Aeroflot announces 4Q and FY 2018 IFRS financial results

Moscow, 4 March 2019 – Aeroflot Group (“the Group”, Moscow Exchange ticker: AFLT) today publishes its consolidated financial statements for the three months (4Q) and full year (FY) ending 31 December 2018, in accordance with International Financial Reporting Standards.

Key financial highlights

RUB million, unless stated otherwise	4Q 2018	4Q 2017	Change	12M 2018	12M 2017	Change
Revenue	145,225	128,161	13.3%	611,570	532,934	14.8%
EBITDAR	11,522	20,792	(44.6%)	122,479	121,808	0.6%
EBITDAR margin	7.9%	16.2%	(8.3) p.p.	20.0%	22.9%	(2.9) p.p.
EBITDA	(13,591)	2,709	-	33,598	56,015	(40.0%)
EBITDA margin	-	2.1%	-	5.5%	10.5%	(5.0) p.p.
(Loss) / profit for the period	(16,777)	(4,089)	-	5,713	23,060	(75.2%)

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

“In 2018 Aeroflot Group carried 55.7 million passengers, an 11.1% increase year-on-year. Growth of operational metrics resulting from the expansion of our route network and additions to the fleet were accompanied by significant developments in the Group’s strategy. Aeroflot, our flagship airline, moved domestic flights to a new, modern terminal at Sheremetyevo airport, leading to an increase in service quality on the ground. Rossiya moved its scheduled flights from Vnukovo to Sheremetyevo, leading to improved transit connectivity with Aeroflot’s core network. Pobeda significantly increased growth rates, expanding the availability of its low-cost product offering. Finally, another important landmark was the updating of the Group’s long-term targets for the next five years.

“The most significant factor affecting the Group’s financial results for 2018 was the unprecedentedly fast increase in the average cost of jet fuel, as well as depreciation of the ruble. Across the Group, jet fuel prices increased by 36%, which at the Group’s consumption volumes led to additional cost of RUB 48 billion. The depreciation of the ruble created additional pressure on the financial results, given that almost half of the Company’s costs are FX-denominated.

“In this situation, a special optimisation programme was launched in addition to existing measures to boost operational efficiency and reduce costs. The programme focused on active capacity and revenue management in addition to direct cost reduction, and has already delivered results: excluding fuel, CASK for the full year increased by just 0.8%, despite increasing currency pressures on FX-denominated cost lines. We were thus able to limit increases in total unit costs, including fuel, to 9.2%. In a climate in which domestic consumers are being conservative with their travel spending, we were able to generate RASK growth of 4.9% while maintaining load factor levels.

“High fuel prices and excess capacity in the market persisted during the low season in Q4. The correction in oil prices was reflected in jet fuel prices only in December, but had a limited effect, while average jet fuel prices remained above the levels of the previous year. Currency pressures on operating costs in Q4 did not weaken, but rather strengthened. These factors explain the increased loss for the final quarter of the year.

“However, despite the record increase in the price of jet fuel and the depreciation of the ruble, thanks to its extensive optimisation programme the Group was able to record a profit for the year of RUB 5,713 million.”