Aeroflot Rossiyskiye Avialinii : announces FY 2017 RAS financial results

05 February 2018

Moscow, 5 February 2018 - PJSC Aeroflot (Moscow Exchange ticker: AFLT) today publishes its financial results for the year ending 31 December 2017 in accordance with Russian Accounting Standards (RAS). RAS results are presented on a non-consolidated basis. PJSC Aeroflot's consolidated financial results for 2017 in accordance with International Financial Reporting Standards IFRS) will be presented in early March 2018.

Highlights under RAS

Note: key financial indicators are presented based on comparable data for 2016 and 2017. Retrospective indicators for 2016 have been calculated due to the introduction of new methodology for calculating reserves. Additional information is presented in the explanatory notes to the financial statements for 2017 available on the Company's website (available in the Russian language).

Commentary on the FY 2017 RAS financial results

• Revenue was RUB 446,649 million, an increase of 4.4% year-on-year, driven by growth of key operational indicators, including a 13.3% year-on-year rise in passenger traffic of Aeroflot airline to 32.8 million (total passenger traffic for Aeroflot Group increased to 50.1 million), as well as a significant currency effect on PJSC Aeroflot's FX-denominated revenue. A progressive increase in the pace of revenue growth was seen in Q4 2017, with revenue increasing by 6.5% year-on-year during the quarter.
  • The rouble appreciated by 11.2% against the euro and by 13.0% against the US dollar during 2017, putting pressure on yields in the international segment: yields of Aeroflot airline decreased overall by 5.5%, though the trend was positive throughout the year (in Q4 2017, yields decreased by just 1.5% year-on-year).
• Cost of sales was RUB 400,268 million, up 7.7% year-on-year. SG&A were RUB 47,914 million, an increase of 9.8% year-on-year. The increase in costs was driven by the Company's growth and the corresponding expansion of its operations in line with Group's strategy - Aeroflot airline's operational volumes and number of flights increased by 10.3% and 11.2%, respectively.
  • Fuel expenses represented the most significant increase, growing by RUB 12,845 million in monetary terms (up 17.2% year-on-year), as a result of increased operational volumes (Aeroflot airline's flight hours rose 9.9%) and a 7.6% increase in rouble-denominated prices for fuel on the back of increase of Brent price on global markets (2017 average price up by 21.3% y-o-y) .
  • In 2017, Aeroflot airline added 35 aircraft to its fleet, leading to an increase in leasing and maintenance expenses.
  • Other expenses that increased were customer service, ground service at airports, as well as staff costs and marketing expenses related to the focus markets.
  • As a result of the effect of these factors on cost of sales and SG&A, the gross loss amounted to RUB 1,533 million.
• The balance of interest receivable and payable amounted to RUB 3,436 million, up 111.7%, as a result of pre-term repayment of loans and borrowings and the subsequent reduction in interest expenses.
• Other income for 2017 decreased, reflecting the absence of currency effects on the return of circa RUB 12.6 billion of deposits paid for aircraft, and on income of RUB 4.7 billion from the sale of aircraft under financial leasing agreements, which had a significant effect on the Company's financial results for 2016.
• Despite presence of pressure from above mentioned factors, mainly linked to macroeconomic factors, Company's netprofit for 2017 amounted to RUB 28,443 million.