigaliKigali

MuscatMuscatHong KongHong Kong

BangkokBangkok

SydneySydney

SharjahSharjah

EntebbeEntebbe

San JuanSan Juan

MexicoMexico

NanjingNanjing

DohaDoha

Bahrain Bahrain

TianjinTianjin

TorontoToronto

DallasDallas BeirutBeirut

Company Confidential 10

Hub concept

Far East

The Americas

Hong Kong

Miami

Amsterdam

Africa Nairobi

Europe

Company Confidential 11

Worldwide Facts

• 470+ locations with Cargo activity:– 95 Sales offices– 76 online destinations (incl. belly)– 200+ trucking destinations– 360+ interline destinations

• 3712 Rotations per year– 1674 Freighters (24% APA, 27% AFR, 50% AME)– 2038 Belly

• Load Factors 2004 (RTK-based):– Average above 83%– Increase vs PY (0.7%)– Despite capacity increase of more than 9%

Company Confidential 12

European Facts

• 34 European offices• 1600+ freighter flights per year• Export trucking:

– 75+ drop-points

– 6 regional consolidation hubs (LHR, MMA, FRA, CDG, MIL, BRU)

• Import trucking:– 100+ scheduled destinations

Company Confidential 13

Facts and Figures – ex-AMS 2005

• Air Waybills 129.617• > 70 % consol. > 6 % D.G.

• Avg. weight 962 kg

• Tons 122.855• Pre-built : 13 %

• Chargeable Tons 133.747• Chargeable vs actual weight + 19 %

• APA 28%, AFR 20%, AME 48%, Belly <4%

• Pieces of cargo1.606,500

• Fail rate < 1,0 %

• Trucks 27.040• > 70 % delivered between 18.00 and 05.00 hours

Company Confidential 14

Facts and Figures – in-AMS 2005

• Air Waybills 125.872• Avg. weight 1353 kg

• Tons 170.283• In-transit beyond AMS about 30%

• Chargeable Tons 184.453• Chargeable vs actual weight + 8 %

• APA 29%, AFR 25%, AME 43%, Belly <3%

• Pieces of cargo8.619.069

• Avg. pieces per shipment > 68 (flowers!)

• Trucks 8.320• > 70 % delivered between 18.00 and 05.00 hours

Company Confidential 15

Key-Competencies (external)

• Perishable traffic• Dangerous goods• Oversized/outside dimensions• Animal traffic• Pharma• (part) Charters, special projects• Customer specific solutions

Company Confidential 16

If only Cargo would buy return trips…

Overcapacity

Capacity shortage

Overcapacity

Company Confidential 17

Sh

ipp

ers

Freight Forwarders

AirlinesFreight

Forwarders

Integrated Airfreight Product

Airfreight Capacity

Co

nsi

gne

es

Positioning

Martinair

Capacity

Partner-integrated product

• Wholesale capacity product offered to forwarders (and shippers) via MP sales channel• Integrated (retail) product offered with partners, managed through key account program

Company Confidential 18

Mission/Vision

• We provide our business partners worldwide cargo services, to the benefit of all stake holders.

• We want to be viewed as an independent, professional and preferred airline.

• We strive for operational excellence by continuously improving our business processes.

• We need to be the most efficient competitor in our markets.

Company Confidential 19

Martinair Cargo Strategy

• Sustained growth:To remain a serious player in the industry by:

– reducing seasonal fluctuation in capacity,

– expanding the network, first frequencies, then destinations,

– leveraging specific areas of expertise (e.g., perishables),

– and an increased customer intimacy by being a forwarder's preferred airline, focusing on key accounts.

• Based on a foundation of "Operational Excellence":An improved quality/consistency and efficiency of:

– Cargo business processes (e.g., efficiency, benchmarked performance)

– the Cargo organization (e.g., skills/training, responsibilities, accountability)

– ICT capabilities (e.g., information and electronic communication systems)

Company Confidential 20

Production Forecast (unconstrained)

Historical and forecasted production

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

To

nn

age

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Co

mp

ou

nd

Gro

wth

Tonnage 5-year CAGR

Sanity-check:Ambitious, but not

unrealistic

MergeGlobal: 5.8%MP: 7.3%

CAGR = Compound Average Growth Rate

Company Confidential 21

Strategic Initiatives

• Increase Cargo Capacity:– Preparation 747F replacement

– General replacement and extension research

• Market Development:– Up-to-date Business Plans per Continent

– Specific action items for market & network development (new destinations)

• Professionalise Business Processes– Key processes described by process owners

– Procedures established as part of ELFIS Cargo system implementation

• Strengthen Cargo Organization– Competencies and role descriptions available as draft.

– Implementation of new MP organizational structure.

• Team-up with partners– Currently several ongoing initiatives, like QT-partnership

Company Confidential 22

MP 747 cargo fleet

• Boeing 747-200/300• PH-BUH Oct 1975 phase out 15 Dec 2006• PH-MCE Feb 1987 phase out 18 Feb 2007• PH-MCF Sep 1988 phase out 05 Nov 2007• PH-MCN Oct 1991 phase out after Feb 2008

• Boeing 747-400 BCF• PH-MPP phase in 16 Nov 2006• PH-MPQ phase in 14 Feb 2007• PH-MPR phase in 29 Oct 2007• PH-MPS phase in 27 Feb 2008

Company Confidential 23

Market information

• MIDDLE/FAR-EAST • Eastbound: relief goods, hard cargo, vegetables, cattle• Westbound: electronics, wearing apparel, consumer goods

• AFRICA• Southbound: relief goods, hard cargo, machinery, car parts• Northbound: mainly perishables

• USA/NORTH- and MIDDLE AMERICA• Westbound: hard cargo, livestock, cars• Eastbound: electronics, hard cargo, perishables

• SOUTH AMERICA• Southbound: hard cargo, livestock, “half products”• Northbound: some “finished goods”, perishables

Company Confidential 24

Aircraft type comparison

• AMS-shj-sin-SYD-HKG-bkk-shj-AMS. Carrying 93 tons eb and 100 tons wb 747-200 appears to be > 10 % more costly than a MD-11 with 80 tons both ways, but appears be be heavily VOLUME restricted

• AMS-tip-nbo-JNB-HRE-NBO-ben-AMS. Carrying 92 tons sb and 95 tons nb 747-200 appears to be > 10 % more costly than a MD-11 with 80 ton both ways, but FREQUENTIE (peaks) is here more important than payload

Company Confidential 25

Aircraft type comparison

• AMS-sju-SCL-LIM-BOG-sju-AMS carrying 71 tons sb and 72 tons nb 747-200 appears to be approx. 25 % more costly than a MD-11 with 67 tons sb and 69 tons nb, but payload difference is not that significant so clear choice: MD-11.

• AMS-atl-MEX-LAX-atl-AMS carrying 76 tons wb and 87 tons eb 747-200 appears to be approx. 30 % more costly than a MD-11 with 69 tons wb and 78 tons eb, here same as above payload difference not that significant so clear choice: MD-11

Company Confidential 26

747-400/747-200 freighter comparison

• Due to its volume the Boeing 747 is the most suitable aircraft to fly to and from the Asia-Pacific region.

• A Boeing 747-400 BCF operates 12.6 % more economical (mainly fuel consumtion) than a Boeing 747-200.

• Newer aircraft, newer engines, less crew, better aerodynamics: LESS COSTS

• An ongoing development