Feasibility

Study

2023 KYRGYZ AIRWAYS

This feasibility study is presented to objectively uncover the strengths and weaknesses
of “Kyrgyz Airways”. It will help to identify and assess the opportunities and threats
present in the natural environment, the resources required for the project, and the
prospects for success.

Kyrgyz Airways www.kyrgyzairways.com

 Kyrgyz Airways

DISCLAIMER
The information and opinions contained in this document are not intended to
be the sole basis upon which the implementation of the opportunity
contemplated herein (the “Opportunity”) can be decided. It is therefore
advisable for the recipient(s) to make its/their own judgment and assessment of
the information and the Opportunity contained in this document.

Opinions expressed herein reflect the judgment as of the date of this document
and may be subject to change without notice, whether specific to the
Opportunity or general, which may have a material impact on any such
opinions. No responsibility is undertaken herein for any consequences resulting
from the use of this document as well as the reliance upon any opinion or
statement contained herein or for any omission.

The preparation of this document is intended for information purposes only and
is not tailored to the specific investment objectives, financial situation, or needs
of any specific person or entity who may receive this material. Investors should
receive independent financial advice regarding the appropriateness of
investing in any securities, financial instrument, or investment strategy discussed
in this document. This document is intended to be directed to qualified investors
only.

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TABLE OF CONTENTS

About Our Company .................................................................................................... 5

1. Preamble ................................................................................................................. 7

1.1. Objectives of Feasibility Study ........................................................................ 7

1.2. Scope of the Study .......................................................................................... 8

2. Industry Overview ................................................................................................... 9

2.1. Industry Structure ............................................................................................. 9

2.2. Key Trends ....................................................................................................... 11

2.3. Significant Opportunities ............................................................................... 13

2.4. Challenges for Travelers ................................................................................ 14

2.5. Threats to the Airline Industry ........................................................................ 15

3. Market Analysis .................................................................................................... 16

4. Operational Feasibility ......................................................................................... 22

4.1. Fleet Selection ................................................................................................ 22

4.2. Route Planning ............................................................................................... 23

4.3. Ground Operations ....................................................................................... 24

4.4. Maintenance & Engineering ........................................................................ 25

5. Legal Feasibility .................................................................................................... 26

6. SWOT Analysis ....................................................................................................... 28

7. Risk Analysis .......................................................................................................... 29

8. Financial Analysis ................................................................................................. 32

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8.1. Five-years profit and loss projection............................................................. 32

8.2. Five-years projected statement of financial position................................. 34

8.3. Five-years projected cash flow .................................................................... 35

8.4. Visualizations................................................................................................... 37

8.5. Financial modeling assumptions .................................................................. 39

8.6. Investor payback period ............................................................................... 41

8.7. Sensitivity analysis ........................................................................................... 43

8.8. Ratio analysis .................................................................................................. 47

9. Assumptions and Limiting Conditions ................................................................. 48

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About Our
Company

A Brief Story Introduction of the Company

Kyrgyz Airways is putting the “Nomad in the Sky” by positioning

as the first true Internationally managed National Airline of
Kyrgyzstan who will provide safe, economical, and reliable air
transport for inbound and outbound traffic and showcase
Kyrgyzstan as a preferred destination and offer strong
competition to all the one stop International Airlines who operate
currently.

Kyrgyz Airways will operate as Ultra Low-Cost Airline, providing

both domestic and international flights to various destinations
across Europe, Asia, and the Middle East. The airline's fleet will
consist of a mix of modern and efficient narrow body aircrafts,
providing passengers with comfortable and safe travel
experiences. The airline will also operate cargo flights to transport
goods and products across its network.

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Vision
Our vision as a first national airline company of Kyrgyz Republic is
to be the leading and most trusted airline in the region, providing
exceptional service and connecting Kyrgyzstan with the world.
We are committed to offering safe, reliable, and affordable s
travel to our passengers, while maintaining a high level of
customer satisfaction. Our goal is to expand our network to new
destinations and continue to innovate in the aviation industry,
while promoting the culture and beauty of Kyrgyzstan to the
world.

Mission
Our mission is to provide our passengers with a safe, comfortable,
and enjoyable flying experience while contributing to the growth
and development of the aviation industry in Kyrgyz Republic. We
strive to achieve this by offering exceptional customer service,
utilizing modern technology and equipment, and maintaining a
team of highly skilled professionals committed to our core values
of safety, reliability, and efficiency.

Our Values
Kyrgyz Airways aims to deliver its services on time and with
the highest level of reliability. We strive to operate
according to our schedules, minimizing delays and
disruptions for our customers. We are committed to
innovation, continuously seeking new and better ways to
improve our services and operations. We will invest in the
latest technologies and processes to enhance our
efficiency, productivity, and customer experience. We
are committed to providing exceptional customer service
to our passengers, ensuring their comfort and
convenience throughout their journey. We seek to
exceed customer expectations, building strong and
lasting relationships with our customers.

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1. Preamble
1.1. Objectives of Feasibility Study

This feasibility study is developed to achieve the following objectives:

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1.2. Scope of the Study

The feasibility study will have following scope:

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2. Industry Overview
2.1. Industry Structure

The industry structure of Airline Industry is provided as under:

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The industry structure impacts competition and profitability in several ways. The
full-service carriers compete for a higher-end market segment, which enables
them to charge higher fares and generate greater revenue per passenger.
However, they face stiff competition from low-cost carriers, which have a lower
cost structure and can offer lower fares. LCCs have disrupted the traditional
airline industry's dominance by providing a more cost-effective alternative,
which has led to increased competition and pressure on full-service carriers'
profitability. Regional carriers provide feed traffic to major airlines and operate in
a more niche market, which makes them less of a competitive threat to full-
service and low-cost carriers.

Overall, the global airline industry's structure is highly competitive, with a few
dominant players in each segment. The intense competition and pressure on
profit margins have led to consolidation within the industry, with mergers and
acquisitions becoming more prevalent. As such, the airline industry's profitability
is closely tied to the global economy's health, fuel prices, and geopolitical
factors, which can have a significant impact on the industry's overall profitability.

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2.2. Key Trends

These are some of the key trends in the global airline industry:

Digital Transformation

With the rise of technology, airlines are using digital platforms to connect with
customers and enhance their overall experience. This includes the use of mobile
apps, self-service check-ins, digital boarding passes, and other features that
enhance the customer journey. The pandemic has further accelerated the
digital transformation trend in the industry.

Sustainability and Environmental Concerns

With increased concerns about climate change, sustainability has become a

key trend in the industry. Airlines are adopting environmentally friendly practices
such as using sustainable aviation fuel, investing in more fuel-efficient aircraft,
and reducing single-use plastics on flights.

New Markets and Emerging Economies

Air travel is becoming more accessible to people in emerging economies,

leading to a rise in demand for air travel in these regions. This has created new
opportunities for airlines to expand their routes and tap into these growing
markets.

Industry Consolidation

Consolidation has been a key trend in the airline industry in recent years, with
larger companies acquiring smaller competitors. This has resulted in fewer airlines
controlling larger shares of the market, which has implications for pricing and
competition in the industry.

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Cost Reduction and Operational Efficiency

Airlines are constantly looking for ways to reduce costs and improve operational
efficiency. This includes strategies such as implementing lean operations,
optimizing fleet utilization, and reducing fuel consumption.

Safety and Security

Safety and security have always been top priorities in the airline industry, but
recent events have brought them even more into focus. Airlines are investing in
new technologies and procedures to enhance safety and security measures
and protect passengers and crew.

Changing Consumer Preferences

Finally, airlines are adapting to changing consumer preferences, including a

desire for greater flexibility in booking and more personalized experiences. This
has led to the rise of low-cost carriers, the development of new cabin classes,
and the integration of new technologies to improve the overall customer
experience.

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2.3. Significant Opportunities

Discussed below are some significant opportunities in the global airline industry.
By capitalizing on these opportunities, airlines can improve their competitive
position and achieve long-term success in a rapidly changing industry.

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2.4. Challenges for Travelers

Kyrgyz Republic can be a challenging destination for air travellers, it is also a

beautiful and unique country that is well worth visiting. The air travellers in Kyrgyz
Republic might face the following challenges:

Overall, while traveling to Kyrgyz Republic may present some challenges, proper
planning and preparation can help mitigate any potential issues.

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2.5. Threats to the Airline Industry

The airline industry in Kyrgyz Republic faces several potential threats, including
limited market size, competition from neighbouring countries, limited
infrastructure, and economic challenges. To succeed in this market, airlines will
need to carefully evaluate these risks and develop strategies to mitigate them
while meeting the needs of local travellers.

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3. Market Analysis

The global airline market was valued at

$332.2 billion in 2020, and is projected to
$744 B
reach $744 billion in 2030, registering a
CAGR of 11.72%1.
CAGR 12.70%
The major factor driving the market
$332.60
growth for this market is the speed of B
transport and reasonable prices. when
compared to other means of transport
airways is the fastest and most reliable
way to transport goods across the globe.
2020 2030

The aviation industry in Kyrgyz Republic has shown steady growth over the past
decade, with increasing demand for air travel both domestically and
internationally. The country is strategically located between China, Kazakhstan,
Uzbekistan, and Tajikistan, making it a key transit hub for air travel in the region.
The air transport sector makes a major contribution to Kyrgyzstan’s economy.
Airlines, airport operators, airport on-site enterprises (restaurants and retail),
aircraft manufacturers, and air navigation service providers employ 3,000

1https://www.prnewswire.com/news-releases/global-airlines-market-report-2022-market-to-reach-744-billion-by-2026---emerging-new-

technologies-for-urban-mobility-to-step-up-the-excitement-in-the-market-post-pandemic-301577764.html

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people in Kyrgyzstan. In addition, by buying goods and services from local

suppliers the sector supported another 16,000 jobs. On top of this, the sector is
estimated to support a further 4,000 jobs through the wages it pays its
employees, some or all
of which are
subsequently spent on
consumer goods and
services. Foreign tourists
arriving by air to
Kyrgyzstan, who spend
their money in the local
economy, are estimated
to support an additional
13,000 jobs. In total
36,000 jobs are
supported by air transport and tourists arriving by air.

The air transport industry, including airlines and its supply chain, are estimated to
support US $153 million of GDP in Kyrgyzstan. Spending by foreign tourists
supports a further US $45 million of the country’s GDP, totaling US $198 million. In
total, 2.4 percent of the country’s GDP is supported by inputs to the air transport
sector and foreign tourists arriving by air2.
Air transport facilitates flows of goods, investment and people.

2 https://www.iata.org/en/iata-repository/publications/economic-reports/Kyrgyzstan-value-of-aviation/

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The most important benefits from air transport go to passengers and shippers
and the spillover impacts on their businesses. The value to passengers, shippers
and the economy can be seen from the spending of foreign tourists and the
value of exports (though note these figures include all modes of transport). A key
economic flow, stimulated by good air transport connections, is foreign direct
investment, creating productive assets that will generate a long-term flow of
GDP.

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Air transport connects Kyrgyzstan to cities around the world. Air transport
generates benefits to consumers and the wider economy by providing speedy
connections between cities. These virtual bridges in the air enable the
economic flows of goods, investments, people and ideas that are the
fundamental drivers of economic growth.
Passenger Facilitation and Visa Openness
Kyrgyzstan’s passenger facilitation (2.6/10) scores below the average of Europe
(4/10). On the World Economic Forum’s Travel & Tourism Competitiveness Index,
the country ranks 23rd out of 140 countries for visa openness. In all these scores,
higher is better.

Measure of air cargo trade facilitation

Kyrgyzstan’s facilitation of air cargo through its regulations ranks 112th out of 124
countries in terms of the Air Trade Facilitation Index (ATFI) and 42nd out of 135
countries in terms of the eFreight Friendliness Index (EFFI) globally.

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Domestic Market
Kyrgyzstan's domestic market is primarily served by four airlines, Avia Traffic
Company, Aero Nomad, SCAT Airlines, and Air Astana. All airlines operate a fleet
of narrow-body aircraft and serve key domestic routes, including Bishkek-Osh,
Bishkek-Jalal-Abad, Bishkek- Nur Sultan, and Bishkek-Batken. The market is
relatively underserved, with limited competition, which presents an opportunity
for new airlines to enter the market and establish a strong foothold.

International Market
Kyrgyzstan's international market is primarily served by foreign airlines, with
limited direct flights to key international destinations. Currently, Turkish Airlines, Air
Arabia, Pegasus, Aeroflot, Jazeera Airways, SCAT Airlines, S7 Airlines, and Fly
Dubai operate flights to Kyrgyzstan's main international airport, Manas
International Airport, located in the capital city of Bishkek. The airport also serves
as a hub for Kyrgyzstan's national airline, Air Kyrgyzstan.

Market Demand Forecast

Air transport in Kyrgyzstan is forecast to grow by 167% in the next 20 years under
the “current trends” scenario. This would result in an additional 2.7 million
passenger departures by 2038. If met, this increased demand would support
approximately US $530 million of GDP and around 45,400 jobs.

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Passengers USD GDP Jobs

2018 1.6 M $198 M 35,770

Current Trends 4.3 M $530 M 45,387

2023

Upside 6.1 M $750 M 65,709

Downside 3.5 M $430 M 36,943

The demand for air travel in the region is driven by several factors, including
business travel, tourism, and the large number of Kyrgyz citizens living abroad.
The tourism industry in Kyrgyz Republic has been growing rapidly, with the
country's natural beauty, unique culture, and historical sites attracting more
visitors each year.

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4. Operational Feasibility
4.1. Fleet Selection

The airline can consider any of the following aircrafts for its fleet:

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4.2. Route Planning

Kyrgyz Airways will operate following routes:

Moreover, the airline will also operate aircrafts on all of the aforementioned
destinations for inbound tourism activities.

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4.3. Ground Operations

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4.4. Maintenance & Engineering

The maintenance and engineering program will have following modules:

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5. Legal Feasibility
The establishment of an airline in Kyrgyz Republic involves complying with a
range of legal requirements at the national and international level. The following
is a more detailed explanation of the legal requirements involved:

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6. SWOT Analysis

INTERNAL FACTORS EXTERNAL FACTORS

Strengths Opportunities
• Expansion of the route network to new
• First national airline of the Kyrgyz
domestic and international destinations
Republic
• Increasing demand for air travel in the
• Underserved destinations such as India,
region
Pakistan, Saudi Arabia, Far east that are
• Increasing popularity of tourism in Kyrgyz
currently only served by One stop Airlines
Republic
at high fares and long travel times
• Development of new tourism products
• Low operating cost compared to other
and services in the region
International Airlines
• Growth in demand for cargo
• Good relationships with key stakeholders,
transportation services
such as government agencies and
tourism boards
• Modern fleet of aircrafts with advanced
technology

Weaknesses Threats

• Limited route network compared to • Intense competition from larger

larger international airlines. international airlines
• Limited financial resources compared to • Political instability in the region
larger international airlines. • Fluctuating fuel prices affecting
• Dependence on seasonal tourism for operating costs
revenue generation • Economic downturns affecting

• Limited access to major international passenger demand and tourism industry

airports

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7. Risk Analysis

Risk Analysis is an essential tool for our company. This tool will help us to identify
and understand the risks that we could face in our role as well as business
activities. Hence, this will help us to manage these risks, and minimize their
impact on our business activities and plans.

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Regulatory & Legal Risk Financial Risk

One potential risk for the Financial risks, including

Risk airline is the complexity of cash flow problems,

Risk
legal and regulatory insufficient capitalization,
requirements. and volatile fuel prices, can
impact the airline's
operations.

To mitigate this risk, the To mitigate these risks, the

airline should seek airline should develop a
professional legal advice comprehensive financial
to ensure compliance and plan that includes
Mitigation

Mitigation
develop a comprehensive forecasting and budgeting.
compliance program that The airline should also
includes policies and explore alternative sources
procedures for ensuring of funding, such as
compliance with all partnerships or investor
regulatory requirements. funding, to ensure sufficient
capitalization.

Operational Risk Safety & Security Risks

Operational risks, including Safety and security risks,

maintenance issues, flight including accidents, terrorist
Risks

Risks

cancellations or delays, attacks, and hijackings, can

and crew shortages, can impact the airline's
impact the airline's operations and reputation.
reputation and revenue.

To mitigate these risks, the To mitigate these risks, the

airline should implement airline should implement
effective maintenance effective safety and
and inspection procedures security protocols, including
to ensure the safety and regular training and drills for
Mitigation

Mitigation

reliability of its fleet. The crew and staff. The airline

airline should also develop should also work closely
contingency plans to with national and
respond to unexpected international security
events and ensure business agencies to stay up-to-date
continuity. on potential threats and
implement appropriate
measures to mitigate those
risks.

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Market Risk Technological Risk

Market risks, including Technology risks, including

competition from other cyber-attacks, system
airlines, changes in failures, and outdated
customer demand, and equipment, can impact the
Risk

Risk
fluctuations in tourism and airline's operations and
travel patterns, can reputation.
impact the airline's
revenue.

To mitigate these risks, the To mitigate these risks, the

airline should conduct airline should implement
regular market research to effective cybersecurity
Mitigation

Mitigation
stay up-to-date on measures, including regular
customer demand and system upgrades and
travel patterns. The airline training for staff. The airline
should also develop should also invest in modern
effective marketing technology to ensure the
strategies and pricing safety and reliability of its
policies to remain operations.
competitive.

Political Risk

Political risks, including

changes in government
Risks

policies, political instability,

and international tensions,
can impact the airline's
operations.

To mitigate these risks, the

airline should maintain
close relationships with
government agencies and
Mitigation

other stakeholders to stay

up to date on potential
risks and opportunities. The
airline should also develop
contingency plans to
respond to unexpected
events and ensure business
continuity.

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8. Financial Analysis
Five-Years of financial model has been developed on the basis of underlying
assumptions. The projected statements are provided below:

8.1. Five-years profit and loss projection

_ _ _ All Amounts in “USD” _ _ _

2024 2025 2026 2027 2028

Revenue 101,265,500 208,455,250 288,848,250 353,286,750 428,847,250

Passenger Transport 85,915,500 174,063,000 239,751,750 291,539,250 356,616,000

Cargo Transport 11,270,000 29,112,250 42,616,500 54,067,500 63,351,250

Charter Flights 2,880,000 3,840,000 4,800,000 5,760,000 6,720,000

Maintenance &
Repair Services 1,200,000 1,440,000 1,680,000 1,920,000 2,160,000

Cost of Sales (13,090,551) (25,608,001) (34,087,800) (39,861,016) (46,311,560)

Passenger Transport 10,576,708 20,378,155 26,870,785 31,070,912 36,297,237

Cargo Transport 1,668,529 4,191,021 5,994,545 7,393,476 8,452,661

Charter Flights 369,509 478,708 581,418 677,917 768,477

Maintenance & Repair

Services 475,805 560,117 641,052 718,710 793,185

Gross Profit 88,174,949 182,847,249 254,760,450 313,425,734 382,535,690

Operating
Expenditures (85,097,433) (164,069,542) (220,447,319) (267,796,824) (329,850,120)

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Salaries & Wages 922,140 1,449,410 1,558,411 1,668,977 1,752,426

Marketing 9,961,488 20,268,798 27,995,524 34,190,934 41,454,381

Airplane Rentals 71,898,505 139,873,473 188,329,059 229,283,101 283,896,880

Software licenses 576,000 617,026 638,621 660,973 684,107

Other Indirect Expenses 1,739,300 1,860,836 1,925,703 1,992,840 2,062,327

Earnings before
interest, tax,
depreciation, and
amortization 3,077,516 18,777,707 34,313,131 45,628,909 52,685,570

Depreciation &
Amortization
Expense (4,133,333) (3,733,333) (5,373,333) (4,849,333) (4,377,733)

Earnings before
interest and tax (1,055,817) 15,044,374 28,939,798 40,779,576 48,307,836

Interest Expense (1,000,000) (2,000,000) (2,000,000) (1,500,000) (1,000,000)

Profit before tax (2,055,817) 13,044,374 26,939,798 39,279,576 47,307,836

Tax Expense - (652,219) (1,346,990) (1,963,979) (2,365,392)

Profit after tax (2,055,817) 12,392,155 25,592,808 37,315,597 44,942,444

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8.2. Five-years projected statement of financial

position

_ _ _ All Amounts in “USD” _ _ _

2024 2025 2026 2027 2028

Non-current
assets

Fixed Assets 36,220,000 32,590,000 47,320,000 42,574,000 38,299,600

Intangibles 946,667 843,333 740,000 636,667 533,333

37,166,667 33,433,333 48,060,000 43,210,667 38,832,933

Current assets

Cash and Bank 20,524,569 35,359,631 32,548,888 61,283,755 97,523,933

Account
Receivable 8,323,192 17,133,308 23,740,952 29,037,267 35,247,719

28,847,761 52,492,939 56,289,840 90,321,022 132,771,652

Total Assets 66,014,428 85,926,273 104,349,840 133,531,688 171,604,585

Owners’ Equity

Share capital 10,000,000 10,000,000 10,000,000 10,000,000 10,000,000

Retained
Earnings (2,055,817) 10,336,338 35,929,146 73,244,743 118,187,187

7,944,183 20,336,338 45,929,146 83,244,743 128,187,187

Non-Current
Liabilities
Long-term
Loans 50,000,000 37,500,000 25,000,000 12,500,000 -

50,000,000 37,500,000 25,000,000 12,500,000 -

Current Liabilities
Accounts
Payable 8,070,245 15,589,935 20,920,695 25,286,946 30,917,398
Short-Term
Loan Payable - 12,500,000 12,500,000 12,500,000 12,500,000

8,070,245 28,089,935 33,420,695 37,786,946 43,417,398

Total owners’
equity and
liabilities 66,014,428 85,926,273 104,349,840 133,531,688 171,604,585

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8.3. Five-years projected cash flow

_ _ _ All Amounts in “USD” _ _ _

2024 2025 2026 2027 2028

Profit/(Loss) before
tax (2,055,817) 13,044,374 26,939,798 39,279,576 47,307,836

Additions to Net
Earnings

Interest Expense 1,000,000 2,000,000 2,000,000 1,500,000 1,000,000

Increase (Decrease)
in Current
Operating Liabilities 8,070,245 7,519,690 5,330,760 4,366,251 5,630,453

Increase (Decrease)
in Current
Operating Assets (8,323,192) (8,810,116) (6,607,644) (5,296,315) (6,210,452)

Non-cash losses and

expenses included
in net income 4,133,333 3,733,333 5,373,333 4,849,333 4,377,733

4,880,387 4,442,907 6,096,449 5,419,269 4,797,734

Interest Paid 1,000,000 2,000,000 2,000,000 1,500,000 1,000,000

Tax Paid - 652,219 1,346,990 1,963,979 2,365,392

(1,000,000) (2,652,219) (3,346,990) (3,463,979) (3,365,392)

Net Cash Flow From

Operating Activities 1,824,569 14,835,062 29,689,257 41,234,866 48,740,178

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Purchase of assets (41,300,000) - (20,000,000) - -

Net Cashflow from

Investing Activities (39,475,431) 14,835,062 9,689,257 41,234,866 48,740,178

Increase in Share
10,000,000
Capital

Issuance of Long-
50,000,000
term Loan

Capital
Repayment - - (12,500,000) (12,500,000) (12,500,000)

Net Cashflow from

Financing Activities 20,524,569 14,835,062 (2,810,743) 28,734,866 36,240,178

Cash at Beginning
of Year - 20,524,569 35,359,631 32,548,888 61,283,755

Cash at End of Year 20,524,569 35,359,631 32,548,888 61,283,755 97,523,933

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8.4. Visualizations

Sales Trend

385,962,525
317,958,075
259,963,425
187,609,725
91,138,950

2024 2025 2026 2027 2028

Gross Profit Margin

88.12%

87.59%

87.02%

86.49%

85.78%

2024 2025 2026 2027 2028

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EBITDA Margin

11.64%
11.08%
10.53%

7.56%

1.36%

2024 2025 2026 2027 2028

Net Profit Margin

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8.5. Financial modeling assumptions

Primary Assumptions

January
Financial Year Start
October-23
Start Month (Operations)
Oct-23
Start Month
8.5%
Inflation
Base
Scenario
12.0%
VAT
10.0%
Sensitivity
5.0%
Tax Rate
4.0%
Interest Rate
10.0%
Depreciation Rate
10.0%
Amortization Rate
30 Days
Debtor Turnover
30 Days
Creditor Turnover

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Revenue Assumptions

Passenger Transport
Passenger Growth Rate 2.94%

Number of Passengers 8100

$
Average Ticket Price 750

Cargo Transport
Cargo Growth Rate 4.0%

Number of Cargos 3000

$
Per Cargo Price 250

Charter Flights
Charter Flight Growth Rate 1

Number of Charter Flights 3

$
Per Charter Flight Price 80,000

Maintenance & Repair

Services
Growth Rate 2

Number of Customers 10
Average Price per $
Customer 10,000

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 Kyrgyz Airways

8.6. Investor payback period

Net Present Value

2023 2024 2025 2026 2027

Free Cashflows
(Excluding
Interest) 2,824,569 16,835,062 31,689,257 42,734,866 49,740,178

Present Value of
Free Cashflows 2,145,953 11,148,504 18,291,439 21,500,676 21,812,782

Initial Investment (60,000,000)

Net Present
Value 14,899,354

Internal Rate of Return

2023 2024 2025 2026 2027

Free Cashflows 1,824,569 14,835,062 29,689,257 41,234,866 48,740,178

Present Value
of Free
Cashflows 1,386,208 9,824,065 17,137,014 20,745,999 21,374,248

Initial
Investment (60,000,000)

Internal Rate
of Return 30.91%

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 Kyrgyz Airways

Investors Payback Period

2023 2024 2025 2026 2027

Free Cashflows
1,824,569 14,835,062 29,689,257 41,234,866 48,740,178

Initial Investment
(60,000,000)

Cumulative
Cashflows (58,175,431) (43,340,369) (13,651,112) 27,583,755 76,323,933

Payback Period 3.54 Years

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 Kyrgyz Airways

8.7. Sensitivity analysis

Optimistic Scenario

_ _ _ All Amounts in “USD” _ _ _

2024 2025 2026 2027 2028

Revenue 111,392,050 229,300,775 317,733,075 388,615,425 471,731,975

Passenger Transport 94,507,050 191,469,300 263,726,925 320,693,175 392,277,600

Cargo Transport 12,397,000 32,023,475 46,878,150 59,474,250 69,686,375

Charter Flights 3,168,000 4,224,000 5,280,000 6,336,000 7,392,000

Maintenance & Repair

Services 1,320,000 1,584,000 1,848,000 2,112,000 2,376,000

Cost of Sales (12,959,646) (25,351,921) (33,746,922) (39,462,406) (45,848,445)

Passenger Transport 10,470,940 20,174,373 26,602,077 30,760,203 35,934,265

Cargo Transport 1,651,844 4,149,111 5,934,599 7,319,542 8,368,134

Charter Flights 365,814 473,921 575,604 671,138 760,792

Maintenance & Repair

Services 471,047 554,516 634,642 711,523 785,253

Gross Profit 98,432,404 203,948,854 283,986,153 349,153,019 425,883,530

Operating
Expenditures (93,259,432) (180,058,060) (242,053,168) (294,116,687) (362,356,742)

Salaries & Wages 922,140 1,449,410 1,558,411 1,668,977 1,752,426

Marketing 10,933,637 22,269,968 30,768,467 37,582,486 45,571,314

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 Kyrgyz Airways

Airplane Rentals 79,088,356 153,860,820 207,161,965 252,211,411 312,286,567

Software licenses 576,000 617,026 638,621 660,973 684,107

Other Indirect Expenses 1,739,300 1,860,836 1,925,703 1,992,840 2,062,327

Earnings before
interest, tax,
depreciation, and
amortization 5,172,972 23,890,794 41,932,985 55,036,331 63,526,789

Depreciation &
Amortization Expense (4,133,333) (3,733,333) (5,373,333) (4,849,333) (4,377,733)

Earnings before
interest and tax 1,039,639 20,157,461 36,559,652 50,186,998 59,149,055

Interest Expense (1,000,000) (2,000,000) (2,000,000) (1,500,000) (1,000,000)

Profit before tax 39,639 18,157,461 34,559,652 48,686,998 58,149,055

Tax Expense (1,982) (907,873) (1,727,983) (2,434,350) (2,907,453)

Profit after tax 37,657 17,249,588 32,831,669 46,252,648 55,241,603

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 Kyrgyz Airways

Pessimistic Scenario
_ _ _ All Amounts in “USD” _ _ _
2024 2025 2026 2027 2028

Revenue 91,138,950 187,609,725 259,963,425 317,958,075 385,962,525

Passenger Transport 77,323,950 156,656,700 215,776,575 262,385,325 320,954,400

Cargo Transport 10,143,000 26,201,025 38,354,850 48,660,750 57,016,125

Charter Flights 2,592,000 3,456,000 4,320,000 5,184,000 6,048,000

Maintenance & Repair

Services 1,080,000 1,296,000 1,512,000 1,728,000 1,944,000

Cost of Sales (12,959,646) (25,351,921) (33,746,922) (39,462,406) (45,848,445)

Passenger Transport 10,470,940 20,174,373 26,602,077 30,760,203 35,934,265

Cargo Transport 1,651,844 4,149,111 5,934,599 7,319,542 8,368,134

Charter Flights 365,814 473,921 575,604 671,138 760,792

Maintenance & Repair

Services 471,047 554,516 634,642 711,523 785,253

Gross Profit 78,179,304 162,257,804 226,216,503 278,495,669 340,114,080

Operating
Expenditures (76,935,434) (148,081,024) (198,841,470) (241,476,962) (297,343,499)

Salaries & Wages 922,140 1,449,410 1,558,411 1,668,977 1,752,426

Marketing 8,989,339 18,267,628 25,222,581 30,799,381 37,337,447

Airplane Rentals 64,708,655 125,886,125 169,496,153 206,354,791 255,507,192

Software licenses 576,000 617,026 638,621 660,973 684,107

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 Kyrgyz Airways

Other Indirect Expenses 1,739,300 1,860,836 1,925,703 1,992,840 2,062,327

Earnings before
interest, tax,
depreciation, and 1,243,871 14,176,780 27,375,033 37,018,707 42,770,582
amortization

Depreciation &
Amortization Expense (4,133,333) (3,733,333) (5,373,333) (4,849,333) (4,377,733)

Earnings before
interest and tax (2,889,463) 10,443,446 22,001,700 32,169,374 38,392,848

Interest Expense (1,000,000) (2,000,000) (2,000,000) (1,500,000) (1,000,000)

Profit before tax (3,889,463) 8,443,446 20,001,700 30,669,374 37,392,848

Tax Expense - (422,172) (1,000,085) (1,533,469) (1,869,642)

Profit after tax (3,889,463) 8,021,274 19,001,615 29,135,905 35,523,206

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 Kyrgyz Airways

8.8. Ratio analysis

2024 2025 2026 2027 2028

Income Statement

Gross Margin 87.07% 87.72% 88.20% 88.72% 89.20%

EBITDA
Margin 3.04% 9.01% 11.88% 12.92% 12.29%

EBIT Margin -1.04% 7.22% 10.02% 11.54% 11.26%

Net Margin -2.03% 5.94% 8.86% 10.56% 10.48%

Times
Interest
Earned -1.06 Times 7.52 Times 14.47 Times 27.19 Times 48.31 Times

Return on
Equity 0.00% 60.94% 55.72% 44.83% 35.06%

Statement of Financial Position

Current
Ratio 3.57 1.87 1.68 2.39 3.06

Working
Capital 20,777,515.96 24,403,004.35 22,869,145.57 52,534,075.90 89,354,253.65

Debt-to
equity Ratio 7.31 3.23 1.27 0.60 0.34

Solvency
Ratio 0.04 0.25 0.53 0.84 1.14

Cash Ratio
2.54 1.26 0.97 1.62 2.25

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 Kyrgyz Airways

9. Assumptions and Limiting Conditions

This report is subject to the following assumptions and limiting conditions:

I. Information, estimates, and opinions contained in this report are obtained

from sources considered to be reliable. However, we assume no liability
for such sources;

II. Kyrgyz Airways and its representatives warranted to us that the information
they have provided is complete and accurate to the best of their
knowledge and that the financial statements’ information reflects the
company's results of operations and financial condition in accordance
with generally accepted accounting principles unless otherwise stated.
Information provided by the management has been accepted as correct
without further verification, and we express no opinion on that information;

III. We have not conducted a site review of the subject business premises,
nor have we audited or otherwise reviewed the business financial
statements, which have been provided by the business management;

IV. Possession of this report, or a copy thereof, does not carry with it the right
of publication of all or part of it, nor may it be used for any purpose by
anyone without the previous written consent of Kyrgyz Airways and, in any
event, only with proper attribution;

V. We are not required to give testimony in court, or be in attendance during

any hearings or depositions, with reference to the company being
analysed;

VI. Various estimates of value presented in this report apply to this study only
and may not be used out of the context presented herein. This study is
valid only for the purpose or purposes specified herein;

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 Kyrgyz Airways

VII. The study contemplates facts and conditions existing as of the reporting
date. Events and conditions occurring after that date have not been
considered, and we have no obligation to update our report for such
events and conditions;

VIII. Information and calculations are based upon the marketing data and
other information as provided to us by the management of Kyrgyz
Airways;

IX. To the best of our knowledge, the projections drawn, and facts narrated
herein are true and correct;

X. The Projected Financial Statements for the next five years have been
prepared in consultation by Kyrgyz Airways. Same projected financial
statements have been used for appraising the venture. Detailed
underlying assumptions used in the preparation of the projected financial
statements have not been validated and analysed by us in detail since
the said scope has not been assigned to us;

XI. We have conducted the appraisal based on non-advocacy and have no

present or contemplated interest in the business appraised;

XII. Our compensation is not contingent on any action or event resulting from
the analysis, opinions, or conclusions in, or the use of, this Report;

XIII. The appraiser's analysis, opinions, and conclusions, as well as the

development of this report, have been in reasonable accordance and
conformity with the generally accepted management consultancy
standards.

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 Kyrgyz Airways

March 12, 2023

Company Contact
Information
Address
106 Chuy Avenue, Bishkek, Kyrgyzstan, 720040

The
Telephone
+996708400766

Email
Telephone

Founde
ratan.ratnakar@kyrgyzairways.com
+123456789

Website
www.abc.com
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