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At the Height of Opportunities

Annual Report 2018

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Aeroflot Group Today

PASSENGERS

55.7 million

Passengers carried

+11.1 %

Passenger traffic increase

82.7 %

Passenger load factor

40.7 %

Share of the Russian air transportation market

РROUTE NETWORK AND AIRCRAFT FLEET

>350

Scheduled routes

Countries

SkyTeam

Aeroflot is a member of the SkyTeam global alliance

366

Aircraft in the fleet

4.2

Average age of Aeroflot airline’s fleet

6.3

Average age of Aeroflot Group’s fleet

EMPLOYEES

The largest employer
in the industry

41.1 thousand

People employed by the Group companies

RECOGNITIONS AND AWARDS

4 stars

in the Skytrax rating

Best Airline in Eastern Europe

Skytrax World Airline Awards 2011 and 2013–2018

5 stars

in the APEX rating

72 %

Aeroflot airline’s Net Promoter Score (NPS)

FINANCIAL HIGHLIGHTS

RUB 611.6 billion

Revenue

+14.8 %

Revenue growth

RUB 121.8 billion

EBITDAR; 22.9% EBITDAR margin

RUB 5.7 billion

Net profit

SHAREHOLDERS AND INVESTORS

RUB 14.2 billion

Paid in dividends in 2017

40.9 %

Free float

Strengthening position in Top 20 globally

Group airlines carried 55.7 million passengers strengthening its position in the world’s Top 20 largest players

Accelerated low-cost carrier growth

Low-cost carrier Pobeda grew at an accelerated rate with passenger passenger traffic up by 56.8% to 7.2 million passengers

Updated Aeroflot Group Development Strategy 2023

Updated Aeroflot Group Development Strategy 2023 was adopted

Domestic flights moved to a new terminal

Aeroflot airline’s domestic flights were moved to Terminal B at Sheremetyevo airport

Rossiya airline’s scheduled flights moved from Vnukovo to Sheremetyevo airport

Rossiya airline’s scheduled flights operated from Moscow were moved from Vnukovo to Sheremetyevo airport

Cost optimisation and operational excellence

Following high growth in jet fuel prices, Aeroflot Group launched a major cost optimisation program

64 %

Share of the Group’s passenger traffic

AEROFLOT Aeroflot is Russia’s leading carrier and one of the oldest airlines in the world which celebrated its 95th anniversary in 2018. Airline ss based at Moscow Sheremetyevo airport.

35.8 Million PAX

80.5 % Passenger
load factor

253 Aircraft

98.0 billion RPK Passenger turnover

112.2
billion ASK Available seat-kilometres

163 Scheduled routes

domestic 63

international 100

24.3 Thousand employees

20 %

Share of the Group’s passenger traffic

ROSSIYA Rossiya is one of Russia’s largest carriers and the market leader in the North-West of the country. Based in Saint Petersburg, the company also operates flights from the Moscow air transport hub (Sheremetyevo and Vnukovo airports). In addition to its scheduled flights, Rossiya operates charter flights.

11.1 Million PAX

86.6 % Passenger
load factor

65 Aircraft

29.6 billion RPK Passenger turnover

34.2
billion ASK Available seat-kilometres

144 Scheduled routes

domestic 100

international 44

7.4 Thousand employees

13 %

Share of the Group’s passenger traffic

POBEDA Pobeda is the leading low-cost airline in Russia. The goal of the airline is to improve accessibility of the regions via more affordable fares. Airline is primarily based at Moscow Vnukovo Airport.

7.2 Million PAX

94.1 % Passenger
load factor

24 Aircraft

13.1 billion RPK Passenger turnover

13.9
billion ASK Available seat-kilometres

103 Scheduled routes

domestic 62

international 41

1.1 Thousand employees

3 %

Share of the Group’s passenger traffic

AURORA Aurora is the leading regional carrier in the Russian Far East. Airline is based at Vladivostok, Yuzhno-Sakhalinsk, and Khabarovsk airports and operates flights between the key population centres in the Far East and Siberia, as well as social flights to remote cities and villages of the region.

1.6 Million PAX

75.2 % Passenger
load factor

24 Aircraft

2.5 billion RPK Passenger turnover

3.3
billion ASK Available seat-kilometres

49 Scheduled routes

domestic 38

international 11

2.2 Thousand employees

Operating and Financial Highlights

Operational Highlights

Passenger traffic (million PAX)

55.7

Passenger load factor (%)

82.7

Passenger turnover (billion RPK)

143.2

Available seat-kilometres (billion ASK)

173.1

Financial Highlights

Revenue (RUB billion)

611.6

Net profit / (loss) (RUB billion)

5.7

EBITDA (RUB billion) and EBITDA margin (%)

33.6

EBITDAR (RUB billion) and EBITDAR margin (%)

122.5

Investment Case

As a major European airline, Aeroflot Group ranks among the world’s Top 20 air carriers by passenger traffic.

Leadership in the Russian air transportation market in both domestic and international network flights.

The Russian market is one of the world’s largest air markets still in the process of growth and evolution.

Aeroflot Group’s share in the Russian market was 40.7% in 2018.

Group companies operate in all market segments providing a wide coverage of the market by product and geography.

Pobeda, the Group’s vibrant LCC extremely popular in Russia, is among the world’s most efficient low-cost airlines.

The expansion of Pobeda’s fleet accelerated its growth and added to the Group’s operational and financial performance: 12.9% of all passengers and 17.5% of all domestic passengers of the Group are carried by Pobeda, an almost 4 p. p. increase year-on-year.

The high-quality network, ever increasing flight frequency, and new destinations unlock more potential for transfer traffic.

Conveniently located at the intersection of transportation flows between Europe and Asia, Aeroflot is well-positioned to develop its international transit segment.

A young and fuel-efficient fleet with highly standardised types of operated aircraft.

To improve flight connectivity, Rossiya airline moved its scheduled flights to Aeroflot’s hub at Sheremetyevo. Aeroflot and Rossiya launched 20 new destinations with high potential of transfers from the base airport.

Aeroflot’s commitment to customer service excellence is recognised by both experts and passengers.

A high customer satisfaction index (NPS).

Aeroflot is certified with the 4 Star airline rating by British Skytrax. We are a seven-time winner of the Skytrax World Airline Awards as the Best Airline in Eastern Europe, and have also been recognised a Five Star Global Airline by APEX, a US-based airline passenger experience association.

Strategy 2023

90–100 million

Grow the number of passengers carried by Aeroflot Group

25–30 million million

Grow the number of passengers carried by Pobeda

10–15 million

Ramp up our international transit passenger traffic

Set up an international hub in Krasnoyarsk
and three regional bases in Sochi,
Yekaterinburg, and Novosibirsk

Increase the fleet of the newest Russia-made aircraft

Drive digitalisation across Aeroflot Group airlines

2023 strategic goals

Aeroflot sees continued growth potential in both domestic and international transfer markets.
Our updated Strategy 2023 provides for the Group’s growth to be focused on creating more shareholder value.

Awards and Ratings

World’s strongest airline brand according to Brand Finance

Five Star Global Airline in APEX’s ratings APEX Passenger Choice Awards winner in the Best Global Airline in Europe and Best Seat Comfort in Europe categories

4 Star rating by Skytrax

Best Airline in Eastern Europe at Skytrax World Airline Awards, for the sixth time in a row and for the seventh time in Aeroflot’s history First-time winner of Best Premium Economy Class Airline Catering

World’s Leading Aviation Brand and World’s Leading Airline – Business Class at the World Travel Awards 2018

Europe’s Leading Airline Brand and Europe’s Leading Airline – Business Class at the World Travel

Awards for Europe First-time winner of Europe’s Leading Airline to Asia

Flyer Award’s Favourite International Airline in China

Best European Airline, Best Premium

Economy in Europe, Best Business Class

Best Russian Airline at TripAdvisor Travellers’ Choice Awards

Best Airline in Eastern Europe at the 2018 Business Traveller Awards voted for by UK readers of the magazine

Aeroflot ranked second in Europe and fifth in the world in on-time excellence at FlightStats’ Annual On-Time Performance Service Awards held by FlightGlobal in 2018

Aeroflot was named one of the world’s ten leading full-service airlines by reputable global booking portal eDreams, based on passenger reviews.

Once again the airline was listed among Forbes Global 2000 companies – the biggest, most powerful and most valuable public companies in the world.

The frequent-flyer programme offered by Aeroflot won three categories at the 2018 Freddie Awards: Best Customer Service, Best Redemption Ability, and Best Elite Program. Aeroflot also won the 210 AWARD for the greatest growth potential.

Aeroflot’s legal team was named among Russia’s top corporate legal services by The Legal 500.

Aeroflot for the fourth time won Randstad Award as the most attractive Russian employer in the Transport category.

Aeroflot won the Skyway Service Award in four categories: Best Airline in Business Class (scheduled international and domestic flights), Best Airline in Economy Class (scheduled international flights), and Best Loyalty Program.

Aeroflot Group was named Airline of the Year at the Wings of Russia National Airline Award in the International Scheduled Passenger Carrier category, also winning the Russian Airline of the Year – People’s Choice Prize, Airline of the Year – Domestic Passenger Carrier, Group 1, Airline of the Year – Domestic Passenger Carrier, Group 2 (Pobeda), and Domestic and Regional Passenger Carrier (Aurora).

Aeroflot won the Russian Business Travel & MICE Award as the Best Airline for Business Travellers.

Aeroflot’s Annual Report received an award in the Best Annual Report of the Company with the Market Capitalisation of RUB 40 Billion to RUB 200 Billion category and the Best Annual Report in the Transport Sector of the Annual Report Competition hosted by the Moscow Exchange and the RCB Media Group.

Aeroflot became the first ever Russian company to win the Grand Prix and three more categories at IPRA Golden World Awards, the leading international PR awards.

Pobeda airline won a special award established by Boeing for record utilization of Boeing 737 NG aircraft at the 16th Wings of the Future forum.

Key Events

January

Aeroflot attained the highest (third) New Distribution Capability (NDC) certification level offered by the International Air Transport Association (IATA)

February

Aeroflot’s CEO Vitaly Saveliev signed a landmark contract with CEO of Rostec Sergey Chemezov for 50 MC-21 aircraft

Aeroflot and its subsidiary Aurora carried Russian Olympic athletes to South Korea for the XXIII Olympic Winter Games

March

Aeroflot completed an audit of compliance with ISO 9001:2015 and ISO 14001:2015

The rating agency Fitch upgraded PJSC Aeroflot’s credit rating to BB–, assigning a Stable outlook

Aeroflot launched the summer schedule introducing six new routes from Moscow which include Saransk, Kyzylorda, Burgas, Naples, Verona and Cairo

April

The State Kremlin Palace hosted a ceremony celebrating the 95th anniversary of Aeroflot

May

Aeroflot embarked on a gradual process to move its domestic flights to Terminal B of Sheremetyevo airport

The Board of Directors of PJSC Aeroflot recommended the 2017 dividend at RUB 12.81 per share, i.e. 50% of net profit under RAS, or RUB 14.2 billion

June

The law On Amending the Aviation Code of the Russian Federation, which was initiated by Aeroflot, came into force. The law allows airlines to blacklist disruptive passengers and refuse to carry them

Vitaly Saveliev was awarded the Order of Alexander Nevsky, the fourth high-level award received by the Aeroflot CEO

Aeroflot launched joint flights with Aerolineas Argentinas from Moscow to Buenos Aires under a code share agreement

July

Aeroflot airline was recognised as the Best Airline in Eastern Europe by Skytrax World Airline Awards for the seventh time. It also became the fist-time winner of the Best Premium Economy Class Onboard Catering award

August

Vitaly Saveliev was re-elected as CEO of PJSC Aeroflot for a term of five years

Andrey Chikhanchin was appointed Deputy CEO of PJSC Aeroflot for Commerce and Finance

September

Aeroflot received its 50th Russian-built Sukhoi Superjet 100. This marked the completion of two firm contracts to buy 30 and 20 jets of this type

Aeroflot signed an agreement for 100 more SSJ100s. The document was signed in the presence of Russian President Vladimir Putin

October

For the third consecutive year, Skytrax, the world’s leader in assessing airline service quality, affirmed its 4 Star rating for Aeroflot

Rossiya airline moved its scheduled flights from Moscow’s Vnukovo airport to Terminal D at Sheremetyevo airport, Aeroflot’s hub

Aeroflot launched its 2018/2019 winter schedule offering 14 new destinations from Sheremetyevo: from Moscow to the North Caucasus (Vladikavkaz, Grozny, Makhachkala, Nazran, and Nalchik) and to Izhevsk and Ulyanovsk. New flights were launched to CIS countries: from Moscow to Bukhara and Osh, as well as to European destinations – Gothenburg, Dublin and Ljubljana. The new destinations to Southeast Asia are Denpasar and Colombo

November

The Board of Directors of PJSC Aeroflot approved the Group’s new Growth Strategy titled 100 Million Passengers by Our 100th Anniversary (100 by 100)

Aeroflot completed moving its long-haul domestic flights to Terminal B of Sheremetyevo International Airport

December

Evgeny Ditrich, Minister of Transport of the Russian Federation, was elected as Chairman of PJSC Aeroflot’s Board of Directors

Sergey Alexandrovsky was elected as CEO of Rossiya airline

Andrey Panov was appointed Deputy CEO of PJSC Aeroflot for Strategy and Marketing

January 2019

Aeroflot and AeroMexico signed a code share agreement

February 2019

Head of Russia’s Federal Tax Service Mikhail Mishustin and Aeroflot’s CEO Vitaly Saveliev presented a digital project titled Tax Monitoring Data Mart to Russian Prime Minister Dmitry Medvedev

March 2019

Krasnoyarsk Territory authorities, Aeroflot, and Krasnoyarsk International Airport signed an agreement to create an Aeroflot Group hub in Krasnoyarsk

Aeroflot launched its 2019 summer schedule adding two new international destinations: Marseille and Palma

April 2019

Aeroflot Group introduced baggage-free fares for a number of medium-haul flights operated by Rossiya airline and Aeroflot, which have seen a high demand for this service

Company History: Key Milestones

Aeroflot’s history represents an era rich in numerous events leading us to Aeroflot’s 95th anniversary celebrated in 2018. Below are selected milestones that mark the path of Aeroflot’s development.

17 March 1923

Joint Stock Company Dobrolet (the Russian Society for Voluntary Air Fleet) was established.

15 July 1923

The first scheduled Moscow–Nizhny Novgorod route was launched. (Distance of 420 kilometres. Four passengers. Two flight crew members).

26 March 1932

The abbreviated name, “Aeroflot”, was adopted by the Soviet Civil Aviation Fleet, the crew uniform and insignias were introduced.

1940

410 thousand passengers were carried.

Since the start of the Great Patriotic War, the Soviet Government suspended all civil aviation flights and Aeroflot switched to supporting the Red Army, with many of its pilots participating in the war.

Soviet aviators made daily flights to the besieged Leningrad, bringing people food and weapons. One of the hardest and most difficult tasks during the war was ferrying the crucial lend-lease military aircraft supplied by the United States to the USSR via the Alaska–Siberia–Urals route.

Over 1.5 million flights were made during the war. Over 20 thousand Aeroflot aviators were decorated with orders and medals. During the war, Aeroflot pilots carried 2.5 million wounded and paratroopers, as well as 300 thousand tonnes of military and strategic cargo. 15 Aeroflot employees were awarded the highest title of the Hero of the Soviet Union.

The post-war period saw the air transportation industry recover and grow stronger with Aeroflot becoming the national symbol of progress in aviation. The Company launched the world’s longest routes, operating transatlantic and transcontinental flights, and became the global leader by passenger traffic.

The world’s first civilian jet air service using Tu-104 and, later, supersonic Tu 144 was launched.
Aeroflot took on the new Soviet aircraft Il 12, Il 14, and Il 18 with higher-speed aircraft enabling flights to the USA, Canada, Cuba, Japan and other countries.

1959

The new Sheremetyevo airport opens, with its ground service handling the first Aeroflot’s Tu 104 flight from Leningrad to Moscow.

1967

The Flight Attendant Service was established.

1971

The Aeroflot Central Administration of International Air Traffic was set up.

1980

Aeroflot was appointed the XXII Olympic Games general carrier, with the new Sheremetyevo 2 international air terminal inaugurated to support the event.

1990

Aeroflot entered the Guinness Book of Records as the airline that carried 139 million passengers.

Following the collapse of the Soviet Union, the unified civil aviation fleet was split into several hundred airlines. However, the state stepped in to prevent unregulated industry fragmentation and saved Aeroflot as a national carrier.

Cutting-edge foreign aircraft came into service: Airbus A310-300, Boeing 777 200, Boeing 737 400, and Boeing 767 300ER.
The 2008–2009 global financial crisis left the Company in a challenging financial situation.

1992

Joint Stock Company Aeroflot Russian International Airlines was established.

1997

Aeroflot shares started trading on the RTS exchange (Moscow Exchange).

1999

Launch of Aeroflot’s website (www.aeroflot.ru).

2006

Aeroflot became a member of SkyTeam Airline Alliance.

A new management team took charge and implemented an anti-crisis action plan including massive fleet additions. Aeroflot launched business process digitisation projects and improved service standards. New services were launched to enhance passenger experience, including the use of mobile phones and Wi Fi access on-board.

2009

Vitaly Saveliev was appointed as CEO of Aeroflot by the Russian Government.

2011

Aeroflot was awarded the prestigious Skytrax World Airline Award as the Best Airline in Eastern Europe for the first time and successfully lived up to this rating six more times.

The Russian Government transferred Rostec Corporation’s carriers to Aeroflot, which prompted large-scale airline integration.

Adoption of Aeroflot Group Development Strategy 2025.

2013

The Internet On-Board programme progressed to the next stage targeting phased rollout of Wi-Fi networks on board all Aeroflot’s wide-body aircraft.

The Group established a unified carrier in the Russian Far East, Aurora airline, through consolidating regional Sakhalin Airways and Vladivostok Avia.

2014

Launch of Pobeda airline – Group’s low-cost carrier.

2015

100% of Aeroflot’s business processes were digitised.

2016

Aeroflot was certified with the 4 Star airline rating by the global rating agency Skytrax for its high-quality service.

Big Data solutions were introduced as part of Aeroflot’s effort to develop digital projects.

1992

Aeroflot ranked 4th among its global peers by digitisation.

Aeroflot’s subsidiaries were consolidated to create a new united carrier, Rossiya Airlines. The Group’s multi-brand platform was finalised.

2017

Aeroflot Group carried over 50 million passengers, ranking among the Top 20 largest global players for the first time in 30 years.

2018

Adoption of updated Aeroflot Group Development Strategy 2023.