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Company News

01 March 2016

AEROFLOT GROUP ANNOUNCES FY 2015 IFRS FINANCIAL RESULTS

Moscow, 1 March 2016. — Aeroflot Group («the Group», Moscow Exchange ticker: AFLT) today published audited financial results in accordance with International Financial Reporting Standards for the year ending 31 December 2015.

Key 2015 financial results for Aeroflot Group:

• Revenue increased 29.8% year-on-year to RUB 415,173 million;

• EBITDAR1 margin increased 9.6 percentage points (p.p.) year-on-year to 24.8%;

• EBITDA1 margin increased 6.3 p.p. year-on-year to 14.1%;

• Operating profit of RUB 44,107 million, nearly 4x increase year-on-year;

• Net loss of RUB 6,494 million.

1EBITDAR = EBITDA + operating lease expenses. EBITDA = operating income + depreciation & amortization + customs duties. 

Shamil Kurmashov, PJSC Aeroflot Deputy CEO for Finance and Network and Revenue Management, commented:

"Aeroflot Group delivered robust revenue growth in 2015 of 29.8% thanks to a proactive approach to managing the Group’s network and revenues as well as strong operating performance in the domestic segment due to increased demand for domestic flights, combined with a corresponding increase in capacity. Passenger traffic across the Group was up 13.4% despite the overall decline in the Russian air travel market for the year.

"The challenging macroeconomic situation had a significant impact on Group financial results throughout the year. In response to the worsening external backdrop we took a number of steps to optimize the fleet and cut costs, enabling us to limit the growth of operating costs despite significant exchange rate pressure over the course of 2015. As a result, Group operating profit rose to RUB 44.1 billion and the EBITDA and EBITDAR margins increased by 6.3 p.p. and 9.6 p.p. to 14.1% and 24.8%, respectively.

"In the second half of the year Aeroflot Group played a key role in stabilizing the Russian air travel market by successfully carrying out the Russian government’s mandate to transport passengers of Transaero airline. The Group incurred costs of nearly RUB 17 billion, which had negative effect on our results.

"Both operating and financial results for 2015 demonstrated that Aeroflot Group is pursuing the right strategy focused on building one of the world’s leading airline groups. We are confident that consistent implementation of this strategy combined with Aeroflot’s success as a reliable partner and an efficient systematically important player on the Russian market will drive further growth of our passenger traffic, route network and overall business." 

Key operating highlights 

 

2015

2014

Change

Passengers carried, thousand PAX

39,393

34,735

13.4%

- international

16,029

17,096

(6.2%)

- domestic

23,365

17,640

32.5%

Revenue Passenger Kilometres, million

97,636

90,075

8.4%

- international

52,953

55,107

(3.9%)

- domestic

44,683

34,968

27.8%

Available Seat Kilometres, million

124,741

115,834

7.7%

- international

68,490

72,219

(5.2%)

- domestic

56,252

43,615

29.0%

Passenger load factor, %

78.3%

77.8%

0.5 p.p.

- international

77.3%

76.3%

1.0 p.p.

- domestic

79.4%

80.2%

(0.8 p.p.)

For the full year 2015, Aeroflot Group traffic totaled 39.4 million, a 13.4% year-on-year increase.

Key financial highlights

RUB million, unless indicated otherwise

2015

2014

Change

Revenue

415,173

319,771

29.8%

EBITDAR1

103,118

48,673

111.9%

EBITDAR margin

24.8%

15.2%

9.6 p.p.

EBITDA1

58,703

24,839

136.3%

EBITDA margin

14.1%

7.8%

6.3 p.p.

Operating profit

44,107

11,268

-

Operating profit margin

10.6%

3.5%

7.1 p.p.

Loss for the period

(6,494)

(17,146)

(62.1%)

1EBITDAR = EBITDA + operating lease expenses. EBITDA = operating income + depreciation & amortization + customs duties.

Revenue 

RUB million, unless indicated otherwise

2015

2014

Change

Passenger traffic revenue

349,574

268,636

30.1%

- scheduled passenger flights

343,428

253,613

35.4%

- charter passenger flights

6,146

15,023

(59.1%)

Cargo flight revenue

9,631

8,718

10.5%

Other revenue

55,968

42,417

31.9%

Total revenue

415,173

319,771

29.8%

In 2015, Aeroflot Group’s revenue increased by 29.8% year-on-year to RUB 415,173 million, as a result of an increase in revenue from scheduled passenger flights and other revenues.

Revenue from scheduled passenger flights increased by 35.4% to RUB 343,428 million, boosted by 13.4% growth in passenger traffic year-on-year. Revenue from charter flights decreased by 59.1% to RUB 6,146 million, as a result of the Group’s strategy of decreasing its charter business and overall market dynamics in this segment. 

Cargo revenue rose 10.5% year-on-year in 2015 — despite a 6.0% decline in the volume of cargo and mail carried — thanks to higher yields in this segment.

Other revenue rose 31.9% year-on-year to RUB 55,968 million, mainly driven by a rise in FX-denominated revenues from airline agreements revenue following changes in the exchange rate.

Operating costs 

RUB million, unless indicated otherwise

2015

2014

Change 

Aircraft servicing and passenger services

75,186

61,070

23.1%

Staff costs

55,619

52,148

6.7%

Operating lease expenses

44,415

23,834

86.4%

Aircraft maintenance

32,042

19,224

66.7%

Sales and marketing, administration and general expenses

26,084

22,206

17.5%

Depreciation, amortisation and custom duties

14,596

13,571

7.6%

Other net expenses

28,742

29,251

(1.7%)

Operating costs less aircraft fuel

276,684

221,304

25.0%

Aircraft fuel

94,382

87,199

8.2%

Total operating costs

371,066

308,503

20.3%

Aircraft fuel costs increased 8.2% year-on-year to RUB 94,382 million due to the weaker ruble as well as higher traffic. Excluding the FX rate effect, aircraft fuel costs were down 18.8% year-on-year as a result of the lower oil price and the success of measures to boost the Group’s fuel efficiency.

Operating costs less aircraft fuel increased 25.0% year-on-year to RUB 276,684 million.

Aircraft servicing and passenger services costs were RUB 75,186 million, a 23.1% year-on-year increase primarily due to the change in the ruble exchange rate. Excluding the FX rate effect, these costs rose 8.4%, primarily because of expansion of operations and higher passenger traffic, and also changes in service tariffs.

Staff costs rose 6.7% year-on-year to RUB 55,619 million primarily due to additional hiring to support greater operations, and as a result of a rise in the ruble equivalent of salaries for employees based outside Russia and additional motivational compensation for cabin crew personnel.

Operating lease expenses were RUB 44,415 million, an 86.4% year-on-year increase, driven mainly by the change in the exchange rate (operating lease expenses are denominated almost completely in USD). An additional factor was the larger fleet (nine more aircraft were under operating lease than were on 31 December 2014, a 5.0% increase) as well as an increase in LIBOR rates throughout the reporting period.

Aircraft maintenance costs rose 66.7% year-on-year to RUB 32,042 million mainly due to changes to the exchange rate. Excluding the FX rate effect, these costs rose 8.2%, mainly due to an increase in the volume of work.

Sales and marketing, administration and general expenses increased 17.5% year-on-year to RUB 26,084 million. The increase is mainly due to scale, as well as an increase in sales and marketing expenses denominated in foreign currencies.

Depreciation, amortisation and custom duties increased 7.6% year-on-year to RUB 14,596 million due to new Boeing 777-300ER aircraft joining the Group’s fleet under finance lease contracts in 2014 and respective realization of wide-body aircraft addition effect in 2015.

Other net expenses declined 1.7% year-on-year to RUB 28,742 million, primarily due to accrual of provisions related to Transaero accounts receivable and increase of RUB equivalent of GDS expense nominated in hard currencies. This growth was partially compensated by VAT refund for code-share agreements and refund of fuel excise duties.

As a result of the above-mentioned factors, the Group’s operating profit in 2015 amounted to RUB 44,107 million (10.6% of revenue). EBITDA reached RUB 58,703 million and EBITDA margin increased by 6.3 p.p. to 14.1%.

Non-operating gains and losses 

RUB million, unless indicated otherwise

2015

2014

Change

Operating profit

44,107

11,268

-

Finance income

15,811

2,471

-

Finance costs

(37,715)

(28,399)

32.8%

Hedging result

(23,746)

(1,723)

-

Share of results of associates

(17)

31

-

Loss before income tax

(1,560)

(16,352)

(90.5%)

Income tax

(4,934)

(794)

-

Loss for the period

(6,494)

(17,146)

(62.1%)

Finance income for 2015 increased more than six times year-on-year to RUB 15,811 million, mainly due to positive effect from revaluation of derivative financial instruments not subject to hedge accounting and interest income earned on bank deposits.

The increase in finance costs to RUB 37,715 million for 2015 was mainly due to the impairment of the Group’s loan to Transaero, as well as an increase in interest expenses and realized losses on derivative financial instruments not subject to hedge accounting.

The realized loss from hedging of RUB 23,746 million is attributable to settlements under derivative instruments recognized in equity, as well as to the effect of revenue hedging with liabilities in USD (finance lease).

As a result of the above factors, the Group posted a net loss for 2015 of RUB 6,494 million.

Debt

RUB million, unless indicated otherwise

31 Dec 2015

31 Dec 2014

Change

Loans and borrowings

68,460

24,203

182.9%

Financial lease liabilities

164,524

149,278

10.2%

Pension liabilities

745

659

13.1%

Customs duties

-

169

-

Total debt

233,729

174,309

34.1%

Cash and short-term investments

36,610

27,508

33.1%

Net debt

197,119

146,801

34.3%

Net debt/EBITDA

3.4х

5.9х

-

Total debt as of 31 December 2015 was RUB 233,729 million, 34.1% higher than a year earlier. This was mainly driven by an increase in loans and borrowing, as well as revaluation of the Group’s finance lease liabilities.

As of 31 December 2015 undrawn lines available to Aeroflot Group from major Russian and international banks amounted to RUB 36.8 billion.

Investor enquiries

Aeroflot Investor Relations

+7 (495) 258-06-86

ir@aeroflot.ru

Media enquiries

Aeroflot Press Service

+7 (495) 752-90-71

+7 (499) 500-73-87

+7 (495) 753-86-39

presscentr@aeroflot.ru