- Joe Breitfeller
Aeroflot Reports H1 2021 Net Loss of $377 Million on 31 Percent Revenue Increase to $2.7 Billion
Aeroflot has reported a 2021 first half loss of $377 million on a year-over-year revenue increase of 31 percent to $2.7 billion. For the second quarter, the carrier’s revenue increased 4.7x versus Q2 2020 to $1.6 billion, with a net loss of $35.3 million.
On Monday (August 30, 2021), the Aeroflot Group reported their first half and second quarter financial results for the period ending June 30, 2021. The Group reported a second quarter net loss of RUB 2.6 billion (US $35.4 million) on a 4.7x increase in year-over-year revenue to RUB 120 billion (US $1.6 billion). For the first six months of 2021, Aeroflot reported a net loss of RUB 27.74 billion (US $377 million) on a year-over-year increase in revenue of 30.7 percent to RUB 195 billion (US $2.7 billion). On June 30, 2021, the company had total debt of RUB 782.5 billion (US $10.65 billion), cash and short-term investments of RUB 113.2 billion (US $1.54 billion) and a net debt of RUB 669 billion (US $9.1 billion).
In Monday’s announcement, PJSC Aeroflot’s Deputy CEO for Commerce and Finance, Andrey Chikhanchin, said,
“In the second quarter of 2021, Aeroflot Group took full advantage of opportunities in the domestic market and of the gradual resumption of international flights to improve its financial results. Given the COVID restrictions that are still in place, as well as the scale of Aeroflot Group’s operations and fleet, macro volatility including factors affecting on fuel costs, the impact of the pandemic on demand, and a decrease in forward bookings, the several fold reduction in our quarterly net loss to RUB 2.6 billion is a significant improvement. The net loss for the same quarter of 2020 was RUB 35.8 billion, and this the closest that the Group has come to a positive result since the onset of the pandemic, including the summer season of 2020.
“Demand for domestic flights, including the effect of substituting international travel with flights within Russia, enabled Aeroflot Group in Q2 2021 to increase passenger traffic on domestic routes by 13.7% compared with Q2 2019. While international flights were once again down on 2019, by 77.7% for Q2, the rate of recovery is showing a positive trend. For example, international passenger traffic in Q1 2021 decreased by 84.2% from Q1 2019, but by June the decrease was already 75.4% compared with the same month of 2019, and the recovery was continuing at the start of the third quarter. However, despite pressure on yields, it was the domestic market that was the driving force behind our improved results and the several fold reduction in losses.
“This recovery in flights drove an increase in revenue to RUB 119.7 billion in Q2 2021. EBITDA, which turned positive in Q1 2021, also continued to recover, totaling RUB 33.9 billion in Q2 2021, lower than in same period of 2019 but ahead of the RUB 20.1 billion we reported in the seasonally strong Q3 2020. At the same time, the EBITDA margin in the second quarter was 28.3%, ahead of the 27.1% recorded in Q2 2019.
“We remain focused on liquidity. As of the end of June 2021, cash and short-term financial investments had increased from the end of 2020 and totaled RUB 113.2 billion, which exceeded our debt, excluding leasing obligations. Liquidity was supported to a significant degree by an increase in bookings ahead of the high season. Moreover, to create an additional liquidity cushion, in June we issued five-year ruble-denominated bonds, which, in addition to enabling drawdown of a number of long-term lines of credit, helped us improve our debt structure by reducing the share of short-term liabilities in favor of long-term ones.
“The pandemic and its consequences continue to affect the Group’s results, which is why we continue to develop by taking advantage of the potential of the domestic market and what opportunities are available in the international market; we have launched and are planning to launch new routes both domestically and internationally. The considerable acceleration of vaccination rates in Russia – much needed for the transport industry – is already having a positive impact on flights and is boosting our confidence in the ongoing recovery in the aviation sector.”
Aeroflot is the flag carrier of Russia and a proud member of the global SkyTeam® alliance. During 2020, Aeroflot carried 14.6 million guests and when the Aeroflot Group subsidiaries are included, the total rises to 30.2 million passengers. The airline holds a 4-Star rating from Skytrax World Airline Awards and has been awarded a five-star global airline rating by APEX. According to Cirium’s On-Time Performance Review, Aeroflot was the world’s most on-time mainline airline for 2019. The carrier has also received a five-star rating from OAG for flight punctuality. In 2021, Brand Finance, a leading brand strategy consultancy, declared Aeroflot the strongest brand in Russia, as well as the “world’s strongest airline brand.” According to Bain and Company research, Aeroflot ranks fourth in the airline industry for digitalization.