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operating leases, BSC Global Markets commented on May 31, noting that this effectively represents an increase in fixed costs, while the quarter offers only 21% of annual passenger flow and the seasonally lowest yields. VTB Capital agrees that the first quarter is typically weak season for airlines, while the reporting quarter in particular was challenging due to cost pressures. The bank notes that Aeroflot plans to compensate for these losses during the rest of 2018, given the upcoming high the third quarter of 2018 and the World Cup.
Despite the drop in earnings and profitability Aeroflot shares were up by 5% due to the most recent positive newsflow  on its dividends, strategy and above-the-market buyback price, VTB notes. The company has announced a RUB7bn buyback programme with the buyout price of RUB 147.22/share offering a 8% premium to the market before the announcement. Aeroflot's free-float is 45% currently, including 4.8% stake held by the Russian Direct Investment Fund (RDIF) and its partners. Most recently Aeroflot's CEO Vitaly Saveliev told Interfax at the SkyService forum in Moscow that the company's Board of Directors is  targeting a 50% dividend payout and will vote on the proposal on May 29 . In the reporting quarter airline's leverage also improved, with Net debt/Ebitda down to 0.6x versus 0.9x as of end-2017. The company still posted positive RUB19bn free cash flow, down by 20% y/y.
The Russian Direct Investment Fund (RDIF) together with funds of Bahrain, Qatar, and Kuwait acquired a stake in Russian national air carrier Aeroflot ,  Vedomosti  daily reported on May 23 citing the head of RDIF Kirill Dmitriev. The stake acquired is worth RUB10bn ($162mn), which is estimated at 4.8% of Aeroflot’s share capital. Unnamed sources confirmed to daily the investment into treasury shares was made in September 2017. Analysts and traders surveyed by  Vedomosti  noted that the value of Aeroflot’s shares have dropped by 27.5% since September, seeing it as an attractive entry opportunity, but believing that it would take RDIF and Gulf funds a long time to recoup the investment. The daily calculated that RIDF would need an additional 1.9% stake in Aeroflot to introduce its candidate to company’s board. The company’s largest shareholder is Rosimushestvo (51.17%) state property agency, with free float of 45.8%.
Russian Helicopters increased its deliveries by 17% in 2017 selling 221 machines ,  Vedomosti  daily reported on May 20 citing the representative of the company – the first increase in sales in five years. The company was sanctioned in October 2017 by the US Department of Treasury (USDT) along with other  33 defence industry related companies and state security and technology agencies . The structure of demand for helicopters is changing towards civil market machines, while previously in 2013-2016 the sales were driven by armament programs in Russia, US, India, China, Eastern Europe, and Middle East, the representative told the daily. The group plans to increase the share of civil sales to 40% by 2035, up from 10% in 2016 and about 30% in 2017. In 2017 the company had IFRS revenues of RUB228bn, with RUB26.9bn in net profit. Russian Helicopters is controlled by Rostec state technology corporation (87.5%) as well as a consortium of Russian Fund for Direct Investment and Middle
82  RUSSIA Country Report  June 2018    www.intellinews.com


































































































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