Red Pacific Airlines

Annual Report 2009

Dear Shareholder,

We are pleased to bring you tidings of growth and success from 2008! Red Pacific Airlines has had a
year of exciting endeavors, and despite the global economic downturn, has met and surpassed our
financial and strategic objectives!

Red Pacific started the year with a challenge – a challenge to enhance and expand our organization from
the ground up. Our goals were high but our will was strong, and 2008 proved to be the most prosperous
year in Red Pacific’s history.

Our strategy for success started with the individuals who set Red Pacific apart from the rest, our family
of employees. The heavy investment in increased compensation as well as total quality management
and training programs provided Red Pacific with huge returns in the form of increased efficiency and an
impeccable safety record. This commitment to our employees will continue in 2009 as we work
together to flourish in the future.

In addition to revitalizing our human resource capital, the Red Pacific fleet got a facelift as well in 2008!
The upgrading of our aircraft allowed us to step up our service and expand our markets. Growing
demand in resort and international markets lead us to Vail and Vancouver, BC!

Our customers responded to our improvements with their increased business, and Red Pacific is proud
to be leading the airline industry! Our competitive edge positions us for further market domination, and
continued increases in profits for you, our shareholders.

The future for Red Pacific has continued expansion and success in store, with growing returns as well as
strengthening our market position. In 2009 we will be implementing our very own strategic system for
identifying viable markets, allowing us to further maximize revenue passenger miles and our return on
sales.

On behalf of all of us at Red Pacific Airlines, thank you for joining us as we bring the banner year of
2008to a close and usher in a new year of prosperity!

Sincerely,

The Red Pacific Team

Red Pacific Management Team

Chief Executive Officer

Stephanie Perry

Age: 48

Education: Bachelor’s of Business Administration Emphasis on Accounting

Stephanie Perry joined Red Pacific Airlines in August 2009. Since that time she has spent
countless hours meeting with the CFO and XXX strategizing, forecasting and decision making to
make our airline the most trusted airline in the United States.

Prior to Red Pacific Airlines, Perry had a successful career as a mother, full time student and a
hair dresser. Her experience in the hair dressing field has given her the insight into the human
psych that was needed when making customer service decisions for the airline.
Chief Operations Officer

Laura Martinson

At Red Pacific Airlines, Laura Martinson

uses her unique skill set and creative
problem solving to keep the organization
ahead of the competition.

Laura has a long history in business, and is

known within the business community as a
no nonsense forward thinker, notorious for
turning struggling organizations into highly
competitive powerhouses. Miss Martinson
acquired her first management position
when she was fifteen years old, and went
on to start her own successful business at
nineteen.

After several years of consulting work and

expansion of her retail establishment,
Laura set out to add to her skill set, and
earned a Bachelor of Business
Administration at the University of Alaska
Southeast. The wisdom she gained from
her years of experience in the business
realm combined with the knowledge
obtained from her prestigious university
studies made Laura the perfect candidate
to help bring Red Pacific to the forefront of
the airline industry.
Chief Financial Officer

Daniel Reierson

Age: 30

Education: Bachelor’s of Business Management

Daniel joined Red Pacific Airlines in September of

2009 taking the position of the chief financial
officer. He is committed to the team and
continually analyzes the company and its
competitors to help Red Pacific Air shine above
all others in the open air.

Prior to Red Pacific Air Daniel worked for

Alaska’s Department of Finance and Survey Point
Holdings as a logistics manager.
Mission Statement
The principal mission of Red Pacific Airlines is to exceed the expectations of our customers, employees
and shareholders. Red Pacific Airline’s safety standards, customer care, and continuous attention to
detail enable us to exceed standards and expectations.

Core Values

Integrity
Integrity is defined as ‘adhering to ethics or principles.’ Our commitment to our customers, employees
and shareholders and the environment shall remain undiminished. From the small tasks to the
miraculous ones, each is completed with integrity.

Trust / Reliability
Red Pacific Airlines has earned the trust of its customers, past, present, and future, by following through
on our mission statement.

Care
Taking care with each employee, providing a sense of ownership, accountability and pride enables Red
Pacific Airlines to continue providing the most excellent customer service in the industry.

SAFETY
Safety is of the utmost importance in the airline industry. Our mechanical staff are well trained and our
safety standards are second to none. The Red Pacific Airlines fleet does not leave the ground without
state of the art safety checks. Our safety guidelines are three times more rigorous than that of the
federal standards.
 Our pilots are some of the best
trained Pilots in the world. Each pilot
is required to attend at least 100
hours of training each year. In
addition, pilots come to Red Pacific
Airlines with only the highest
credentials. There is no question that
Red Pacific Airlines is not only the
best airline for investment purposes,
we are the safest and most reliable
airline in the air.
 Competitive Industry
Advantage Outlook

 Unblemished safety record  Strong air travel demand for the

next quarter
 Strong financial position
 Decreasing fuel prices
 #1 Customer care/service
 US Economic stimulus expected
to help airlines to cope with
recession
 Strategic Objectives
Red Pacific started off the year with an absolute resolve to increase
market share, develop sustainable growth for our company, and
increase stock values for our shareholders. This ambitious
commitment to excel above the competition was met by an
equally ambitious overhaul of company image, service, and
aircraft. The strategic objectives of Red Pacific were simple and
effective, to exceed the expectations of all shareholders including
customers, stockholders, employees, and competing firms. It was
clear that in order to accomplish such objectives our firm must set
itself apart from the rest, thus differentiation became the main
strategic objective of our firm. In order to create a superior brand
reputation for Red Pacific, we set out to improve the organization
from the ground up, starting with our most valuable asset, our
employees. At the onset of 2008 employee wages were increased
to exceed industry averages, and total quality and training
programs were made a top investment priority. By investing in
human capital, Red Pacific was able to create a cohesive team synergy, moving towards success for the
future by increasing productivity and decreasing costs. In addition to human capital, 2008 was also a
year of investment in Red Pacific’s fleet.

Striving to achieve the highest levels of customer satisfaction in the industry, Red Pacific upgraded its
fleet to consist of more comfortable and fuel efficient aircraft. To further increase comfort and
amenities, our cabin service levels were increased to the highest in the industry. With huge changes in
place for the first half of 2008, Red Pacific was ready to take on the world – and so we did just that.
Expanding to new, profitable markets both international and domestic was a major strategic objective
for Red Pacific, and accomplishing these goals was instrumental in pushing us far ahead of our
competitors. The addition of a resort market proved especially profitable for Red Pacific, and gave us
the opportunity to showcase our new fleet and improved service. The final piece in implementing our
differentiation strategy was to get the word out; Red Pacific was the airline to fly in 2008, and our
customers and potential customers needed to know! Heavy investments in marketing and promotion
throughout the year were key in achieving the highest market standing, and positioning Red Pacific for
further growth in 2009.
 Destinations

2008 was marked as a destination revolution for Red Pacific Airlines. Armed with a new and improved
fleet, enhanced service, and a highly motivated workforce, Red Pacific took its world-class airline to the
next level by expanding into several new and exciting markets. Utilizing rigorous market research and
industry trends, management at Red Pacific was constantly assessing available markets and their
profitability potential. Our strategic market expansion in 2008 was driven by demand we well as
superior standards for load factors and revenue passenger miles. In the first quarter of 2008 Red Pacific
introduced service to Vancouver, a landmark move as the company’s first international destination. This
exciting addition to our routes serves a bustling tourism market as well as several other diversified
industries. The addition of Vancouver to Red Pacific’s service represents the beginning of strategic
global expansion as our airline continues to diversify. In addition to exciting new international markets,
Red Pacific expanded its domestic service in 2008 as well. Recognizing the potential for a higher class of
aircraft and service, the airline inaugurated itself into the lavish resort market of Vail, Colorado. With
potential for a growing demand, and the absence of any major airline, Vail was in need of a caliber of
service that Red Pacific was able to offer, and pleased to do so! Exotic and fun destinations aside, 2008
was not all play and no work for Red Pacific. As domestic markets provided room for expansion, our
airline was ready and willing to meet demand. The second and third quarters saw new service launched
to growing cities with industrial parks, as well as growing routes from Red Pacific’s mini-hub. Service
was further expanded in the fifth quarter with the addition of routes to serve a major university as well
as a high tech industrial center.
 Financial Highlights

Financial Objectives

We are excited for the opportunities presented to us in the upcoming year. We

have had strong success in managing the financial aspects of Red Pacific Air. We
have continued to generate strong cash flow to the point of excess. Our future
plans are to invest a portion of our cash interest into short term interest bearing
CD’s. We have created a systematic return for our investors. As of this past
quarter we have decided that every quarter we will be paying twelve percent of
the net income in dividends to our shareholders. In the upcoming year we will
begin a series of cost controlling measures on our operations and marketing
costs. While we maintain a strategy to attract the highest paying customer it is
prudent to keep our costs down in the long run.
Our main objectives were met financially in the first two years of operations to
continually generate a positive net income and to maintain a financially healthy
company above our competition.

In an effort to provide a greater return to our shareholders one of the new

objectives will be to maximize our Revenue Passenger Miles in each market. We
have created a systematic process that helps identify the most viable markets for
us to operate in and generate the highest return for each market. The system
also analyzes our competitors giving us a leading edge in each market.
 Red Pacific Airlines
Aggregated Financials Quarters 1 - 9 (in thousands)
Gross Revenue 55837029
Commissions 4872621
Refunds 1900712

Net Revenue 49063696

Expenses 8878807
Flight Operations 7759052
Fuel 8223462
Maintenance 5979200
Passenger Service 2467674
Cabin Service 918000
Insurance 1282998
Promotions & Advertising 432000
Sales Force Cost 317800
Employee Compensation 592000
Emp Training & Quality Control 57000
Hiring Cost 185063
Social Giving 279000
Market Research 1695078
Interest Expense
3200000
Admin Expense 3317500
Depreciation 356822
Other
Total Expenses 45941456
Operating Profit/Loss 3122240
Other Profits/Losses 229982

EBIT 3352222
Taxes 1293696
Net Income After Tax 2058526
Dividends 642692
Profits Retained 1415834
 Red Pacific Airlines
Balance Sheet as of 4/29/09 (in thousands)
Cash 3932
Accounts Receivable 2740
Total Current Assets 6672
Aircraft 23800
Depreciation -2372
Facilities Net 550
Total Fixed Assets 20582

Total Assets 27254

Accounts Payable 1619

Short Term Loans 79
Total Current Liabilities 1698
Long Term Loans 9952
Total Liabilities 11650

Common Stock 14000

Retained Earnings 1603
Total Equity 15603
Total Liab & Equity 27254