Aeroflot’s net loss almost doubled in the first quarter of 2019

Russia’s largest airline accrued a 16.85 billion roubles net loss, according to local financial standards

Aeroflot, Russia’s national airline, posted a net loss of 16.85 billion roubles (US$265 million) in the first quarter of 2019, according to figures from Russian accounting standards (RAS), which are presented on a non-consolidated basis. Raised jet fuel costs, additional leasing expenditure and maintenance and repair expenses, as well as the effects of the depreciation of the rouble, means the loss is almost double that of the 8.75 billion roubles deficit for the same period a year ago.

The country’s dominant carrier has nevertheless continued its growth path in the first three months of the year, despite the implementation of new cost control measures. Despite this, market factors including changes in foreign exchange rates and jet fuel pricing pressure, significantly affected financial results, says the statement.

In the period, revenue grew by 21.1 per cent year-on-year to 114 billion roubles, an improvement influenced by a 14.3 per cent passenger traffic increase to 8.5 million, following an expansion of the airline’s route network and an increase in flight frequencies to some destinations. At the same time, foreign-denominated revenues rose due to the appreciation of the euro against the rouble by 7.1 per cent year-on-year; and there were positive trend in yields (+5.6 per cent year-on-year) and RASK (+4.6 per cent), due to an increase in capacity and currency effects.

Aeroflot says that macroeconomic developments, as well as factors associated with the development of the company led to a 25.8 per cent rise in the cost of sales to 133 billion roubles.

Overshadowing all of this, the main first-quarter 2019 increase in costs was the imposition of rising jet fuel expenses, which rose to 6,199 million roubles (up 24.5 per cent year-on-year) due largely to, among other factors, a 10.4 per cent year-on-year increase in rouble prices for fuel. Despite a 5.4 per cent decrease in the Brent oil price, the increase in jet fuel prices was also driven by a 16 per cent depreciation of the rouble against the dollar.

During the first quarter, leasing and aircraft and engine maintenance costs increased in line with the expansion of Aeroflot’s fleet and its operating leases for 21 aircraft made available during the last 12 months.

Increased costs are also attributed to an increase in ground service expenditure, added costs for air navigation services and, following an increase in traffic and tariffs charged by Russian airports, higher landing and parking fees.