The type of aircraft will be changed without prior notice due to market demand

C O N T E N T S

CONTENTS

EXECUTIVE SUMMARY

COMPANY PROFILE

BUSINESS PLAN

Preface

a.1. Background

a.2. Economic Indicator

Commercial aspect

b.1. Route Planning

b.2. Demand & Market Share

b.3. Marketing Strategy

Operation and Technical Aspect

c.1. Aircraft Fleet Plan

c.2. Flight Frequencies

c.3. Block Time

c.4. Training Program

c.5. Maintenance Program

Organization and Management

d.1. Human Resources

d.2. Organization

Financial Aspect

e.1. Investment

e.2. Revenue Projection

e.3. Cost Projection

e.4. Profit Loss Projection

e.5. Cash Flow Projection

e.6. Financial Ratio

FLORES AIR MAP ROUTE

BUSINESS LICENSE AND AOC

LEGAL DOCUMENTS

EXECUTIVE SUMMARY

Flores Sky Airlines was established in August 2^nd 2008. It was initiated by a good combination of a group of airlines young executive and well experience businessmen, who has great vision to be solution Provider for Travel Agent.

The directors and senior Executive have combined experience of over than 10 years in all aspects of the aviation industry, management and have held a senior managerial positions with well known Indonesian Airlines and other industry.

Most of shareholders have been experienced in Travel Agent Business for more than 15 years. Their involvement in the airline investment is part of their great strategy to secure then seat guarantee that so far, they have been experience mostly with difficulties.

As a result of this involvement, especially with a great vision and innovation of our young executive, we have developed a unique strength point in the marketing strategy by selecting the travel agents as our niche market.

This has an able the company to maximize each performance in taking market share and minimize each operating cost particularly organization cost, as most of the saleable seat has been sold to travel agents in long term contract.

Furthermore our strategic alliance concept not only to expand our networking and range of service but also result our company as a most slim organization and cost efficient airlines. Having all these strong point, we are sure gradually we will achieve our company goal.

Investment Concept

The company needs the investment at the first phase at USD 9,600,000 to operate 3 units B737-300 for domestic and international flights. The additional paid up capital at the second phase the company needs capital at USD 5,800,000 to operate 1 unit B737-400 and 3 units B737-300. And at the next year (2011), the company needs capital at USD 6,800,800 to operate 1 unit B737-400, 4 units B737-300, and 3 units F50.

The Board and shareholders of the company aware that networking, finance strength and market control are part of the main key success of an airline industry. Therefore in expending our business, we are now looking at the possibility of additional equity participation by foreign partners to aboard the company as shareholders.

Despite of low economic growth for last five years (less than 5%), the finance indicator of our business plan shows a very interesting return. Based on Discount factor at 9%, Profitability index at 1.2872, Payback period within 3 years 1 month, IRR at 18.76%, ROI at 4.36% per month or 262% since 5 years. and Benefit cost ratio at 1.0319.

The above was based on exchange rate projection USD 1 = IDR 8,500.

C O M P A N Y P R O F I L E

BRIEF PROFILE

PT.FLORES SKY AIRLINES was founded in April 3, 2008 under Notary Act No. 2 (Witness by Rosalia Nurak,SH) and has been legalized by Ministry of Justice and Human rights Decree No. C-441.HT.03.02.-Th.2009 .

Existence of FLORES SKY AIRLINES reflects the desire of airliners to participate professionally in airline business amidst the increasing interest of national air transport users in line with the improving economic condition and buying capacity of Indonesian people by improving

Guarantee flight standard safety (Refer to Civil Aviation Safety Regulation)

Service quality and satisfaction for passengers

Comfortable and efficient flight schedule for passengers

Efficient flight operation by efficient cost, profitable routes(s), and high productivity

COMPANY VISION

To achieve a reputable national airline which will produce high profit for benefit of the company

COMPANY MISSION

ð To provide high quality service for getting profit by effort through efficient operation cost.

ð Operation flight mission with solid and professional teamwork.

COMPANY STRATEGY

ð Flight standard safety

ð Efficient and “easy” service to passenger with warm and hospitality

ð On time and comfortable schedule by connecting flight system

ð To operate on profitable route(s)

ð Discipline with reward and punishment to company employees

COMPANY CAPITAL

FLORES AIR was founded with initial capital IDR 50,000,000,000 with paid up capital IDR 12,500,000,000.

ORGANIZATION

Member of the Board

President Director : Gregorius Philemon

Commercial Director : Engerbert Kerong

Operation Director : Capt. Chipto Asmoro

Chief Pilot : Capt. ------------------

C.A.S.O : Yoseph Wayan Praten

Technical Director : Nicolass Tatipikalawan

Quality Assurance : Dewanto Anugraha

Deputy Finance Director : Sarifudin Dalle

ROUTES PLANNING

In order not to repeat the failure of new airlines, conducts careful thorough study and evaluation on all trends in the market before opening new route(s)

In the coming five years, FLORES AIR will have permitted by The Directorate General of Air Communication (DGAC) as attachment of The Business License (SIUP), consist of 46 domestic routes and 15 international routes, as follows:

Domestic Routes:

1. MES-LSW 12. BTJ-MES 23. KOE-MOF 34. BPN-TRK 45. BPN-CGK

2. LSW-BTJ 13. MES-PKU 24. PKY-SUB 35. BTH-MES 46. MDC-BPN

3. BMU-DPS 14. CGK-PDG 25. AMI-SUB 36. SUB-UPG

4. DPS-LBJ 15. MES-PDG 26. AMI-WGP 37. CGK-UPG

5. KOE-LBJ 16. BDJ-PNK 27. AMI-TBK 38. TIM-UPG

6. BDJ-PKY 17. PNK-BTH 28. CGK-SUB 39. DJJ-TIM

7. PKY-PNK 18. BPN-BDJ 29. CGK-SUB 40. CGK-PLM

8. BDJ-PBN 19. BDJ-SRG 30. BTH-CGK 41.DPS-CGK

9. BDJ-CGK 20. CGK-MES 31. AMQ-SUB 42. DPS-UPG

10. BDJ-SUB 21. DPS-AMI 32. DPS-SUB 43. KDI-UPG

11. CGK-SOC 22. DPS-MOF 33. BPN-SUB 44. SUB-KOE

International Routes:

1. BTJ-PEN 6. MES-HTY 11. MES-GZO

2 CGK-KUL 7.PKU-JHB 12. MES-BKK

3. KUL-MES 8. PKU-SIN 13. SUB-KUL

4. MES-PEN 9. PKU-KUL 14. CGK-SIN

5. MES-IHP 10. MES-SHA 15. KOE-DIL

The networking of the FLORES AIR route planning can be seen at Map Route, attached.

BUSINESS PARTNERSHIP

To pioneer air transport service, FLORES AIR has cooperated with companies who offer the professional support to FLORES AIR mission. The concern companies are:

1. Ground Handling

(a). Gapura Angkasa, (b). Antariksa, (c). Gading Aero Services

2. Catering

(a). Delapan Pelita Harapan; (b). Rezeki Utama;(c) ACS

3. Maintenance

PT Indopelita Aircraft Services (IAS)

4. Travel Agents

(38 Travel Agents in Jakarta, 40 travel agents in Medan, 25 travel agents in Banjarmasin, 10 travel agents in Kupang and 45 travel agents in Bali)

CUSTOMER CARE SERVICE (CCS)

To improve and maintain high quality service on premium service level, FLORES AIR provide hotline phone number that can be contacted in 18 hours a day for any complaints, suggestions, inputs from users or the general society. With the availability of CCS, FLORES AIR expects all staffs and management always able to improve service quality in efforts to satisfy the customers.

EXPLANATION OF DESTINATION

Domestic Destinations

1. MES= Medan 12. BMU= Bima 23. SOC= Solo

2. LSW= Lhok Seumawe 13. BDJ= Bma 24. PKU= Pekanbaru

3. BTJ= Band Aceh 14. BTH= Batam 25. PLM= Palembang

4. SUB= Surabaya 15. BPN= Balikpapan 26. KDI= Kendari

5. CGK= Jakarta 16. TRK= Tarakan 27. PKY= Palangkaraya

6. UPG= Makassar 17. DPS= Denpasar 28. AMI= Mataram

7. TIM= Timika 18. MOF= Maumere 29. WGP= Waingapu

8. DJJ= Jayapura 19. KOE= Kupang 30. TBK= Tambulaka

9. SRG= Semarang 20. PDG= Padang 31 MDC= Manado

10. PNK= Pontianak 21. AMQ= Ambon

11. PBN= Pangkalanbun 22. LBJ= Labuan Bajo

International Destinations:

1. PEN= Penang 5. IPH= IPOH 8. GZO= Guang Zou

2. KUL= Kualar Lumpur 6. HTY= Hat Yai 9. BKK= Bangkok

3. JHB= Johor Bahru 7. DIL= Dilli 10. SHA= Shanghai

4. SIN= Singapore

OFFICE ADDRESS

Head Office

Airport Ngurah Rai Cargo International Terminal Room 209 2^nd Floor

Phone : 62 361 9930993, 751011 ext. 5236

Fax : 62 361 760216

Email : flores.skyairlines@gmail.com

Blog : www.floresairlines.blogspot.com

Sales Office

JAKARTA

TBA

BUSINESS PLAN

BACKGROUND

The recovery from dimensional crisis in Indonesia today has given the positive effect to almost all business sector either real or service sector especially national air transport sub sector. This recovery process appears in economic growth rate and that shows positive rate with significant increasing trend has bolster the growth of national air transport service sub sector.

To support national economic activities in efforts to speed up economic recovery, all consent parties are expected to maintain the business climate toward improvement of economic activities. PT FLORES SKY AIRLINES as a one of prospective business player in air transportation services sub sector would like to play active roles in participate in efforts to bolster economic recovery by providing high quality and professional service facilities for passenger and cargo air transport without awaiting economic condition already recover.

ECONOMIC INDICATOR

Based on GDP growth calculations, national economic growth in year 2001 was 3.3% and increased in year 2002 was 3.6%. In year 2003, the economists and independent institutions predict the national economic will be better with growth rate around 3.83% with inflation rate 10.4%. Meanwhile, the government has targeted national economic growth around 4% with inflation rate is 9%.

In general, the growth of economic indicator can be seen in the following table:

1999 2000 2001 2002 2003 2004 *)

Gross Domestic Product (%) 0.80 4.90 3.32 3.60 3.83 4.5

Inflation Rate (%) 2.01 9.35 12.55 10.03 9.0 8.7

Number of passenger (000) 6.3 7.6 9.2 12.3 15.3 19.1

Population (mill) 207.4 210.5 213.5 217.1 221.2 224.8

______________

*) Projection data

FLORES AIR is aware that the availability of adequate and high quality air transport facilities would become indicator of acceleration economic recovery because the geography condition of Indonesia is a maritime state with east-west distance surpasses east-west range of Europe. And plays role in uniting the unitary state of The Republic of Indonesia.

ROUTE PLANNING

From the five years’ fleet planning of FLORES AIR, separated in 4 phase of INVESTMENT PLAN. The first Investment Plan, FLORES AIR will operate 3 units B737-300 (consist of purchase 2 units and lease option to purchase 1 unit) in April 2010. The second investment plan, FLORES AIR will operate 2 units B737-300 (with lease option to purchase) in July 2010, 2 units B737-300 and 1 unit B737-400 (with dry lease) in Oct 2010. The third investment plan, FLORES AIR will operate 1 unit B737-400 (dry lease), 4 units B737-300 (with lease option to purchase), and 3 units F50 (dry lease) in May 2011.

FLORES AIR plans to fly the routes in three phases at coming two years, as follows:

No. ROUTE(S) 2010 2011 2012 2012 2014

DOMESTIC ROUTES

1. DPS-CGKvv X X X X X

2. BDJ-CGKvv X X X X X

3. CGK-MESvv X XX XX XX XX

4. MES-PENvv X X X X X

5. DPS-SUBvv X X X X X

6. SUB-BPNvv X X X X X

7. BPN-TRKvv X X X X X

8. BTJ-MESvv X X X X X

9. UPG-SUBvv X XX XX XX XX

10. SUB-BDJvv X X X X X

11. SOC-CGKvv X X X X X

12. CGK-KOEvv X X X X X

13. BDJ-PNKvv X X X X X

14. PNK-BTHvv X X X X X

15. BTH-MESvv X X X X X

16. AMI-SUB X X X X

17. SUB-PKY X X X X

18. DPS-AMI XX XX XX XX

19. AMI-TBK X X X X

20. AMI-WGP X X X X

21. PLM-CGK XX XX XX XX

No. ROUTES 2010 2011 2012 2013 2014

22. DPS-UPG X X X X

23. UPG-KDI X X X X

24. SUB-CGK XX XX XX XX

DOMESTIC ROUTES

25. CGK-BTH X X X X

26. MES-PKU X X X X

27. PKU-CGK X X X X

28. CGK-PDG X X X X

29. PDG-MES X X X X

INTERNATIONAL ROUTES

1. CGK-KUL X X X X X

2. KUL-MES X X X X X

3. MES-PEN X X X X X

4. MES-HTY X X X X X

5. MES-IPH X X X X X

6. SUB-KUL X X X X X

7. KOE-DIL X X X X X

8. MES-BKK X X X X

DEMAND AND MARKET SHARE

The development of national air transport sub sector cannot be separated from the effect of economic growth where as this sub sector has been severely affected by the crisis in late 1997. In general, the indicator of the growth of air transport sub sector can be seen in the growth of the number of passenger transported as shown in the following table.

National Passenger growth 1997-2003 and projection 2004 as follows:

Year Domestic Pax International Pax

1997 12,800 8,900

1998 7,600 7,400

1999 6,300 7,900

2000 7,600 8,500

2001 9,200 9,200

2002 12,300 9,900

2003 16,700 10,800

2004*) 20,872 13,500

Note: *) Projection

From this table, it can be seen that since 2000, the growth of air transport service sub sector begin to improve and absolutely shows the significant increase in the number of passenger compare to the period before crisis. Even in 2003 the projection for the growth of passenger of air transport reaches 33,7%, from the previous year. The recovery of this sub sector is also bolstered by the government policy on district autonomy that results in increasing intensity of the used of the air transport from the provinces to Java (Jakarta and others cities).

Based on recovering of economic indicator and in fact, Indonesia is one of five countries who has a high population in the world, FLORES AIR is sure that Indonesia has a high potential market of air transport in the future.

Air transport is the best choice for everybody because of the geography condition comparing with land transport or sea transport facilities.

To get the market share of air transport passenger, FLORES AIR in calculations, successful to get the number of passenger on the flown routes, that is at the first year is 521,334 pax, at second years is 1,731,840 pax, until fifth year is 2,246,682 pax.

And the percentage of FLORES AIR market share is 15% (1^st year), 23% (2^nd year), 25% (3^rd year), 23% (4^th year), and 21% (5^th year).

MARKETING STRATEGY

To get the best number of passengers, FLORES AIR will use the marketing strategy as follows:

Market Target

FLORES AIR market target are passengers who loyal to travel agents because FLORES AIR build cooperated with the big five travel agents on destination cities. The FLORES AIR passenger segmentation is the people from the middle and lower class and the businessman market.

Using competitive aircraft

B737-300 series is an aircraft with a high communality in Indonesia with the professional maintenance experience. For more efficient, FLORES AIR also using the Boeing series for bigger seats capacity.

On Time Performance

FLORES AIR tries to build on time performance for all flights. If all FLORES AIR staff successful to maintain some level of on time, business travelers always use the FLORES AIR flight.

Connecting Flight

All flight schedule planning arranged with considering connecting flight among each other flight in destination. So the schedule makes easy for passenger to plan their trip.

Reservation System

FLORES AIR will using the global system reservation to make easy for passengers getting confirm reservation.

Interlining

For making sure the flight and avoiding a possibility of flight cancel, FLORES AIR will cooperate with any airlines whose fly on same routes with a special prorate agreement to transfer passenger if FLORES AIR flight cancel for technical reason.

City check In Facility

This facility prepare to passenger with non-carried baggage to check in the downtown.

Corporate Account Program

FLORES AIR will make arrangement with some company, especially the big companies in all destination cities, to buy some seat (with the block seat system) in every flight. This policy is better than if the companies must charter some flight to moving their executive to any places.

Cargo compartment optimization

All cargo compartments will be subcontract with the local freight forwarder to fill the cargo space.

A. AIRCRAFT FLEET PLAN

1. Total Aircraft

In efforts to improve the efficiency of operations, the aircraft provision by FLORES AIR refers to the efficiency in maintenance program by using the certain aircraft, namely Boeing 737-300, Boeing 737-400 and F50.

The number of aircraft and their provision operated by GOLDEN AIR in the coming years are 15 units consisting of:

Leasing

Period No of A/C Type of A/C

April 2011 3 units B737-300

July 20101 1 unit B737-400

4 units B737-300

Jan 2012 1 unit B737-400

4 units B737-300

2 units Embraer 150

Purchase

April 2011 2 units Embraer 190

2 units Boeing 737-800

May 2011 2 units Embraer-175

July 3 unit Fokker -50 Freighter

2. Aircraft Type Selection

There are some considerations for FLORES AIR to choose B737-300 as a main fleet plan, as follows:

a. Communality

Mostly new airlines in Indonesia and the region use the B737-300 because of the high communality, all cost related the aircraft would decrease, especially for maintenance and spare part and easy to get the spare part if the aircraft troubles.

b. Maintenance facility

Many maintenance providers in either Indonesia or neighbors country provide maintenance facility for B737-300 and Boeing type in generally. So it will reduce maintenance cost with the high dispatch reliability.

c. Crew and Technician

Indonesia has many pilots, cabin crews, and technicians with the B737-300’s license, so it will reduce recruitment and recurrent cost.

d. Airport Facility

Many airports in Indonesia are being prepared landed by B737-300 without any restriction.

B. TRAINING PROGRAM

To prepare the operation flight at the first, second, and the third phase, FLORES AIR will provide the training program for get crew readiness. The training program will need many costs as a capital expenditure.

The activities of the training program and how much the cost we needed, can be seen as follows:

The First Phase (presently, we have pilot and cabin for operating 1 aircraft)

Initial/transition training

1. Cockpit crew 12 pilots @ USD 16,000 USD 192,000

2. Cabin crew 28 cabins @ USD 2,000 USD 56,000

Total training cost at the first phase USD 248,000

The Second Phase (Initial/ transition training)

1. Cockpit crew for:

4 units B733 24 pilots @ USD 16,000 USD 384,000

1 unit B734 6 pilots @ USD 25,000 USD 150,000

2. Cabin crew

4 units B733 48 cabins @ USD 2,000 USD 96,000

1 unit B734 12 cabins @ USD 2,000 USD 24,000

Total training cost at the second phase USD 654,000

The Third Phase (Initial/ transition training)

1. Cockpit crew for:

4 units B733 24 pilots @ USD 16,000 USD 384,000

1 unit B734 6 pilots @ USD 25,000 USD 150,000

2 unit ERJ 12 pilots @ USD 15,000 USD 180,000

2. Cabin crew

4 units B733 48 cabins @ USD 2,000 USD 96,000

1 unit B734 12 cabins @ USD 2,000 USD 24,000

3 unit F50 16 cabins @ USD 2,000 USD 24,000

Total training cost at the third phase USD 858,000

From the preparation training until the crew is ready, we need 2 months. So it means that we must prepare crew readiness, 2 months before the flight.

C. MAINTENANCE PROGRAM

To support the sales and marketing department for carrying passenger, FLORES AIR must be well preparing the maintenance working to keep aircraft in airworthy condition.

For the daily maintenance, FLORES AIR already recruits the engineers and technicians to maintain the aircraft every day. The staffs of technical department also do “A”-check and “B”-check on the maintenance program.

FLORES AIR has cooperated with the maintenance provider, who one of the big maintenance provider in Indonesia, and offer the professional maintenance (for the heavy maintenance program) to support FLORES AIR mission. The company is INDOPELITA AIRCRAFT SERVICES (IAS).

Human Resources

The availability of qualified human resources is a key factor to support corporate mission. FLORES AIR has qualified personnel to fill the job with more than 10 years experience in the airline business who posses high motivation and suitable educational background.

Organization Structure of FLORES AIR can be seen on the attachment.

Specification of Human Resources requirement

2010 2011 2012 2013 2014

Management | Member of The Board 2 2 2 2 2

| President Director 1 1 1 1 1

| Director 4 4 4 4 4

| General Manager 5 7 9 11 11

| Manager 10 13 15 17 17

| Supervisor 15 20 23 23 23

| Staff 20 25 35 35 35

| Branch Manager 9 19 23 23 23

| Branch Staff 12 30 40 40 40

| Total 78 121 156 156 156

Crew | Pilot 9 21 42 42 42
| Copilot 9 21 42 42 42

| Cabin crew 60 160 160 160 160

| Total 78 202 244 244 244

Non Crew | FOO 5 14 24 24 24

| Engineer & Mechanic 16 26 55 55 55 |

| Total 21 40 79 79 79

GRAND TOTAL 177 363 479 479 479

A. INVESTMENT

In accordance with operational scheme, FLORES AIR will start operation with on the first phase: 3 units B737-300 at April 2010; the second phase: 4 units B737-300 and 1 unit B737-400 at July 2010; and the third phase: 1 unit B737-400, 4 units B737-300, and 3 units F50.

In this business plan, the investment will be done in three phases, when starting the business by operating 3 units aircraft. The second phase will do by adding 5 units aircraft (consist of 1 B737-400 and 4 B737-300), and the third phase by using additional 7 units aircraft (1 B737-400, 4 B737-300, and 3 F50).

Investment consist of:

Leasing 1^ST phase 2^nd phase 3^rd phase

(a) Asset and equipment USD 7,387,000 USD 2,406,000 USD 4,535,000

(b) Capital Expenditure USD 1,413,000 USD 2,044,000 USD 1,165,000

TOTAL INVESTMENT USD 9,600,000 USD 5,800,000 USD 6,800,000

Please find the Investment table at the Attachment 01.

B. REVENUE PROJECTION

Related with the fleet planning and the route plan at the business plan, shows that Revenue Projection every year, as follows:

2010 2011 2012 2013 2014

Passenger Revenue 26,235.8 89,984.6 111,413.6 116,984.3 121,150.8

Excess Baggage 131.2 449.9 557.1 584.9 605.8

Cargo and mail 2,562.8 7,701.3 9,041.0 9,041.0 9,041.0

Total Revenue (000) 28,929.8 98,135.9 121,011.7 126,610.2 130,797.6

Revenue Projection detail for each route, as at the table at the Attachment 02.

C. COST PROJECTION

Related with the fleet plan and the route plan at business plan, shows that the details of operations cost per item, can be seen at the Cost Projection table as the Attachment 03.

D. PROFIT & LOSS PROJECTION

The comparison of the cost figures and the revenue figures, it shows that start from the first year until fifth year, FLORES AIR will be able to make a profit with the variation numbers and it always increase.

The figures of company result in operation, can be seen at the operating profit as follows:

2010 2011 2012 2013 2014

Operating Profit(000) 455.9 3,728.8 10,567.3 15,943.0 19,963.7

Net Income 455.9 3,728.8 6,868.7 10,362.9 12,976.4

The complete figure of the Profit and Loss Projection, see Attachment 04.

E. CASH FLOW PROJECTION

The cash flow projection shows that in operation company has a strength cash flow since for the first year. The complete figure of cash flow projection can be seen at the Attachment 05.

F. BALANCE SHEET

The balance sheet of the business plan, can be seen at Attachment 06

G. FINANCIAL RATIO

All the calculation from the financial side, reflects at the financial ratio and shows how the company get the efficiency in the financial faces. The Financial analysis of FLORES AIR investment plan can be seen at the Attachment 07.