Aeroflot issued a report detailing a 40% decline in annual profits attributable to mounting costs of operation. The net profit of the Russian airline dropped from $409 million dollars in 2017.
The airline said staff costs were up by almost 30%, which contributed to an overall operating cost increase of 13.8 %. Despite Aeroflot’s losses, revenue actually increased according to the carrier.
Record high traffic, which increased 15.4 per cent year-on-year, was a positive up-tick that slightly compensated for the bad news. Shamil Kurmashov, Aeroflot deputy chief executive for commerce and finance, commented:
“Last year was another landmark year for Aeroflot, as the group’s airlines carried 50.1 million passengers, 15.4 per cent more than the previous year. We took full advantage of the opportunities offered by the growing passenger transportation market in both the scheduled and charter segments.”
The group continued its sustainable growth on domestic and international routes, and the carrier utilised its significant capacity additions – up 14.2 per cent year-on-year. The resulting efficiently also revealed a load factor of 83 per cent, 1.4 per cent higher than in 2016. Kurmashov added that:
“Yields came under pressure from a changing competitive landscape and international carriers adding capacity back into the Russian market, while the re-opening of the Turkish market led to structural changes in demand. On the other hand, higher oil prices and the change in rouble and currency correlation pattern rate put pressure on fuel costs, a key expense item accounting for 24.9 per cent of operating costs. The key tools available to help us manage the impact of these macro factors are an efficient system for purchasing fuel on favourable conditions, as well as continued incremental improvements in fuel efficiency.”