Aeroflot announces Q3 and 9M 2021 RAS financial results

29 October 2021

Moscow, 29 October 2021 – PJSC Aeroflot (the “Company”, Moscow Exchange ticker: AFLT) today announces its financial results for the third quarter (Q3) and first nine months (9M) of 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

Q3 2020 Q3 2021 Change 9M 2020 9M 2021 Change
Revenue 55,246 126,118 +2.3x 176,950 276,016 56.0%
Cost of sales 75,648 117,651 55.5% 253,224 295,219 16.6%
Gross income/(loss) (20,402) 8,467 n/a (76,274) (19,203) (74.8)%
Net income/(loss) (23,261) 2,893 n/a (65,555) (23,441) (64.2)%

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

“Aeroflot’s RAS results once again confirm the progress the Company has achieved in 2021. Following consistent improvements in financial performance over several quarters, the Company delivered net profit of RUB 2.9 billion in Q3. Our improved financial results were driven largely by demand, which meant a higher volume of domestic traffic – something the Company was betting on in the high season. In Q3 2021, Aeroflot Group’s passenger numbers in the domestic market exceeded the numbers for the same period of 2019 by 27.4%.[1] The Company also made the most of the gradual removal of restrictions on international flights, which also had a positive impact on results. Whereas Aeroflot’s capacities on international routes were only 16% of the level of the same period in 2019 in January 2021, they had recovered to 40% by September.

“Aeroflot has continued to pay particular attention to flight safety throughout the year. Air transport in general has been one of the safest ways to travel during the pandemic thanks to state-of-the-art technologies for filtering and purifying the air on board aircraft. Numerous studies by industry experts and international organisations, including IATA, have confirmed the safety of air travel. We will continue to make every effort to ensure that our passengers feel safe. Wearing masks on board is mandatory. Circa 80% of our employees are already vaccinated. Moreover, we are making every effort to promote vaccination among our passengers: in addition to raising awareness, we carried out a special campaign called Vaccination Miles. The Company continues to perform additional pre-flight preparations, disinfect aircraft and provide passengers with personal protective equipment. We are confident that our efforts are necessary to ensure safe, high-standard travel for our passengers.”

Comments on Q3 and 9M 2021 RAS financial results

  • Revenue in 9M 2021 amounted to RUB 276,016 million, an increase of 56.0% year-on-year. Revenue in Q3 2021 reached RUB 126,118, up 2.3x year-on-year and about 75% of the Company’s revenue for Q3 2019. Increased domestic flights and the ongoing recovery in international flights had a positive impact on revenue. Improved yield dynamics was supported by an 8.4 p.p. year-on-year increase in passenger load factor in 9M 2021, which had a positive impact on RASK dynamics.
  • Cost of sales in 9M 2021 totalled RUB 295,219 million, which was considerably lower than revenue dynamics and only 16.6% higher year-on-year. Large-scale cost optimisation measures begun in 2020, a conservative approach to costs and ongoing negotiations with counterparties on further restructuring of lease payments made it possible to constrain increases in the cost of sales, even taking into account the higher workload in Q3 and despite continuing pressure on the cost of sales due to the cost of jet fuel and changes in exchange rates.
  • Fuel costs in 9M 2021 increased by RUB 11.6 billion (30.1%) year-on-year, which was mainly (+RUB 6.4 billion) due to an increase in the price of jet fuel (the average price was up 29.2%). Aircraft leasing costs remained at 2020 levels thanks to strict discipline regarding fleet expansion, which is taking place in line with expected demand dynamics. Labour costs in 9M 2021 decreased by 12.2% year-on-year.
  • Gross loss for 9M 2021 decreased nearly fourfold year-on-year to RUB 19.2 billion thanks to strong revenue growth and cost controls. At the same time, in Q3 2021, the Company enjoyed a gross profit, of RUB 8.5 billion, for the first time in the last eight quarters.
  • As a result of optimisation measures taken in 9M 2021, the Company kept management costs flat year-on-year. Selling expenses increased by 25.2%, mainly due to an increase in the cost of booking systems amid a considerable rise in reservations due to increased demand and the rapid expansion of domestic flights and partial recovery of international flights. At the same time, the Company continues to constrain increases in other selling expenses.
  • The Company is paying close attention to its solvency. Aeroflot established a stable liquidity position in 2021, which remained high at the end of September (RUB 67.5 billion). The decrease in the amount of cash on hand in Q3 2021 (down RUB 19.7 billion) was seasonal and was associated with the fulfilment of obligations to passengers in the amount of RUB 21.0 billion as a result of increased domestic air traffic and the resumption of flights on international routes as well as the seasonal increase in passenger traffic in the summer, with a subsequent seasonal slowdown in the number of future bookings. Similar seasonal trends in Q3 were typical prior to the pandemic. PJSC Aeroflot’s total debt as of 30 September 2021 did not change from 30 June 2021, amounting to RUB 98.6 billion, more than 80% of which was attributed to long-term loans and borrowings.
  • Given the above-mentioned factors and measures implemented by the Company, the financial results for 9M and Q3 2021 showed further improvement. In Q3 2021, the Company earned a net profit on the back of an increase in operational volumes in the domestic market and higher demand for flights in the summer season. Although the situation in the industry remains challenging, Aeroflot continues to use every opportunity presented by the market to continue expanding its operations and to improve its financial performance.

[1] The change in operating results in 2021 compared with 2019 was calculated on the basis of the comparable structure of the Aeroflot Group – i.e., excluding the results for Aurora Airlines in 2019.