Aeroflot Announces Results of Board of Directors’ Meeting for December 2017

22 December 2017, Moscow – PJSC Aeroflot (MOEX: AFLT) announces the results adopted at the final Board of Directors’ Meeting of 2017 held on 21 December in the form of absentee voting.

The agenda included the following items:

Results of Aeroflot Group’s consolidated budget for the first nine months of 2017

Civil aviation passenger traffic in the Russian Federation for the first nine months of 2017, inclusive of foreign airlines, amounted to 95.6 million passengers carried. Aeroflot Group’s share of this market declined year-on year by 1.6 percentage points – from 41.7% to 40.1%. The Company exceeded its traffic targets for the period, with passengers carried 0.4% above target for Aeroflot – Russian Airlines and 0.8% above target for Aeroflot Group. The Group outperformed international peers in terms of growth across key operational indicators.

Key Performance Indicators (KPI) for 2018

The list, weight and target values for the 2018 KPIs of Aeroflot Group and the CEO of PJSC Aeroflot were approved, in accordance with the Group’s Long-Term Development Programme. Similar KPIs for 2018 were established for members of PJSC Aeroflot’s Executive Board.

The implementation of Aeroflot Group’s Long-Term Development Programme and attaining Q3 2017 KPIs

It was noted that Aeroflot Group’s Long-Term Development Programme is being implemented successfully, with KPIs exceeding target values. Necessary changes were made to the Long-Term Development Programme, updating it for the 2018-2022 period whilst maintaining consistency with the current strategy. The Group’s strategic development goals will continue up to 2025, including the aim of being in the top 5 European and top 20 global airlines by passenger traffic and revenue.

Aeroflot Group’s motivation policy

The PJSC Aeroflot Management’s KPI results for Q3 2017 were approved. It was decided to approve bonus payments for Aeroflot Group’s management team in light of Q3 2017 KPI results.

Service enhancement at Aeroflot Group

In 2017 Aeroflot – Russian Airlines won a number of prestigious Russian and international awards, confirming its high level of service. Aeroflot’s NPS customer loyalty index was 72.5% in 2017 (2nd place in the world, just 0.5% behind Emirates). Innovative solutions based on digital technology are widely deployed: it’s possible to buy a ticket up to two hours before a flight, the first wave of the IATA NDC service distribution project was launched, options to register online were expanded, the website interface was improved, etc. Content has been added to the entertainment programme for passengers with disabilities. Signage in Chinese has been added in key locations at Sheremetyevo as well as information broadcast in foreign languages over the loudspeaker in departure lounges. The contact centre introduced an automated questionnaire for assessing customer satisfaction. Aeroflot Group's initiatives for improving service in 2017 cover every aspect of the passenger experience and are aimed at enhancing the competitiveness of the product and in turn increasing consumer loyalty.

Processing client requests

It’s been deemed that the provision of a single automated platform for dealing with requests is a fundamental condition for high quality service. Special attention is paid to monitoring social media, which enables to build a strategy of workflows based on customer needs. The call processing platform has entered a phase of test-operation. A unified automated call processing centre has been created from various communication channels with categorization and routing of calls to the responsible department. The platform enables the online monitoring of key trends on social networks, including feedback on PJSC Aeroflot from opinion leaders.

The Exchange-traded Bond Programme. The P01-BO series exchange bond programme for PJSC Aeroflot-Russian Airlines was approved. It was thought necessary to approve the program for a period of ten years with a volume of 24.65 billion roubles. The program will allow Aeroflot, if necessary, to quickly issue bonds and attract long-term financing.

Implementation of the Corporate Governance Code. A decision was made to strengthen PJSC Aeroflot's Corporate Governance Code. This step was seen as essential from the point of view of the relationships between shareholders and representatives of the investment community, to raise the level of corporate governance and to obtain high rankings in this area. The Code is based on documents already approved and in use by Aeroflot (The Charter, regulations on management bodies, Code of Ethics, Anti-Corruption Policy, etc.) It describes the current corporate governance system of the Company, as well as areas of further improvement.

Purchasing activity during the 3rd quarter of 2017.

Online competitive processes during the first nine months of 2017 accounted for more than 60% of procurement, which is in line with the norm established by the state. For the indicated period there was a significant increase in the number of contracts concluded with small and medium-sized businesses compared to the period 2015-2016.

Implementing the programme for disposal of PJSC Aeroflot's non-core assets.

The updated version of the Program for disposal of PJSC Aeroflot's non-core assets was approved, taking into account the new Methodological Recommendations of the Federal Property Management Agency, the influence of external factors and already implemented measures. The list of Aeroflot's non-core assets and the plan of measures for their implementation were also approved.

Aeroflot Group's risk management system. The Board approved and updated documents aimed at building an integrated, effective risk management and internal control system within Aeroflot Group.