PUBLISHER Croatia Airlines d.d., Zagreb, Savska cesta 41

www.croatiaairlines.hr

EXECUTIVE EDITOR Ksenija lof

EDITOR ASSISTANTS Ana ulumovi, Davor Janui

DESIGN Ivana Ivankovi Prli, Nenad Vujoevi

PHOTOGRAPHY Damir Fabijani

PROOF READER Mirjana Miholek

TRANSLATION Lancon d.o.o.

PHOTOLITOGRAFY AND PRINT ZRINSKI d.d., akovec

USA

Networld

INC./CROATIA AMERICA (GSA)

300 Lanidex Plaza,

PARSIPPANY NJ 07054

Tel. (+1-973) 884 3401

Fax (+1-973) 428 3929

Toll free 888-462-7628

AUSTRALIA

SKY AIR SERVICES (GSA)

7/24 Albert Road,

STH. MELBOURNE

Vic. 3205

Tel. (+61-3) 9699-9355

Fax (+61-3) 9699-9388

NEW ZEALAND

CROATIA TIMES TRAVEL Ltd. (GSA)

131 Lincoln Road,

HENDERSON, AUCKLAND

Tel. (+64-9) 838 7700

Fax (+64-9) 838 7722

JAPAN

DARUMA CORPORATION (GSA)

106 Liberty Hill 3,

3-30-5 YAKUMO,

MEGURO-KU TOKYO 152

Tel. (+81-3) 5701-5651

Fax (+81-3) 5701-5652

(GSA = Glavni prodajni zastupnik)

Scheduled

flights

destinations

Domestic

Bra

Dubrovnik

Osijek

Pula

Rijeka

Split

Zadar

Zagreb

International

Amsterdam

Vienna

Brussels

Dsseldorf

Frankfurt

Istanbul

Lisbon

London

Lyon

Manchester

Mostar

Munich

Paris

Prague

Rome

Sarajevo

Skopje

Tel Aviv

Zurich

SALES AGENTS

EUROPE

ISTANBUL

INTER RUT (GSA),

80280 Zincirlikuyu,

Istanbul

Buyukdere Caddesi No: 122

Ozbezen is Mrk. C Bik K. 10/3

Tel. (+90-212) 212-83-64

Fax (+90-212) 356-28-37

PRAGUE

Blue Sky Travel s. r. o. (GSA)

Ruov ul. 15

11000 Praha 1

Tel. (+420-2) 2222-2235

Fax (+420-2) 2222-0237

SOUTH AFRICA

TOP HOLIDAYS-BROOKLYN OFFICE

Block C Momentum Office Park

Cnr. Brooklyn Circle & Fehrsen Str.,

Brooklyn

Pretoria 0181

Tel. (+27-12) 346-6869

Fax (+27-12) 346-8292

MIDLE EAST/ISRAEL

BIAF AVIATION SERVICES LTD (GSA)

1 Ben Yehuda St. Migdalor

blgd.5th Floor, Tel Aviv 63802

Tel. (+972 3) 620 0213

Fax (+972 3) 620 8571

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5 Report of the Supervisory Board

8 Chronicle of Major Events

12 Croatia Airlines Fact Sheet

16 Business Analysis 2005

22 Sustainable Development and

Outlook for the 2006 Business Year

30 Financial Results

44 Sales Agents and Offices

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Report of the Supervisory Board

On the basis of Articles 300c, 300d and 263 of the Company Law and Article 24 of theStatute, the Supervisory Board submits to the Annual General Meeting of Croatia Airlines d.d.the following

Report of the Supervisory Board on Supervision of the Conduct of Business Operationsof the Company in 2005 and on the examination of the Financial Reports

1. In accordance with its obligations, the Supervisory Board has conducted the supervision ofbusiness operations of the company Croatia Airlines d.d. (hereinafter: the Company) anddetermined that the Company is operating in accordance with the Law, the Articles ofAssociation, other acts of the Company and decisions of the General Assembly.

2. During 2005, the Supervisory Board had twelve (12) members, since Mr. Josip Horvat waselected a member of the Supervisory Board replacing the deceased Mr. Drago Durajlija, onthe basis of the AGMs decision of 6 September 2005.

The employees of the Company did not nominate their representative to the SupervisoryBoard in 2005, and the Supervisory Board has no special committees.

In 2005, the Supervisory Board held three sessions, and received the regular reports of theManagement Board on all important business events and the course of affairs, the profitabilityof operations, revenues and expenditures, and on the state of the Company in general. TheManagement Board regularly submitted quarterly, semi-annual and annual written reports onbusiness activities to the Supervisory Board, which had no objections to those reports andadopted them unanimously.

3. The Supervisory Board, in accordance with the legal timeframe under Article 300c of theCompany Law, has examined the annual financial reports with the opinion of the auditor,submitted by the Management of the Company. The Supervisory Board has determined thatthe reports were compiled in accordance with the data in the books of accounts, and thatthey show a true and objective financial position and business results of the Company for theyear ending December 31, 2005. The Supervisory Board is in agreement with the annualfinancial report for 2005 and with the opinion of the auditor Deloitte & Touche. Thus, on thebasis of Article 300d of the Company Law, the Management Board and the SupervisoryBoard adopted the annual financial reports.

4. The Supervisory Board has examined the report of the Management Board on the losses ofthe company and the proposal to cover the losses of the company incurred in 2005 andamounting to 22,775,816.96 kuna, and it agrees with the proposal of the Management tocover the losses of the company from future profit.

5. The Supervisory Board has also examined the Annual Report of the Management Board onbusiness activities in 2005, and it has determined that this Report accurately and objectivelyshows the current business position of the Company. In accordance with that finding, theSupervisory Board accepted the Report of the Management Board on Business Activities in2005.

6. On the basis of the foregoing, the Supervisory Board submits this report to the AGM, withthe proposal that the AGM reaches other decisions within its jurisdiction in accordance withthe proposals of the Management Board and the Supervisory Board.

Zagreb, 12 July 2006

Miomir uul, Phd President of the Supervisory Board

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Members of the Supervisory Board

Miomir uul, Phd Petar TurkoviPresident member

Miroslav Kovai Ratimir Andrijanimember member

Bianca Matkovi Marija aimember member

Niko Rai Boo Jusupmember member

Zdenko Mii Boko Matkovimember member

Ante Nosi Josip Horvatmember member

President ot the CompanyShareholders Assembly

Boidar Kalmeta

Management Board

Ivan MietiPresident and C.E.O.

Vice Presidents

Sreko imunovi Svemir RadmiloExecutive Vice President Executive Vice Presidentmarketing and network management sales

Miljenko Radi Vanja RollerExecutive Vice President Executive Vice Presidentoperations maintenance and engineering

Damir prem Josip BiliExecutive Vice President Executive Vice Presidentfinance, accouting, controling, HR management,revenue calculation and investment legal affairs, IT and infrastructure

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In 2005, a record number of transported passengers was achieved. A total of 1,555,033passengers were transported, which is 2 percent more than in 2004. A total of 1,360,600passengers were transported through regular flights, which is 87.5 percent of the total numberof passengers. In international regular flights, almost 897,000 passengers were transported,4 percent more than in 2004.

May 4 An Airbus A320 was christened and blessed at Split Airport. This aircraft was leasedin April from the American company IFLC for a three-year period, in order to additionallyincrease the fleets available seating capacity. The leased A320 was named after the city ofibenik, and painted in Star Alliance colours.

May Croatia Airlines won the international ReBrandTM award for aircraft redesign, in aselection by the most notable world experts in business design. In the first annual ReBrandTMaward ceremony, which took place in Providence, US, the redesign of our aircraft received anaward in the category notable.

June 1 Croatia Airlines introduced the Ticket Service Charge system. This system ofcalculating agent charge was introduced instead of the agent commission fee, which waspreviously the usual method of paying fees for representatives (agents).

June A new service was introduced on company Internet pages, allowing passengers tomake on-line reservations and payments for hotel accommodation, in addition to on-linepurchasing of plane tickets. The service provides a selection of 20,000 hotels in 3,300 citiesaround the world.

August 17 One million transported passengers were recorded in 2005, three days earlierthan in 2004.

August Our aircraft transported 193,425 passengers, which is a record number of passengersin a single month in the companys history. It was 432 passengers more than in the previousrecord month, July 2005, when 192,993 passengers were recorded.

October 27 The Companys new Internet (web) pages were introduced. The key novelty isthe flexibility in selecting the desired route, since the passenger has the ability to