ΑΕ GEAN AIRLINES S.A.

GENERAL COMMERCIAL

REGISTRTY 1797901000

ANNUAL FINANCIAL

REPORT

FOR THE FISCAL YEAR 2023

In accordance with art. 4 of Law 3556/2007 and the Board of

Directors’ Resolutions of the Hellenic Capital Market Commission

1. Statements of the Board of Directors' Members

(in accordance with art. 4 paragraph 2 of Law 3556/2007)

It is hereby stated that, to the best of our knowledge, the Annual Financial statements of Aegean Airlines S.A. for the period 1 January 2023 to 31 December 2023, which were prepared in accordance to the International Financial Reporting Standards as adopted by EU, truly reflect all Assets, Liabilities and Shareholders’ Equity along with the Income Statement of the Company, as well as of the companies included in the consolidation.

It is also declared that, to the best of our knowledge, the Board of Directors’ Annual Report truly reflects the business developments, the performance and the position of the Company, as well as of the companies included in the consolidation, including the key risks and uncertainties they are facing.

Annual Report of the Board of Directors of AEGEAN AIRLINES S.A. on the Consolidated and Company Financial Statements for Fiscal Year from 1 st January to 31 st December 2023

2.1 Report of the Board of Directors

Introduction

The Board of Directors’ report of the company “AEGEAN AIRLINES S.A.” (hereinafter called the “Company” or “AEGEAN”) covers the twelve-month period ending 31.12.2023 and has been published on the Company’s website under the European Single Electronic Format – «ESEF», in accordance with the provisions of Law 3556/2007. The content of this report has been prepared in accordance with the provisions of articles 150-154 of L. 4548/2018, article 4 of L.3556/2007 and decision 8/754/14.4.2016 of the Hellenic Capital Markets Commission.

The Consolidated and Parent Company Financial Statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), as endorsed by the European Union.

This report contains financial and non-financial information of AEGEAN and its fully owned subsidiaries Olympic Air S.A. (100% ownership), Aegean Cyprus Limited (100% ownership), Hellenic Aviation Maintenance Center S.A. (100% ownership), Aegean Executive S.A. (100% ownership) and its subsidiary Animawings Aviation Srl. (51,00% ownership), (hereinafter the subsidiaries jointly with the Company, called the “Group”), description of significant events that took place during the current financial year, description of anticipated significant risks and uncertainties for the following financial year, disclosure of material transactions that took place between the Company and the Group and their related parties, presentation of qualitative information and estimates relating to the development of operations of the Company and the Group for the following financial year, as well as presentation of the most significant non-financial information that has an impact on the Company and the Group.

The Company and the Group operate in the aviation sector, providing services of air transportation for passengers and cargo with domestic and international, scheduled and non-scheduled flights, in short and medium haul destinations. Moreover, they offer aviation related services, aircraft technical support and ground handling services.

On 21.04.2023, Aegean CAE Flight Training S.A. ("ACFT") was established as a joint venture between 100% subsidiary Olympic Air and CAE Aviation Training BV in order to implement the investment of a Crew Training Center equipped with flight simulators at Athens International Airport.

The two shareholders have joint control of ACFT, as they jointly determine its commercial strategy, appoint the same number of members to the Board of Directors and unanimity is required for all material decisions that are essential for the commercial and operational strategic policy of the joint venture.

In 2023, the management of the Company has decided to proceed with the sale of its stake (51,00%) in the subsidiary company Anima Wings SRL. In October 20, 2023, the relevant agreement was signed between the Company and the other shareholder and main commercial partner of Animawings, Memento Group. The transaction was completed in the first quarter of 2024.

The parent company Aegean Airlines S.A. is listed on the Athens Stock Exchange. AEGEAN’s bond loan is also listed on the Athens Stock Exchange.

The Company’s Head office is in the Municipality of Spata. The Company has branches and offices in Greece and abroad.

The Company’s business activities include, among others, the following:

services related to the transportation of passengers and cargo, with domestic and international, scheduled and non-scheduled flights;

airline services of all kinds;

aircraft technical support and ground handling services;

participation in domestic or foreign companies with similar activities (related in the tourism sector);

establishment of subsidiaries and agencies;

import, trade and leasing of aircraft and spare parts.

The Group’s mission is to provide high quality services across all travel stages, via an extensive network of domestic and international destinations. Key pillars in the Groups’ mission implementation include the investment in training and continuous development of its human resources and the customer- centric approach.

Vision

The Group’s vision is to operate responsibly, contributing to the sector and the economy, thus creating value to all stakeholders.

Corporate Values

The Group’s operation is governed by ethical and professional standards and the values that stem from its mission and vision. They constitute the foundations of the Group’s growth and are focused on the “continuous development, quality service & reliability” approach.

Continuous Development

- Investment in innovation, aiming at the continuous improvement of its services and enhancing passenger travel experience;

- Investment in employees training and development;

- Sustainable growth contributing to the tourism sector, the economy and creating value for all stakeholders.

Quality Services

- Customer-centric approach and authentic high-quality passenger service culture;

- Support and development of Greek tourism product;

- Partnership with key sector stakeholders for the promotion of Greek tourism.

Reliability

- Conduct business in a responsible and respectful way towards the environment, its employees, passengers, suppliers and local communities;

- Best representation of Greece abroad;

- Support of local communities.

In an industry characterized by intense seasonality, cyclicality and increasing competition the strategic priorities are the following:

- Efficient commercial policy, focusing on network planning and revenue management, efficiently adapting in the volatile market conditions;

- Maintaining competitive unit costs, focusing on the fixed and variable costs related to the aircraft fleet, following the recent investment in Airbus A320neo family fleet, as well as on distribution costs;

- Investing in further development and exploitation of the loyalty program;

- Putting technology into use for finding efficient solutions for the passengers, improving the travel experience and catering for the Group’s business needs;

- Utilizing opportunities offered from new fleet investment, targeting the improvement of the passengers services, the reduction of CO2 emissions and enhancement of the Group’s competitiveness overall;

- Investing in training, aiming at further developing skills and talents;

- Investment in Maintenance, Repair and Overhaul Facility and in Simulator and Training Center for pilots and cabin crew members;

- Strategic partnerships with key sector stakeholders, promoting the Greek tourism product and its quality characteristics.

Macroeconomic Conditions Overview

- Global economy continued to show resilience in 2023

Global economy proved to be more resilient in 2023, with GDP rising 3,1%, facilitated by strong labor market and rapid growth of service-related industries. European economy has narrowly avoided recession. Surging energy prices, tight monetary policy, fiscal stimulus withdrawal and ongoing disruptions in supply chain impacted the economic environment. Adverse geopolitical developments from the ongoing war in Ukraine and renewed elevated uncertainty due to the war in the Middle East in October 2023 have negatively affected the economic activity. Inflation remained at elevated levels despite significant deceleration. Food prices continued their upward trajectory despite lower energy prices.

The world GDP is expected to record growth of 3,1% in 2023 from 3,5% in 2022 and is estimated to remain stable in 2024. The slowdown is more pronounced in advanced economies than in emerging and developing markets, whose economies are expected to remain stable in 2024, despite variations across countries’ economies.

Global inflation is expected to fall to 6,8% in 2023 and 5,8% in 2024, from 8,7% in 2022 amid restrictive monetary policy with advanced economies to be able to see faster disinflation. Eurozone has avoided recession and is expected to achieve a growth rate of 0,5% in 2023 and 0,8% in 2024. The German economy contracted in 2023 as GDP shrank by 0,3% in 2023 from a growth of 1,8% in 2022, due to higher financing cost of investments, weak foreign demand and restrictions on subsidies to green transition.

The European Commission’s economic forecasts revises downwards the growth in both the EU and the Eurozone and estimate a growth of 0,3% for Germany, 0,9% for France, 0,7% for Italy and 1,7% for Spain for 2024.

- Monetary policy remains restrictive

Central banks worldwide continued with drastic increases in interest rates, keeping liquidity tight, especially in the third quarter of 2023, as inflation proved more persistent than initially projected, further impacting economic growth. European Central Bank (ECB), since the start of the interest rates increases in July 2022, has increased cumulatively the key ECB interest rate by 450 basis points until September 2023, signaling its commitment to reduce inflation despite the consequences on economic activity from higher cost of funding.

ECB’s strategy in the latest meeting demonstrates its determination to ensure the return of inflation to the medium- term target of 2% by the end of 2025, keeping key ECB interest rate at sufficiently restrictive levels for as long as necessary, despite continuing declining trend in inflation.

- Greek economy maintained its growth momentum with GDP growing well above the European average

Greece recorded strong economic growth, higher that the EU average, while it is expected to keep the same trajectory for 2024 as well. Greece’s GDP is estimated to grow by 2,0% in 2023, compared to 0,5% growth in the Eurozone, driven by private consumption and investments.

The Economic Sentiment Index recorded its highest value in the last 16 months in August 2023 (111,3 units), declining in the fourth quarter to 106,0 units from 110,0 units in the third quarter of 2023, but still remaining at higher levels compared to 2022 amid improved business expectations in retail and services sectors and strong consumer confidence.

Greece regained investment grade in its credit rating from Standard & Poor's Global Ratings in October 2023 to "BBB-" from “BB+” with a stable outlook. In December 2023, Fitch Ratings also upgraded Greece to investment grade to "BBB-" from “BB+” with stable prospects.

Greek Consumer Price Index was reduced more than in the Eurozone to 4,2% in 2023 from 9,3% in 2022 mainly due to lower energy prices but was accompanied by inflationary pressures across a wide range of products and services.

Data: IMF, European Commission

- Gradual de-escalation of the energy crisis

Despite negative forecasts in the beginning of 2023, mainly due to the ongoing war in Ukraine, a series of coordinated global measures to contain energy costs along with the milder winter conditions in Europe helped to modulate energy consumption, thus achieving energy efficiency and a significant reduction in energy prices. The fact that none of the neighboring countries were involved in the Middle East war also prevented from a new energy crisis. The war in Middle East initially sparked fuel prices increase but they were eventually reduced. Amid increased geopolitical uncertainty, the future trajectory of energy prices remains uncertain.

In 2023, the price of Brent crude oil continued to fall from $85,91/bbl on December 30, 2022 to $77,04/bbl on December 29, 2023. The average price stood at $82,17/bbl in 2023, down from $99,04/bbl in 2022.

The Euro strengthened against the US Dollar, with the exchange rate reaching 1,1036 on December 29, 2023, compared to 1,0702 on December 30, 2022. The average Euro/USD exchange rate in 2023 was 1,0814, up from 1,0532 in 2022.

Airline Sector Overview

- Strong industry- wide recovery close to pre-pandemic levels

According to International Air Transportation Association (IATA), global passenger traffic in revenue passenger kilometers (RPKs) reached 94,1% of pre-pandemic levels in 2023, marking a 36,9% increase compared to 2022. North America and Latin America experienced the strongest recovery, surpassing 2019 levels mainly due to their increased domestic markets demand. Revenue passenger kilometers in Europe rebounded to 95,2% of 2019 levels, an increase of 20,2% compared to 2022. China’s re-opening after a prolonged period, resulted in a surge in air passenger traffic.

The aviation industry encountered significant challenges, such as supply chain disruptions, increased interest rates, inflationary pressures in costs and geopolitical tensions. Despite challenges, capacity continued to recover in 2023, reaching 94,4% of pre pandemic 2019 levels in Available Seat Kilometers (ASKs), 31,0% higher than 2022. In Europe, ASKs reached 96,1% of pre pandemic 2019 levels, 15,8% higher than in 2022.

Load Factor worldwide reached 82,3%, reaching 2019 levels. In Europe Load Factor reached 84,4%, 0,8 p.p. lower than pre-pandemic levels and 3,1 p.p. higher than in 2022.

According to Eurocontrol, in 2023 there were significant variations among European countries in passenger traffic recovery, with South-East European countries experiencing strong growth due to flows to/from Asia and the Middle East. In contrary, North-West European countries faced challenges due to economic softness, while Baltic and North-East European countries continued to be influenced by the impact of the war in Ukraine.

- Airline Sector recorded profits in 2023

Airline sector profitability outlook for 2023 strengthens as International Air Transportation Association (IATA) upgraded its forecast for the sector. Total revenues are expected to grow 21,7% year over year to $896 billion, 6,9% higher than 2019, supported by strong yields for the third consecutive year (6,2% higher year over year) and strengthening passenger traffic despite still being marginally below pre pandemic levels.

Airline industry net profits are expected to reach $23,3 billion from losses of $3,8 billion in 2022, with EBIT margin reaching 4,5% from 1,6% in 2022. Europe is also expected to record profits of $7,7 billion in 2023 from $4,1 billion in 2022, the second highest profitability after North America, while set to record a 6,5% EBIT margin from 4,0% in 2022.

For 2024, IATA estimates total revenue to reach $964 billion, 7,6% higher compared to 2023, with RPKs to record a 9,8% increase and ASKs to grow by 8,9% compared to 2023. Airline industry net profit is expected to reach $25,7

- Passenger traffic at Greek Airports reached record high, rising 14% YoY

Passenger traffic at all Greek airports reached 71,9 million from 63,1 million in 2022 and 64,2 million passengers in 2019, representing a 14% increase compared to 2022 and a 12,0% increase compared to 2019, according to Hellenic Civil Aviation Authority (HCAA). In terms of arrivals and departures for both international and domestic flights, a total of 552.887 flights were operated, 7,5% higher compared to 2022 and 5,1% higher compared to 2019.

Greece had already exceeded pre-pandemic capacity levels in 2022 and yet recorded an additional 8% increase in the average number of daily flights compared to 2022, according to Eurocontrol, when Italy, France and Spain were still lagging behind 2019 levels. Total capacity in Greece in 2023 recorded a 10% increase compared to 2022 and a 19% increase compared to 2019.

By country of origin, Eurozone countries recorded an 11,5% increase, while the rest EU countries recorded a 24,4% increase, constituting the main sources markets for Greek tourism. More specifically, the number of passengers from Germany rose by 9,5%, from France by 4,2%, from the United Kingdom by 2,4% and from the United States by 29,2%.

Tourist growth in Athens has been consistently upward trending as a result of the coordinated effort to promote Greece’s capital as a city-break destination and the overall upgrade in service quality offered. Moreover, significant investments in infrastructure in the capital are undergoing a major revamp with the largest and premium hotel chain franchises investing in Athens.

At the same time, the willingness and ability of Greek travelers to travel more for leisure, combined with the increased demand throughout the year, contributed to a further strengthening of both Athens and Thessaloniki hubs. Furthermore, smaller destinations contributed as well, with AEGEAN enabling the wide spread of the tourist product and the extension of the touristic season, by providing increased options to passengers.

The airports with the highest passenger traffic increase are Heraklion, Rhodes, Corfu and Chania. Popular tourist destinations such as Santorini, Mykonos and Paros experienced a decline in international traffic compared to 2022, with passenger traffic remaining however well above pre pandemic levels.

Based on Bank of Greece provisional data, in 2023, the travel balance of payments recorded a surplus of €18.014,4 mil., compared to a surplus of €15.751,5 mil. in 2022 and a surplus of €15.416,0 mil. in 2019. Travel receipts increased by 15,7% compared to 2022 and by 12,7% compared to 2019, reaching €20.459,5 mil.

The average expenditure decreased by 2,7% compared to 2022 but remains 7,0% higher than 2019.

The Group in 2023

Business Developments

AEGEAN delivered an exceptional strong financial and operational performance in 2023 supported by network expansion, significant capacity investment in the international network along with the consistent strategy of fleet modernization and services upgrade. The Group in 2023 was flying to 14 destinations in Germany, 14 destinations in France, 10 destinations in Italy and 10 destinations in the Iberian Peninsula, while also extending its network to the Middle East and Scandinavia.

Demand continued to be strong, mainly driven by leisure traffic. AEGEAN offered a significant higher number in available seats in 2023 and started its summer schedule earlier in the year by adding new destinations and increased frequencies. More specifically network expansion yielded positive results with 180 destinations in 49 countries and the addition of more than 30 new international destinations in the summer season, as well as the capacity investment with 2,2 million additional seats in the international network.

In 2023, AEGEAN offered 20,4 billion ASKs, 3,7 billion more than 2022 while welcomed 15,7 million passengers, 3,2 million more than the previous year, an increase of 26%, thus recording a new record high.

In the international network, AEGEAN welcomed 9,5 million passengers, 29% higher compared to 2022. Domestic passenger traffic increased by 22%, reaching 6,2 million passengers, following the positive feeding of connecting traffic, due to the expansion of the international network, as well as strong recovery in the Greek economy. The willingness and ability of Greeks to travel mainly for leisure, combined with the increased demand throughout the year, contributed to further strengthening Athens and Thessaloniki hubs thus enabling the wide spread of the touristic product and the extension of the touristic season. Load factor stood at 83,4%, from 79,8% in 2022.

- Fleet Renewal boosts efficiency and competitiveness

In 2023 the Group took delivery of 9 new Airbus A320neo family aircraft. Overall, the Group’s A320 neo family fleet consists of 28 aircraft.

Fleet modernization contributed to cost reduction, while further strengthening Group’s competitiveness by upgrading passenger services.

During the fourth quarter, the Group expanded its Airbus A320neo family aircraft orders from 46 to 50 aircraft by exercising the option for three aircraft, whilst securing another aircraft from a lessor.

As part of AEGEAN’s continued efforts of constantly upgrading its service offering, the Group enhanced its onboard travel experience in 2023 by offering its passengers new services such as multiple flights at a fixed price (AEGEAN pass), discounts for passengers aged 18-25 (GenAIRation AEGEAN), new services in AEGEANForFamilies, digital ID through gov.gr wallet app, AEGEAN Wi-Fi and new entertainment content through its new digital platform.

In 2023 AEGEAN has completed its new rebranding by launching the new uniforms for its captains, cabin crew and ground staff.

AEGEAN in its effort to support young people and strengthen the professions of aviation ecosystem in Greece has launched a new cycle of a Pilot Scholarship Programme and an Aircraft Maintenance Engineers Scholarship Program, ensuring their immediate professional development starting their professional careers within the Group.

- Repayment of debt obligations and increase in unencumbered aircraft ownership

In March 2023, the Group has proceeded to the early full repayment of its Common Bond Loan, guaranteed by the Hellenic Development Bank, totaling €68,5mil. which was drawdown in October 2020.

In May 2023, one new A320neo aircraft delivered from Airbus was purchased in cash. In June 2023, the Group proceeded with the early repayment of a finance leased A321 neo aircraft, originally contracted in 2020, thus acquiring the ownership title of the aircraft.

In total, as of 31.12.2023 the Group owns 11 aircraft (2 A320neo family aircraft, 6 A320 ceo aircraft and 3 ATR72- 600 aircraft), from 4 owned aircraft on 31.12.2019.

- Progress for the Training Center and the Maintenance, Repair and Overhaul Facility

Aegean CAE Flight Training S.A., a joint venture between the 100% subsidiary company of the Group, Olympic Air and CAE Aviation Training BV was established in 2023 in order to operate a Flight Crew Training Center, equipped with flight simulators, located at the Athens International Airport.

Within 2023, the building constructions were completed, creating an infrastructure able to operate 7 simulators, as well as specialized cabin crew training equipment. At the end of 2023 the first 4 simulators were delivered out of which 3 are currently in operation, covering the needs of both AEGEAN and third -party airlines, an investment that was implemented within 12 months.

Regarding the Maintenance, Repair and Overhaul center, the Group plans to start its full operation within the first four months of 2024.

The above investments significantly enhance the Group's competitiveness and capabilities for aircraft maintenance and training, bringing a range of support services within the organization that were previously executed abroad. Additionally, it will eventually create a great potential to support cabin crew training for third parties. With a strong environmental orientation, this investment is fully harmonized with the Group’s wider sustainability roadmap and also with a strong social, environmental and national positive impact.

Pursuant to the resolution of its Annual General Meeting of the Shareholders dated 26.07.2023 and in accordance with article 49 of L.4548/2018, the Company has proceeded to the following share buyback until 12.03.2024 the date of publication of this Financial Report, as per below: