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negotiates to have the sanctions lifted or eased. Reportedly Deripaska is actively lobbying for lifting the sanctions on GAZ, with Deputy Prime Minister Dmitri Kozak suggesting that one of the options was selling the carmaker to the Volkswagen car major. This confirms previous reports that Deripaska is considering selling his stake in GAZ Group. Currently 65.56% in GAZ is held by Deripaska’s Russian Machines, with a capitalisation of RUB8bn as of June 1 in Moscow. Previously on the day the sanctions were announced, Deripaska's Ingosstrakh insurer already sold 17.52% in the group.
Russian truck producer Kamaz will start the production of new generation six-cylinder R6 diesel engines in 2019 in Tatarstan, Tass reported on November 13 citing the press service of republic's president. The new Euro 5 and Euro 6 emissions standards complying engines will be produced in partnership with the Swiss-German Liebherr group. Test versions of the engines will be issued in 2018, with mass output planned for 2019. Kamaz is the world’s 16th biggest heavy duty truck producer and the world’s eighths manufacturer of diesel engines. In September the company also said it will start a 50/50 joint venture with Chinese Weichai Power Co to produce industrial and ship engines. Most recently Russia's largest private car and LCV manufacturer Avtovaz also announced its intention to boost engine output. Russian state technology corporation Rostec is the biggest shareholder in both Kamaz and Avtovaz, in partnership with foreign car majors Daimler and Renault, respectively.
9.2.3 Aviation corporate news
Aeroflot Group disclosed its operating results for October. Passenger turnover for the group rose to 12.3bn passenger-km (up 9.2% y/y) last month. Domestic destinations led the way with an almost 15% y/y increase. In terms of the number of passengers carried, the growth in October was 11.4%, so the trend of decreasing route length on international destinations continued. Load factors were flattish on average and materially improved only on domestic destinations. The growth in passenger turnover of the flagship airline slowed to 5.2% y/y in October versus 6.2% for 10m18. Domestic destinations, once again, fared better than international ones. For the Russian aviation industry as a whole, the Federal Agency for Air Transportation reports that the number of passengers grew 10.4% y/y in 10m18, which is very similar to the 10.3% turnover figure. That means that after several months of outperformance relative to the market, Aeroflot has reverted closer to the mean. Year-to-date, the company is now in line with the market in terms of passenger growth and somewhat behind in terms of turnover. Given that the group's performance is now increasingly being determined by Pobeda, investors should to look at the two segments (i.e. traditional aviation and low- cost) separately going forward.
Russian national air carrier Aeroflot posted net profit of RUB22.5bn ($338mn) under IFRS for January-September 2018, the company said on November 29. Net profit declined by RUB175mn year-on-year, but was in line with analysts' expectations. Aeroflot, that was one of investor darlings in 2017, but rising costs of both staff and fuel have hurt its bottom line. Now it is reportedly gearing up for a one-off revenue miss of RUB55bn ($0.82bn) in 2018 due to high jet fuel costs and the ruble devaluation affects. Still, revenues in in January-September increased by 15.2% to RUB466bn. The company's Ebitda declined by 11.5% y/y to RUB47.2bn, with the margin down from 13.2% to 10.2%. VTB Capital on November 28 expected Aeroflot's financials to
105 RUSSIA Country Report December 2018 www.intellinews.com