Aeroflot Group posts positive financial results for nine months of 2019

In the first nine months of 2019, Aeroflot Group carried 46.7 million passengers, a 10.6% y-on-y increase, while revenue increased by 12.4% to US$8.2 billion (Aeroflot)

Good high summer season results helped Aeroflot Group generate a positive result of 20.3 billion roubles (US$317 million) in the first nine months of 2019, according to International Financial Reporting Standards (IFRS).

Key financial highlights for Aeroflot Group’s 2019 nine-month period include:

• A year-on-year, 12.4 per cent revenue increase to 524 billion roubles (US$8.2 billion);
• EBITDA amounted to 141.7 billion roubles (US$2.2 billion);
• Net profit reached 20.3 billion roubles (US$317 million).

Andrey Chikhanchin, the Aeroflot Group’s deputy chief executive for commerce and finance, states: “The results of the third quarter – the high summer season – were positive for Aeroflot Group, which posted a net profit of 29.1 billion roubles for the quarter, and as a result generated a positive result of 20.3 billion roubles for the first nine months of 2019.”

Commenting on the current external market environment, Chikhanchin further adds: “The year began with consistently high fuel prices and foreign exchange pressures on the non-rouble component of our expenses, which contributed to our moderate results in the first half of 2019.

“Fuel costs remained significantly above the historical average. Given [Russian] passengers’ limited purchasing power, this put additional pressure on the company’s financial results. In addition, in the second quarter, the closure of Pakistan’s airspace led to additional fuel costs as flight times to destinations in Thailand, India and Vietnam all increased.

He continues: “When comparing the results of the summer season with the same period of last year, it is important to note that, for June and July, the comparable period corresponds with the FIFA World Cup, which Russia hosted in 2018. Higher demand, primarily from overseas, and an increased load factor on the domestic route network, resulted in a high base effect in terms of yields that could not be further increased.”

In the first nine months of 2019, Aeroflot Group carried 46.7 million passengers, a 10.6 per cent year-on-year increase. In the same period, revenue increased by 12.4 per cent year-on-year to 524 billion roubles (US$8.2 billion).

In the period, operating costs increased by 15.8 per cent to 462 billion roubles, primarily due to an increase in operations supported by a 12.4 per cent year-on-year growth in capacities.

Meanwhile, aircraft fuel costs surged by 10.3 per cent year-on-year to 146 billion roubles, mainly due to the Group’s enhanced operational development and the subsequent increase in carrying capacity. Nevertheless, excluding fuel, operating costs increased by 18.4 per cent year-on-year to 317 billion roubles.

Expenses related to aircraft ground support and passenger service amounted to 97 billion roubles, a 20.7 per cent increase year-on-year, due primarily to the growth of passenger traffic and increased domestic airport fees.

Staff costs increased by 9.9 per cent year-on-year to 67 billion roubles, mainly due to an increase in the number of flight crews to support the Group’s business growth.

Expenses related to aircraft maintenance increased by 44.6 per cent year-on-year to 24 billion roubles. These expenses were affected by an increase in aircraft servicing, which in turn was due to an increase in flight hours, as well as the depreciation of the ruble and maintaining product quality, says a statement.

As a result of all of these contributing factors, EBITDA amounted to 142 billion roubles while the EBITDA margin was 27 per cent.

Considering all the factors noted above, Aeroflot Group’s net profit for the first nine months of 2019 amounted to 20.3 billion roubles.