Category Archives: Aeroflot Group

Aeroflot assigns an Orenair Boeing 777-200 to fly Transaero’s passengers for Biblio Globus

Aeroflot Russian Airlines (Moscow) has issued this statement:

Aeroflot logo-1

Aeroflot, tour operator Biblio Globus and Transaero Airlines (Moscow) have reached agreement on transportation of Transaero passengers through December 15, 2015.

Orenair logo-1

Aeroflot has made available a long-range Boeing 777-200 from the fleet of its Orenair (Orenburg Airlines) (Orenburg) subsidiary to the tour operator in fulfilment of obligations between Biblio Globus and Transaero to carry tourists through December 15. The decision was taken due to Transaero’s inability to operate its own planes on the tour operator’s routes and the cancellation by Transaero of all charter flights after October 25.

Transaero (2015) logo

Biblio Globus thanks the management of Aeroflot and Transaero for its assistance in resolving the challenge of carrying Transaero passengers. The airplane will be made available for two months, from October 15 to December 15.

Copyright Photo: OSDU/AirlinersGallery.com. Orenair (Orenburg Airlines) Boeing 777-2Q8 ER VQ-BNU (msn 29908) departs from Moscow’s Shermetyevo Airport.

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Will the Transaero Airlines brand be retired and merged into Aeroflot?

Aeroflot Russian Airlines (Moscow) has agreed to acquire 75 percent of the shares of failing Transaero Airlines (Moscow). Aeroflot is buying out its main competitor (and its $1.6 billion debt) for the symbolic price of one ruble. Transaero Airlines is the second largest airline in Russia and has lately been failing and building up a large debt.

According to Reuters, “Transaero will be completely overhauled and integrated into the Aeroflot group,” an Aeroflot spokesman was quoted as saying by RIA news agency.

For now, the Transaero Airlines name will be kept alive as a significant but shrinking part of the Aeroflot Group. However for the long term, will Transaero be merged into Aeroflot and the brand retired?

Above Copyright Photo: Gerd Beilfuss/AirlinersGallery.com. Transaero has been introducing this new brand with its new deliveries. Will this new look be retained?

51 percent of the Aeroflot stock is owned by the government of Russia. The government is backing its major industries.

Transaero Airlines (and many other Russian airlines) have been struggling since the ruble collapsed in 2014. In short, Russian citizens are traveling less overseas with their devalued currency.

As we previously reported, even Aeroflot reported a loss in the first half of this year.

On September 1, Transaero Airlines issued this short statement:

Transaero logo

The Government of the Russian Federation held the meeting of the Intergovernmental commission chaired by Igor Shuvalov, First Deputy Prime Minister, on the issues of air transport industry.

In the interests of the development of the commercial aviation and creating one of the largest in the world group of airlines, the commission has approved the acquisition of JSC Transaero Airlines by Aeroflot group.

The shareholders of Transaero Airlines believe this measure will serve the interests of passengers, personnel and partners of the airline.

The Chairman of the meeting has highly appreciated the role of the founders, managers and all the personnel of Transaero Airlines in the modern history of the commercial aviation of the country.

Top Copyright Photo: Michael B. Ing/AirlinersGallery.com. Ex-United Airlines and Air India  Boeing 777-222 ER EI-UNV (msn 28714, ex N205UA/VT-AIK) arrives at Los Angeles International Airport.

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Aeroflot Group reports a net loss for the first half

Aeroflot Group (Aeroflot Russian Airlines) (Moscow) today (August 31) published its consolidated interim financial statements for the six months ended June 30, 2015, in accordance with International Financial Reporting Standards:

Aeroflot logo

First Half (1H) 2015 Operating and Financial Highlights for Aeroflot Group:

  • Group passenger traffic increased by 14.0% year-on-year, with 33.4% year-on-year growth in the domestic segment;
  • Aeroflot Group increased its market share [1] by 5.8 percentage points (p.p.) year-on-year to 37.0%;
  • Revenue reached RUB 176,467 million, up 25.8% year-on-year;
  • EBITDAR [2] nearly doubled year-on-year to RUB 33,252 million;
  • EBITDA [2] increased by more than two-fold year-on-year to RUB 13,311 million;
  • Operating profit amounted to RUB 5,866 million as compared to an operating loss of RUB 1,384 million in 1H 2014;
  • Net loss amounted to RUB 3,541 million ($52,699.99)

Shamil Kurmashov, PJSC Aeroflot Deputy CEO for Finance and Network and Revenue Management, commented:

“In the first half of 2015, Aeroflot Group strengthened its position as the leader in the Russian air transportation market with 14.0% year-on-year growth in passenger traffic and a 5.8 percentage point increase in market share. This was driven by strong operational performance at Aeroflot airline and the successful roll-out of Russia’s first low-cost carrier, Pobeda, which has quickly become one the top airlines in the country. The Group also benefited from changes in the competitive landscape, taking market share from foreign carriers that decreased frequencies on a number of routes as well as less efficient Russian peers.

“Our focus on the high-growth domestic market paid off with strong increases in Group traffic, which drove revenue up 25.8% year-on-year to RUB 176.5 billion, while strict cost control reined in growth of operational expenses despite exchange rate volatility. As a result, in the first half of 2015 Aeroflot Group posted an operating profit of RUB 5.9 billion; EBITDA and EBITDAR also rose, and the EBITDA and EBITDAR margins increased 3.9 and 6.9 percentage points to 7.5% and 18.8%, respectively.

“The Group focused on fleet optimization, cost-cutting, boosting efficiency of business processes and financial management, and maintaining a robust financial position. We are confident our policy of expanding our presence on the growing Russian market, maintaining customer loyalty and increasing business efficiency will enable continued growth in the Group’s profitability as the Russian economy recovers.”

In 1H 2015, Aeroflot Group’s revenue increased by 25.8% year-on-year to RUB 176,467 million, primarily as a result of an increase in revenue from Scheduled passenger flights and Other revenues.

Revenue from scheduled passenger flights in 1H 2015 increased by 30.0% year-on-year to RUB 144,087 million, boosted by 14.0% growth in passenger traffic year-on-year. Revenue from charter flights decreased by 71.0% to RUB 2,075 million, due to the Group’s strategy to decrease its presence in this market segment, as well as overall market dynamics in tourism traffic.

Despite a 1.0% decrease in the volume of cargo and mail carried in 1H 2015, cargo revenue increased 16.3% year-on-year on the back of stronger yields.

Other revenues increased by 39.9% year-on-year to 25,863 million, mainly driven by an increase in FX-denominated revenues from airline agreements following changes in the exchange rate.

Notes:

1. Including foreign carriers traffic.

2. EBITDAR = EBITDA before operating lease expenses. EBITDA = operating income + depreciation & amortization + customs duties.

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Aeroflot Group’s full year 2013 net profit increases 41.9% to $203.3 million

Aeroflot Russian Airlines (Moscow) today announced the consolidated IFRS financial results of the Aeroflot Group (Moscow) for the twelve months ending December 31, 2013. Key financial highlights:

• Full year 2013 net income increased 41.9% to RUB 7,334.7 mlm ($203.3 million);

• Full year 2013 revenue increased 15.0% to RUB 290,955.8 mlm ($9.135 billion);

• Full year 2013 traffic revenue increased 16.4% to RUB 257,545.7 mlm ($8.086 billion);

• Fuel costs for 2013 rose 11.2% to RUB 79,127.8 mlm ($2.484 billion);

• Operating costs excluding aircraft fuel, staff costs and depreciation and amortization for full year 2013 increased 9.9% to RUB 133,354.0 mlm ($4.187 billion);

• Full year 2013 basic and diluted earnings per share (EPS) were both RUB 7.6 (US cents 23.9), which is 15.2% higher than basic EPS in 2012 and 16.9% higher than diluted EPS in 2012.

Other 2013 highlights

Aeroflot became the official carrier of the football club Manchester United in 3Q 2013. The long-term sponsorship agreement helps position Aeroflot as a premium global brand.

In October 2013 Aeroflot announced plans to launch Russia’s first national low-cost carrier under the brand Dobrolet. The airline will operate as a 100%-owned subsidiary of Aeroflot. Since the October announcement Aeroflot has worked closely with relevant government authorities to ensure that necessary legislation and regulations are in place to allow for the LCC model to succeed in Russia. Aeroflot views the LCC market as a significant source of future growth and an opportunity to expand its business with negligible cannibalisation. The Group plans to launch Dobrolet this year.

In November 2013 Aeroflot introduced Aurora Airlines, a unified Russian Far East subsidiary based on the legacy assets of Vladivostok Avia and Sakhalin Aviatrassy (SAT). The roll-out of Aurora Airlines presents a strong opportunity to capture market share in the Far East, a region with few transport alternatives. The Group expects that Aurora will fly 2.4 million passengers a year by 2018. The creation of Aurora contributes to the consolidation and restructuring of Aeroflot’s legacy subsidiaries.

In December 2013 JSC Aeroflot was granted permission by the Central Bank of Russia to introduce a depositary receipt program. The following month Aeroflot launched a Level 1 American Depositary Receipt (ADR) program.

Copyright Photo: Antony J. Best/AirlinersGallery.com. Airbus A321-211 VP-BTL (msn 5881) in Manchester United special promotional livery arrives at London (Heathrow).

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Aeroflot reports record operating results for 2013

Aeroflot Russian Airlines (Moscow) has announced record operating results in the modern history of the company and Aeroflot Group for the twelve months ending on December 31, 2013. The airline issued this report:

Key drivers of the strong operational highlights included: a marked expansion of the route network, fleet enlargement and passenger traffic growth.

Highlights

Aeroflot standalone:

• Passenger traffic for the full year 2013 was a record 20.9 million. This represented 18.4% year-on-year growth, considerably ahead of the overall Russian industry growth rate of 14.2%. December 2013 passenger traffic was 1.6 million, a 17.0% rise over December 2012 (and well ahead of the 9.6% rise of the overall industry).

• Revenue passenger kilometers in 2013 totalled 50.5 billion, a year-on-year increase of 19.2% (versus 15.0% for the industry overall). In December revenue passenger kilometers increased 13.3%, versus 10.1% for the industry overall.

• In 2013 the company expanded its fleet, flying eight new Airbus A320s, five new Airbus A321s, three new Boeing 737-800s and four new Boeing 777-300s. Despite the larger fleet driving available seat kilometers 17.8% higher, the passenger load factor was 78.8%, or 0.9 percentage points higher than in 2012.

Aeroflot Group:

• Total passenger traffic in 2013 rose 14.3% year-on-year to 31.4 million. For December, passenger traffic was 2.3 million, a 13.3% increase over the same period a year earlier.

• Revenue passenger kilometers for 2013 increased 14.3% year-on-year to 85.3 bln. In December revenue passenger kilometers increased 6.9% versus the same period a year earlier to 6.3 billion;

• The passenger load factor for 2013 was 0.1 percentage point higher at 78.2%, despite a slight decrease (0.3 percentage points) in December versus the same period a year earlier.

Key factors that impacted the Group’s 2013 operating results:

• Aeroflot standalone continued attract more passengers by delivering a premium product at a competitive price, maintaining a strong safety record and expanding its network of routes.

• Charter subsidiary Orenburg Airlines redirected some of its capacity to European destinations from the Middle East and Asia due to political instability in those regions.

• Russian Far Eastern carrier Aurora Airlines was formed through the combination of Sakhalin Airways (SAT Airlines) and Vladivostok Avia, integrating the route networks and optimizing the fleets of the two formerly separate subsidiaries.

• Aeroflot discontinued its dedicated cargo fleet, switching to belly cargo operations.

The tables below provide key operating results for Aeroflot and Aeroflot Group.

Aeroflot standalone traffic figures

Dec 2013 Dec 2012 Change 12M 2013 12M 2012 Change
Passengers carried (000s)

1,630.2

1,393.6

17.0%

20,902.4

17,656.1

18.4%

Revenue passenger km (mln)

4,689.4

4,139.4

13.3%

60,226.3

50,532.5

19.2%

Available seat km (mln)

6,390.9

5,623.5

13.6%

76,444.8

64,880.0

17.8%

Passenger load factor

73.4%

73.6%

(0.2pp)

78.8%

77.9%

0.9pp

Cargo + mail carried (tonnes)

14,806.8

16,154.6

(8.3%)

176,456.1

193,948.8

(9.0%)

Total revenue ton-kilometers – pax, luggage, cargo (mln)

489.1

458.4

6.7%

6,339.9

5,669.2

11.8%

Available cargo ton-kilometers (mln)

790.0

744.4

6.1%

9,848.7

8,881.1

10.9%

Revenue load factor

61.9%

61.6%

0.3pp

64.4%

63.8%

0.6pp

Revenue cargo ton-kilometers (mln)

67.1

85.8

(21.8%)

919.5

1,121.3

(18.0%)

Aeroflot Group traffic figures

December 2013 December 2012 Change 12M 2013 12M 2012 Change
Passengers carried (000s)

2,316.3

2,044.0

13.3%

31,390.7

27,471.7

14.3%

Of which international

1,210.0

1,146.5

5.5%

17,391.4

15,963.3

8.9%

Of which domestic

1,106.3

897.5

23.3%

13,999.3

11,508.4

21.6%

Revenue passenger km (mln)

6,253.1

5,848.1

6.9%

85,273.3

74,617.2

14.3%

Of which international

4,051.7

3,966.1

2.2%

56,112.6

50,279.9

11.6%

Of which domestic

2,201.4

1,882.0

17.0%

29,160.7

24,337.3

19.8%

Available seat km (mln)

8,590.8

8,004.7

7.3%

109,063.8

95,598.1

14.1%

Of which international

5,600.4

5,426.4

3.2%

71,529.8

63,851.3

12.0%

Of which domestic

2,990.4

2,578.3

16.0%

37,534.0

31,746.8

18.2%

Passenger load factor

72.8%

73.1%

(0.3pp)

78.2%

78.1%

0.1pp

Of which international

72.3%

73.1%

(0.8pp)

78.4%

78.7%

(0.3pp)

Of which domestic

73.6%

73.0%

0.6pp

77.7%

76.7%

1.0pp

Cargo + mail carried (tons)

16,977.5

18,958.7

(10.5%)

204,554.1

223,771.7

(8.6%)

Of which international

9,116.7

12,034.9

(24.2%)

121,797.4

153,117.1

(20.5%)

Of which domestic

7,860.8

6,923.8

13.5%

82,756.7

70,654.6

17.1%

Total revenue ton-kilometers – pax, luggage, cargo (mln)

634.1

620.1

2.3%

8,666.1

7,925.7

9.3%

Of which international

406.3

424.5

(4.3%)

5,710.8

5,445.6

4.9%

Of which domestic

227.8

195.6

16.5%

2,955.3

2,480.1

19.2%

Available cargo ton-kilometers (mln)

1,027.8

1,001.8

2.6%

13,388.5

12,152.9

10.2%

Of which international

669.8

690.8

(3.0%)

8,872.6

8,351.7

6.2%

Of which domestic

358.0

311.0

15.1%

4,515.9

3,801.2

18.8%

Revenue load factor

61.7%

61.9%

(0.2pp)

64.7%

65.2%

(0.5pp)

Of which international

60.7%

61.5%

(0.8pp)

64.4%

65.2%

(0.8pp)

Of which domestic

63.6%

62.9%

0.7pp

65.4%

65.2%

0.2pp

Revenue cargo ton-kilometers (mln)

71.3

93.8

(23.9%)

991.5

1,210.0

(18.1%)

Of which international

41.6

67.6

(38.4%)

660.7

920.3

(28.2%)

Of which domestic

29.7

26.2

13.3%

330.8

289.7

14.2%

Copyright Photo: OSDU/AirlinersGallery.com. Celebrating “90 Years in the Sky”, Superjet 100-95B RA-89009 (msn 95017) in a special anniversary livery, arrives at the Moscow (Sheremetyevo) hub.

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Aeroflot Group to take control of Rossiya Airlines on March 30

Aeroflot Group (Aeroflot Russian Airlines) (Moscow) will assume full commercial control of Rossiya Airlines (St. Petersburg) on March 30, 2014. According to the group, this step “continues the process of the successful integration of the subsidiaries that Aeroflot acquired from State Corporation Rostec in 2011.”

From March 30, 2014 all flights operated by Rossiya Airlines will be designated by Aeroflot’s IATA code (SU), and the code of Rossiya Airlines (FV) will cease to be used.

The assumption of commercial control marks a key step toward the full integration of Rossiya into Aeroflot Group, and is expected to generate additional revenues through the sale of flights operated by Aeroflot subsidiaries through the Group’s more than 200 interline e-ticket agreements, further strengthening Aeroflot’s financial position.

Rossiya was established in 1992 and was previously owned by the Russian government as a state airline. It is unclear at this time if Rossiya will remain a separate airline under the Aeroflot Group or it will be integrated at some point into Aeroflot Russian Airlines.

Copyright Photo: Ton Jochems/AirlinersGallery.com. Rossiya’s Boeing 767-3Q8 EI-DZH (msn 29390) arrives at the popular resort of Antalya, Turkey.

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Aeroflot reports net income of $545.2 million for the first 9 months of 2013

Aeroflot Russian Airlines (Aeroflot Group) (Moscow) issued its financial results for the first nine months of 2013:

Aeroflot has announced the consolidated IFRS financial results of Aeroflot Group for the nine months ending 30 September 2013.

Key financial highlights:

  • Net income for the nine-month period of $545.2 million, an increase of 84.1% versus 9M 2012
  • Revenue for the nine-month period was up 16.8% year-on-year to $7,032.7 million
  • Traffic revenue for the nine-month period grew 17.8% year-on-year to $6,259.0 million
  • Fuel costs for the nine-month period rose 11.4% year-on-year to $1,877.5 million (9M 2012: $1,685.0 million)
  • Non-fuel operating costs for the nine-month period increased 10.1% year-on-year to $4,305.4 million
  • 9M 2013 basic and diluted earnings per share of $0.500 and 0.499, up 63.4% and 64.7%, respectively, from 9M 2012

Operational highlights:

  • Aeroflot Group passenger traffic grew 14.7% year-on-year in 9M 2013 to 24.0 million people, while revenue passenger kilometres (RPK) rose 16.2% to 65,363.0 million
  • Aeroflot standalone capacity rose 18.3% year-on-year in the period, while Aeroflot Group capacity was up 15.8% compared to 9M 2012

Aeroflot suspended operations of its cargo plane fleet in 2013, switching to belly cargo operations. This was the main factor driving the 8.6% decline in tons of cargo carried in 9M 2013 vs. 9M 2012

“Aeroflot Group’s strong financial results were driven by three factors.  First, we offer clients a premium product at an attractive price.  Second, we are managing costs effectively.  Third, we are optimising the operations of our subsidiaries that are being integrated into the Group,” said Vitaly Saveliev, Aeroflot’s chief executive officer.  “We are on track this year to serve the most customers in Russia’s modern history.  At the same time we maintain our relentless focus on safety.  This is bolstered by our aircraft fleet, which is the best in Russia and one of the youngest in Europe.”

USD mln, unless otherwise stated

3Q 2013

3Q 2012

Change

9M 2013

9M 2012

Change

Revenue

2,900.1

2,406.1

20.5%

7,032.7

6,020.7

16.8%

EBITDAR1

931.6

552.6

68.6%

1,575.4

1,068.9

47.4%

Margin (%)

32.1%

23.0%

9.1 p.p.

22.4%

17.8%

4.6 p.p.

EBITDA2

779.3

407.1

91.4%

1,131.1

654.5

72.8%

Margin (%)

26.9%

16.9%

10.0 p.p.

16.1%

10.9%

5.2 p.p.

Operating Income

682.8

327.0

108.8%

849.8

425.1

99.9%

Margin (%)

23.5%

13.6%

9.9 p.p.

12.1%

7.1%

5.0 p.p.

Net Income

543.7

289.1

88.1%

545.2

296.2

84.1%

Margin (%)

18.7%

12.0%

6.7 p.p.

7.8%

4.9%

2.9 p.p.

(1) EBITDAR = EBITDA + operating lease expenses; (2) EBITDA = operating income + depreciation & amortization + customs duties

Operational performance:

Aeroflot Group reported strong traffic revenue in the first nine months of 2013 of $6,259.0 million, representing a 17.8% increase over the same period in 2012. Group passenger traffic rose 14.7% to 24.0 million people, while revenue passenger kilometres (RPK) was up 16.2% to 65,363.0 million. Aeroflot Group’s seat load factor was relatively flat at 79.1%.

Financial performance:

Aeroflot Group revenue in 9M 2013 increased by 16.8% year-on-year to $7,032.7 million, primarily due to strong growth of 19.3% in the passenger segment, which was balanced by a decline in cargo revenue of 10.9% after Aeroflot suspended its cargo fleet operations.  Other revenue increased by 9.0% year-on-year to $773.7 million.

Fuel costs for the nine-month period increased 11.4% year-on-year to $1,877.5 million, driven by the significant growth in passenger traffic and the addition of new routes.

Non-fuel operating costs for the nine months of 2013 also increased in line with the growth in the Group’s operations, up 10.1% to $4,305.4 million, primarily due to year-on-year increases in aircraft and traffic servicing costs (up 17.9% to $1,252.7 million).  Staff costs increased 11.7% year-on-year to $1,003.9 million.

Aeroflot Group operating income for 9M 2013 nearly doubled year-on-year to $849.8 million, representing a margin of 12.1%, compared to an operating margin of 7.1% for 9M 2012.

The Group’s net income in 9M 2013 was $545.2 million, up 84.1% from the first nine months of 2012.

Other 2013 highlights:

In the beginning of 3Q, Aeroflot was unveiled as the Official Carrier of Manchester United Football Club. The multi-year sponsorship positions Aeroflot as a premium international brand by aligning it with a global symbol of excellence.

In October 2013 Aeroflot presented plans to launch Russia’s first national low-cost carrier (LCC), a new 100% subsidiary to be known as “Dobrolet”. Ticket prices are expected to be on average 40% lower than mainstream carriers, thus attracting a new customer segment to air travel. Aeroflot views the LCC market as a sizeable growth opportunity and a chance to diversify its business without the risk of cannibalization. Dobrolet is targeting the start of operations in 2014.

In November 2013 Aeroflot announced the roll-out of Aurora Airlines, a new subsidiary focused on the Russian Far East that has been created from Group subsidiaries Vladivostok Avia and Sakhalin Airlines. The launch of Aurora represents a unique opportunity to achieve significant market share in the Far East where there are few alternatives to air travel. Aurora has an annual traffic target of 2.4 million passengers by 2018.  The creation of Aurora is part of the process of consolidation and restructuring of subsidiary assets.

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