Aeroflot announces 1Q 2018 RAS financial results
03 May 2018
Moscow, 3 May 2018 – PJSC Aeroflot (Moscow Exchange ticker: AFLT) today publishes its financial results for the first quarter of 2018 in accordance with Russian Accounting Standards (RAS). RAS results are presented on a non-consolidated basis.
Key results for 1Q 2018
|million RUB ||1 Q 2018||1 Q 2017 |
|Cost of sales||(105,789)||(89,808) |
|Gross loss||(11,594)||(2,029) |
|Net loss||(8,750)||(4,704) |
Comments on 1Q 2018 RAS financial results
- Revenue was RUB 94,195 million, an increase of 7.3% year-on-year, due to growth of Aeroflot airline’s operational indicators, including RPKs, which increased by 4.6% to 21.0 billion passenger-kilometres, and passenger numbers, which increased by 5.4% to 7.4 million. Another factor contributing to higher revenue was positive trends in terms of yields and passenger revenue per available seat-kilometre.
- Yields continued to improve. Against a backdrop of decreasing pressure on Aeroflot airline’s yields during 2017 (in 2017 yields decreased by 5.5% year-on-year; in 4Q 2017 the decrease amounted to 1.5%), growth resumed in 2018, supported by FX factors and dynamics of major currencies in particular (the euro appreciated against the rouble by 11.8%, while the US dollar depreciated against the rouble by 3.1%).
- In 1Q 2018, Aeroflot airline’s yields increased by 4.5% year-on-year.
- Cost of sales was RUB 105,789 million, up 17.8% year-on-year. The increase in costs is due to the growth of the Company in line with its strategy and corresponding increase in capacity – in 1Q 2018 capacity and the number of flights operated by Aeroflot airline increased by 6.3% and 8.5% year-on-year, respectively.
- Leasing and maintenance expenses represented the most significant increase as a result of an expansion of the fleet of Aeroflot airline by 41 aircraft over the past 12 months.
- Fuel remains the Company’s biggest expense, and contributed significantly to an overall increase in operating expenses. Fuel expenses increased by RUB 4,857 million in monetary terms (up 23.8% year-on-year), as a result of a 17.0% increase in the cost of kerosene against the backdrop of a significant growth in the price of Brent crude (average price in US dollars per barrel increased in 1Q 2018 by 23.1%; at the same time the appreciation of the rouble against the dollar was relatively insignificant compared to the same period last year).
- An increase in salaries for captains, aimed at improving the attractiveness of the Company’s employment terms, led to an increase in staff costs.
- Other expenses that increased were customer service and ground service at airports.
- Cost-control measures enabled the company to limit SG&A growth to a modest 7.1% year-on-year.
- There were no interest expenses, as a result of pre-term repayment of loans and borrowings (in 1Q 2017 interest expenses amounted to RUB 402 million).
- The balance of other income and expenses in 1Q 2018 increased, reflecting the sale of three aircraft operated under financial lease agreements.
- 1Q is traditionally the industry’s lowest season. This explains the Company’s net loss, which was additionally affected by a number of market factors amid improving yield dynamics. The RUB 8,750 million net loss therefore reflects the seasonality of the Russian market as well as the influence of the specific factors described above. The Company and the Group plan to continue active revenue and cost management.