Page 90 - RusRPTFeb20

2.5 years of underperformance, Aeroflot seems to be shaping up for a change." As reported by ​bne IntelliNews,​ Aeroflot managed to contain the losses of 2018 on high fuel costs and had its ​investment case improve in both structural and fundamental terms​, with a brighter outlook on regulatory and cost relief in 2019-2020, as well as an expected resumption of dividend payments to investors. Prior to the fall in the companies shares in 2019 Aeroflot was an investors darling for several years on the back of increased traffic volumes and growing profitability.
Russia’s flag carrier ​Aeroflot​ has taken delivery of five more government-subsidized Superjet 100 regional jets​, bringing its fleet of the type to 54 units and its combined capacity offering to 4,700 passenger seats, Rusaviainsider.com ​reports​. SSJ-100 is produced by ​Sukhoi Civil Aircraft Corporation​ (SCAC). All of the five new SSJ-100s were produced in 2019 and have been delivered under a lease contract with VEB-Leasing. They are the first batch of 100 units for which the airline has a September 2018 agreement. The latest deliveries are behind the original schedule dates. Aeroflot was expecting to introduce 10 new SSJ-100s last year.
Aeroflot’s December operating data showed volume growth capped.
Aeroflot released December operating data. In December, the group’s passenger volumes growth stood at 0.9%, with Aeroflot airlines standalone showing a decline of 3.9%. Lower PLF (76.4% vs 77.1% a year ago) contributed to weak operating data. ASK increased by a marginal 1.5% as the number of phased out aircraft exceeded additions in December; as of YE19, the group’s total fleet stood at 358 aircraft vs 366 as of YE18. With Aeroflot’s volumes growth declining 3.9%, growth of the groups’ volumes was capped, largely as a result of the expected net decrease of the fleet (358 vs 366 as of YE18) and soft PLF (76.4% vs 77.1% a year ago).
Aeroflot Russian tour operators cease organized tours from China in January because of flu fears. ​Russian tour operators stop accepting organized tourist group from China. Tour operators are no longer accepting such tours as of 28 January, in an effort to contain the spread of the coronavirus, according to TASS. For now, little impact on traffic; if blackout continues, L-T effect negative. Direct flights to China total c2% of the group’s total passenger volumes, c4% – including transit flights. Still, contribution to revenues is above 4%, as those routes are more marginal. Should the decline of traffic be limited by the abovementioned numbers, our 2020 forecasts remain relatively safe. Furthermore, weakness on traffic may be offset by lower costs (jet fuel). However, if the decrease in flying activity spreads into other regions of Asia and Europe, not the case as of now, the impact would be notably bigger than just a few percent of revenues. To remind, during the SARS virus blackout in 2003, traffic fell by 30-40% in Asia. At this stage, Aeroflot sees no impact on traffic due to the blackout, and the spread of the virus has slowed. Any ban of flights to China could cost Aeroflot up to 4% of passenger volumes. Still, for now, such a measure seems excessive, as carriers continue to fly to China. A longer blackout could damage volumes by several dozen percent.
9.2.4 ​Construction & Real estate corporate news
LSR Group​ (LSR) released its 4Q19 operating results, wrapping up the reporting season in the development segment with ​lower results y/y on the
90​ RUSSIA Country Report​ February 2020 ​ ​www.intellinews.com