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Costs: rising at a high, double digit pace . The overall 17% growth in costs was due to a confluence of several factors, all of which pressured the airline’s profitability. Fuel costs (the most important item) grew 24% y/y, on the 17% y/y increase in fuel prices. The highest (but undisclosed) growth was in operating lease expenses due to the delivery of 41 new aircraft under the operating lease. Pressure also came from airport services, pilots’ salaries and SG&A costs (+7% y/y). Overall, we estimate RAS EBITDA at a RUB 7.7bn loss during the period, or a -8% EBITDA margin (vs. a RUB 0.1bn loss in 1Q17), meaning that consolidated IFRS EBITDA might return a loss of some RUB 9bn for the group. The company reported a net loss of RUB 8.8bn on the bottom line, vs. a RUB 4.7bn loss in 1Q17, which is however a poor cross-read for the upcoming IFRS earnings.
Russian airline UTair ordered 30 Boeing 737 MAX jets in April 2018 , Vedomosti  daily reported on May 10 citing the monthly report of Boeing and the general director of the carrier Anrei Martirosov. The order of about $1.76bn to be delivered from 2019 to 2025 would make the largest order of Airbus or Boeing jets by a Russian carrier ever. Recently S7 Group also ordered 37 jets, including 10 Boeing 737 MAX 8 and 27 Airbus 320/321 neo. Russian air transportation market was recovering steadily in 2017, with the number of passengers carried by Russian airlines soaring  by 18.6% y/y to 105mn. Total passenger turnover was up 20.1% last year to 258.8bn passenger-kilometres. The passenger load factor added 1.9 percentage points annually to 83%. On the recovering market UTAir reported RUB5.4bn (€84.9mn) of net IFRS profit in 2016,  swinging into profit  from RUB2.78bn loss posted in 2015.  Vedomosti  reminds that UTAir is the last of large Russian carriers to renew the fleet, after cutting the number of jets almost twofold in 2014-2015. The company was on the verge of bankruptcy in 2014-2015 and in order to lower costs the airline reduced its route network, fleet and staff.
9.2.4  Construction & Real estate corporate news
Etalon Group has announced a number of changes to its management team , and that the BoD had recommended a $0.18/share final dividend for 2017 (implying a 6.3% yield), bringing the total dividend payout for the year to $0.22/share (versus our forecast of $0.24/share). The payout for the full year comes to 51% of net income, which is in the lower half of the 40-70% payout range, since the company spent an estimated R7bn on replenishing its land bank last year. During the BoD meeting on April 27, at, which the final dividend recommendation was determined, it was decided that key executives would receive a total of 2% of the company's treasury shares as compensation, with a seven-year lock-up period. Some changes to the management structure and the BoD composition were also made: Vyacheslav Zarenkov, the founder, will step down as CEO and become the chairman of the BoD. Dmitri Zarenkov, the founder's son, will stay on the BoD but give up his position as chairman to become a non-executive director. Dmitri Kashinsky, the former COO, will become the CEO, retaining his seat on the BoD. Kirill Bagachenko, a deputy CEO and the head of IR, will become the CFO. Michael Calvey, a founding partner of Baring Vostok Capital Partners (BVCP, holder of a 5.7% stake in Etalon Group), will resign from the BoD, leaving just one BVCP representative (Alexei Kalinin) as a non-executive director. This is a logical move following BVCP's sale of an 11% stake last year. Maxim Berlovich, the CEO of EtalonStroy, will take Calvey's seat on the BoD.
84  RUSSIA Country Report  June 2018    www.intellinews.com


































































































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