Page 98 - RusRPTMay20

already anticipating a substantial decrease in its fleet this year (by more than 10%), and expects no sizeable cash inflow this year, forecasting drastic measures to keep the business alive (such as substantial salary/personnel cuts and downsizing operations).
Russian President Vladimir Putin announced plans to allocate more than RUB23bn ($306mn) to support domestic airlines​. He specified that these funds in particular will be spent on leasing aircraft, replenishing working capital, paying salaries and parked aircraft." These payments might be used to support companies’ working capital, and cover aircraft leasing and parking costs.
For the first time in history, Aeroflot has ​lost its position​ as the leading Russian airline by number of daily flights​. In the middle of April, Aeroflot completed an average of 70-80 flights per day. Russia’s second largest airline, S7, completed 120-130. While Aeroflot specializes in flights in and out of Moscow, including many international flights which have been canceled, S7 is primarily a regional airline and thus has been less directly affected by COVID.
The number of passengers flying with Russian airlines fell by 26.6% in March, ​federal aviation agency ​Rosaviatsiya​ said on Thursday, according to Rusaviainsider.com.​ Amid heavy restrictions imposed to curb the spread of the coronavirus, Russian carriers served 6.57mn people in March, a sharp decline year-on-year. First-quarter numbers were also down to 23.4mn passengers, a drop of 5.3% year-on-year. The only airline in the top-five group that managed to improve its year-on-year performance during the month was Aeroflot Group’s low-cost subsidiary Pobeda Airlines. The low-cost carrier served 748,000 passengers, up 3% in March 2019, ranking it as Russia’s third-largest after parent ​Aeroflot​ and ​S7 Airlines​. Despite Aeroflot’s privileged position as Russia’s only airline allowed to continue some international flights before the borders were closed in late March, the Russian flag carrier nevertheless experienced a 41.5% drop of passenger numbers in the month, down to 1.8mn passengers. A similar traffic slowdown of 41.7% was registered by its sister airline Rossiya, which carried 415,100 passengers, ranking it as Russia’s fifth-largest. Aeroflot’s privately owned rival S7 Airlines served 999,600 passengers in the period, 22.1% down on March 2019.
Airline traffic fell 27% y/y in March, in-line with expectations; ​however, April has been below forecasts. So far in April, there have been 90% fewer passengers than a year ago. Bankers switched from a base case of a 17% traffic decline in 2020 to a bear case of a 35% decline, with almost a full cut of traffic in the next two months. The outbreak peak in China was in early February. That month, Chinese traffic fell 85% y/y, then in March by 61%. Applying this to Russia, where the outbreak peak might come in the next 2-3 weeks, April-May is almost entirely lost, with recovery thereafter. No dividends in 2020. Aeroflot had a RUB26bn balance sheet cash positon as of YE19; it would have a RUB20bn monthly cash burn if its fleet were 100% grounded. To preserve liquidity, Aeroflot has suspended cash refunds for tickets. Another anticrisis measure includes asking for a six-month delay in dividend payments, reducing payout ratio to 25% of NI. We now forecast that the company will pay RUB3bn or a 4% DY for 2019 in 2021. For FY21F, we expect Aeroflot revenues to recover to RUB775bn (+75% y/y, and +14% from 2019), with EBITDA at RUB213bn (+93% y/y, +26% to 2019). We calculate NI at RUB9bn, offering a 5% DY.
Passenger traffic in Russian airports decreased by 75% in March
98​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com