Moscow, 1 August 2019 – PJSC Aeroflot (“the Company”, Moscow Exchange ticker: AFLT) today announces its financial results for the second quarter and first six months of 2019 in accordance with Russian Accounting Standards (RAS). RAS results are presented on a non-consolidated basis.
Comments on Q2 and 6M 2019 RAS financial results
In the first six months of 2019, growth at the Company continued to be accompanied by strict cost control. Market factors, including changes in FX rates and fuel prices, significantly affected financial results year-on-year.
Revenuefor 6M 2019 was RUB 252,863 million, up 15.4% year-on-year. Revenue was affected by growth in Company’s operations and FX dynamics (in 6M 2019 euro appreciated against the ruble by 2.8% year-on-year, US dollar appreciated vs. the ruble by 10.1%).
Passenger turnover increased by 8.7% to 48.8 billion RPKs in 6M 2019 year-on-year. Passenger traffic increased by 9.7% to 17.8 million following an expansion of the route network and an increase in flight frequencies to popular destinations.
Active capacity management and currency effects resulted in continuing positive trend in yield (+3.7% year-on-year in 6M 2019) and RASK (+2.8%) notwithstanding high base of 6M 2018 due to stronger demand in June backed by world football championship in Russia.
Cost of sales in 6M 2019 was RUB 269,355 million, up 17.9% year-on-year. Apart from objective factors associated with the development of the Company the cost of sales continued to be affected by macroeconomic factors.
In 6M 2019, the main increase in costs was driven by rising jet fuel expenses. Total fuel expenses rose by RUB 8,691 million (up 15.4% year-on-year), due to 12.2% year-on-year increase in flight hours and 4.5% year-on-year growth in ruble prices for fuel. May 2019 has seen a first decrease in Company’s average price of jet fuel year-on-year since July 2017 (benchmarked on a monthly basis).
Leasing and aircraft and engine maintenance costs increased due to US dollar dynamics vs. ruble in the period as well as expansion of Aeroflot airline’s leased fleet by 8 aircraft over the last 12 months.
Cost growth was also driven by an increase in ground service costs, costs for air navigation services and airport charges following an increase in traffic and tariffs charged by Russian airports.
The Company continued to implement optimization measures which allowed to mitigate the growth rate of selling costs and administrative costs, which grew by 10.2% and 10.9%, respectively – a significantly lower growth rate than that of revenue and total cost.
It is important to underline stabilizing financial result of Q2 2019 vs. previous year.
Revenue in Q2 2019 amounted to RUB 138,837 million, up 11.1% year-on-year on the back of Company’s RPK increasing by 6.6% and passenger traffic growing by 5.8% year-on-year.
Q2 2019 cost of sales increased by 11.2% year-on-year in line with revenue growth, which was backed by Company’s route network development and traffic increase.
Resulting Aeroflot airline gross income stabilized in Q2 2019 at RUB 2,521 million, +6.6% year-on-year.
Q2 2019 net income of RUB 2,730 million (+74.1% year-on-year) allowed to bring down 6M 2019 net loss to RUB 14,120 million.
In order to lock in Q2 2019 positive dynamics and improve Company’s results in H2 2019 Aeroflot will continue to exercise active revenue management and pursue further cost control taking into account current macro trends and situation in air transportation market.