The Russian airline Aeroflot freeze investment in the development of IT technologies due to the rising kerosene costs, according to the general director of the carrier, Vitaly Savelyev. In his words, the airline seeks to hedge risks due to rising prices for jet fuel, currency instability and the situation in Venezuela, which may affect the oil market.
Vitaly Savelyev noted that kerosene costs went up by 30% YoY last year.
“This is significant, and, we did not expect these expenses”, said Vitaly Savelyev. He added that the second reason that influenced the company is currency fluctuations since Aeroflot pays domestic companies “in rubles”.
According to the general director of the airline, the year 2018 was “the worst for the market in recent decades”.
“We ended [year] positively, but the result is not the one we would like”, said Vitaly Savelyev. He added that some issues could be solved by raising ticket prices, but this option has exhausted itself since passengers, in this case, refuse to buy them.
Net profit of Aeroflot in 2018 fell 10 times to 2.8 billion rubles (42.08 million USD). In the fourth quarter of 2018, the company reported a net loss of 12.8 billion rubles, while a year earlier the profit was 1.5 billion rubles. Basically, as noted by Aeroflot, this is due to rising costs for kerosene. Cost of sales grew by 25% to 499.7 billion rubles.
