UTair Aviation posts $38 million loss in Q3

Photo by UTair

UTair Aviation has reported a net loss of 2.482 billion rubles ($38 million at the current exchange rate) for the third quarter of 2015, compared to a revenue of 9.2 million rubles for the same period last year, as follows from the carrier’s financial report based on the Russian Accounting Standards. UTair has managed to significantly reduce the extent of its loss since the beginning of 2015: it amounted to 22.301 billion rubles at the end of the first quarter and 3.505 billion rubles at the end of the second quarter. This could be both due to the carrier’s successful cost optimization policy and thanks to great traffic volumes in the spring and summer.

UTair ran into losses by accumulating excessive capacity on the back of the weakening ruble and the decrease in demand for air travel. In order to come out of the crisis, the airline resorted to radical fleet cutting measures: since October 2014, UTair’s fleet has shrunk from 115 to 63 aircraft (-45.2%).

The carrier has also laid off 42.6% of personnel over the past year, from 6,498 to 3,729 people, cutting the total gross payroll payments from 5.478 billion to 2.825 billion rubles (-48.4%). Labor efficiency grew by 32.1%thanks to the personnel cuts, but the airline’s revenue shrank from 54.939 billion to 38.586 billion rubles (-29.8%).

Since last September, UTair’s long-term borrowings have decreased from 27.577 billion to 11.364 billion rubles (-58.8%), while its short-term borrowings have grown from 46.544 billion to 73.181 billion rubles (+57.2%). Total payables also grew, from 16.517 billion to 31.251 billion rubles (+89.2%).

As of late September, when Transaero Airlines ceased operations, UTair ranked Russia’s fourth largest carrier for passenger traffic. The airline had seen its passenger numbers drop 37.8% year-on-year, from 6.9 million to 4.3 million people.

Commenting on the company’s performance for the first eight months of 2015, a UTair representative has stressed that other Russian carriers are also experiencing difficulties, and that its performance has been no worse than that of the other market players.