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in terms of passengers carried," Sberbank CIB noted on March 11. However, ”the major impact of the virus will clearly appear in the upcoming months. Aeroflot and other airlines have started to decrease the frequency of flights and have suspended flights to certain destinations as the coronavirus outbreak has spread," Sberbank warns. As reported by bne IntelliNews, Russian tourism operators has already suffered a RUB27bn ($406mn) loss due to the outbreak of the Coronavirus.
Aeroflot reported February operating results. The results were strong, albeit largely irrelevant now, as the current situation is dramatically different. Total passenger volumes stood at 3.9mn PAX – just minor 0.1% decline y/y. Aeroflot airlines, due to its higher exposure to international traffic, showed 4.5% decline PLF stood at 74.4% vs 77.5% in February 2019. International PLF fell 4 pp and domestic slid 1.8%. Logically, despite 3.6% of capacities, RPK fell 0.5%
In January, the Russian airline industry grew 6% y/y, to 9mn PAX. The rate of growth is gaining momentum, up 1pp since last month. RPK was at 24bn p-km, +9% y/y. Aeroflot Group (AFLT RX) traffic was flat at 4.2mn PAX. Aeroflot Airlines' traffic declined 5% y/y as the company retired its outdated A330s, but low-coster Pobeda saw 34% y/y growth, which once again significantly pulled the Group's numbers up. The industry load factor was flat in December at 79%. Excess capacity was balanced by stronger demand. Industry airfares continued to grow in January: the 7% y/y rise was above inflation and is a sign of further strengthening demand, we think. Jet fuel prices were about RUB40,400/t in January, down 7% y/y. With a 1-mo lag in fuel contracts and MTD prices on hand, Aeroflot's purchase price in 1Q20F is shaping up at about RUB40,000/t (down 10% y/y). The coronavirus impacts both ways. Having started to spread in January, the new virus immediately became a risk for Aeroflot (China accounts for 2-4% of its traffic). Russia has now suspended all flights to the region, except Aeroflot's. At the same time, with oil prices pushed down by new risks, jet fuel prices have fallen 19% y/y to RUB36,200/t in February, which eases airlines' costs.
Preliminary aviation industry statistics for February released by Russia's Federal Agency for Air Transportation show no major impact of the virus. The number of passengers carried decreased by 4% y-o-y for the flagship Aeroflot airline and 13% for Rossiya, but increased by 32% for Pobeda. These numbers do not indicate a substantial change in the y-o-y dynamics versus January. Overall, the market grew 6.5% y-o-y in terms of passengers carried. The major impact of the virus will clearly appear in the upcoming months. Aeroflot and other airlines have started to decrease the frequency of flights and have suspended flights to certain destinations as the coronavirus outbreak has spread.
9.1.4 Construction & Real estate sector news
Investment in Russia’s real estate fell by 16% to RUB51bn in January– March hurt by the global COVID-19 pandemic, and falling demand for crude that triggered national currency devaluation and growing uncertainty, residential and commercial property consultancy Knight Frank said in March. The share of foreign investors fell significantly to just 2% as compared with 28% in the same period of 2018.
Construction activity was up +2.3% y/y in February. The growth was mainly
99 RUSSIA Country Report April 2020 www.intellinews.com