Exchange rates hit Aeroflot profits but cargo revenue increases

Aeroflot Boeing 737-800

Net profits for the Aeroflot Group have fallen by 38 per cent in the first nine months of 2017 due to weaker exchange rates.

Nine month net profits up to 30 September 2017 were down to 27.1 billion roubles ($463 million) with lower finance income due to lower earnings from exchange rate difference, though finance costs were down 14.3 per cent to 6.3 billion roubles due to reduced debt levels.

Total revenue was up 6.2 per cent to 404.7 billion roubles and cargo flight revenue increased 37.2 per cent to 11.3 billion roubles due to new wide-body aircraft joining the fleet, and cargo & mail revenue growing 38.9 per cent.

Aeroflot deputy chief executive officer for commerce and finance, Shamil Kurmashov says: “Increased capacity supply across the market and exchange rate fluctuations led to a decrease in yields compared to the year-ago period, when we saw a significant dislocation between supply and demand.”

“On the other hand, rising fuel costs, which normalised only in the third quarter, as well as cost pressures from staff costs and investments in the quality of our product, were the main contributors to the rise in operating costs, in addition to growth attributable to increased operating volumes and the growth of the company.”

He also says exchange rates supported operating costs, explaining: “Whereas rates in 2016 put pressure on line items including operational leasing, technical maintenance costs and airport fees outside Russia, in nine months of 2017 the strengthening of the rouble had a positive effect on operating costs.”

On 28 November, Aeroflot released its October figures; cargo & mail volumes for the airline were up 17.1 per cent, with international volumes increasing 30.5 per cent to 14,416 tonnes but domestic services down 1.9 per cent to 7,603 tonnes.

On a year-to-date basis, Aeroflot airline has handled 183,860 tonnes, an increase of 33.6 per cent, with international volumes up 65.2 per cent to 119,218 tonnes and domestic dipping 1.3 per cent to 64,643 tonnes.