Aeroflot Announces Results of Board of Directors Meeting

26 April 2018

Moscow, 26 April 2018 – PJSC Aeroflot (Moscow Exchange ticker: MOEX) announces the results of a meeting of its Board of Directors held on 26 April 2018. The meeting was chaired by Mikhail Poluboyarinov.

The meeting agenda included the following items:

Update of Aeroflot Group’s consolidated budget for 2018 in accordance with IFRS

In 2018, growth of all key operational indicators is expected. To achieve Aeroflot Group’s strategic targets and support sustainable growth, the 2018 investment programme was optimised. The following documents were approved:

  • PJSC Aeroflot’s budget for 2018 in accordance with IFRS, including the Sponsorship Fund and Charity Fund;
  • Aeroflot Group’s consolidated plan in accordance with IFRS for 2018;
  • The investment programmes of PJSC Aeroflot and Aeroflot Group for 2018.

PJSC Aeroflot’s incentive system.

The list, weight and targets of KPIs for Aeroflot Group’s Long-term Development Programme and PJSC Aeroflot’s CEO for 2018 were approved. KPI targets were revised in line with Aeroflot Group’s updated budget for 2018.

Implementation of Aeroflot Group’s Long-term Development Programme in 2017 (including audit results).

The Report on Implementation of Aeroflot Group’s Long-Term Development Programme and Meeting Key KPIs in 2017, including information about implementation of key initiatives to achieve the Group’s strategic goals, was approved. Initiatives include the Group’s development as a multi-brand platform, development of the route network, fleet, operational assets, an increase in labour productivity, among others. According to the auditor, Aeroflot Group’s Long-Term Development Programme initiatives are being implemented in line with the principles in the Guidelines, directives and instructions of the Russian government; KPIs are met as a result of implementing key programmes and efficient operational management.

Review of findings and summary by the Revision Commission for 2017.

The summary says there was no evidence that could give rise to any doubts regarding the accuracy of the Company’s financial statements as of 31 December 2017. It concludes that the Company fully implemented all decisions approved by the General Meeting of shareholders held in June 2017.

PJSC Aeroflot’s annual report for FY 2017.

The report highlights that in 2017 Aeroflot Group achieved strong operational results, including passenger traffic of 50 mln and a passenger load factor of 82.8%. The results are reflected in positive assessments from the expert community. Aeroflot reconfirmed its role as the Russian flag carrier and the backbone of Russian commercial aviation. Key 2017 milestones included further development of the Group’s airlines, and development of IT infrastructure, the route network and Aeroflot’s modern fleet. Despite pressure from external economic factors, the Group posted a net profit of RUB 23.1 bln. It was decided to preliminarily approve the report and recommend that the upcoming Annual General Meeting of PJSC Aeroflot’s shareholders be held on June 25 2018 to approve the annual report of PJSC Aeroflot for 2017.

Aeroflot’s procurement activities in 2017.

In 2017, the share of non-competitive procurements continued to decline, which reflects Aeroflot’s steps to prioritise competitive procurement procedures. In 2017, the share of competitive tenders held online was 61%, which complies with the requirement established by the government. Aeroflot works closely with SMEs through the SME Corporation. The share of procurements from SMEs in 2017 was 89%, one of the highest levels among large federal-level customers.

Review of the Internal Audit Department report for 2017.

The Internal Audit Department completed all of the activities it had planned for 2017. The Department’s plan called for 62 audit activities. When conducting audits, the Internal Audit Department is governed by the Code of Ethics for Internal Auditors and international guidelines for professional standards of internal audit.

On the results of implementation of the Innovative Development Programme in 2017.

Aeroflot successfully financed and fulfilled the main targets and projects planned for 2017 as a part of Aeroflot Group's Innovative Development Programme. The key targets of the Group's Innovative Development Programme were fulfilled in accordance with the plan or ahead of targets. There share of digital technology projects is substantial. A medium-term plan for the implementation of the Innovative Development Programme for 2018-2020 was developed. It provides for the implementation of 16 innovative projects and 42 research and development initiatives for PJSC Aeroflot alone. The foundation for successful implementation of the Innovative Development Programme in 2018 was laid.

Charitable and sponsorship initiatives.

Among the main recipients of Aeroflot’s charitable support in 2017 were sponsored foster homes (Pokrovsky foster home and St. Sergius boarding school). Sponsorship support prioritises sports competitions and organisations, culture and entertainment as well as educational projects on Russian TV channels, national and international infrastructure projects, events conducted on behalf of the Russian Government, international events in the fields of culture, science and education to popularise civil aviation, Russian culture, sports and tourism. It is recognised that in 2017 charity and sponsorship funds allocated their resources in accordance with plans approved by management as well as provisions approved by the Board of Directors regarding the procedure of development and use of these funds.