The revenue of the Russian airline Aeroflot increased by 8.5% yoy in Q1 2018 to 111.942 billion rubles (1.8 billion USD). At the same time, the company’s earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) amounted to 10.767 billion rubles. The net loss of the airline amounted to 11.543 billion rubles.
“Aeroflot Group for the first time discloses consolidated IFRS results for the first quarter. This became possible due to the active work of the Company in developing internal accounting and reporting systems conducted over the years and aimed at accelerating the closure of the period and the formation of financial results”, said the Deputy General Director for Commerce and Finance of PJSC Aeroflot, Shamil Kurmashov. “The disclosure of the consolidated financial statements for the first quarter is aimed at improving the Company’s transparency for stakeholders, primarily for shareholders and investors and deepening their understanding of seasonal trends in our business”, added he.
The first quarter is the weakest season in Russian aviation, due to several reasons. Mainly – this is seasonality of demand: in this period the least quantity of passengers is transported. Even with the continued growth of the air transportation market in general for the Russian industry, the number of passengers transported in the first quarter of 2018 is 9% less than in the fourth quarter of 2017, which can also be considered a low season in the industry, and 38% in the high season of the third quarter of 2017. For the Group, seasonality is also pronounced: passenger traffic in the first quarter of 2018 is 7% lower than in the fourth quarter of 2017 and 29% in the third quarter. Lower volumes mean that operations are characterized by reduced rates of seat load, average daily flying time per aircraft, lower yield rates, and therefore a higher share of fixed costs in the overall cost structure. Therefore, the disclosed results should be considered in the context of the indicated seasonal specifics, he noted.
As a result of the first quarter of 2018, Aeroflot Group carried 11.0 million passengers, increasing passenger traffic by 6.6% compared to the same period last year. The growth of income rates, supported by the exchange rate effect, amounted to 3.6% and allowed to accelerate the revenue growth for the quarter in comparison with the annual growth rates – revenue amounted to 111.9 billion rubles, an increase of 8.5%. Nevertheless, the increase in leasing costs due to the significant influx of new aircraft, as well as our initiatives to improve working conditions and increase the reward of the flight crew, led to a decrease in the financial result compared to the same period last year – a net loss of 11.5 billion rubles.
“Ahead of the main part of the year, including the high season, during which Russia accepts the prestigious sporting event – the World Cup, Aeroflot and the Group companies fly to all 11 match cities and are ready to host the championship at the highest level”, emphasized Shamil Kurmashov. “The group will continue to actively manage revenue and strict control over the management expenses for obtaining the optimal financial result for the year”, added he.
