Page 110 - RusRPTApr19

autumn 2018 Rostec and Renault Nissan seek to consolidate 100% in Avtovaz. In April Avtovaz completed the second stage of a $1bn recapitalization by the French car major and Rostec, which brought their joint stake in the company to 83.5%.
9.2.3 Aviation corporate news
Russian national air carrier Aeroflot saw a net profit drop by 75% to RUB5.7bn ($87mn) in 2018 according to its IFRS accounts, the company said on March 4. Revenues of Aeroflot grew by 15% to RUB612bn, but Ebitda was down by 40% to RUB33.6bn and Ebitda margin declined by 5pp to 5.5%. The company attributed the decline in earnings to 48% jump in jet fuel spending of RUB182bn, which was due to oil price dynamics and higher traffic and flight time. Net debt of Aeroflot increased from RUB50bn to RUB67.5bn, with debt to Ebitda leverage up from 0.9x to 2x. Aeroflot was one of investor darlings in 2017, but rising costs of both staff and fuel have hurt its bottom line last year. Previously it was reportedly gearing up for a one-off revenue miss of RUB55bn in 2018 due to high jet fuel costs and the ruble devaluation effects With RUB48bn Aeroflot accounted for over a half of the additional fuel spending in the sector, estimated by experts surveyed by Kommersant daily at RUB87bn. But the national state-controlled carrier was able to compensate this with non- operational revenues, most of which are royalties on international flights over Siberia ($0.6-0.8bn annually). In the end of 2018 Aeroflot adopted an ambitious growth strategy, planning to outpace the market by 2023 through deeper regional penetration. Last year the carrier managed to beat the market in terms of passenger growth, posting 11.1% passenger turnover increase to 55.7mn people (9.7% to 24.7mn for international and 12.3% to 31mn for domestic routes), while the market growth rate was 10.5% in 2018.
Russian national air carrier Aeroflot plans to boost the share of non- aviation income from current 6% to 20%, Kommersant daily reported on March 15 citing the CEO of the company Vitaly Savelyev. Aeroflot was one of investor darlings in 2017, but rising costs of both staff and fuel have hurt its bottom line last year. The company saw a net profit drop by 75% to RUB5.7bn ($87mn) in 2018 according to its IFRS accounts, with Ebitda down by 40% to RUB33.6bn and Ebitda margin shrinking by 5pp to 5.5%. Now the carrier will try to gain more competitive edge by introducing 20 new services, without providing the detailed description. Currently most of the non-core income of Aeroflot is constituted by loyalty programs, overweight luggage, hotel and car rental booking, etc. Analysts surveyed by Kommerstant believe that such a steep spike in non-core revenues is only possible on introduction of luggage- free tariffs, but the carrier has not yet announced such potentially unpopular move. In the end of 2018 Aeroflot adopted an ambitious growth strategy, planning to outpace the market by 2023 through deeper regional penetration. Despite taking a hit from high fuel costs, in 2018 the carrier managed to beat the market in terms of passenger growth, posting 11.1% passenger turnover increase to 55.7mn people (9.7% to 24.7mn for international and 12.3% to 31mn for domestic routes), while the market growth rate was 10.5% in 2018.
Russian airline Aeroflot and its subsidiary Rossiya airline will introduce luggage-free tariffs that will be on average 30% cheaper than the economy class tickets, the national air carrier said on March 19. The announcement follows the guidance by Aeroflot's management to boost the non-core revenues by introducing 20 new non-aviation services. As expected by the analysts, the main driver of such revenue growth will be new luggage-free
110 RUSSIA Country Report April 2019 www.intellinews.com