Page 131 - RusRPTDec21

and K by YE21. The decline from these peaks will be lingering, in our view, so the K price will increase y/y, as will N and P. We have AKRN and ICL as Buys, and PHOR and MOS as Holds.
9.1.12 Transport sector news
● Planes
In October, airline traffic saw a mild recovery. In Russia, it was at -2% to pre-COVID levels (vs. -4% in September), due to the new Egypt flights.
In Turkey, it was at -19% (vs. -29%), due to the international network recovering. In Europe, it stood at -41% (vs. -42%), and in the US it was -21% (vs. -24%).
Along with this recovery, the MSCI World Airlines Index printed 1% growth over the last month. Aeroflot was down 5% against the backdrop of sanctions noise, while Turkish Airlines was up 16% on the strong 3Q21 results. We note that traffic trends were above our expectations, despite the increase in the number of new COVID cases and the low season. Thus, we think that November might be strong as well. In Russia, we note that there was large demand for flights during the non-working week, coupled with the ongoing increase in flights to Egypt.
In Russia, traffic was 11mn PAX, -2% to October 2019 (vs. -4% in September). We calculate that international traffic was -35% (vs. -42%), supported by the increased number of flights to Egypt, while domestic was at +26% (vs. +28%). Aeroflot Group carried 4mn PAX, -13% (unchanged). While the recovery of main Aeroflot subsided to -34% (vs. -28%), it was compensated by the 6% growth of Rossiya, due to its charter programme (was -16%). Pobeda’s growth was unchanged, +38% to October 2019. Also, high oil activated the damper mechanism. We calculate that Aeroflot’s effective fuel price was RUB 44k/t, (RUB 49k/t fuel minus the RUB 5k/t damper return). In November, we see it at RUB 50k/t, 7% above the 2019 level, which could be compensated by elevated international tariffs.
131 RUSSIA Country Report December 2021 www.intellinews.com