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Published on : Wednesday, August 30, 2017
“In the first half of 2017 Aeroflot Group continued its operational growth, with passenger numbers increasing by 16.6% year-on-year to 23.0 million. This growth is driven by increasing demand for air transportation, and respective need for additional passenger capacity. Passenger capacity on international and domestic routes increased by 18.8% and 11.9%, respectively, while the passenger load factor rose 2.0 p.p. year-on-year to 80.6%.
“Group revenue increased by 4.9% to RUB 234.9 billion on the back of our continued strong operational performance, driven by increased passenger traffic. Revenue grew at a slower pace than operational indicators due to exchange rate fluctuations, which affected FX-denominated revenues and led to a decrease in yields on international routes.
“Operating costs also increased along with operational volumes. The strengthening of the ruble in the reporting period had a positive effect on operating costs, unlike in previous reporting periods, when the exchange rate negatively impacted the cost of operating leases, aircraft maintenance and airport tariffs. At a unit cost of RUB 3.08 per seat-kilometre, the Group saved up to 30 kopeks per seat-kilometre, or roughly 10% of CASK. However, a 10% increase in the price of aircraft fuel as a result of higher oil prices meant that Aeroflot Group did not realised all benefits from the strengthening of the ruble. As fuel prices rise, it is particularly important to increase fuel efficiency. The Group has continuously increased its fuel efficiency in recent years, and as a result fuel consumption per available seat-kilometre across Aeroflot Group amounts to 22.8 grams.
“As a result of the strengthening of the ruble and reduction in foreign exchange revenue, combined with higher costs for aircraft fuel (the main factor affecting operating costs), EBITDA decreased to RUB 15.4 billion. The EBITDA margin was 6.6%.
“Despite the reduction in operating profitability, Aeroflot Group’s net income for the reporting period was on a par with last year’s result, at RUB 2.9 billion. This was mainly due to a significant reduction in debt through repayment of loans and borrowings ahead of schedule, as well as savings on non-operating costs.
“We enter the third quarter – traditionally a high season for Russian civil aviation – with favourable conditions: the exchange rate and the fuel prices are at a ‘normalised’ level, and we continue our active demand-oriented revenue-management programme. We are maintaining the pace of operational growth on both foreign and domestic markets, and this allows us to be optimistic about the second half of the year.”