Moscow, 10March2021 – Aeroflot Group (“the Group”, Moscow Exchange ticker: AFLT) today publishes its consolidated financial statements for the year ended 31 December 2020, in accordance with International Financial Reporting Standards.
Key financial highlights:
Andrey Chikhanchin, PJSC Aeroflot Deputy CEO for Commerce and Finance, said:
“In Q4 2020 Aeroflot Group carried 7.1 million passengers, including 6.3 million passengers on domestic routes. This is slightly below the level achieved in Q3, which reflects the adjustment of Group's capacity on the back of seasonal decrease in demand and the impact of second wave of the pandemic. Thanks to positive dynamics and scale of the domestic market, Aeroflot Group in the second half of the year was able to recover about half of the capacity, which ranks as the best result among European airlines, according to a study by CAPA analytical agency. However, the persistence of large-scale restrictions on international flights and closed borders due to the pandemic are significant negative factors that continue to have a decisive impact on the aviation industry in general and on Aeroflot Group in particular.
“Revenue in Q4 2020 amounted to RUB 68.0 billion, 55.8% less year-on-year. Revenue management efforts as well as maintaining an emphasis on cargo transportation helped to slightly slow down decrease of revenue compared to Q3 when it amounted to 60.1% year-on-year. We continued to cut costs, with all key cost lines showing reductions, which helped to contain mounting losses.
“As anticipated net loss in Q4 2020 increased and amounted to RUB 43.8 billion. This reflects the specifics of supply-demand balance in the low season, and consequently lower yields, as well as a number of one-off adjustments, including Rossiya airline goodwill write-off due to a decrease in forecasts on the back of the pandemic. Excluding these adjustments, the net loss amounted to RUB 32.9 billion. Despite the loss, taking into account current operational and economic challenges of air transportation sector and executed flight program, operations of Q4 are financially efficient.
“Outstanding achievements of Pobeda airline are noteworthy at it increased passenger traffic by 7.6% in second half of the year. Despite complete suspension of operations in April and May, as well as decrease in average fares aimed at stimulating demand, the company was profitable on annual accounts. Pobeda is already a large company, there were 34 aircraft in its fleet at the end of 2020. Given the scale of the crisis, when the global industry incurred losses in the amount of USD 118 billion, this result is extremely strong.
“In 2020, Aeroflot Group secured necessary liquidity resources, including funds from secondary public offering in the amount of RUB 80 billion and credit lines in the amount of RUB 70 billion secured by state guarantees, which made it possible to regularly fulfill Group’s obligations.
“The low winter season of the first quarter continues. There are some minor improvements in operating performance, load factors and bookings, but overall the situation remains difficult. In this regard, we maintain a conservative approach to capacity deployment in addition to its seasonal decline.
We continue to look to the future while implementing anti-crisis measures. The transformation of Aeroflot Group has begun: work is underway on intra-group transfer of the fleet, subsidiaries are opening flights on new routes. In the summer season, Pobeda Airlines starts flights from our main hub – Moscow Sheremetyevo Airport. All these changes are aimed at long-term improvement of the efficiency of Aeroflot Group, but we are confident that these steps will have a positive impact on the performance of the current year as well.”
Key operating highlights
| Q4 2020 | Q4 2019 | Change | 12M2020 | 12M2019 | Change | |
| Passengers carried, thousand PAX | 7,100 | 13,990 | (49.2%) | 30,157 | 60,719 | (50.3%) |
| - international | 799 | 6,161 | (87.0%) | 5,984 | 27,118 | (77.9%) |
| - domestic | 6,301 | 7,830 | (19.5%) | 24,172 | 33,601 | (28.1%) |
| Revenue Passenger Kilometres, million | 14,282 | 35,985 | (60.3%) | 68,014 | 156,253 | (56.5%) |
| - international | 2,520 | 21,191 | (88.1%) | 21,150 | 91,401 | (76.9%) |
| - domestic | 11,762 | 14,793 | (20.5%) | 46,863 | 64,852 | (27.7%) |
| Available Seat Kilometres, million | 19,140 | 45,476 | (57.9%) | 92,402 | 190,856 | (51.6%) |
| - international | 3,701 | 27,433 | (86.5%) | 30,039 | 113,766 | (73.6%) |
| - domestic | 15,438 | 18,042 | (14.4%) | 62,363 | 77,089 | (19.1%) |
| Passenger load factor, % | 74.6% | 79.1% | (4.5 p.p.) | 73.6% | 81.9% | (8.3 p.p.) |
| - international | 68.1% | 77.2% | (9.2 p.p.) | 70.4% | 80.3% | (9.9 p.p.) |
| - domestic | 76.2% | 82.0% | (5.8 p.p.) | 75.1% | 84.1% | (9.0 p.p.) |
In 12M 2020, Aeroflot Group carried 30.2 million passengers, 50.3% down year-on-year. The operating results of 12M of 2020 were affected by the dynamics of demand and significant flight restrictions imposed amid the spread of the novel coronavirus infection. The international segment was hit hardest, following the shutdown of international air travel in March. Suspension of scheduled international flights and quarantine restrictions in Russia influenced the decline in traffic indicators. In Q3 and Q4, domestic traffic showed a significant recovery, and in the international segment flights were resumed to a number of destinations, however, in general, international traffic remained significantly limited. In Q4 the impact of the pandemic on airlines complemented the seasonal decline in demand.
Key financial highlights
| RUB million unless stated otherwise | Q4 2020 | Q4 2019 | Change | 12M2020 | 12M2019 | Change |
| Revenue | 67,969 | 153,898 | (55.8%) | 302,182 | 677,881 | (55.4%) |
| EBITDA | (4,191) | 27,249 | – | 26,989 | 168,924 | (84.0%) |
| EBITDA margin | – | 17.7% | – | 8.9% | 24.9% | (16.0 p.p.) |
| (Loss) / profit for the period | (43,802) | (6,793) | 6.4х | (123,208) | 13,512 | – |
| Adjusted (loss) / profit for the period[1] | (32,856) | (8,348) | 3.9х | (113,135) | 11,957 | – |
Revenue
| RUB million unless stated otherwise | Q4 2020 | Q4 2019 | Change | 12M2020 | 12M2019 | Change |
| Passenger traffic revenue | 50,133 | 132,536 | (62.2%) | 243,708 | 594,570 | (59.0%) |
| - scheduled passenger flights | 46,398 | 125,951 | (63.2%) | 225,753 | 557,132 | (59.5%) |
| - charter passenger flights | 3,735 | 6,585 | (43.3%) | 17,955 | 37,438 | (52.0%) |
| Cargo flight revenue | 9,635 | 5,669 | 70.0% | 26,768 | 19,282 | 38.8% |
| Other revenue | 8,201 | 15,693 | (47.7%) | 31,706 | 64,029 | (50.5%) |
| Total revenue | 67,969 | 153,898 | (55.8%) | 302,182 | 677,881 | (55.4%) |
In 12M 2020, Aeroflot Group’s revenue decreased by 55.4% year-on-year to RUB 302,182 million.
Revenue from scheduled passenger flights decreased by 59.5% year-on-year to RUB 225,753 million, due to a decrease in passenger traffic as a result of the COVID-19 pandemic.
Cargo revenue rose by 38.8%, to RUB 26,768 million year-on-year as the Company reoriented some of its wide-body aircraft to carry cargo and mail in the baggage compartment as well as in the cabin.
Other revenue decreased by 50.5% year-on-year to RUB 31,706 million.
Operating costs
| RUB million unless stated otherwise | Q4 2020 | Q4 2019 | Change | 12M2020 | 12M2019 | Change |
| Depreciation, amortisation and customs duties | 31,207 | 28,281 | 10.3% | 119,142 | 108,261 | 10.1% |
| Staff costs | 15,091 | 25,554 | (40.9%) | 65,445 | 92,413 | (29.2%) |
| Aircraft servicing and passenger services | 14,783 | 30,347 | (51.3%) | 63,623 | 127,240 | (50.0%) |
| Aircraft maintenance | 8,809 | 6,624 | 33.0% | 29,056 | 30,566 | (4.9%) |
| Selling, general and administrative expenses | 5,423 | 8,926 | (39.2%) | 20,578 | 31,407 | (34.5%) |
| Other net expenses | 12,603 | 9,891 | 27.4% | 19,034 | 36,455 | (47.8%) |
| Operating costs less aircraft fuel | 87,916 | 109,623 | (19.8%) | 316,878 | 426,342 | (25.7%) |
| Aircraft fuel | 15,451 | 45,307 | (65.9%) | 77,457 | 190,876 | (59.4%) |
| Total operating costs | 103,367 | 154,930 | (33.3%) | 394,335 | 617,218 | (36.1%) |
In 12M 2020, operating costs decreased by 36.1% to RUB 394,335 million, primarily due to a reduction in operational volumes (capacities decreased by 51.6% year-on-year), as well as due to the implementation of measures aimed at reducing fixed and quasi-fixed costs.
Aircraft fuel costs decreased by 59.4% year-on-year to RUB 77,457 million as flight volumes and flying time decreased and average jet fuel prices were lower.
Excluding fuel costs, operating costs decreased by 25.7% year-on-year to RUB 316,878 million, primarily due to reduced operational volumes and the almost complete suspension of flights in April and May 2020.
Selling, general and administrative expenses decreased by 34.5% year-on-year to RUB 20,578 million, due to additional measures to optimise general business, consulting and marketing expenses.
Other expenses (net) decreased by 47.8% year-on-year to RUB 19,034 million, due to a decrease in expenses associated with the booking system and flight catering amid lower flight volumes. This line also includes a subsidy from the Russian government. In Q4 growth in other expenses is explained by Rossiya airline goodwill write-off.
Amortisation and customs duties, the largest expense item that is generally independent from operating volumes, increased by 10.1% year-on-year to RUB 119,142 million, primarily due to revaluation of reserves for aircraft maintenance required before return to the lessor following the year-on-year appreciation of the US dollar in 12M 2020.
As a result of these factors, EBITDA totalled RUB 26,989 million.
Non-operating gains and losses
| RUB million unless stated otherwise | Q4 2020 | Q4 2019 | Change | 12M2020 | 12M2019 | Change |
| Operating (loss) / profit | (35,398) | (1,032) | – | (92,153) | 60,663 | – |
| (Loss) / profit from investments, net | (200) | (1) | – | (557) | 357 | – |
| Finance income | 2,062 | 1,012 | 2.0x | 4,938 | 5,486 | (10.0%) |
| Finance costs | (11,210) | (11,225) | (0.1%) | (47,252) | (52,050) | (9.2%) |
| Realised hedging results | (2,922) | (66) | – | (13,254) | (2,368) | 5.6х |
| Other | (5,109) | 1,490 | – | (5,209) | 1,715 | – |
In 12M 2020, finance income reduced by 10.0% year-on-year to RUB 4,938 million, primarily due to a decrease in interest income on deposits as a result of lower interest rates.
Finance costs decreased by 9.2% year-on-year to RUB 47,252 million, primarily due to a decrease in leasing interest expenses as a result of lower interest rates, and also due to a decrease in lease liabilities in their respective payment currencies.
The realised loss from hedging amounted to RUB 13,254 million and includes portion of revaluation of lease liabilities of RUB 7,237 million. The depreciation of the rouble during the reporting period led to a revaluation of our debt portfolio. Following the decrease in FX-denominated revenue in accordance with applicable accounting standards, the revaluation is reflected in the Company’s profit and loss account.
Aeroflot Group’s net loss for 12M 2020 amounted to RUB 123,208 million.
Debt and liquidity
| RUB million unless stated otherwise | 31.12.2020 | 31.12.2019 | Change |
| Loans and borrowings | 88,635 | 15,792 | 5.6х |
| Lease liabilities | 662,507 | 557,124 | 18.9% |
| Pension liabilities | 792 | 784 | 1.0% |
| Total debt | 751,934 | 573,700 | 31.1% |
| Cash and short-term investments | 93,775 | 25,861 | 3.6х |
| Net debt | 658,159 | 547,839 | 20.1% |
As of 31 December 2020, total debt increased by 31.1% compared to 31 December 2019, to RUB 751,934 million. The increase was due to the revaluation of lease liabilities as of 2020 year-end following the depreciation of the rouble by 19.3% since the beginning of the year, as well as due to increased leverage to boost liquidity and to finance current operations amid a significant decrease in expected and actual revenues. Successful placement of shares among wide range of investors in October 2020, which contributed RUB 80 billion, was the key driver behind the increase in cash, which amounted to RUB 93.8 billion as of 31 December 2020.
[1] Adjusted (loss) / profit for the period does not include Rossiya airline goodwill write-off, financial result from disposal of subsidiaries, other one-off effects.
