Moscow, 29 May 2018 — PJSC Aeroflot (Moscow Exchange ticker: MOEX) announces the results of a meeting of its Board of Directors held on 29 May 2018. The meeting was chaired by Mikhail Poluboyarinov.
The meeting agenda included the following items.
Implementation of Aeroflot Group’s strategy. The active growth of the Russian aviation market, as well as a significant improvement in recent years of indicators across the global industry as a whole, make it possible to look at the forecast for 2023 to the upside. Aeroflot Group achieved a number of goals in its Strategy 2025 ahead of time, including becoming a top-five European carrier and among the global top 20. The Group ranks among the world’s 20 largest carriers by passenger numbers, and among the top five European carriers (excluding low-costers) by revenue and passenger numbers. It was deemed appropriate to set the Group more ambitious strategic goals in terms of passenger numbers. Key drivers were defined as Europe-Asia transit traffic, as well as low cost flights (Pobeda Airlines). Aeroflot Group will become a global aviation leader and will significantly increase people’s mobility in Russia. A resolution was adopted to draft a new strategy to achieve the updated goals and submit the strategy for consideration to the Board of Directors.
Development of service across Aeroflot Group. Aeroflot continues to achieve global recognition for its service, and the Group’s airlines remain the leaders of Russian ratings and awards. In 2017 Aeroflot implemented a number of measures to improve service quality. Innovations of significant importance were made to improve food and the drinks assortment on board aircraft; the appearance of dishes designed by the Imperial Porcelain Factory attracted attention, as did the introduction of service items with Aeroflot’s 95th-anniversary livery. Measures for 2018 include introduction of individual product items with a football theme to mark the holding in Russia of the football World Cup, as well as work to provide internet access and streaming entertainment systems on Airbus A320 family aircraft. Steps taken at Aeroflot’s hub airport of Sheremetyevo include improving the quality of service for passengers with short transfer times, as well as speeding up pre-flight procedures (queue management). In particular in 2018 it is planned to introduce an interactive map of Sheremetyevo. Measures have been taken to streamline rules for hand baggage and hold luggage, with the aim of improving service quality and passenger loyalty. Particular attention is being devoted to handling of customer feedback. Aeroflot continues to roll out its product at main points of contact with the client, with the focus on digitalisation. A number of measures to further support Aeroflot’s Skytrax 4-Star Airline rating were discussed.
Non-aviation revenue of Aeroflot Group. In 2017 Aeroflot introduced a number of initiatives to develop ancillary revenues. These revenue streams are continuing to increase steadily both in volume terms and as a share of Group revenue. Aeroflot plans to work on stimulating non-aviation revenue and intends to achieve further growth, primarily by developing services already offered by PJSC Aeroflot.
Investor relations. In 1Q 2018 Aeroflot’s share price rose faster than the index of global airlines. The main factor driving the share price was positive perceptions in the market of Aeroflot Group’s IFRS financial results for 4Q 2017. During 1Q 2018 active work with the investment community continued; the number of meetings held with investors was at the level of the same period in the previous year. As part of the discussion of this issue the investment cases of a number of leading global airlines and key business factors impacting their share-price dynamics were considered.
Distribution of profit, including payment (declaration) of dividends, and losses of the Company based on the results of the 2017 financial year, and the size, timing and form of payment of dividends on shares of PJSC Aeroflot for the 2017 financial year. Net profit for 2017 was distributed in full. According to the adopted resolution, the amount of dividends paid for 2017 was calculated at the level of 50% of net profit of PJSC Aeroflot under Russian Accounting Standards, or RUB 14,221.7 million. The dividend per share of PJSC Aeroflot is RUB 12.8053; payment will be made as stipulated by law by 10 August 2018.
Payment of remuneration to members of the Board of Directors, Committees of the Board of Directors and Revision Committee. It was resolved to approve and to recommend for approval by the Annual General Meeting of shareholders of PJSC Aeroflot (AGM) scheduled for 25 June 2018 remuneration for members of the Board of Directors of PJSC Aeroflot in line with the Regulations of PJSC Aeroflot on Remuneration and Compensation Paid to Members of the Board of Directors. It was also resolved to approve and recommend to the AGM for approval the amount of remuneration for members of the Revision Committee of PJSC Aeroflot.
Motivation system at PJSC Aeroflot. A new edition of the Regulations on Key Performance Indicators (KPIs) of PJSC Aeroflot was approved. The regulations call for the introduction of individual functional KPIs for senior managers in order to increase the operational efficiency of production processes and to increase the level of personal responsibility for implementing relevant functional indicators.
Consideration of conclusions of the Audit Committee of the Board of Directors for 2017. The Committee reviewed the Annual Report on the results of PJSC Aeroflot’s economic activity for 2017, as well as the conclusions of the Company’s Auditor and the Revision Committee, presented as part of the Annual Report for 2017. The Committee recommends that the Board of Directors and AGM approve the results of financial activity for 2017 presented by the Company. Based on the presented and other available information there were no instances of corrupt activity by members of the Company’s management or members of the Board of Directors during the reporting period.
Major related-party transaction (series of related transactions) for operational leasing of 50 new MC-21-300 aircraft. The Board of Directors considered the material conditions of the transaction and proposed (recommended) that the AGM approve it. Leasing company Aviacapital Service, a subsidiary of State Corporation Rostec, will act as the lessor. The planned delivery schedule to the lessee, PJSC Aeroflot, of new Russian-built passenger aircraft will run from 1Q 2020 to 3Q 2026 (delivery schedule subject to amendment/prolongation). The lease period for each aircraft will be 12 years with the option of prolongation for two years no more than three times.
Work of the Board of Directors and Committees of the Board of Directors of PJSC Aeroflot. A report was heard on the work of the Board of Directors and Committees of the Board in 2017.
Preparation for the AGM. Resolutions were adopted concerning a number of issues in preparation for the AGM on 25 June 2018, including approval of the agenda, compiled based on proposals submitted by shareholders by 12 March 2018 and the Board of Directors.
Innovative development at PJSC Aeroflot. In line with the Directive of the Government of the Russian Federation, Aeroflot must ensure technological development and key performance indicators at an appropriate level vis-à-vis the indicators of leading foreign peers. The Board of Directors approved a resolution to send the results of work to ensure an appropriate level of technological development and proposals for amending Aeroflot Group’s Innovative Development Programme and Long-Term Development Programme to the Ministry of Economic Development and Ministry of Transport by 1 November 2018.