High season boosts Aeroflot’s revenues as ground costs rise in the period

Aeroflot Rising ground handling costs, airport charges and air navigation fees were the main contributors to Aeroflot’s overall costs surge (Aeroflot)

High summer season revenues helped Aeroflot climb out of the red, with Russia’s largest airline reporting 7.2 billion roubles net income in the first nine months of this year in accordance with Russian Accounting Standards (RAS). The positive development however was 52.6 per cent behind the same period of 2018 due to a tangible loss (16.8 billion roubles) registered in the first quarter. The second quarter result was profitable, but it only cut the losses by 2.7 billion, to 14.1 billion roubles. Net income in the third-quarter was 21.4 billion roubles.

The weakening of the euro-to-rouble rate by 5.8 per cent in the third quarter and the high base of July 2018 (when Russia hosted the FIFA World Cup finals) trimmed the yield rate growth, which resulted in 2.6 per cent compared to the same period last year.

In the nine-month period, revenues increased by 10.7 per cent to 422 billion roubles (including 169.3 billion roubles, up by 4.4 per cent for the third quarter), driven by the improvement of operational results and the carrier’s active capacity management. In the nine months, the airline served 28,4 million passengers (up by 6.2 per cent on the same spell of last year), its RPKs increasing by 5.6 per cent to 77.6 billion.

A collective increase of 25.3 per cent (to 11 billion roubles) in ground handling costs, airport charges and air navigation fees, partly in proportion to the airline’s expanded flight schedule, were the main contributors to Aeroflot’s overall costs surge in the nine-month period. At the same time, fuel expenditures rose by seven per cent to 6.5 billion roubles – resulting from a 9.5 increase of total flight time and a one per cent decrease in fuel costs. Last year the carrier, and the Russian airline industry as a whole, were plagued by a 36.5 per cent fuel costs spike, which resulted in a 46.9 per cent increase in Aeroflot’s fuel spending. However, from June of this year, Aeroflot has observed a slight decrease of fuel costs.

Aircraft and engine maintenance costs also rose in the period, due to the larger number of repairs and overhauls, and also because of increased flight operations amidst the 5.8 per cent strengthening of the US dollar against the rouble currency rate.

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