Aeroflot announces Q2 and 6M 2021 RAS financial results

02 August 2021

Moscow, 2 August 2021 – PJSC Aeroflot (“the Company”, Moscow Exchange ticker: AFLT) announces its financial results for the second quarter (Q2) and six months (6M) ending 30 June 2021 in accordance with Russian Accounting Standards (RAS). RAS results are presented on a non-consolidated basis.

Key results in accordance with RAS, RUB million

  Q2 2020 Q2 2021 Change 6M 2020 6M 2021 Change
Revenue 20,837 91,025 +4.4х 121,704 149,898 23.2%
Cost of sales 54,312 95,225 75.3% 177,576 177,568 -
(Gross loss) (33,474) (4,200) (87.5)% (55,872) (27,670) (50.5)%
(Net loss) (26,156) (1,431) (94.5)% (42,294) (26,333) (37.7)%

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

“The pandemic continues to have a serious impact on aviation: international air traffic is still heavily restricted affecting all airlines. Despite this, in Q2 2021, Aeroflot was able to significantly improve its RAS financial results and reduce its net loss manifold. This result is due to Aeroflot Group’s active work in the domestic market: in Q2 2021, the Group’s domestic passenger traffic reached historic levels, exceeding the result of Q2 2019 by 17.9%[1]. The recovery of the domestic market has therefore significantly contributed to Aeroflot’s results, despite the segment’s growing competition.”

Comments on Q2 and 6M 2021 RAS financial results

  • In 6M 2021, revenue amounted to RUB 149,898 million, up 23.2% year-on-year, due to the expansion of the domestic flights programme as well as due to continued recovery of the international flights programme. In 6M 2021, revenue from scheduled passenger flights increased by 29.7% year-on-year. The improvement in yield dynamics during 6M 2021 was reinforced by an increase in Aeroflot’s passenger load factor by 8.6 p.p. year-on-year, which had a positive impact on RASK dynamics.
  • Cost of sales in 6M 2021 amounted to RUB 177,568 million, almost unchanged compared to the same period last year. Large-scale cost optimization measures taken by the Company’s management in 2020, a conservative approach to cost management and continued negotiations on lease payments with our partners helped us mitigate an increase in the cost of sales amid a growing pressure from FX rates dynamics.
  • Controlling costs as traffic recovers helped to reduce variable costs based on the volume of operations: in 6M 2021, we recorded a 9.9% year-on-year decrease in ground handling costs, a 10.3% decrease in in-flight catering expenses and a 24.0% decrease in staff costs. Aircraft leasing costs remained at the 2020 level, as the US dollar appreciated. In 6M 2021, rising kerosene prices continued to put pressure on the financial result.
  • In 6M 2021, the gross loss decreased by 50.5% year-on-year to RUB 27.7 billion, due to a significant increase in revenue amid strict cost control.
  • As a result of optimisation measures, in 6M 2021, the Company’s administration costs remained unchanged from the same period last year. Selling expenses increased by 6.2%, as costs associated with the booking systems increased amid a growing number of bookings, which in turn was driven by the expansion of the domestic flights programme and partial recovery of international flights programme. At the same time, the Company continues to strictly control other types of selling expenses.
  • Results of other activities were significantly influenced by the need to acquire funds to support operations, which led to an increase in the interest payable.
  • As of the end of the reporting period, the Company’s liquidity position remained stable. As of 30 June 2021, Aeroflot’s cash and cash equivalents amounted to RUB 87.2 billion, up RUB 28.8 billion in Q2 2021 amid a seasonal increase in bookings and following a successful bond issue. As of 30 June 2021, PJSC Aeroflot’s total debt amounted to RUB 98.6 billion, of which RUB 11.4 billion account for short-term loans.
  • In Q2 and 6M 2021, the Company delivered stronger financial results year-on-year due to the factors and measures described above. In 6M 2021, the net loss reduced by 37.7% year-on-year to RUB 26.3 billion. In Q2 2021, the net loss amounted to just RUB 1.4 billion, which is significantly better compared to the net loss of RUB 24.9 billion in Q1 2021 and RUB 26.2 billion in Q2 2020. This was due to an active expansion of the domestic flights programme and high demand for air transportation during the summer season.
  • While the situation in the industry remains difficult, Aeroflot continues to use all existing market opportunities to further expand its flights programme and improve financial results.

[1] the change in operating performance in 2021 vs. 2019 is calculated based on the comparable structure of Aeroflot Group, i.e. excluding the performance of Aurora Airlines in 2019.