Aeroflot · RUS:AFLT
Aeroflot — Investor Day (December 2019)
109 slides from Aeroflot's investor day presentation, Dec 12, 2019
Slide 1: London 12 December 2019
AEROFLOT # —=% Russian Airlines
Slide 2: Disclaimer
Disclaimer This document has been prepared by PJSC “Aeroflot” (the “Company”). By attending the meeting where the presentation is made, or by reading the presentation slides, you agree to the following. This document does not constitute or form part of any advertisement of securities, any offer or i
Slide 3: Agenda
Agenda 9.20 – 10.00 Registration and Coffee 10.00 – 10.05 Introduction Andrey Napolnov Aeroflot Head of Investor Relations 10.05 – 10.40 Aeroflot Digital Transformation Vitaly Saveliev Aeroflot Chief Executive Officer 10.40 – 11.20 Market performance and Strategy 2023 Andrey Panov Aeroflot Deputy CE
Slide 4: Vitaly Saveliev, Chief Executive Officer
Vitaly Saveliev Chief Executive Officer 4
Slide 5: Global Aviation Trends and Aeroflot Group Highlights
Global Aviation Trends and Aeroflot Group Highlights Passenger traffic globally and in Europe Passenger traffic in Russia (incl. foreign carriers) and of Aeroflot Group Europe CAGR World CAGR 5.5% for 2009-2019 6.7% for 2009-2019 4.4 4.6 10.0% Russia CAGR for 2009-2019 18.6% Group CAGR for 2009-2019
Slide 6: Aeroflot: Yesterday and Today
Aeroflot: Yesterday and Today Passenger load factor, % Aeroflot Group PAX, mn Employees per one million PAX Workforce Productivity +18.2% 5.0x (61.1)% 82.7 55.7 1,744 64.5 678 11.1 2009 2018 2009 2018 2009 2018 The transformation enabled Aeroflot to regain its positions and become a TOP 20 aviation
Slide 7: Aeroflot's Competitive Edge
Aeroflot’s Competitive Edge Aeroflot aircraft fleet Aeroflot fleet average age, years Fleet average age, years² 4.2 Hainan Airlines 4.6 Ethiopian Airlines 5.2 Shandong Airlines 5.3 253 Spirit Airlines 5.3 Sichuan Airlines 5.4 IndiGo 5.5 9.5 Xiamen Airlines 5.5 Shanghai Airlines 5.6 Qatar Airways 5.9
Slide 8: Airline Holding Establishment
Airline Holding Establishment In 2016 we completed creation of Aeroflot Group as a unified airline holding Aeroflot Group operates across all segments of the aviation transportation market Aeroflot – premium Rossiya – mid-price Pobeda – low-cost Aurora – regional carrier carrier carrier carrier for
Slide 9: Aeroflot Group: 2023 Vision
Aeroflot Group: 2023 Vision 1 Carry 90-100 mn passengers 2 Increase international transfer traffic to 10-15 mn PAX Launch regional bases in Sochi, Yekaterinburg and Novosibirsk 3 and an international hub in Krasnoyarsk 4 Put into operation 200 domestic aircraft (SSJ100 and MC-21) by 2026 5 Enhance d
Slide 10: Achievements To Date: Digital Take-off and New Heights
Achievements To Date: Digital Take-off and New Heights Aeroflot 2009 Aeroflot 2019 Flight management system 35% 100% of business Other IT of business processes are systems processes are automated automated Other production and commercial IT systems By 2019, key business processes at Aeroflot have be
Slide 11: Aeroflot IT Solutions
Aeroflot IT Solutions SAP ERP development Aeroflot’s IT backbone 1. Accounting Aeroflot website, including mobile 19. Network profitability check-in Corporate loyalty program 2. Lease accounting 18. Occupational safety Single payment solution Agency loyalty program management 3. Procurement and inve
Slide 12: Innovations: Aeroflot's Digital Transformation
Innovations: Aeroflot’s Digital Transformation Internet of things Artificial intelligence for aircraft operations Digitalization of flight management Aircraft All flight documentation automatically uploaded to the aircraft’s computer and EFB 1 Online MRO 2 Digital profile Aircraft transmits all key
Slide 13: Online Services Development
Online Services Development Aeroflot Group remains the largest online store in Russia New distribution capability (NDC) Aeroflot Group's annual online sales, bn RUB Strong sales growth High level certification Payments through NDC for key partners RUB bn Level 3 IATA NDC Certificate 221 Level 4 IATA
Slide 14: Digitalization in Support Functions: Case Study
Digitalization in Support Functions: Case Study Digital transformation of the tax function “Tax monitoring” project development Objectives of the “Tax Monitoring” project Increased tax reporting transparency Digitalization of traditional forms of communication with tax authorities 2021 Electronic ex
Slide 15: Big Data Project: Results and Plans
Big Data Project: Results and Plans Big Data implementation Big Data and machine learning Execution of Big Data business cases Accumulation of data about existing clients from internal and B2C external sources Look-alike customers attraction Demand forecasts and supply optimization on specific fligh
Slide 16: Aeroflot Ranks Fourth Globally by Digitalization
Aeroflot Ranks Fourth Globally by Digitalization Global full service carriers digitalization rating1 Index: Singapore Airlines = 100 100 97 94 92 90 88 87 82 81 73 Source: 1 Digitalisation rating, Bain & Company 16
Slide 17: Aeroflot's Awards and Recognition
Aeroflot’s Awards and Recognition Five Star Global Airline, Airline World’s Strongest Airline Brand, Best Airline in Eastern Europe, Passenger Experience Five-star punctuality rating 4 Star rating by Skytrax according to Brand Finance Skytrax World Airline Awards Association (APEX) for three from OA
Slide 18: Andrey Panov, Deputy CEO for Strategy, Service and Marketing
Andrey Panov Deputy CEO for Strategy, Service and Marketing 18
Slide 19: Aeroflot
AEROFLOT ssi Russian Airlines ——
Slide 20: Airline Industry: Material Improvement in Efficiency Over the Decades
Airline Industry: Material Improvement in Efficiency Over the Decades Profitability profile of global air transportation industry has significantly improved Cumulative net profit, $bn 2010 2017 +$28bn +$30bn 1947 2009 +$183bn for 8 years 2018 2019E -$13bn for 63 years The industry demonstrates solid
Slide 21: Russian Market Growth vs. Global Multiples
Russian Market Growth vs. Global Multiples Global aviation industry vs. GDP European aviation industry vs. GDP Russian aviation industry vs. GDP CAGR 2009-2018 CAGR 2009-2018 CAGR 2009-2018 10.1% 6.8% 6.1% 6.0x 1.8x 2.3x 3.3% 3.0% 1.7% GDP growth RPK growth GDP growth RPK growth GDP growth RPK growt
Slide 22: Competitive Dynamics on Russian market
Competitive Dynamics on Russian market Passenger Traffic: Russian Air Transportation Market Growing Market Share (PAX) mn PAX ml PAX 9M 2019 CAGR: 5.2% 137.0 123.7 +7.6% Other Russian Airlines 111.8 114.0 41.0% 107.2 21.8% 105.9 +10.8 p.p. 102.8 +2.9 p.p. 68.1 57.7 114.0 Foreign Airlines million 13.
Slide 23: Russian Market Continues its Robust Growth
Russian Market Continues its Robust Growth Passenger traffic, mn PAX CAGR +6.5% CAGR 189 +10.2% 147 137 124 112 107 104 103 92 80 70 57 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Reported Forecast Sources: FAVT, internal analysis 1 Structural trends 2 Evolving airport
Slide 24: Trends Supporting Industry Structural Growth
Trends Supporting Industry 1 Structural (long-term) growth trends 2 Evolving airport infrastructure 3 Stimulation effect of LCCs 24
Slide 25: Long-term Market Growth Drivers
1 Long-term Market Growth Drivers 1 We remain constructive on Aeroflot’s prospects in the long-term, viewing it as well- 3 positioned to benefit from long-term growth in air traffic Recovering passenger traffic Passenger traffic Domestic air and railways PAX, mn 139 mln Domestic air transportation P
Slide 26: Infrastructure: Upgrade Over the Recent Decade
2 Infrastructure: Upgrade Over the Recent Decade Russia’s comprehensive modernization of regional airport network in the last decade… Volgograd, 2018 Nizhniy Novgorod, 2017 Novosibirsk, 2015 Kazan, 2012 1.1mn 1.3mn 1.6mn 1.3mn New Perm, 2017 Rostov-on-Don, 2017 Samara, 2014 Vladivostok, 2012 termina
Slide 27: Aeroflot's Growth Supported by Development of SVO
2 Aeroflot’s Growth Supported by Development of SVO Runway-3 Terminal C Terminal B 3rd runway increased operational capacity Terminal C-2 Cargo Terminals from 60-65 to 90 aircraft movements Overall capacity to exceed 80 mn by 2026 Runway-1 Runway-2 Service improvement Recent additions Future plans T
Slide 28: Stimulation Effect of LCCs
3 Stimulation Effect of LCCs Capacity at selected destinations: Aeroflot, Pobeda, Others Since its establishment in December 2014 Pobeda has expanded to ~351 Mn Seats destinations operated by Aeroflot from 5 Moscow. 4 Other carriers: CAGR +1% 2 3 2 Pobeda: CAGR +21% 3 1 Aeroflot: CAGR +10% 2 0 Jan-1
Slide 29: Case Study 1: Moscow – Yekaterinburg Route
3 Case Study 1: Moscow – Yekaterinburg Route Yekaterinburg - largest city in the Urals - 2 hours East from Moscow by plane Pobeda launched service in December 2014 Aeroflot and Pobeda have 66 and 16 flights per week, respectively Aeroflot and Pobeda networks focus on different market segments due to
Slide 30: Case Study 2: Moscow – Milano Route
3 Case Study 2: Moscow – Milano Route Italy, and Milano in particular, is a sizable international market from Russia Pobeda launched service in December 2015 to secondary airport (Bergamo) Aeroflot operates 35 flights per week to Malpensa a/p, Pobeda - 10 to Bergamo a/p … providing for no cannibaliz
Slide 31: Aeroflot
AEROFLOT ssi Russian Airlines ——
Slide 32: Key Strategic Goals for 2023
Key Strategic Goals for 2023 1 Carry 90-100 mn passengers 2 Increase international transit traffic to 10-15 mn 3 Launch 3 new regional bases and 1 international hub 4 Enhance digitalisation of the Group 32
Slide 33: Strategic Goal: 90-100 mn PAX in 2023
1 Strategic Goal: “90-100 mn PAX in 2023” 90–100 mn passengers in 2023 mn PAX mn PAX 52 36 mn PAX mn PAX 3 2023 25-30 1.6 2018 ~4.0x 2023 2018 11.1 10-15 7.2 2023 2-3X International transit will increase 2-3x to 2018 10-15 mn PAX 2023 2018 • Pobeda to benefit from large underpenetrated Key PAX drive
Slide 34: Strategic Goal 90-100 mn PAX: Execution
1 Strategic Goal “90-100 mn PAX”: Execution Increase in Aeroflot Group passenger traffic… … with the highest growth rates posted by Pobeda LCC mn PAX mn PAX + ~9-10% +11.1% + ~40% +10.6% +46.4% ~61 +56.8% ~10 55.7 50.1 46.7 7.6 42.2 7.2 5.2 4.6 2017 2018 2019E 9M 2018 9M 2019 2017 2018 2019E 9M 2018
Slide 35: Strategic Goal International Transfer (1/2)
2 Strategic Goal “International Transfer” (1/2) Aeroflot has a successful track records of international … and maintains leading positions on sizable O&D routes transfer development… between Europe and Asia 2.0х – 3.1x Shanghai 1 Istanbul 2.6х 4.8 10-15 Shanghai 1 Amsterdam 1.9 mn mn mn Beijing 1 Pr
Slide 36: Strategic Goal International Transfer (2/2)
2 Strategic Goal “International Transfer” (2/2) SVO location on great-circle path between key Asian and … provides for a time saving when flying with Aeroflot European cities… via Moscow… From/To Via Paris Rome London Vienna Stockholm London - Bangkok Madrid - Shanghai SVO 14:22 14:17 14:34 13:13 12
Slide 37: Strategic Goal International Transfer: Execution
2 Strategic Goal “International Transfer”: Execution Increasing scale of …backed by improving quality of … and expansion of international transfer… our SVO hub… international network Number of international transfer PAX, mn Average number of connecting flights per unique Number of routes (Aeroflot +
Slide 38: Strategic Goal Regional Development
3 Strategic Goal “Regional Development” Increase in regional traffic ~2x1 St Petersburg 2х 2023 mn 2018 mn 19 passengers Moscow 9 passengers Sochi Ekaterinburg Novosibirsk Krasnoyarsk New bases and hubs Khabarovsk 2х Bases – aircraft overnighting bases Hubs – wave transit schedule 2х Increase in pas
Slide 39: Strategic Goal Regional Development: Execution
3 Strategic Goal “Regional Development”: Execution 1 2 The project launched to develop an international hub in Aeroflot Group is actively expanding routes from Russian Krasnoyarsk regions 13 new regional destinations in 2019 (incl. 7 destinations from Sochi) Working Group set up Sales started Cooper
Slide 40: Strategic Goal Digital Transformation
4 Strategic Goal “Digital Transformation” 1 Industry trends 2 Technology trends 3 Managerial trends Personalization (offering, passenger experience) Increasing importance of mobile devices Data management IFE (In-Flight Entertainment) Cloud technologies Cyber security New technologies in the airport
Slide 41: Strategic Goal Digital Transformation: Execution
4 Strategic Goal “Digital Transformation”: Execution Higher online sales Higher sales Continued roll-out of IT projects and on Aeroflot website via mobile apps implementation of new technologies Share in money terms, % Share in money terms in overall online sales, % New functions of mobile applicati
Slide 42: Aeroflot
AEROFLOT ssi Russian Airlines ——
Slide 43: Ancillary Revenue Strategy
Ancillary Revenue Strategy Network carriers Low-cost segment • Convenience as a core philosophy • Maximal unbundling • Targeting and individuality Passenger • Wide coverage and appeal to customers • Up-scale nature of our product experience and • Focus on execution Focus on • Sales channels convenie
Slide 44: New Ancillary Services: Case Study
New Ancillary Services: Case Study Paid Upgrade to Comfort & Business Other popular services 1 3 Available 72h before departure Flight and medical insurance All fare classes eligible Targets impulse purchases Virtual gift certificate 60 thd upgrades and ~1 bn RUB revenues in 9M’19 Extra Seat Selecti
Slide 45: Aeroflot
AEROFLOT ssi Russian Airlines ——
Slide 46: Approach to Marketing and Customer Service
Approach to Marketing and Customer Service Aeroflot airline’s NPS performance (%) Key focus areas of customer service 2019 73 enhancements in 2018-2019 Customer 2018 72 excellence KPMG: the only Russian Skyway Service Award: 2013 58 In-flight services company in the TOP 10 Best online services; Best
Slide 47: Marketing Strategy 2023: Key Markets for the Group
Marketing Strategy 2023: Key Markets for the Group 1 Russia: In/Outbound 2 Russia Domestic 3 Europe – Russia & CIS 4 Europe – Asia 5 China – Europe 6 China – Russia & CIS 1 For the purposes of Aeroflot Group marketing strategy we identified six focus markets for long-term growth 47
Slide 48: Customer Perception: Awareness & Considerations
Customer Perception: Awareness & Considerations Aeroflot Group Airlines: Russia Aeroflot Airline: International Market 97% 93% Europe-Asia Europe-Russia China-Europe China-Russia 70% 57% 57% 57% 55% 50% 44% 40% 41% 38% 35% 33% 30% 24% Awareness Consideration Awareness Consideration Airlines of the G
Slide 49: Manchester United: Strategic Marketing Partner
Manchester United: Strategic Marketing Partner Key benefits of the partnership for Aeroflot Promotion of our 3bn brand among international people viewed the games with customers Aeroflot brand promoted 6% Increase in international traffic international PAX say partnership is crucial for their choice
Slide 50: Enhanced Loyalty through Aeroflot Bonus Programme
Enhanced Loyalty through Aeroflot Bonus Programme Aeroflot Bonus Cobranding cards New opportunities Key facts Partners of the Programme Key additional features 2018-2019 and onwards Largest FFP in Russia and Eastern Europe Airline partners – 18 Improved functionality of the mobile app 9.6 million me
Slide 51: Andrey Chikhanchin, Deputy CEO for Commerce and Finance
Andrey Chikhanchin Deputy CEO for Commerce and Finance 51
Slide 52: Aeroflot
AEROFLOT#* se Ru:
Slide 53: Airlines of Aeroflot Group
Airlines of Aeroflot Group Business Flight Aircraft Focus International RPK PAX Positioning model range fleet airport Share1 contribution1 Scheduled flights • Short- to long-haul • Narrow-body aircraft • Moscow SVO Premium product • Flagship carrier • Wide-body aircraft • Krasnoyarsk • Hub and spoke
Slide 54: Aeroflot Group: Key Developments 2019-2020
Aeroflot Group: Key Developments 2019-2020 Ongoing infrastructure upgrade in SVO: separate operations from South and North Terminal B: Domestic flights 3rd runway: Opened Terminal C: Expected opening Operational development of the airlines KJA hub Long-haul network Airlines transformation Enhancing
Slide 55: Slide 55
Slide 56: Aeroflot Airline At a Glance
Aeroflot Airline At a Glance Key operational metrics Aeroflot airline route map 2018 Murmansk Salekhard Arkhangelsk New Urengoy Syktyvkar Khanty Mansiysk Saint Petersburg Surgut Yakutsk Nizhnekamsk Nizhnevartovsk Perm Magadan Nizhny Novgorod TyumenEkaterinburg Kemerovo MOSCOW Samara Krasnoyarsk Kali
Slide 57: Krasnoyarsk – New Home for Aeroflot
Krasnoyarsk – New Home for Aeroflot 1 Where is Krasnoyarsk? 2 Why Aeroflot selected Krasnoyarsk City population Region GRP Krasnoyarsk Frankfurt Moscow 1.1 mn 1.8 trn RUB Vladivostok Bejing NO base airline 3 Is sufficient infrastructure in place? 4 Is there a development plan? KRASNOYARSK 2020 2023
Slide 58: Krasnoyarsk is Located at the Very Heart of Russia
Krasnoyarsk is Located at the Very Heart of Russia 3,350 km Krasnoyarsk 3,150 km Moscow Vladivostok Helsinki Stockholm Krasnoyarsk London Amsterdam Petersburg Berlin Moscow Irkutsk Warsaw Frankfurt Prague Paris Munich Harbin Vladivostok Rome Beijing Seoul Tokyo Chengdu Shanghai Hong Kong Range Hanoi
Slide 59: Krasnoyarsk has Well-developed Infrastructure in Place
Krasnoyarsk has Well-developed Infrastructure in Place 3,700 x 60 12 New Experienced 1980 2017 meters operations taxiway operator Year of New terminal Runway Current runways Infrastructure construction opened parameters capacity per hour development to double runway capacity Airport has brand new fa
Slide 60: Network of the KJA Hub
Network of the KJA Hub New destinations to be launched in the first year will compliment existing flights of Aeroflot, Rossiya and Aurora Network: 2023 vision Existing network Domestic point-to-point and Frequency transfer flows Airline 28 flights from St. Petersburg Yekaterinburg Tyumen Moscow Toms
Slide 61: 2020-2023 Development Plans
2020-2023 Development Plans Number of Airplanes Passenger turnover, mm PAX Sukhoi Superjet (Y100) Boeing 737-800 (C12Y156) Sukhoi Superjet (Y100) Boeing 737-800 (C12Y156) 12 1.0 11 0.9 10 0.7 8 0.4-0.5 2020 2021 2022 2023 2020 2021 2022 2023 Aeroflot fleet will include 12 aircraft at the Krasnoyarsk
Slide 62: Slide 62
Slide 63: Rossiya Airlines: Yesterday, Today and Tomorrow
Rossiya Airlines: Yesterday, Today and Tomorrow Before 2016 2016 - 2018 2019 and onwards Operational entities and brands 01 Presence in LED, VKO, DME, LED: Scheduled regional LED: Scheduled regional regional airports product product 02 Mid-price product and VKO: Scheduled operations Business segment
Slide 64: Network, Fleet and Operations Overview
Network, Fleet and Operations Overview Key operational metrics Rossiya airline route map Murmansk 2018 Arkhangelsk Syktyvkar Saint Petersburg Surgut Tyumen Perm Magadan Kaliningrad MOSCOW Samara Ekaterinburg Kazan Krasnoyarsk Omsk Hamburg Berlin Ufa Chelyabinsk Novosibirsk P. Kamchatsky London Dusse
Slide 65: Charter Operations Overview
Charter Operations Overview Partnership and Asset Allocation 2019 and onwards Contribution to Group (FY) Passenger traffic Reliable partner FY2018 9M 2019 6.9% 3.8 mn 3.5 mn Turnover (RPK) FY2018 9M 2019 Long-term contract 9.1% 13.0 bn 10.6 bn Revenue (RUB) Aircraft Fleet FY2018 9M 2019 6.2% 17 airc
Slide 66: Aurora Airlines
Aurora Airlines
Slide 67: Aurora Overview
Aurora Overview Key operational metrics Aurora airline’s route map 2018 Yakutsk Magadan Krasnoyarsk Novosibirsk 1.6 mn PAX 3.3 bn ASK 75.2% PLF Irkutsk Blagoveshchensk Komsomolsk-on-Amur Khabarovsk Petropavlovsk- Kamchatsky Aurora local routes in Far East Harbin Yuzhno- Sakhalinsk Sapporo Beijing 9M
Slide 68: Aeroflot
AEROFLOT ssi Russian Airlines ——
Slide 69: Aeroflot Group Network Overview
Aeroflot Group Network Overview 300+ 57 routes1 countries1 Murmansk Arkhangelsk Salekhard New Urengoy Syktyvkar Khanty Mansiysk Saint Petersburg Surgut Yakutsk Nizhnekamsk Nizhnevartovsk Perm Ekaterinburg Magadan Nizhny Novgorod Tyumen Kemerovo MOSCOW Samara Kaliningrad Novokuznetsk Krasnoyarsk Kaza
Slide 70: Network Breadth and Depth (Network Carriers)
Network “Breadth” and “Depth” (Network Carriers) Moderate increase in number of … combined with focus on network … across all domestic and International destinations … quality… network segments # of destinations – network carriers1 Average weekly scheduled flight frequency1 Average weekly scheduled
Slide 71: Frequency for Selected Destinations
Frequency for Selected Destinations Weekly frequency evolution of Top-5 by 2014 PAX international flights Weekly frequency evolution of Top-5 by 2014 PAX domestic flights 2014 2016 2019 2014 2016 2019 Prague 28 35 42 St Petersburg 119 119 140 Erevan 28 28 42 Sochi 42 49 77 Minsk 21 35 42 Ekaterinbur
Slide 72: New Route Launch: Moscow – Ljubljana Case
New Route Launch: Moscow – Ljubljana Case Analysis of the Market and Modeling Seasonality Analysis Ranking of key markets with connection Market MOW–LJU, average PDEW per month to Moscow by PDEW over 12 months 64 PAX PDEW 65 64 PAX (57 PAX P-t-P + 7 PAX with 2 stops) Jan 16 Apr 16 Jul 16 Oct 16 Jan
Slide 73: Performance of Routes Launched in 2018/2019
Performance of Routes Launched in 2018/2019 Russia Europe Mid-Haul CIS Mid-Haul World Long-Haul 7 routes lunched 5 routes launched in 2 routes launched 2 routes launched in Winter 2018/19 Winter 2018/19 and Summer in Winter 2018/2019 In Winter 2018/19 Network contribution Further ramp-up possibility
Slide 74: New Services to be Launched in 2020
New Services to be Launched in 2020 Mumbai Osaka Chengdu Goa Singapore Traffic rights Flight Launch Network expansion in 2020 will be concentrated in the long-haul segment with a number of milestone destinations in Asia that will feed our European network 74
Slide 75: Strategic Partnerships of Aeroflot
Strategic Partnerships of Aeroflot 87 codeshare destinations 16 in Europe 29 code-sharing partners codeshare destinations in the Americas 41 codeshare destinations 151 destinations in in Asia-Pacific addition to Aeroflot own network 7 ~430 thousand PAX codeshare destinations transported by partners
Slide 76: Code-sharing: Case Studies
Code-sharing: Case Studies Bangkok Airways: Unlocking regional routes potential AeroMexico: Connecting Mexico market via European hubs Code-sharing partners since Code-sharing partners since July 2014 December 2018 15 destinations from Bangkok (to Moscow No direct connection between points in Thaila
Slide 77: Aeroflot
AEROFLOT ssi Russian Airlines ——
Slide 78: Highly Unified Aircraft Fleet
Highly Unified Aircraft Fleet 5 types 4 types 1 type 3 types Narrow-body • Airbus A320F • Airbus A319 In the last decade • Airbus A320F • Boeing 737 NG • Boeing 737 NG • DHC-6-400 Aeroflot Group • Boeing 737 NG substantially • SSJ100 • DHC-8-200/300/400 reduced number of aircraft types Wide-body ope
Slide 79: Aeroflot Group Fleet Composition
Aeroflot Group Fleet Composition Number of aircraft types operated 13 13 11 11 10 9 8 Lufthansa Air France - KLM Qantas Delta Turkish IAG Aeroflot Aeroflot Group fleet is quite simple compared to the fleet operated by other carriers Source: Companies’ data as at 31 December 2018 79
Slide 80: Aeroflot Group Fleet Overview
Aeroflot Group Fleet Overview Breakdown by Aircraft Type Breakdown by Airline Wide-body Narrow-body Narrow-body (medium-haul) (regional) Wide-body 16% 41 159 49 17% 19 43 Narrow-body (regional) 67% 30 10 13 Narrow-body (medium-haul) 60 242 62 Aeroflot Group’s aircraft fleet was built and is growing
Slide 81: Aeroflot Group Fleet Expansion Plan
Aeroflot Group Fleet Expansion Plan Fleet expansion in 2020-2023 (number of aircraft) Highlights 600 364 Extending aircraft as of 30 Sep 2019 lease terms 500 ~520 400 Shifting of aircraft to be operated by 2023YE planned deliveries 300 ~80 Existing widebody aircraft by 2023YE fleet with the 200 curr
Slide 82: Introduction of Airbus A350-900 in 2020
Introduction of Airbus A350-900 in 2020 Airbus 330 Airbus 350 Range up to 12,000 km Range up to 15,000 km 300-350 seats 250-290 seats MTOW 280 t MTOW 242 t Lower fuel consumption and CO2 emission per seat In 2020 Aeroflot will introduce a brand new Airbus A350XWB aircraft which will gradually replac
Slide 83: A350/A330 Phase-in/Phase-out Plan
A350/A330 Phase-in/Phase-out Plan Aeroflot Airline Wide-body Fleet Vision Comments A350-900 will replace A330 fleet in the 300 Potential WB aircraft growth in wide- seater capacity segment body segment 22 11 22 A350-900 will provide New wide- next stage of passenger 22 А350-900 body aircraft type ca
Slide 84: A350-900 Configuration
А350-900 Configuration 28 24 264 316 business + comfort + economy = seats The configuration of A350 will further improve a long-haul proposition allowing our passengers to enjoy superior product in all classes 84
Slide 85: Increasing Capital Efficiency
Increasing Capital Efficiency Aeroflot’s Boeing 777-300 Reconfiguration to Improve Value Intergroup redistribution of Rossiya’s B737 fleet to back continued Proposition and Create Unified Long-Haul Product Pobeda’s growth B777-300 aircraft fleet to be reconfigured in 2020-2022 4 Seats: 189 Full Econ
Slide 86: Aeroflot
AEROFLOT ssi Russian Airlines ——
Slide 87: 9M and Q3 2019 Results at a Glance
9М and Q3 2019 Results at a Glance 1 2 3 Operating Expansion and Active …Backed by Strict Cost Control and …Translated into Improved 9M and Q3 Revenue Management… Macro Environment… Financial Results RPK, bn CASK, RUB EBITDA, bn RUB +10.9% +3.0% +1.2% +6.7% -0.5% +6.5% 3.09 3.18 3.06 3.09 73.7 73.4
Slide 88: 9M 2019 Results in Historical Context
9M 2019 Results in Historical Context Continued Operational … Backed by Yield Management Has Driven … and Created Opportunities to Development… Top-line Growth … Sustain Absolute Profitability RPK, bn Traffic Revenue, bn RUB EBITDA (RUB bn) and Margin +9.9% +16.6% +10.9% +12.7% 28.5% 27.0% 143.2 534
Slide 89: Revenue Management Delivered Positive Results
Revenue Management Delivered Positive Results Competition and FX factors impacted yield … However Recent RASK Trend Confirms Demand dynamics… … and All Together Created Pressure on PLF… Resilience Yield for scheduled flights (RUB/RPK) PLF (% and y-o-y p.p. change) RASK for scheduled flights (RUB/ASK
Slide 90: Long Term Focus on Efficiency
Long Term Focus on Efficiency Controlled CASK Inflation Cost Advantage vs. Foreign Peers RUB/ASK US$ cents/ASK 8.5 +9.2% Lufthansa Air France-KLM +3.0% 7.5 (Eurowings) (network airlines) 3.42 6.5 CASK ex.-fuel, USD cents / ASK 3.13 3.09 3.18 Qantas easyJet Air Canada 5.5 Turkish Airlines LATAM 4.5 (
Slide 91: Long Term Focus on Efficiency: Fuel
Long Term Focus on Efficiency: Fuel Jet Fuel Price As a Key Headwind to Results in 2017-2018 Our Approach to Fuel Management Thousand RUB per tonne of jet fuel 2019 2018 2017 2016 Strategy based on young and modern fleet 50.0 Efficient procurement and contractual terms 40.0 Economy of scale and inte
Slide 92: Aeroflot Group CAPEX and FCF
Aeroflot Group CAPEX and FCF Aeroflot Group target capex amounts to ~10 bn RUB FCF remains strong affected By PDPs RUB, bn RUB, bn -18.0% -60.6% 107.2 9.8 ~10-11 87.9 8.8 61.8 5.7 24.3 2017 2018 2019E 2020E 2017 2018 9M 2018 9M 2019 Note: based on PPE line in IFRS statements; 2019 estimates based on
Slide 93: Financial Framework
Financial Framework Supporting a value creation model Achieving top financial performance Revenue Growth Target EBITDA Margin Net Debt/EBITDA to RUB 1.3 trillion at 24% to 26% Projection ~3-4x based on RPK and yield growth normalized normalized trillion RUB Pursuing strategic targets and improving f
Slide 94: Low Cost Carrier – Pobeda Airlines
Aeroflot Group Capital Markets Day 2019 Low Cost Carrier – Pobeda Airlines LASZLO SZABO Director of Services, Pobeda Airlines
Slide 95: Russian LCC Market is Fundamentally Underpenetrated and Set for Accelerated Growth
Russian LCC Market is Fundamentally Underpenetrated and Set for Accelerated Growth Russian low cost air transportation market in global context Evolution of the European LCC market LCC market highlights Share of Low Cost Carriers in PAX, 9M 2019, % Share of the market controlled by LCC 90’s Emergenc
Slide 96: Pobeda's 5 Years in the Sky: Key Milestones
Pobeda’s 5 Years in the Sky: Key Milestones First flight from Moscow Development of international Cumulative number of customers since the launch close to 20 mln to Volgograd on network and intra-regional flights Pobeda accelerates growth: delivery of 8 Boeing 737NG December 1 Pobeda enter
Slide 97: Pobeda – Russia's First and Only Low-Cost Carrier
Pobeda – Russia’s First and Only Low-Cost Carrier 9M 2019 highlights #4 airline 7.6 mln 14.5 bn 42.7 thd in Russia customers ASK flights Industry-leading efficiency Modern fleet Rapidly growing network 96.5% load factor in Q3 2019 108 routes in summer schedule 2019 30 Boeing 737-800 NG aircraft 4,90
Slide 98: Pobeda's Way of Doing Business
Pobeda’s Way of Doing Business 01 02 03 04 https:// Young and efficient fleet Steadily expanding route Low-cost online distribution Sustainably low of Boeing 737-800 NG network via pobeda.aero operating costs 08 07 06 05 Industry–leading aircraft High seat density Growing ancillary Outsourced utiliz
Slide 99: Pobeda Is One of the Most Efficient LCC in the Industry
Pobeda Is One of the Most Efficient LCC in the Industry Total CASK (EUR cents) 3.11 3.62 5.83 3.44 3.65 N/A6 Single class Yes Yes Yes Yes Yes Yes Aircraft utilization rate (hours) 15.0 9.0 10.9 12.0 12.66 Around 14 B737-800, A320Neo, B737-800 B737-800, A320 A319, A320, A321 A320, A321 A320Ceo, A320N
Slide 100: Route Network
Route Network Route network for summer 2019 Network highlights Russia Pobeda’s network for summer 2019 comprises 108 routes, double Ulan-Ude compared to summer 2018 Mongolia Petrozavodsk Surgut – 67 domestic routes Saint Petersburg Kirov Perm Tomsk Riga Cheboksary Tyumen Moscow Kemerovo Ekaterinburg
Slide 101: Who is Pobeda's Customer?
Who is Pobeda’s Customer? Our customer More than 50% of first-flyers are switching from bus and rail Source: Sberbank CIB Ivanov confidence tracker Males Females Didn't travel to destinations I fly now 42% 58% “I am an “I always choose 8% Other efficiency the cheapest Train Gender option” 2% 22% see
Slide 102: Competition with Rail: Pobeda is Ahead
Competition with Rail: Pobeda is Ahead Pobeda’s offering is very attractive compared to Rail transportation Prices for air/rail travel (RUB)1 x Time required (hours)² Moscow Novosibirsk Moscow Surgut 4h 45h 45h 3h 46h 46h 4,530 6,889 6,698 2,930 3,179 2,512 Regular fare 3 Economy fare 4 Regular fare
Slide 103: Market Stimulation Case Study: Nizhnekamsk Airport
Market Stimulation Case Study: Nizhnekamsk Airport Passenger traffic in Nizhnekamsk airport evolution Nizhnekamsk airport PAX, thousand X% Pobeda’s share in total seats offered 6% 17% 21% 25% from the airport Sochi-Nizhnekamsk route moved to all year-round service in May 2019 Launched service from S
Slide 104: Key Operational Highlights (1/2)
Key Operational Highlights (1/2) Number of aircraft Capacity & load factor Capacity, mln ASK X% Load factor 3.8x 78.0% 81.2% 88.3% 94.2% 94.1% 94.6% 94.1% 45.9% CAGR for 34% 2015-2018 30 13,925 14,547 24 9,972 16 8,419 7,606 12 12 5,746 8 172 2014 2015 2016 2017 2018 9M 2019 2014 2015 2016 2017 2018
Slide 105: Key Operational Highlights (2/2)
Key Operational Highlights (2/2) Customers (thousand) Highlights In 5 years Pobeda became Top-5 airline in Russia Pobeda is #4 airline in Russia by number 46.4% In 2018, Pobeda’s passenger traffic increased by 56.8% year-on-year of carried to 7.2customers million passengers and continues to 32%
Slide 106: Key Financial Highlights
Key Financial Highlights Revenue (RUB mln) IFRS Net income1 (RUB mln) 55.0% 40,779 CAGR for 45% 2015-2018 34,373 26,483 3,747 3,664 20,633 2,834 19,131 1,763 11,248 – – (80) 2014 2015 2016 2017 2018 9M 2018 9M 2019 2014 2015 2016 2017 2018 9M 2019 Since its inception, Pobeda was growing at 45% annua
Slide 107: Pobeda's Ancillary Revenue
Pobeda’s Ancillary Revenue Ancillary revenue evolution Key ancillary services for Pobeda customers Ancillary revenue, RUB mln1 Baggage Seat selection X% Ancillary revenue as % of total revenue (%) 11% 11% 13% 17% 17% 6,801 5,961 CAGR for 67% 2015-2018 Fare bundles 2,576 2,023 1,280 33 2014 2015 2016
Slide 108: Long term Development Plans
Long term Development Plans 2023 01 Passenger traffic increase 7.2 mln ~25-30 mln 02 Fleet expansion 30 aircraft1 ~80-85 aircraft Moscow 03 Operational Bases Petersburg + Regional Bases Above Group’s Above Group’s 04 Profitability average average Note: 1 As of 9M 2019 15
Slide 109: Aeroflot
AEROFLOT ssi Russian Airlines —~