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Company News

03 October 2015

Aeroflot announces results of Board of Directors meeting

MOSCOW, 3 OCTOBER 2015 – Aeroflot (Moscow Exchange ticker: AFLT) announces the results of the meeting of the Company’s Board of Directors that took place on 1 October. The meeting was chaired by Kirill Androsov.

The meeting’s agenda included the following items:

Aeroflot’s consolidated budget for 1H 2015. During the period Aeroflot Group carried 17.9 mln passengers. The Group’s total share of the Russian market by passenger traffic (including foreign airlines) rose by 5.8 p.p. year-on-year and reached 37.0%. The Group increased its market share on both domestic and international routes as competitors scaled back their activities and Aeroflot Group adopted a pro-active approach to managing its carrying capacities. Aeroflot Group met its target for passenger traffic in 1H 2015 by 99%, and for RPKs (44.5 bln passenger km) by 100.1%. The group’s net loss was less than forecast, and totaled RUB 3.5 bln.

The Board reviewed and note a report by PJSC Aeroflot’s IFRS auditor on the results of the audit for 1H 2015.

Aeroflot Group strategy. The need for additions to the Group’s Strategy and Long-Term Development Programme was recognized in view of the requirement to adapt Aeroflot’s multi-brand strategy to new market conditions, as well as the decision to involve Aeroflot Group in the restructuring of Transaero. In the next two years the Group will move to a new operational structure comprising four companies. Alongside Aeroflot – Russian Airlines, which will remain the Group’s premium carrier; the low-cost carrier Pobeda; and the Far Eastern carrier Aurora; a single regional carrier under the Rossiya name will be formed from the merger of Rossiya, Orenair and Donavia. The Group expects to generate synergies of several billion roubles from this combination, driven by product improvements and an expanded customer offering. The Board of Directors instructed the Management Board of PJSC Aeroflot to prepare a draft of additions to the Strategy and Long-Term Development Plan for Aeroflot Group for 2016-2021 due to the Group’s move to a new operational structure.

Development of Aeroflot Group’s customer service. Aeroflot’s achievements in this area include continued growth of the NPS client loyalty index, which in 2015 increased by 5% and reached 72% - significantly higher than a number of major competitors. This year an assessment of the NPS index was conducted among Aeroflot’s subsidiaries, also showing an increase. Measures were taken to improve quality of service on board Aeroflot aircraft, including the addition of Wi-Fi Internet access on board three Boeing 777s, bringing the total number of aircraft fitted with the service to 33. The in-flight menu was refreshed across all classes, as well as the business class wine menu. Aeroflot now offers more web services, including a Chinese-language interface for booking and purchasing tickets. Passenger service has been significantly improved in other Aeroflot Group companies. At Aeroflot – Russian Airlines alone, more than a dozen service development projects are planned. The Board of Directors reviewed the budget required for implementation of these measures.

PJSC Aeroflot company documents. The following documents were approved:

-       Provisions on Internal Audit of Aeroflot Group

-       New edition of the Operational Quality Guidelines of PJSC Aeroflot

The Board of Directors of PJSC Aeroflot was also informed that Transaero shareholders, who previously submitted a tender offer to PJSC Aeroflot, had not submitted a proposal for the purchase by Aeroflot of a stake of 75% plus one share in Transaero within the deadline stipulated in the tender offer. The Board of Directors voted to reject the proposal to acquire shares of Transaero and instructed Aeroflot’s management to put in place measures to ensure Transaero fulfilled its obligations to passengers, and also to minimize possible negative social consequences among the company’s staff. Information regarding this decision was published on 1 October 2015 on Aeroflot’s website: http://www.aeroflot.com/cms/en/new/54379

Aeroflot is Russia’s flagship carrier and one of the largest airline groups in Europe. In 2014, Aeroflot carried 23.6 million passengers (34.7 million passengers as Aeroflot Group including subsidiaries), a record for any Russian airline. A proud member of the SkyTeam global airline alliance, Aeroflot and its partners serve 1,052 destinations in 177 countries worldwide. Aeroflot operates one of the youngest fleets in the world, numbering 163 Airbus, Boeing and Sukhoi airliners. Aeroflot is among the global leaders in aviation safety. The company’s European Community Safety Assessment of Foreign Aircraft (SAFA) Index, which is the main globally recognized safety parameter, is comparable to global peers. The first Russian carrier to enter the IATA Operational Safety Audit (IOSA) register, renewing its registration for the sixth time in 2015, Aeroflot has successfully passed the IATA Safety Audit for Ground Operations (ISAGO) and is fully ISO 9001:2008, ISO 14001:2004 compliant. In 2015 Aeroflot was named by SKYTRAX as the Best Airline in Eastern Europe for the fourth time. Find more at www.aeroflot.com.