Financial Results

Financial Highlights

IFRS financial highlights (RUB million)
2014 2015 2016 2017 2018 Change
2018/2017, %
Revenue 319,771 415,173 495,880 532,934 611,570 14.8
Growth, % 9.9 29.8 19.4 7.5 14.8 7.3 p.p.
EBITDAR 48,673 103,118 137,567 121,808 122,479 0.6
EBITDAR margin, % 15.2 24.8 27.7 22.9 20.0 (2.9) p.p.
EBITDA 24,839 58,703 78,004 56,015 33,598 (40.0)
EBITDA margin, % 7.8 14.1 15.7 10.5 5.5 (5.0) p.p.
Operating profit 11,268 44,107 63,254 40,411 19,657 (51.4)
Operating profit margin, % 3.5 10.6 12.8 7.6 3.2 (3.4) p.p.
Profit/(loss) for the period (17,146) (6,494) 38,826 23,060 5,713 (75.2)
Net profit margin, % 7.8 4.3 0.9 (3.4) p.p.

Note. Hereinafter, EBITDAR = EBITDA + operating lease expenses. EBITDA = operating profit + depreciation and amortisation + customs duties.

2018 was another year of operational growth for Aeroflot Group – increased passenger traffic and passenger turnover were the key drivers of a 14.8% revenue expansion to RUB 611.6 billion. The Group demonstrates sustainable longterm growth. At the same time, there is a decline in profitability compared to the previous years. In a historical context, 2018 financial performance proves that the unprecedented pressure on costs from macroeconomic factors complemented the normalisation of profitability amid the growing competition within the sector in 2017.

The record growth of the average cost of jet fuel and the depreciation of the rouble were the key factors that influenced the Group’s financial performance in 2018. Across Aeroflot Group, jet fuel prices increased by 36.1% year-on-year, which led to the additional RUB 48.3 billion worth of cost given the Group’s current consumption volumes. The depreciation of the rouble put additional pressure on financial results, given that almost half of the Group’s costs are denominated in foreign currencies.

A special optimisation programme was launched in addition to the existing measures to boost operational efficiency and reduce costs. Along with direct cost reduction, the programme focused on active capacity and revenue management and has already delivered strong results: excluding fuel, CASK for the full year increased by only 0.8% despite increasing currency pressure on FX-denominated cost lines. We were therefore able to limit the increase in total unit operating costs, including fuel, to 9.2%. Although consumers are being conservative with their travel spending, the Group was able to generate a 4.9% growth of RASK while also maintaining stable load factor levels.

In 2018, due to its extensive optimisation programme, the Group was able to record a profit of RUB 5,713 million despite the record increase in jet fuel prices complemented by the rouble depreciation.

Traffic and Other Revenue

Revenue (RUB million)
2017 2018 Change, %
Revenue from passenger flights, 458,390 534,292 16.6
including scheduled flights 427,529 496,454 16.1
charter flights 30,861 37,838 22.6
Revenue from cargo 16,526 18,900 14.4
Total traffic revenue 474,916 553,192 16.5
Revenue from airline agreements 33,196 36,646 10.4
Revenue from FFP partners 11,588 12,704 9.6
Other revenue 13,234 9,028 (31.8)
Total other revenue 58,018 58,378 0.6
Total revenue 532,934 611,570 14.8

In 2018 Aeroflot Group’s revenue increased by 14.8% year-onyear to RUB 611,570 million.

Revenue from scheduled passenger flights increased by 16.1% year-on-year to RUB 496,454 million, driven by an increase in passenger traffic. Revenue growth was also affected by an increase in yields, primarily on international routes, due to the rouble depreciation against the euro and a corresponding adjustment to FX-denominated revenue.

Revenue from charter flights was up 22.6% year-on-year to RUB 37,838 million primarily due to an increase in unit yields on charter flights and the expansion of Rossiya airline’s charter programme. The share of charter flights in the Group’s total revenue increased to 6.2% from 5.8% in 2017.

Cargo revenue grew by 14.4% year-on-year to RUB 18,900 million following a 11.2% increase in cargo and mail volumes.

Revenue breakdown, 2017 (%)
Revenue breakdown, 2018 (%)

Other revenue increased by 0.6% year-on-year to RUB 58,378 million. A rise in FX-denominated revenues from airline agreements was offset to a significant degree by a decrease in revenue from maintenance of other airlines’ aircraft, as well as the introduction of the new IFRS 15 standard which affected the classification of service fees for reservation changes as other revenue or revenue from scheduled passenger flights.

Revenue growth decomposition (RUB million)


In 2018, scheduled flight yields increased by 5.0% year-on-year including yields on international destinations (by 8.2%) and yields on domestic destinations (by 0.9%). Yields were mainly influenced by the competitive environment in the market and the need for gradual transfer of fuel costs into yields through adjusting the fuel surcharge. Another Group-wide driver was the accelerating development rate of Pobeda airline which, being a low-cost carrier, provides air transportation with lower yields. It is important to note that a low-cost carrier can have low yields due to cost efficiency (low CASK), which helps ensure profitability of transportation operations in the low-cost segment.

Domestic yields demonstrated growth with RASK increasing by 3.5% year-on-year due to higher load levels. Yields experienced pressure from the introduction of flat fares for Rossiya airline’s flights to the Far East to improve affordability of air travel to remote regions.

International yield increase primarily resulted from the foreign exchange effect as all fare groups (for outbound and inbound flights and for international transfer) are denominated in foreign currencies. In particular, during the year, the rouble depreciated by 12.2% against the euro and by 7.5% against the US dollar (RUB 65.9 per EUR and RUB 58.4 per USD in 2017; RUB 74.0 per EUR and RUB 62.7 per USD in 2018). Moreover, unlike domestic flights, the passenger load factor decreased leading to RASK in this segment growing by 6.0%, slower that the yield.

Scheduled flights yields (RUB)
Scheduled flights RASK (RUB)
Total RASK (including other revenue) (RUB)

Operating Costs

Operating Costs (RUB million)
2017 2018 Change, %
Aircraft, traffic, and passenger servicing 96,418 108,589 12.6
% of revenue 18.1 17.8 (0.3)
Staff 82,801 82,817 0.0
% of revenue 15.5 13.5 (2.0)
Operating lease 65,793 88,881 35.1
% of revenue 12.3 14.5 2.2
Aircraft maintenance 36,433 45,527 25.0
% of revenue 6.8 7.4 0.6
Selling, general and administrative expenses 36,139 31,743 (12.2)
% of revenue 6.8 5.2 (1.6)
Depreciation, amortisation and customs duties 15,604 13,941 (10.7)
% of revenue 2.9 2.3 (0.6)
Communication expenses 14,795 15,584 5.3
% of revenue 2.8 2.5 (0.2)
Other expenses 21,855 22,967 5.1
% of revenue 4.1 3.8 (0.3)
Operating costs, excluding aviation fuel 369,838 410,049 10.9
% of revenue 69.4 67.0 (2.3)
Aviation fuel 122,685 181,864 48.2
% of revenue 23.0 29.7 6.7
Total operating costs 492,523 591,913 20.2
% of revenue 92.4 96.8 4.4

In 2018, aviation fuel costs increased by 48.2% year-on-year to RUB 181,864 million. The increase was driven by a 36.1% year-on-year growth of rouble-denominated average price of aviation fuel amid changes in the price of oil, as well as an increase in traffic and flight hours. Thus, the change in rouble-denominated jet fuel price only (including the change in US dollardenominated price and rouble depreciation) put a RUB 48,255 million worth of pressure on the Group’s profitability.

Excluding aviation fuel costs, operating costs increased by 10.9% year-on-year to RUB 410,049 million.

Aircraft and passenger servicing costs totalled RUB 108,589 million, up 12.6% year-on-year, due primarily to the growth of passenger traffic and increased airport taxes. The increase of this cost item was constrained by the servicing cost optimisation efforts.

Staff costs remained flat and totalled RUB 82,817 million. In spite of the growing costs due to a significant increase of pilot-in-command salary in early 2018 (as part of working conditions improvement for pilots) and an increase in the number of staff to support the Group’s growth, Aeroflot was able to constrain the increase of this cost item through decreasing top management remuneration and re-evaluating reserves for future bonus payments.

Operating costs breakdown (%)

Operating lease expenses grew to RUB 88,881 million, up 35.1% year-on-year, mainly due to a significant fleet expansion (the increase in the Group’s leased fleet was 47 aircraft, or 16.8%, compared to 31 December 2017) and a year-on-year increase in the 2018 LIBOR rate (in particular, the average LIBOR 3M rate grew by 1.05 p. p. to 2.31%).

Aircraft maintenance costs increased by 25.0% year-onyear to RUB 45,527 million. This cost item was impacted by the growing volume of day-to-day repair works due to the aircraft fleet expansion and different agendas for regular repairs in the compared periods, as well as by the foreign exchange effect.

Selling, general and administrative expenses decreased by 12.2% year-on-year to RUB 31,743 million due to the implementation of the expense optimisation programme including sales and marketing expenses.

Depreciation, amortisation and customs duties decreased by 10.7% year-on-year to RUB 13,941 million due to a lower number of aircraft under finance lease agreements.

Decomposition of changes in operating costs (RUB million)

Communication expenses including the services of global distribution systems totalled RUB 15,584 million having increased insignificantly by 5.3%, which is lower than the operations growth, thus leading to savings under this cost item.

Other expenses were up 5.1% year-on-year.

Cost per Available Seat-Kilometre (CASK)

Total cost per available seat-kilometre (CASK) increased by 9.2% to RUB 3.42, which is explained almost exclusively by the growing jet fuel prices. To offset this price growth, the Company implemented a large-scale savings programme which led to controllable CASK (CASK excluding jet fuel) rising by only 0.7% to RUB 2.37. Taking into account the rouble depreciation against US dollar and euro, and the fact that a series of major cost items including operating lease, aircraft maintenance and repair, and airport taxes abroad are fully or partially denominated in foreign currencies, this programme may be considered a success.

CASK excluding specific fuel costs (RUB)
Total CASK (RUB)


Following the impact of the above drivers, earnings before interest, taxes, depreciation, amortisation, and operating lease expenses (EBITDAR) amounted to RUB 122,479 million, while EBITDAR margin stood at 20.0% (22.9% in 2017).

In 2018, EBITDA totalled RUB 33,598 million. EBITDA margin decreased to 5.5% (10.5% in 2017). These changes reflect the fuel and FX pressure on the Company’s performance, detailed earlier.

EBITDAR (RUB million) and EBITDAR margin (%)
EBITDA (RUB million) and EBITDA margin (%)

Finance Income and Costs

Non-operating profit and loss (RUB million)
2017 2018 Change, %
Operating profit 40,411 19,657 (51.4)
Loss from investments, net (144) (689) 4.8х
Finance income 7,127 4,164 (41.6)
Finance costs (8,225) (7,904) (3.9)
Hedging result (5,613) (6,788) 20.9
Share of results of associates 170 254 49.4
Results from disposal of companies 1,240
Profit before income tax 33,726 9,934 (70.5)
Income tax (10,666) (4,221) (60.4)
Profit for the period 23,060 5,713 (75.2)

In 2018, finance income decreased by 41.6% year-on-year to RUB 4,164 million, which reflects lower foreign exchange gains and the general trend of lower interest rates in the Russian economy leading to lower interest income from placement of available cash.

Finance costs decreased by 3.9% year-on-year to RUB 7,904 million, mainly due to the reduction in loan interest expense following debt levels falling significantly in 2017.

The hedging result of RUB 6,788 million is the effect of revenue hedging with liabilities in US dollars (finance lease liabilities).

Cash Flows

Condensed consolidated statement of cash flows (RUB million)
2017 2018 Change, %
Profit before income tax 33,726 9,934 (70.5)
Depreciation and amortisation 14,084 12,912 (8.3)
Change in impairment provision 10,852 11,352 4.6
Foreign exchange loss/(gain), net (2,409) 1,086
Hedging result 5,613 6,788 20.9
Interest expense 8,179 6,445 (21.2)
Interest income (4,718) (4,156) (11.9)
Results from disposal of companies (1,240) 100.0
Change in cost of investments 144 689 378.5
Other adjustments (576) (531) (7.8)
Working capital changes and income tax paid/refunded (17,463) (23,784) 36.2
Net cash flows from operating activities 47,432 19,495 (59)
Deposits return 13,649 23,926 75.3
Deposits placement (16,300) (21,152) 29.8
Proceeds from sale of assets held for sale 1,856 4,203 126.5
Interest received 4,241 3,115 (26.6)
Purchases of property, plant and equipment, and intangible assets (7,681) (13,131) 71.0
Prepayments / return of prepayments for aircraft, net 18,343 10,080 (45.0)
(Repayment)/return of operating lease security deposits, net 114 (2,428)
Other 147 229 55.7
Net cash flows used in investing activities 14,369 4,842 (66.3)
Free cash flow 61,801 24,337 (60.6)
Placement of loans and borrowings 350 100.0
Repayment of loans and borrowings (17,417) (131) (99.2)
Sale/(purchase) of treasury shares 9,730 (7,040)
Repayment of the principal element of finance lease liabilities (15,513) (21,955) 41.5
Interest paid (4,762) (5,207) 9.3
Dividends paid (18,859) (14,543) (22.9)
Net cash used in / from financing activities (46,821) (48,526) 3.6
Effect of exchange rate fluctuations (478) 1,922
Net increase/(decrease) in cash and cash equivalents 14,502 (22,267)
Cash and cash equivalents at the beginning of the year 31,476 45,978 46.1
Cash and cash equivalents at the end of the year 45,978 23,711 (48.4)

Cash flows from operating activities

In 2018, net cash flows from operating activities reached RUB 19,495 million while profit before income tax amounted to RUB 9,934 million.

The record growth of the average cost of jet fuel was also one of the main factors that impacted the 2018 profit before income tax.

Key non-cash adjustments of profit before income tax made to net cash flows from operating activities for 2018 were related to:

  • changes in provisions, mainly attributable to accrual of the provision for scheduled maintenance and repair of aircraft, and the provision for doubtful accounts
  • hedging result – the effect of revenue hedging with liabilities in foreign currency (reflection of the FX effect of finance lease revaluation in the reporting period)
  • depreciation and amortisation.

Working capital

In 2018, working capital change was RUB 6,321 million. Increase in accounts receivable and prepayments in the amount of RUB 15,916 million had the most significant impact backed by the growth of revenue and prepayments made by Aeroflot under the operating lease of 18 aircraft in 2018.

Cash flows from operating activities were largely affected by an increase in accounts payable and accrued liabilities, amid the growth in operating costs by 20.2% in 2018.

Free cash flow

In 2018, free cash flow totalled RUB 24,337 million. The year-on-year decline was mainly due to the growing average cost of jet fuel. Prepayments for aircraft leased in 2018, repayment of operating lease security deposits, and growing capital expenditure were among other factors.

Cash and cash equivalents decreased by 48.4% to RUB 23,711 million, due to, among other factors, the effect of exchange rate fluctuations. Aside from the above factors, the decline in available cash was also attributable to the purchase of treasury shares in the amount of RUB 7,040 million in 2018 (in 2017, proceeds from the sale of treasury shares totalled RUB 9,730 million).

Purchases of property, plant and equipment, and intangible assets, cash flows from operating activities, depreciation and amortisation (RUB million)
Cash flows from operating activities and free cash flow (RUB million)

Capital Expenditure

Purchases of property, plant and equipment, and intangible assets in 2018 (RUB million)

In 2018, purchases of property, plant and equipment, and intangible assets totalled RUB 13,131 million. Purchases of property, plant and equipment were mainly relating to aircraft and aircraft engine overhaul, and the procurement of aircraft engines, aircraft, and equipment.

Net capital expenditure (RUB million)
31.12.2017 31.12.2018 Change, %
Purchases of PPE and intangible assets (7,681) (13,131) 71.0
Proceeds from sale of assets held for sale 1,856 4,203 126.5
Proceeds from sale of property, plant and equipment 88 93 5.7
Net capital expenditure (5,737) (8,835) 54.0

Non-current assets

In 2018, non-current assets increased by 10.4% and reached RUB 171,308 million due to an increase in prepayments for aircraft and other non-current assets, mainly following higher prepayments to organise operating lease transactions.

Current assets

Current assets decreased by 13.6% to RUB 145,318 million. The change was mainly due to the reduction of cash and cash equivalents


In 2018, equity, including non-controlling interest, decreased to RUB 45,335 million (RUB 67,299 million in 2017).

The key reason behind this change was a RUB 8,698 million increase in the hedging reserve, which comprised revaluation of derivatives under IAS 39 and revaluation of finance lease liabilities. Furthermore, the equity was impacted by a RUB 7,040 million increase in treasury shares reserve due to the purchase of treasury shares from voting shareholders who voted against a significant interested party transaction (operating lease of 50 new МС 21 300 airliners) or did not vote on this matter.

Change in prepayments for aircraft (current portion) (RUB million)

Current liabilities

In 2018, current liabilities increased by 11.1% (by RUB 15,709 million). The change was due to an increase in unearned traffic revenue, liabilities related to assets classified as held for sale, and deferred revenue related to the frequent flyer programme by RUB 6,179 million, RUB 4,413 million, and RUB 2,366 million respectively.

Non-current liabilities

The main changes in non-current liabilities were related to a decrease in finance lease liabilities in the amount of RUB 6,669 million mainly due to the disposal of aircraft, and to an increase in provisions for liabilities in the amount of RUB 6,804 million primarily due to an increase in provisions for scheduled maintenance and repair.

Breakdown of loans and borrowings by currency as at 31 December 2018 (%)

Debt and Liquidity

As at 31 December 2018, total debt decreased by 6.8% yearon- year to RUB 97,618 million driven by lower finance lease liabilities following a disposal of 12 aircraft and a transfer of several aircraft into assets held for sale. In 2018, Aeroflot Group had RUB 84.2 billion undrawn credit lines from major Russian and international banks.

Net debt/EBITDA ratio

Note. Excluding operating lease capitalisation
Finance lease repayment schedule (RUB million)
Breakdown of total debt (%)

Debt (RUB million)
31.12.2017 31.12.2018 Change, %
Loans and borrowings 3,181 3,486 9.6%
Finance lease 100,689 93,224 (7.4)%
Pension liabilities 922 908 (1.5%)
Total debt 104,792 97,618 (6.8%)
Cash, cash equivalents, and short-term investments 54,909 30,148 (45.1)%
Net debt 49,883 67,470 35.3%
Net debt/EBITDA ratio 0.9x 2.0x

Add to my report
Add to my report
My report (0)
My report
Download page
Download page
Submit page
Submit page
Print page
Print page
Site Map
Site Map
Interative Analysis
Interative Analysis
Search Overlay Close