Aeroflot 1Q 2019 IFRS financial highlights

Moscow – Aeroflot Group (“the Group”, Moscow Exchange ticker: AFLT) today publishes its condensed consolidated interim financial statements for three months of 2019, in accordance with International Financial Reporting Standards. Results are published in accordance with the new IFRS 16 Leases standard.

Key financial highlights for 1Q 2019:

• Revenue increased by 23.3% year-on-year to RUB 138,041 million;
  
• EBITDA amounted to RUB 21,333 million;
  
• The net loss totalled RUB 15,746 million.
  

Andrey Chikhanchin, PJSC Aeroflot Deputy CEO for Commerce and Finance, said:

"In the first quarter of 2019 Aeroflot Group continued to develop in line with the approved strategy. The Group carried 12.8 million passengers, an increase of 16.2% year-on-year. Growth of passenger numbers and positive yield trends drove revenue higher by 23.3% to RUB 138.0 billion.

"Market factors including FX swings and fuel costs remained significant for our results in comparison with the year-ago period. As in previous quarters, the most substantial influence on costs in 1Q 2019 was higher fuel costs. The Group's total fuel costs increased by RUB 9.7 billion, or 28.4%, as prices rose by 10.2% in ruble terms compared to the first quarter of 2018. The higher cost of jet fuel in the reporting period, despite a 5.4% decrease in Brent crude prices, was due to a 16.3% depreciation of the ruble against the US dollar compared to the year-ago period. CASK increased by 6.4%, due to currency movements as well as fuel costs.  

"As a result of the new IFRS 16 Leases standard coming into effect and replacing IAS 17, in 2019 a number of metrics in our consolidated financial statements are changing. In line with the new standard, the Group has recognised in its financial statements assets and liabilities relating to all aircraft leasing agreements, including those relating to aircraft that were previously classified as aircraft on operational leases. This accounting change affects our balance sheet, including total assets and liabilities, and also a number of items in the profit and loss account and the cash flow statement. Our decision to use fully retrospective method for the transition to the new standard, and the work we have done to introduce it, are designed to minimise the effect of the transition on profitability and the volatility of profitability measures in future.

"The winter season is traditionally the toughest time of year for the industry, as airlines continue to shoulder fixed costs while demand troughs as a result of the seasonality that can clearly be seen in passenger numbers. This seasonal effect, combined with the continued impact of fuel prices and stronger currency effects, were the reasons for the net loss for the reporting period of RUB 15,746 million.

"The bulk of the year is ahead, including the high season. Our results may be significantly affected by jet fuel prices, which remain high but are also showing signs of relative stabilisation compared to previous months. Aeroflot's management team remains committed to active revenue management and strict cost control throughout the year to minimise the impact of macroeconomic factors."