Russia’s fifth largest air carrier UTair posted a 2.716 billion ruble (about $38 million) net loss in the first half of 2017. The losses escalated 43.2% compared to the same period last year, according to the airline’s Russian accounting standards report.
The airline explained that the current financial performance is in line with its business-plan. Its forecast factored in the growing competition among operators, especially in view of aggressive capacity expansion.
UTair’s financial director Igor Petrov explained that other factors contributing to escalating losses were seasonality and massive costs of planned maintenance, which occurred during said period.
UTair’s revenue in the first six months of 2017 decreased 2.5% to 23.099 billion rubles. The group’s operational losses grew more than twice, to 2.409 billion rubles.
Long-term liabilities decreased to 80.876 billion rubles down from 82.048 billion rubles as of December 31, 2016. The short-term obligations, on the contrary, increased to 16.776 billion rubles as of June 31, 2017 against 13.158 billion rubles at the end of last year.
Commenting on its financial performance UTair emphasized that “during the posting period the liquidity index, which is very important for the airline industry, has been demonstrating a high level of purchasing power. The instant liquidity was 1.7, current liquidity stood at 2.0, which is within the industry requirements. According to regulations it should be no lower than 1 and 1.15 respectively. Increased asset turnover compared to the first half of 2016 is the evidence of faster asset reproduction.”
Last year UTair climbed out of red. Its net profits stood at 589.7 million rubles against net loss of 18.426 billion in 2015. Improvement of financial performance was driven by fast passenger traffic growth (+20.1%) and the fact that during the downturn the air travel market saw offer reduced more than demand.
In the first half year UTair, which has been holding its fourth largest airline position for an extended period of time, ceased that title to Ural Airlines, which is expanding its fleet extensively. From January to June UTair’s traffic grew 15.9%, to 3.273 million passengers, due not to capacity expansion, but to increased load factor, which was up 4.5 p.p. to 71.5%.
Russian Aviation Insider
Powered by Air Transport Observer, Russia & CIS’ premier information provider on commercial aviation with a 20-year legacy, Russian Aviation Insider provides you with timely and reliable business news, insights and analysis on commercial aviation all around CIS.
Sign up for our free Newsletter and never miss:
Get relevant data from reliable industry sources!