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Langen, 4 July 2005 DFS is getting ready for competition: Foundation of Tower Company is imminent The air navigation services organisations in Europe are faced with fundamental changes. According to the plans of the European Union, direct competition for air navigation services organisations may become reality sooner than expected in some areas. By the end of next year, any air navigation services organisation certified in Europe will have the right to offer aerodrome control services to regional airports, and this also applies to regional airports in Germany. DFS is responding to this challenge by founding "The Tower Company", a provider of aerodrome control services at competitive prices. The services at the 17 international airports in Germany will continue to be provided by DFS. Competition will not yet be introduced for area control centres, i.e. for en-route control, but we have already started to pave the way for this step. The magic words are "Functional Airspace Blocks", FAB in short. DFS has already taken up negotiations concerning possible cooperation schemes with neighbouring organisations. The airspace blocks will be organised according to traffic flows rather than national borders – a very sensible requirement made by the European Union and its Single European Sky initiative. Ensuring the competitiveness of DFS today is a major prerequisite for safeguarding the future of our company since only those providers that meet the criteria of safety, efficiency and cost-effectiveness will be designated to provide services in future Functional Airspace Blocks. DFS is well prepared to meet these criteria. It ranks at the top in Europe, both in terms of safety and punctuality. An independent group of experts recorded only six aircraft proximities in German airspace in 2004 (as opposed to eight in the previous year), three of which were assigned to risk category A (risk of collision) and three to risk category B (safety not assured). Three of the cases were caused by DFS. More than 2.7 million flights were controlled in 2004 - an increase of 6.7 per cent over the previous year (4.8 per cent in Europe). Ninety-six per cent of these flights were handled without any ATC-related delays. In comparison with other European operators, this rate is top. In terms of cost-effectiveness, however, DFS will have to improve. DFS is not the most favourable provider in Europe, even though in 2006 air traffic control charges will be reduced for the third consecutive year. At the moment, DFS comes fifth in the list of the most expensive air navigation service providers in Europe. We are certainly on the right path as far as costs are concerned. Since Germany has the most complex airspace in Europe, however, we have our doubts as to whether it will be possible to reach a top position in Europe comparable to the one in the fields of safety and punctuality. Our airspace is characterised by many large airports in close proximity to one another, a large number of arrivals and departures, many climbs and descents in narrow airspaces, and a great number of overflights. These characteristics cannot be changed and are extremely labour- and cost-intensive, in particular, since DFS places great emphasis on quality. The fact that DFS has nevertheless succeeded in continuously cutting costs is mainly attributable to a dedicated approach which was started many years ago. The Efficiency Programme alone will lead to savings of approximately one hundred million euros in the coming years. But there is still more to come. We are currently assessing the administrative organisational units to find out which jobs could be cut in the medium term. Technological innovations have also led to redundancies. The cuts will be made as socially compatible as possible. "We are doing this for the sake of the European development and the future of our company", said DFS CEO Dieter Kaden. "In the long term, only those air navigation service providers that offer high quality at favourable prices will survive on our continent." DFS has a sound economic basis. With revenues of €923.4 million in 2004, DFS realised a profit of €36.3 million despite a marked reduction in air traffic control charges. Cash flow amounted to €165.1 million, which corresponds to an increase of twelve per cent over the previous year. Net debt dropped from €236.2 million to €60.3 million. Equity capital was increased to €252.7 million. "Our starting conditions are good – and we are proud of that", said Kaden. "We are getting ready to face the challenges of the future." Kaden used the lengthy negotiations with the DFS shareholder, the German government, concerning the founding of The Tower Company in the form of a DFS subsidiary as an example to demonstrate the necessity for further privatisation. This protracted process was the crucial factor in the decision of the German government and all parliamentary parties to press ahead with further privatisation and to offer 74.9 per cent of DFS to private investors. In future, DFS ought to be in a position to actively participate more easily and more effectively in the growing air transport market. With its 270,000 direct jobs and another 500,000 indirect jobs, the air transport market constitutes a major engine of growth in the German economy. If the forecasts that air transport will record growth rates between three and four per cent in Europe and five per cent in the world are correct, this will lead to the creation of another 330,000 jobs in Germany. In the German Air Transport Initiative, the airports of Frankfurt and Munich, Deutsche Lufthansa and DFS have joined forces with politicians in order to consolidate and safeguard Germany's position on the international air transport market. "Made in the Heart of Europe", this was the motto of this year's Annual Press Briefing. Using this motto, DFS presented "Phoenix", a new radar system it has developed that runs both on a conventional notebook and on a large computer network. It displays the targets of up to fifty radar stations simultaneously and covers airspace of the size of Europe. It is a very versatile tool that can be used by a small control tower as well as by a large radar control centre. Not only air navigation services organisations have expressed interest in this system but also universities and security services. It may even be used when the Pope comes to visit Cologne in August. DFS Deutsche Flugsicherung GmbH is a State-owned company under private law and has 5,200 employees. DFS ensures the safe and punctual handling of flights. Staff coordinate around 10,000 aircraft movements in German airspace every day, and more than three million movements every year. With this large number of flights, Germany has the highest traffic volume in Europe. DFS operates control centres in Langen, Bremen, Karlsruhe and Munich. In addition, DFS is represented in the Eurocontrol Centre in Maastricht, the Netherlands, and in the control towers of the 16 international German airports. DFS provides training and consultancy services around the world and develops and sells air traffic control, surveillance and navigation systems. The company's portfolio also comprises flight-relevant data, aeronautical publications and aeronautical information services. DFS has the following business units: Control Centre, Tower, Aeronautical Solutions and Aeronautical Information Management.
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