S7 Airlines net profit tripled in 2016

The Russian airline's main focus is on regional operations, but it also has Boeing 767 widebodies in its fleet (Gleb Osokin / Wikipedia)

Russian carrier Sibir Airlines (operates under the brand name S7 Airlines) posted 2.896 billion rubles ($50.8 million) in net profit in 2016, thrice as much as in the previous year. The airline’s revenue increased by 31.5% to 108.111 billion rubles, as per the company’s annual financial report made to the Russian accounting standards.

S7 and its sister company Globus are subsidiaries of S7 Group. The parent company has not yet released the 2016 financial results for Globus. TASS newswire reports, citing S7 Group co-owner Natalia Fileva, that the carrier expects its financial performance to deteriorate in 2017, mainly due to excessive capacities available on the market and the ever-growing competition from railroad transport. The Russian monopoly railroad operator has recently been granted an extension of its existing VAT relief to cover long-haul operations.

S7 Airlines is planning to focus on domestic operations this year. In particular, the carrier intends to “relaunch” its hub at Novosibirsk’s Tolmachevo airport. The airline has announced plans to take 17 Embraer E170LRs on lease in order to further develop its regional route network.

Last year S7 came second among Russia’s airlines by traffic. In January and February 2017 it carried a combined 1.3 million passengers, just 1% up year-on-year. According to Vedomosti daily, in January through March the operator ceded its position to Aeroflot Group’s subsidiary Rossiya Airlines, which had merged with sister companies Donavia and OrenAir in 2016. Following the merger and restructuring Rossiya inherited the widebody fleet of defunct Transaero Airlines; in Q1 2017 its traffic reached 1.986 million passengers, against 1.974 million carried by S7.

Within S7 Group, Globus is growing faster than its sister ailrine. Last year the carrier took delivery of six Boeing 737-800s. Its 2016 traffic surged 50.2% to 3.638 million passengers; in the first two months of 2017 it carried 618,000 passengers, or 71% year-on-year. The differing growth trends between Globus and S7 results from the group’s operational policy, which is based on flexible fleet management principles.

In January through March 2017, the entire S7 Group served a total of 2.9 million passengers, against 2.5 million during the same period last year, demonstrating a 15.4% traffic growth.