Aeroflot has tumbled into the red

Aeroflot Group’s revenue increased 9.4% year-on-year in 1H 2014, primarily due to growth in passenger traffic. Revenue for the period was also positively affected by a year-on-year decline in the average rouble exchange rate vs. key currencies the russian airline told.

Aeroflot Group’s operating loss for 1H 2014 amounted to RUB 1,384 million, compared to an operating profit of RUB 5,181 million in 1H 2013. The Group’s net loss for the first six months of 2014 was RUB 1,905 million, compared to net profit of RUB 45 million a year ago.

Aircraft fuel costs in 1H 2014 increased by 8.9% to RUB 40,236 million, driven by growth in passenger traffic, fleet expansion and the addition of new routes.

Faster growth in operating expenses compared to revenue in 1H 2014 was primarily due to the Group’s increased operations, as well as several significant one-off factors. In addition, growth in operating expenses was affected by the decline in the rouble exchange rate vs. key currencies.

Operating costs less aircraft fuel, staff costs and depreciation and amortisation increased by 15.3% year-on-year to RUB 68,773 million, primarily due to preparation for “high season”, as well as expansion of the Group’s route network and fleet. Higher operating lease expenses (up 28.4% year-on-year) represented was the top factor affecting this increase, followed by aircraft servicing (+11.1%) and passenger services (+39.0%). Staff costs increased by 13.8% year-on-year to RUB 24,304 million.

Other expenses amounted to RUB 3,205 million for 1H 2014, up 45.9% year-on-year, primarily due to increased bank commissions and higher costs for training and certification of pilots.