Fitch Downgrades Aeroflot's Long-term Credit Rating

17 April 2020

Moscow, 17 April 2020 – Fitch Ratings has downgraded PJSC Aeroflot’s long-term issuer default rating to “BB-” from “BB” maintaining “negative” outlook.

Fitch noted that the downgrade reflects the impact of COVID-19 on the Company's metrics in 2020, as a significant reduction in the flight program is expected following the results of the year. The agency noted Aeroflot’s effort in managing liquidity. In particular, the agency assumes “Aeroflot will reduce operating expenses and manage working capital outflows”. This includes working with lessors to restructure payments.

According to Fitch Ratings’ opinion Aeroflot's strength which differentiates the Company from the European peers in the current situation is “a significant share of revenue being generated in the domestic market”, which the agency anticipates “to recover quicker than international flights”. The agency notes that “the airline is important for developing connectivity among various regions in Russia” and expects that “tangible state support for Aeroflot to be forthcoming, if needed”.

Andrey Chikhanchin, Aeroflot’s Deputy CEO for Commerce and Finance, said:

“The Company's downgrade is in line with previous decisions made by rating agencies regarding the sector in general and specific airlines in particular, reflecting the extremely difficult situation in the global aviation industry. Notably, the ratings of US and European companies, as well as budget airlines that traditionally have higher financial stability, were lowered. We continue to work actively to maintain liquidity and reduce costs and expect active domestic market recovery”.