Leading Russian airline Aeroflot has just released its latest results for the third quarter and once again the crunched numbers demonstrate the massive progress the carrier has made in recent months.
The Aeroflot Group recorded a quarterly profit – the first in two years – of RUB 11.6 billion, a major step forward and a clear indication of the way Russian air travel has bounced back.
Key financial highlights
Q3 2021 | 9M 2021 |
Revenue doubled year-on-year to RUB 167,072 million | Revenue increased by 54.7% year-on-year to RUB 362,220 million |
EBITDA totalled RUB 54,052 million | EBITDA totalled RUB 95,635 million |
Net profit was RUB 11,635 million | Significant reduction in net loss to RUB 16,102 million |
Andrey Chikhanchin, PJSC Aeroflot’s Deputy CEO for Commerce and Finance, said:
”Our results for the third quarter once again underscore the progress that Aeroflot Group has made in 2021. Continuing the consistent improvement in our financial performance over the past several quarters, in the reporting period Aeroflot Group recorded a quarterly profit – the first in two years – of RUB 11.6 billion.
“A significant contribution to the improvement in our financial results came from increased demand and the resulting growth in operational volumes of Russian domestic flights, which we doubled down on in the high season. During the third quarter, Aeroflot’s passenger numbers on the domestic market were 27.4% higher than the same period in 2019 (before the COVID pandemic). We also took maximum advantage of the gradual lifting of restrictions in the international segment, and this also had a significant positive impact on the results. Whereas our capacity on international flights in January of this year was at just 15.4% of the level of the same period in 2019, by September this metric had recovered to 43.1%.
“This recovery in flight volumes supported growth in revenue, which reached RUB 167.1 billion in the third quarter. EBITDA, which had turned positive in the first quarter of this year, also continued to grow and reached RUB 54.1 billion for the third quarter of 2021, 2.7 times higher than in the same period of 2020. The EBITDA margin was 32.4%, which is comparable with our pre-pandemic performance, given the impact of the pandemic and the resulting restrictions on forward booking timeframes, profitability in the domestic segment and load factors.
“As of the end of the reporting period, Aeroflot Group had cash and short-term financial investments totalling RUB 93.3 billion. The seasonal reduction compared to June is due to our fulfilment of commitments to passengers under bookings made before the start of the summer season, and is comparable with historical trends. Aeroflot Group is entering the new season, when cash burn traditionally increases, with a high level of reserves. We intend to maintain strict control over management of cost lines to maintain financial resilience through to the start of the next seasonal cycle of increased sales and reservations and positive cash flow.”
Key operating highlights
Indicator | Q3 2021 | Q3 2020 | Change | 9M 2021 | 9M 2020 | Change |
Passengers carried, thousand PAX | 15,557 | 10,129 | 53.6% | 34,114 | 23,056 | 48.0% |
- international | 2,991 | 619 | 4.8x | 5,444 | 5,185 | 5.0% |
- domestic | 12,566 | 9,510 | 32.1% | 28,670 | 17,871 | 60.4% |
Revenue Passenger Kilometres, million | 34,732 | 21,015 | 65.3% | 73,722 | 53,734 | 37.2% |
- international | 9,162 | 1,786 | 5.1x | 17,504 | 18,630 | (6.0%) |
- domestic | 25,570 | 19,230 | 33.0% | 56,218 | 35,104 | 60.1% |
Available Seat Kilometres, million | 41,406 | 25,324 | 63.5% | 90,858 | 73,194 | 24.1% |
- international | 12,242 | 2,400 | 5.1x | 23,901 | 26,271 | (9.0%) |
- domestic | 29,165 | 22,924 | 27.2% | 66,957 | 46,924 | 42.7% |
Passenger load factor, % | 83.9% | 83.0% | 0.9 p.p. | 81.1% | 73.4% | 7.7 p.p. |
- international | 74.8% | 74.4% | 0.4 p.p. | 73.2% | 70.9% | 2.3 p.p. |
- domestic | 87.7% | 83.9% | 3.8 p.p. | 84.0% | 74.8% | 9.2 p.p. |
In 9M 2021, Aeroflot Group carried 34.1 million passengers, up 48.0% year-on-year. Domestic traffic has fully recovered, exceeding the results for the same period of 2019. The partial recovery of international air traffic continued, with significant restrictions still in place.
Key financial highlights
RUB million unless stated otherwise | Q3 2021 | Q3 2020 | Change | 9M 2021 | 9M 2020 | Change |
Revenue | 167,072 | 84,861 | 2.0x | 362,220 | 234,213 | 54.7% |
EBITDA | 54,052 | 20,088 | 2.7x | 95,635 | 31,180 | 3.1x |
EBITDA margin | 32.4% | 23.7% | 8.7 p.p. | 26.4% | 13.3% | 13.1 p.p. |
Profit/(loss) for the period | 11,635 | (21,136) | – | (16,102) | (79,406) | (79.7%) |
Revenue
RUB million unless stated otherwise | Q3 2021 | Q3 2020 | Change | 9M 2021 | 9M 2020 | Change |
Passenger traffic revenue | 151,569 | 73,984 | 2.0x | 316,625 | 193,575 | 63.6% |
- scheduled passenger flights | 141,942 | 64,852 | 2.2x | 300,380 | 179,355 | 67.5% |
- charter passenger flights | 9,627 | 9,132 | 5.4% | 16,245 | 14,220 | 14.2% |
Cargo flight revenue | 6,353 | 4,851 | 31.0% | 20,734 | 17,133 | 21.0% |
Other revenue | 9,150 | 6,026 | 51.8% | 24,861 | 23,505 | 5.8% |
Total revenue | 167,072 | 84,861 | 2.0x | 362,220 | 234,213 | 54.7% |
In 9M 2021, Aeroflot Group’s revenue increased by 54.7% year-on-year to RUB 362,220 million.
Revenue from scheduled passenger flights increased by 67.5% year-on-year to RUB 300,380 million due to a partial recovery in passenger traffic and a 7.7 p.p. increase in the passenger load factor to 81.1 %.
Cargo revenue increased by 21.0% year-on-year to RUB 20,734 million on the back of a 22.7% increase in cargo and mail volumes.
Other revenue increased by 5.8% year-on-year to RUB 24,861 million.
Operating costs
RUB million unless stated otherwise | Q3 2021 | Q3 2020 | Change | 9M 2021 | 9M 2020 | Change |
Depreciation, amortisation and customs duties | 30,656 | 30,724 | (0.2%) | 87,621 | 87,935 | (0.4%) |
Aircraft servicing and passenger services | 29,518 | 15,903 | 85.6% | 66,151 | 48,840 | 35.4% |
Staff costs | 17,868 | 15,734 | 13.6% | 49,004 | 50,354 | (2.7%) |
Aircraft maintenance | 7,012 | 6,778 | 3.5% | 20,152 | 20,247 | (0.5%) |
Selling, general and administrative expenses | 5,242 | 4,676 | 12.1% | 14,379 | 15,155 | (5.1%) |
Other net expenses | 10,540 | 3,605 | 2.9x | 29,048 | 6,431 | 4.5x |
Operating costs less aircraft fuel | 100,836 | 77,420 | 30.2% | 266,355 | 228,962 | 16.3% |
Aircraft fuel | 42,840 | 18,077 | 2.4x | 87,851 | 62,006 | 41.7% |
Total operating costs | 143,676 | 95,497 | 50.5% | 354,206 | 290,968 | 21.7% |
In 9M 2021, operating costs increased by 21.7% to RUB 354,206 million, due to the partial recovery in operational volumes – carrying capacity increased by 24.1% year-on-year.
Aircraft fuel costs increased by 41.7% year-on-year to RUB 87,851 million as fuel prices, flight volumes and flying time increased. The average fuel price increased by 12.3% year-on-year in 9M 2021 and by 57.4% year‑on-year in Q3 2021.
Excluding fuel costs, operating costs increased by 16.3% year-on-year to RUB 266,355 million, primarily due to increased operational volumes.
Expenses related to aircraft servicing and passenger service increased by 35.4% year-on-year to RUB 66,151 million, due primarily to the growth of passenger traffic. At the same time, due to an increased focus on passenger safety and countering the spread of coronavirus infection, the Group continued to perform additional procedures for pre-flight preparation and aircraft disinfection, and provided passengers with personal protective equipment.
Staff costs decreased by 2.7% year-on-year to RUB 49,004 million.
Aircraft maintenance costs remained essentially flat year-on-year at RUB 20,152 million.
Selling, general and administrative expenses decreased by 5.1% year-on-year to RUB 14,379 million, due to extensive measures to optimise general business, consulting and marketing expenses.
Other expenses (net) increased 4.5x year-on-year to RUB 29,048 million due to the disposal of Aurora while continuing to cooperate with the airline under a code-share agreement (i.e., costs attributable to the code‑share agreement previously recorded in Group operating expenses as fuel costs, staff costs, aircraft maintenance and others are now reflected as a single sum in other expenses). In addition, the Group’s results for 9M 2020 included a subsidy of RUB 7.9 billion from the Government of the Russian Federation.
Amortisation and customs duties, the largest expense item that is generally independent from operating volumes, remained essentially flat at RUB 87,621 million.
As a result of the above factors, EBITDA totalled RUB 95,635 million.
Non-operating gains and losses
RUB million unless stated otherwise | Q3 2021 | Q3 2020 | Change | 9M 2021 | 9M 2020 | Change |
Operating profit/(loss) | 23,396 | (10,636) | – | 8,014 | (56,755) | – |
Profit/(loss) from investments, net | 157 | (48) | – | (185) | (357) | (48.2%) |
Finance income | 3,047 | 1,097 | 2.8x | 8,843 | 3,208 | 2.8x |
Finance costs | (10,617) | (13,238) | (19.8%) | (30,428) | (36,374) | (16.3%) |
Realised hedging results | (1,069) | (2,775) | (61.5%) | (4,920) | (10,332) | (52.4%) |
Share of financial results of associates | 106 | 80 | 32.5% | 66 | (100) | – |
In 9M 2021, finance income increased 2.8x year-on-year to RUB 8,843 million, primarily due to growth in interest income on deposits as a result of higher average cash balances in bank accounts year-on-year.
Finance costs decreased by 16.3% year-on-year to RUB 30,428 million, primarily due to a decrease in leasing‑related interest expense as a result of lower interest rates.
The realised loss from hedging (the line that reflects accounting movements on FX-denominated lease liabilities) amounted to RUB 4,920 million. This metric was RUB 10,332 million in 9M 2020 and included a portion of the revaluation of lease liabilities in the amount of RUB 7,237 million, which was recognised in profit or loss in accordance with applicable accounting principles as a result of a decrease in revenue received by the Group in foreign currencies.
Aeroflot Group’s net loss for 9M 2021 decreased by 79.7% year-on-year to RUB 16,102 million. Notably, Aeroflot Group recorded a net profit of RUB 11,635 million in Q3 2021.
Debt and liquidity
RUB million unless stated otherwise | 30.09.2021 | 31.12.2020 | Change |
Loans and borrowings | 107,122 | 88,635 | 20.9% |
Lease liabilities | 675,961 | 662,507 | 2.0% |
Pension liabilities | 753 | 792 | (4.9%) |
Total debt | 783,836 | 751,934 | 4.2% |
Cash and short-term investments | 93,275 | 93,775 | (0.5%) |
Net debt | 690,561 | 658,159 | 4.9% |
Total debt as of 30 September 2021 stood at RUB 783,836 million, an increase of 4.2% from 31 December 2020. Cash and short-term financial investments remained essentially flat compared with 31 December 2020 and totalled RUB 93,275 million.
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