warning!You useInternet Explorer. Certain functions may not work correctly. We recommend that you use a different browser.

Company News

30 November 2017

AEROFLOT ANNOUNCES 9M 2017 IFRS FINANCIAL RESULTS

Мoscow, 30 November 2017 – Aeroflot Group (“the Group”, Moscow Exchange ticker: AFLT) today publishes its condensed consolidated interim financial statements for the nine months ended 30 September 2017, in accordance with International Financial Reporting Standards.

9M 2017 Financial Highlights for Aeroflot Group

  • Revenue increased to RUB 404,773 million, up 6.2% year-on-year;

  • EBITDAR reached RUB 101,016 million. The EBITDAR margin was 25.0%;

  • EBITDA reached RUB 53,306 million. The EBITDA margin was 13.2%;

  • Net income totalled RUB 27,149 million.

Shamil Kurmashov, PJSC Aeroflot Deputy CEO for Commerce and Finance, commented:

“Aeroflot Group completed the high season successfully. Passenger numbers grew strongly in the third quarter of 2017 as we increased available seats while keeping passenger load factors stable. In the first nine months of the year we carried 38.3 million passengers. Operational indicators grew due to both a revival of the international segment and the continued development of domestic flights. International transit traffic continues to increase apace as we increase flight frequencies on key routes, thus improving the quality of our network and the Company’s product.

“Our financial results for the first nine months and the third quarter of 2017 reflect a normalisation of profitability and the effect of a number of market factors that also affected our results for the first half of the year. Increased capacity supply across the market and exchange rate fluctuations led to a decrease in yields compared to the year-ago period, when we saw a significant dislocation between supply and demand. On the other hand, rising fuel costs, which normalised only in the third quarter, as well as cost pressures from staff costs and investments in the quality of our product, were the main contributors to the rise in operating costs, in addition to growth attributable to increased operating volumes and the growth of the Company.

“Here we should note a positive trend seen in the third quarter compared with the first half of the year. Yields decreased at a slower pace on scheduled flights (4% vs 8% in the first half), while the cost of fuel, which in the first six months had increased by 10%, in the third quarter remained at a comparable level to the previous year.

“Exchange rates also supported operating costs. Whereas rates in 2016 put pressure on line items including operational leasing, technical maintenance costs and airport fees outside Russia, in nine months of 2017 the strengthening of the ruble had a positive effect on operating costs. Savings from this amounted to 24 kopecks at a cost per seat-kilometre of RUB 3.06, representing approximately 8% of unit costs (CASK).

“Given the effects of exchange rate fluctuations, growth of fuel costs, and the lack of material currency differences on refunds of pre-payments for aircraft – which had an effect in the third quarter of 2016 – the financial result for the accounting period decreased. However, net profit was supported by a significant reduction in our debt burden due to pre-term repayment of credit lines during the year, as well as savings on other non-operating costs, and amounted to RUB 27.1 billion.

“The financial results for this accounting period confirm the favourable conclusion to the third quarter, which traditionally forms the major part of Aeroflot’s full-year results.”

Key operating highlights

 

9M 2017

9M 2016

Change

Passengers carried, thousand PAX

38,340

32,826

     16.8%

- international

17,221

13,626

     26.4%

- domestic

21,119

19,200

     10.0%

Revenue Passenger Kilometres, million

99,381

84,228

18.0%

- international

58,408

46,902

     24.5%

- domestic

40,974

37,326

      9.8%

Available Seat Kilometres, million

118,754

102,237

     16.2%

- international

69,820

58,337

     19.7%

- domestic

48,934

43,900

     11.5%

Passenger load factor, %

83.7%

82.4%

     1.3 p.p.

- international

83.7%

80.4%

    3.3 p.p.

- domestic

83.7%

85.0%

   (1.3 p.p.)

In 9M 2017, Aeroflot Group carried 38.3 million passengers, up 16.8% year-on-year.

 

Key financial highlights

RUB million, unless stated otherwise

9M 2017

9M 2016

Change

Revenue

404,773 

381,306

6.2%

EBITDAR[1]

101,016 

120,330

(16.1%)

EBITDAR margin

25.0%

31.6%

(6.6 p.p.)

EBITDA1

53,306 

77,160

(30.9%)

EBITDA margin

13.2%

20.2%

(7.0 p.p.)

Operating profit

41,862 

66,926

(37.5%)

Operating profit margin

10.3%

17.6%

(7.3 p.p.)

Profit for the period

27,149 

43,798

(38.0%)

Net profit margin

6.7%

11.5%

(4.8 p.p.)

Revenue

RUB million, unless stated otherwise

9M 2017

9M 2016

Change

Passenger traffic revenue

350,502 

326,324

7.4%

          - scheduled passenger flights

327,726 

313,234

4.6%

          - charter passenger flights

22,776 

13,090

74.0%

Cargo flight revenue

11,300 

8,239

37.2%

Other revenue

42,971 

46,743

(8.1%)

Total revenue

404,773 

381,306

6.2%

In 9M 2017, Aeroflot Group’s revenue increased by 6.2% year-on-year to RUB 404,773 million.

Revenue from scheduled passenger flights increased by 4.6% year-on-year to RUB 327,726 million, boosted by an increase in passenger traffic. Revenue growth was affected by a decrease in yields, primarily on international routes, due to the strengthening of the ruble and the consequent effect of this on FX-denominated revenue.

Revenue from charter flights increased by 74.0% to RUB 22,776 million, due among other factors to the growth of Rossiya’s charter programme.

Cargo revenue rose by 37.2% year-on-year to RUB 11,300 million as the Group added new wide-body aircraft to its fleet and cargo and mail volumes grew by 38.9%.

Other revenue decreased by 8.1% year-on-year to RUB 42,971 million, due mainly to a decrease in the ruble equivalent of FX-denominated revenues from airline agreements following changes in the exchange rate.

Operating costs

RUB million, unless stated otherwise

9M 2017

9M 2016

Change

Aircraft servicing and passenger services

74,706

64,775

15.3%

Staff costs

60,509

48,118

25.8%

Operating lease expenses

47,710

43,170

10.5%

Aircraft maintenance

26,247

27,034

(2.9%)

Sales and marketing, administration and general expenses

23,846

20,089

18.7%

Depreciation, amortisation and customs duties

11,444

10,234

11.8%

Other net expenses

28,505

27,043

5.4%

Operating costs less aircraft fuel

272,967

240,463

13.5%

Aircraft fuel

89,944

73,917

21.7%

Total operating costs

362,911

314,380

15.4%

In 9M 2017, aircraft fuel costs increased by 21.7% year-on-year to RUB 89,944 million. This was due to an increase in the average price of aircraft fuel in rubles in the context of changes to the price of oil and exchange rates, as well as an increase in flight numbers and flying time.

The strengthening of the ruble mitigated the increase in expenses due to the growth of the business. Operating costs less aircraft fuel increased by 13.5% year-on-year to RUB 272,967 million.

Expenses related to aircraft servicing and passenger service amounted to RUB 74,706 million, a 15.3% increase year-on-year, due primarily to the increase in passenger traffic. This item was additionally impacted by new initiatives aimed at boosting service quality.

Staff costs rose 25.8% year-on-year and amounted to RUB 60,509 million, as a result of salary indexation in accordance with the collective bargaining agreement, an increase in the number of staff to support operational growth, growth of the variable component of salaries linked to the achievement of corporate KPIs, and an increase in unused vacation accrual.

Operating lease expenses rose to RUB 47,710 million, a 10.5% increase year-on-year, due to expansion of the fleet (net increase of 26 aircraft, or 11.0%, on operating leases compared with 30 September 2016), as well as an increase in the average three-month LIBOR rate in the first nine months of 2017 compared to the same period last year.

Aircraft maintenance costs fell by 2.9% year-on-year to RUB 26,247 million, largely due to the strengthening of the ruble.

Selling, general and administrative expenses (SG&A) grew by 18.7% year-on-year to RUB 23,846 million, due to the development of IT infrastructure and an increase in investments in marketing campaigns.

Amortisation and customs tariffs increased by 11.8% year-on-year to RUB 11,444 million, due to Aurora taking ownership of two new aircraft and the introduction of IT equipment over the past 12 months.

Other expenses increased by 5.4% year-on-year to RUB 28,505 million, mainly due to increased expenses related to accrual of provisions for periodic maintenance of aircraft.

As a result, Group EBITDAR totalled RUB 101,016 million, and the EBITDAR margin was 25.0%. EBITDA totalled RUB 53,306 million, and the EBITDA margin was 13.2%.

Non-operating gains and losses

RUB million, unless stated otherwise

9M 2017

9M 2016

Change

Operating profit

41,862 

66,926

(37.5%)

Loss from sale and impairment of investments

(108) 

(3,734)

(97.1%)

Finance income

6,349 

18,860

(66.3%)

Finance costs

(6,331) 

(7,388)

(14.3%)

Realised hedging result

(4,226) 

(10,611)

(60.2%)

Share of results of associates

140 

-

-

Result from disposal of companies

-

(5,099)

-

Profit before tax

37,686 

58,954

(36.1%)

Income tax

(10,537) 

(15,156)

(30.5%)

Profit for the period

27,149 

43,798

(38.0%)

Finance income decreased by 66.3% year-on-year to RUB 6,349 million, mainly due to lower earnings from exchange-rate differences lower earnings from exchange-rate differences.

Finance costs declined by 14.3% year-on-year to RUB 6,331 million as debt levels fell, leading to a reduction in the cost of debt servicing.

The realized loss from hedging of RUB 4,226 million was attributable both to settlements under derivative instruments recognised in equity and to a realised result related to hedging of USD-denominated revenue through USD-denominated lease obligations.

Aeroflot Group’s net profit for the first nine months of 2017 amounted to RUB 27,149 million.

Debt and liquidity

RUB million, unless stated otherwise

30.09.2017

31.12.2016

Change

Loans and borrowings

3,182

20,367

(84.4%)

Finance lease liabilities

106,153

122,736

(13.5%)

Pension liabilities

927

805

15.1%

Total debt

110,262

143,908

(23.4%)

Cash and short-term investments

61,336

37,795

62.3%

Net debt

48,926

106,113

(53.9%)

Net debt / EBITDA

0.9х[2]

1.4х[3]

-

Total debt as of 30 September 2017 decreased by 23.4% compared to 31 December 2016, to RUB 110,262 million. The reduction was due to repayment of loans and borrowings both as they came due and ahead of schedule, as well as adjustments to the valuation of financial leases due to changes in the RUB-USD exchange rate as of 30 September 2017 compared to 31 December 2016. Despite significant repayments, cash and short-term investments increased by more than 50% versus 31 December 2016 and totalled RUB 61,336 million.

As of 30 September 2017, undrawn lines available to Aeroflot Group from major Russian and international banks amounted to RUB 103.4 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

 

[1] EBITDAR = EBITDA + operating lease expenses. EBITDA = operating profit + depreciation & amortisation + customs duties.

[2] Calculated based on EBITDA for the 12 months ended 30.09.2017 of RUB 54,150 million.

[3] Calculated based on EBITDA for the 12 months ended 31.12.2016 of RUB 78,004 million.