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ticket classes that will be first launched on German and Italian destinations. The global trend of unbundling that includes luggage-free tariffs was first adopted by S7 Airlines, as well as Urals Airlines, Utair, and Nordwind. Such tariffs allow only for cabin luggage. The popularity of such tariffs is on the rise in Russia, with the 52% of the passengers choosing those in 2018 as compared to 45% in 2016 (according to the data of OneTwoTrip cited by Vedomosti daily). 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%. 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.
9.2.4 Construction & Real estate corporate news
The Russian real estate market leader PIK Group will have to raise RUB170bn-250bn ($2.6bn-3.3bn) of banking loans to comply with the new residential housing rules coming into effect as of July 1 2019, the VP of the company Dmitry Timofeev told the press. As analysed by bne IntelliNews, the changes will ban pre-selling apartments, which has been a favourite way to finance the construction of buildings for Russian developers. Now the homeowners will pay their money into escrow accounts that the developer can only tap once the building is complete. PIK noted that the need for additional financing will depend on the rules of using the escrow accounts, and degree of readiness of the projects that would still allow pre-sales. Previously, seeking to relieve the strain on the real estate sector, the Ministry of Construction suggested to waive escrow account requirements for projects that are at least 30% ready and for developers that participate in state renovation projects (such as Moscow residential renovation programme). PIK reported sales in 2018 were up by 17.0% to a total of RUB221.1bn ($3.3bn). Last year PIK sold a total of 1.94mn sqm of housing, an increase of 5.6% y/y, as the Russian housing market began to show green shoots of recovery. The average price for residential space was RUB108,896 ($1,639) per square meter, an increase of 5.5% y/y.
9.2.5 Retail corporate news
The iconic Russian children's goods chain Detsky Mir controlled by AFK Sistema multi-industry investment conglomerate will acquire Valdai shopping mall in Moscow from Sberbank to move its flagship Vozdnizhenka store, the company said on March 28. The company will pay about RUB1bn for the new store, out of which about 90% will account for the property purchase, which could significantly increase the capital spending.
One of Russia's largest cosmetics, toiletries, and household products retail chains Sangi Style is close to bankruptcy, with creditors claiming over RUB4bn from the company, Vedomosti daily reported on March 4 citing the court data. With over 800 outlets Sangi Style was one of the top three chains in the segment, behind Magnit Cosmetic (3,774 outlets) and L'Etoile (900). The
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