Aeroflot’s financials outperform pre-pandemic results

:: Aeroflot

Aeroflot continues to improve its earnings metrics – an indicator, which is so crucial in the new environment. The Group’s overall financial performance is on the rise year-on-year, but on top of that, it has climbed above the benchmark pre-pandemic levels. In particular, for the first time in its history Aeroflot posted net profit of 1.1 billion roubles for Q1 – the traditional loss-making period of the year. The figures are cited in the group’s IFRS (International Financial Reporting Standards) consolidated financial statement.

Having capitalized on the market opportunities, Aeroflot Group, despite the traditionally low winter season, expanded its available seat capacities by 27.9 per cent and generated additional 21.7 per cent traffic. Its RPKs improved by 30.9 per cent year on year, as the international route network was considerably expanded, while domestic traffic for the season hit a new record.

The improved operational performance fostered an impressive 54.3 per cent growth of consolidated revenues, which hit 173.6 billion roubles. The EBITDA doubled compared to Q1 2023 to 59.4 billion roubles.

The climbing revenues catered for the uptick in fuel costs, which have reached the historic maximum of 85,100 roubles per ton, as well as the soaring MRO costs, as well as offset other costs sensitive to inflation. The rigorous cost control has helped in the general improvement of financial performance.

As a result, the traditionally low Q1 has generated net profits of 1.1 billion roubles – compared to 46.5 billion rouble loss in Q1 2023, and 15.7 rouble loss in Q1 of the pre-pandemic 2019.

OPERATIONAL PERFORMANCE

In Q1, Aeroflot Group’s three airlines – Aeroflot, Rossiya and LCC Pobeda – collectively carried 11.5 million passengers, up 21.7 per cent year on year. The domestic traffic grew 14.9 per cent to 8.6 million passengers, whilst international increased by 47.9 per cent to 2.9 million passengers. Seat load factor improved 2.1 percentage points to 88.3 per cent. On domestic flights the indicator reached 90.4 per cent having climbed 2.2 percentage points.

REVENUES

The Group’s total revenue in Q1 increased by 54.3 per cent reaching 173.6 billion roubles, including 160 billion roubles from scheduled domestic operations (up 55.5 per cent, due primarily to traffic growth). Revenue from cargo operations increased 25.2 per cent to 6.8 billion roubles.

OPERATIONAL COSTS

Operational costs for Q1 increased by 21.2 per cent year-on-year, reaching 142.8 billion roubles. Growth of the key expenditures – including fuel, airport costs and aircraft maintenance – was attributed primarily to increase in the number of flights, as well as changes in providers’ pricing policies.

Aviation fuel costs spiked 54.9 per cent year-on-year, to 65.8 billion roubles, contributed by 21.2 per cent growth of the fuel prices and partially offset by fuel buffer compensations.

With fuel costs not factored in, operational expenditures increased by mere 2.2 per cent. Aircraft and passenger handling costs increased by 39.6 per cent to 31.6 billion roubles, due both to increase in the traffic numbers and airport fares.

Aircraft maintenance, repair and overhaul (MRO) costs increased 2.9 times to 9.6 billion roubles. To a certain extent, this growth is explained by the low base of Q1 2023, when complete rearrangement of logistics resulted in less expenditures compared to normal level. On the other hand, the cost of part and components has significantly increased. Despite this unprecedented growth, Aeroflot Group emphasizes that providing continued airworthiness of its aircraft fleet and ensuring flight safety remains its core and absolute priority, and all necessary MRO procedures are continuously performed at due intervals and in due volumes, regardless of costs.

The resulting Q1 EBITDA stabilized at 59.4 billion roubles.

PROFITS

For Q1 Aeroflot Group posted 1.1 billion rouble net profits against 46.5 billion rouble loss for the same period last year. The net profit includes the effect of negative currency revaluation of the leasing payments in the amount of 10.7 billion roubles, as well as a positive one-off net effect of insurance settlement for aircraft, in the amount of 4.0 billion roubles. The adjusted net profits amount to 6.5 billion roubles, compared to adjusted loss of 13 billion roubles for Q1 2023.

DEBT LEVERAGE

Total debt as per March 31 reduced by 0.9 per cent to 741.4 billion roubles. The size of credits and loans decreased by 9.7 per cent, the amount of bank debt and bond debt reduced by 12.1 per cent.