Aeroflot announces Q3 and 9M 2019 RAS financial results

31 October 2019

Moscow, 31 October 2019 – PJSC Aeroflot (“the Company”, Moscow Exchange ticker: AFLT) today announces its financial results for the third quarter and first nine months of 2019 in accordance with Russian Accounting Standards (RAS). RAS results are presented on a non-consolidated basis.

Key results in accordance with RAS, RUB million

Q3 2018Q3 2019Change9M 20189M 2019Change
Cost of sales134,559143,0166.3%362,946412,37213.6%
Gross income27,62526,284(4.9)%18,3959,791(46.8)%
Net income22,80921,367(6.3)%15,6267,246(53.6)%

Comments on Q3 and 9M 2019 RAS financial results

  • In the first nine months of 2019, growth at the Company continued to be accompanied by strict cost control. Market factors, including changes in FX rates, significantly affected financial results year-on-year.
  • Revenue for 9M 2019 was RUB 422,163 million, up 10.7% year-on-year. Revenue was affected by growth in Company’s operations and FX dynamics (in 9M 2019 euro depreciated against the ruble by 0.4% year-on-year, US dollar appreciated vs. the ruble by 5.8%).
    • Passenger turnover increased by 5.6% to 77.6 billion RPKs in 9M 2019 year-on-year. Passenger traffic increased by 6.2% to 28.4 million following an expansion of the route network and an increase in flight frequencies to popular destinations.
    • Active capacity management resulted in continuing positive trend in yield (+3.1% year-on-year in 9M 2019) and RASK (+1.3%) notwithstanding high base of 9M 2018 due to stronger demand in June and July backed by world football championship in Russia. Currency effect constrained growth of yields in 9M 2019.
  • Cost of sales in 9M 2019 was RUB 412,372 million, up 13.6% year-on-year. Apart from objective factors associated with the development of the Company the cost of sales continued to be affected by macroeconomic and sector-specific factors.
    • In 9M 2019 the main increase in costs was driven by rising ground service costs, costs for air navigation services and airport charges. Costs related to this line grew by RUB 11,242 million (+25.3% year-on-year) following an increase in traffic and tariffs charged by Russian airports.
    • Total fuel expenses rose by RUB 6,482 million (up 7.0% year-on-year), due to 9.5% year-on-year increase in flight hours and 1.0% year-on-year decrease in ruble prices for fuel. Decrease in Company’s average price of jet fuel year-on-year has been recorded on a monthly basis since June 2019 amid oil price and FX rates dynamics. Yet overall jet fuel prices still remain elevated.
    • Aircraft and engine maintenance costs increased due higher number of maintenance procedures including regular repairs and heavy maintenance in accordance with the existing schedules as well as increase in volume of operations and US dollar dynamics vs. ruble in the period.
  • The Company continued to implement optimization measures which allowed to mitigate the growth rate of selling costs and administrative costs, which grew by 6.9% and 4.2% year-on-year in 9M 2019, respectively – a significantly lower growth rate than that of revenue and total cost.
  • It is important to underline significant contribution of Q3 2019 results in 9M 2019 figures: quarterly financial results are commensurate to those achieved in Q3 2018.
    • Revenue in Q3 2019 amounted to RUB 169,300 million, up 4.4% year-on-year. Revenue dynamics was impacted by euro depreciating 5.8% against the ruble in Q3 2019 year-on-year alongside with growth of operating indicators. Euro depreciation and high base effect of July 2018 constrained growth of yield to 2.6% in Q3 2019 year-on-year.
    • Q3 2019 cost of sales increased by 6.3% year-on-year in line with revenue growth. Fuel expenses decrease by 6.1% year-on-year alongside lease expenses declining by 7.2% year-on-year positively contributed to cost of sales dynamics in the third quarter.
    • Resulting PJSC Aeroflot gross income stabilized in Q3 2019 at RUB 26,284 million (-4.9% year-on-year).
    • The Company constrained growth of selling costs in Q3 2019 to 0.8% year-on-year, administrative costs decreased by 7.6% year-on-year.
    • As a result of the aforementioned factors Q3 2019 net income of RUB 21,367 million contributed to positive financial result of 9M 2019 which amounted to RUB 7,246 million.
  • The Company will continue to exercise active revenue management and pursue further cost control taking into account current macro trends and situation in air transportation market.