Aeroflot posts first full year profit since pandemic

: Aeroflot

Aeroflot Group has reported strong FY2024 results in accordance with International Financial Reporting Standards (IFRS), showing:

• 40.0 per cent improvement of revenues, reaching 856.8 billion roubles
• 18.4 per cent uptick in adjusted EBITDA, to 237.6 billion roubles
• Net profit of 55.0 billion roubles against net loss of 14.0 billion roubles for FY2023

Last year Russia’s largest airline group, comprising flag-carrier Aeroflot, Rossiya Airlines and LCC Pobeda, achieved a substantial improvement of both operational and financial performance, posting net profit for the FY 2024 for the first time since the pre-pandemic 2019. The group has managed to adjust its business-model first to the pandemic and then to the geopolitical constraints by expanding its domestic offer and capitalizing on all available international destinations.

The positive operational performance trends are the fundamental factor behind the financial growth. For the entire year 2024 the Group’s airlines carried 55.3 million passengers, up 16.8 per cent year-on-year and surpassing the pre-pandemic 2019 traffic (international transit traffic not factored in). The rise in traffic numbers as well as further improvement of operational efficiency – primarily, through higher seat load factor, while exercising strict cost control, made a definitive contribution to improving profitability.

Notably, over the last two years traffic increased by almost 15 million passengers, which provided the necessary scale effect to offset the growing expenses.

“Generating tangible net profit and maintaining it in the face of rising costs of kerosine, airport fees and labor costs is vital, it is precondition for capital-intensive model for providing the necessary capacities for the air travel market in Russia,” Andrey Chikhanchin, Aeroflot’s first deputy director general for commerce and finance comments.

The Group’s revenues increased 40.0 per cent compared to 2023 and reached 856.8 billion roubles. The main contributor to the improvement was the revenue from scheduled passenger service, which increased 41.5 per cent to 797.8 billion roubles, while cargo revenue went up 37.4 per cent.

Expansion of the flight program and 18.0 per cent capacity increase resulted in 27.3 per cent increase or operational costs, which reached 745.5 billion roubles. Increase was registered across the entire cost structure, including fuel, airport fees, labor and maintenance, driven by the increase in the number of flights, as well as the increasing costs of products and services from suppliers.

Fuel expenses spiked 38.6 per cent reaching 303.9 billion roubles. The price of one ton of kerosene increased by 15.0 per cent.

Costs of aircraft and passenger services at airports increased by 32.2 per cent to 149.2 million roubles due to expanded flight program as well as growing airport fees.

Staff incentives, work conditions improvement initiatives and increase in the number of flights resulted in 28.9 per cent increase in labor costs, amounting to 99.9 billion roubles.

The Group continues to dedicate major attention to continued airworthiness of its aircraft fleet to increase its fleet utilization. As a result of these efforts, the cumulative total flight time exceeded 1 million hours last year, a 15.1 per cent year-on-year increase.

Maintaining fleet in peak condition has required considerable investments. The MRO costs were up 2.4 times on the previous year, having hit 57.1 billion roubles. Such increase is partly explained by the low base of 2023, when the new logistic chains of component supplies were just being created, but also by the significant increase in the prices of parts and components.

However, ensuring continued airworthiness and flight safety remains Aeroflot’s key and unconditional priority. The Group has emphasized that the maintenance will continue to be performed regardless of costs.

The EBITDA in 2024 reached 214.1 billion roubles. Adjusted against the insurance settlement with the foreign lessors, as well as creation of provisions for the anticipated credit losses, and other non-recurring effects, the EBITDA resulted 237.6 billion roubles.

For FY2024 Aeroflot Group posted net profit of 55.0 billion roubles, against 14.0 billion rouble loss in 2023. It includes the effect of negative currency revaluation and other effects.

Total bank debt and obligations reduced by 49.3 per cent to 44.7 billion roubles. At the same time Aeroflot’s credit ratings improved – Expert RA agency improved its rating to ruAA with a steady forecast (this rating was first assigned in November and later revalidated). In July Aeroflot was rated by AKRA agency for the first time, which also awarded AA(RU) rating with a steady forecast.