Slide 1: Aeroflot Group 9 Months 2016 Financial Results
Aeroflot Group 9 Months 2016 Financial Results Shamil Kurmashov, Deputy CEO for Commerce and Finance Giorgio Callegari, Deputy CEO for Strategy and Alliances Moscow, Russian Federation 30 November, 2016 1
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: 9M 2016 Highlights
9M 2016 Highlights Aeroflot Group • Aeroflot Group carried 2.8 million more passengers in 9M 2016 compared to 9M 2015 (+9.2% passenger traffic; load factor growing to 82.4%). • Expansion in the number of customers resulted in market share increase of 6.5 p.p. from 35.2% in 9M 2015 to 41.7% in 9M 201
Slide 4: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 4
Slide 5: Aeroflot Group vs Air Transportation Market: 9M 2016
Aeroflot Group vs Air Transportation Market: 9M 2016 Passenger Traffic: Market vs Aeroflot Group Change in Airlines’ Passenger Numbers Russian Air Transportation Market (PAX) mn PAX, 9M 2016 Domestic Routes Increase/decrease in PAX million International Routes (4.1%) +2.8 (7.9%) 111.8 107.2 32.8 85.
Slide 6: Capacity Optimization by Russian and Foreign Airlines
Capacity Optimization by Russian and Foreign Airlines Capacity to and from Russia (ASK) was optimized1 … … on Domestic and International Routes… ASK change, y-o-y 9M 2016 vs. 9M 2015, billion ASK 13.6% 13.3% Jan Feb Mar Apr May Jun Jul Aug Sep 9.3% 7.6% 8.3% 9.3% 8.8% 5.5% 6.0% 7.1% (6.9)% (6.7)% (1
Slide 7: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 7
Slide 8: Multi-Brand Strategy: 2016 Vision
Multi-Brand Strategy: 2016 Vision Brand Business Model Focus Airport PAX Contribution1 PAX Growth • Flagship carrier • Moscow 9M 2016 9M 2016 • Premium product (Sheremetyevo) y-o-y 10.4% Premium • High income and middle class 21.7 66.1% 21.7 • Hub and spoke model 19.7 • Focus on domestic regional fl
Slide 9: Pobeda Airline: Group's Low Cost Carrier
Pobeda Airline: Group’s Low Cost Carrier Overview of Pobeda Pobeda’s Network • Operating from Vnukovo airport (3rd Moscow airport by PAX) Network • Network comprising 36 routes (22 unique for the Group) Surgut • Additional expansion to international destinations (6 countries) Saint Petersburg Yarosl
Slide 10: Aeroflot Group Network
Aeroflot Group Network # of Flights Evolution by Region1 Geographic Network (9M 2016, y-o-y) Murmansk Arkhangelsk Novy Urengoy Russia (3.4)% Saint Petersburg Nizhnekamsk Syktyvkar Surgut Nizhnevartovsk Perm Yakutsk Magadan Kemerovo Nizhny Novgorod Ekaterinburg Tomsk MOSCOW Samara Novosibirsk Krasnoy
Slide 11: Aeroflot Airline Domestic and International Transit
Aeroflot Airline Domestic and International Transit Growing Connectivity of Aeroflot Flights1 ... … Results into a Flexible Approach to Transit Flows Average weekly frequency per route – Aeroflot airline Growing share of transit of Aeroflot airline in Sheremetyevo 12.7x 13.5x 16.0x Growth 17.2x 19.0
Slide 12: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 12
Slide 13: Aeroflot Group Monthly Operating Results
Aeroflot Group Monthly Operating Results Passenger Traffic Dynamics PAX Load Factor Change (PLFM 2016 – PLFM 2015 for respective month) 9.1 5.4% 6.4% 11.6% 5.8% 7.4 8.8% 12.4% 8.8% 6.0 11.6% 14.4% 17.1% 12.2% 5.4 5.0 5.2 8.5% 26.8% 5.1 9.2% 4.3 3.9 4.1 6.2% 7.9% 4.6 2.7% 7.3% 3.3 3.4 2.8 4.3 2.5 2.3
Slide 14: Operating Data – 3Q & 9M 2016
Operating Data – 3Q & 9M 2016 Aeroflot airline Aeroflot Group 3Q 3Q 9M 9M 3Q 3Q 9M 9M Y-o-Y Y-o-Y Y-o-Y Y-o-Y 2015 2016 2015 2016 2015 2016 2015 2016 Indicator Unit Passenger Traffic th PAX 7,689 8,272 7.6% 19,669 21,710 10.4% 12,199 13,132 7.6% 30,053 32,826 9.2% International Routes th PAX 3,836 4
Slide 15: 9M 2016 Operating Data by Region
9M 2016 Operating Data by Region (Scheduled Routes) Americas Russia CIS 8.4 % 11.4 % 14.8 % 15.3 % 7.4 % 12.0 % 5.6 % 4.3 p.p. 5.3 p.p. 2.5 p.p. 1.6 % (8.3)% Passengers RPK ASK SLF Passengers RPK ASK SLF Passengers RPK ASK SLF carried carried carried Higher demand on the flights to the region on the
Slide 16: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 16
Slide 17: Traffic Revenue Analysis
Traffic Revenue Analysis Traffic Revenue Breakdown by Type Revenue from Scheduled Passengers (RUB mn)1 9M 2016 Sheduled 9M 2016, % of Passenger Flights total 93.6% 3Q 2015 3Q 2016 Y-o-Y Region 9M 2015 9M 2016 Y-o-Y scheduled revenue 53,068 60,287 13.6% Russia 110,490 131,798 19.3% 42.1% Charter Pass
Slide 18: Scheduled Flights Revenue Units
Scheduled Flights Revenue Units 3Q 2016 Yield (PAX Revenue / RPK) 3Q 2016 RASK (PAX Revenue / ASK) RUB RUB 1.6% (0.4)% 3.6% 7.5% 7.8% 14.2% 4.18 4.17 3.59 3.56 3.53 3.53 4.02 3.87 3.88 3.31 3.59 3.09 Domestic International Total Domestic International Total 9M 2016 Yield (PAX Revenue / RPK) 9M 2016
Slide 19: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 19
Slide 20: Aeroflot Group Fleet Evolution
Aeroflot Group Fleet Evolution Aeroflot Group Fleet in Operation 1 Average Age of the Fleet 2 Aircraft Average Age 4.0 10.4 Shandong Airlines 4.5 8.8 Azul 4.6 7.7 7.0 6.4 6.4 Hainan Airlines 4.8 Garuda Indonesia 4.9 283 IndiGo 4.9 232 251 247 Sichuan Airlines 5.0 209 222 China Eastern Airlines 5.3 X
Slide 21: Aeroflot Group Fleet Breakdown
Aeroflot Group Fleet Breakdown Operated by Lease type Total as of Total as of Change vs. Aircraft Type Owned Aeroflot Subsidiaries Finance Operating 30-Sept-2016 31-Dec-2015 31-Dec-2015 Wide-body 37 14 18 33 - 51 39 12 Boeing 767 - - - - - - 1 (1) Airbus A330 22 - 8 14 - 22 22 - Boeing 777 15 8 10 1
Slide 22: Fleet Expansion Plan
Fleet Expansion Plan Delivery/Phase-out Schedule in Accordance with Existing Contracts Type of 9M 2016 (Actual) 4Q 2016 2017 2018 2019 2020 and beyond Current (1) Phase fleet Phase Phase Phase Phase Phase aircraft Delivery Delivery Delivery Delivery Delivery Delivery out out out out out out Wide-bod
Slide 23: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 23
Slide 24: Financial Highlights
Financial Highlights Q3 2015 Q3 2016 Change RUB mn 9M 2015 9M 2016 Change (where applicable) 133,043 157,482 18.4 % Revenue 309,510 381,306 23.2 % 45,935 61,933 34.8 % EBITDAR1 79,187 120,330 52.0 % 34.5 % 39.3 % 4.8 p.p. EBITDAR1 margin 25.6 % 31.6 % 6.0 p.p. 34,535 47,125 36.5 % EBITDA 47,846 77,1
Slide 25: Revenue Growth Decomposition
Revenue Growth Decomposition Revenue by Key Factors Revenue by Business Segments RUB mn RUB mn 23.2% 23.2% 10.5% + 11.1% + 0.4% + 1.2% 17.8% + 3.0% + 0.6% + 1.9% 34,378 1,317 381,306 9,229 1,757 5,795 381,306 3,673 55,015 32,430 309,510 309,510 Other Yields up Driven by Up by 498.7 Cargo revenue by
Slide 26: Operating Costs
Operating Costs % of Total Change Operating Expense Change Change Change Operating 3Q 2015 3Q 2016 ex. FX & (RUB mn If not stated 9M 2015 9M 2016 ex. FX & y-o-y y-o-y Expense NRE otherwise) NRE (9M) 26,287 29,127 10.8 % 6.9 % Fuel 71,001 73,917 4.1 % (5.4)% 23.5% 75,814 84,679 11.7 % 12.6 % Opex (ex
Slide 27: Group Unit Costs
Group Unit Costs 3Q 2015 3Q 2016 Change Operating Expense per ASK (CASK), RUB 9M 2015 9M 2016 Change 0.75 0.75 0.9 % Fuel 0.76 0.73 (4.3)% 2.16 2.19 1.7 % Opex (ex. Fuel): 2.15 2.35 9.6 % 0.62 0.64 2.9 % Aircraft, Traffic and Passenger Servicing 0.60 0.63 5.7 % 0.38 0.44 16.0 % Staff 0.43 0.47 8.8 %
Slide 28: Fuel Cost Management
Fuel Cost Management Flight Hours Fuel Consumption per ASK Fuel Consumption per ATK (thousand hours) (gr/ASK) (gr/ATK) 4.9% (1.0)% (1.6)% 682 23.1 22.9 191.6 188.5 650 9M 2015 9M 2016 9M 2015 9M 2016 9M 2015 9M 2016 Aeroflot Airline Jet Fuel Price Comments (RUB per tonne of jet fuel) 2015 2016 • Con
Slide 29: Headcount Overview
Headcount Overview Aeroflot Group Headcount by Category Flight crew 31-Dec-2015 30-Sep-2016 Y-o-Y 10.3% Flight crew 3,524 3,750 6.4% Other airline Cabin crew 9,758 10,094 3.4% personnel 14.7% Technical maintenance and repair 3,871 4,337 12.0% Cabin crew 27.8% Tickets and services sales, advertising
Slide 30: EBITDA Evolution
EBITDA Evolution (RUB mn) Total effect on revenue Total effect on costs ∑=71,798 RUB mn ∑=(42,482) RUB mn Net volume and price effect ∑=(21,852) RUB mn Net volume and price effect 34,378 (20,630) ∑=37,420 RUB mn 3,811 (7,443) (5,535) (7,325) 1,317 3,673 (2,147) 32,430 (1,048) (2,165) (774) Net FX ef
Slide 31: Net Income Evolution
Net Income Evolution (RUB mn) 5,795 (41,678) 66,001 15,171 (2,196) (9,062) 11,782 (7,909) 4,068 43,798 1,826 Reported Net Traffic Revenue Other Revenue Operating Financial Subs Reserve on Settlement of Finance Lease Taxation Reported Net Income 9M 2015 Expenses Income/Expense* Reorganization Transae
Slide 32: Reported and Adjusted Operating and Net Income Analysis
Reported and Adjusted Operating and Net Income Analysis 9M Adjusted Operating Income Build-Up (RUB mn) 770 (2,784) 1,240 66,926 66,152 Reported Operating Income 9M Pre-term return of aircraft* BSP and other agents bad debt, Sale of aircraft in finance lease Adjusted Operating Income 9M 2016 fines an
Slide 33: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 33
Slide 34: Leverage and Liquidity
Leverage and Liquidity Debt Profile1 Net Debt / LTM EBITDA2 3.3 3.4 RUB mn 31-Dec-2015 30-Sep-2016 Change Borrowings 68,460 31,805 (53.5)% 1.6 Finance Lease Liabilities 164,524 132,746 (19.3)% 1.2 Pension Liabilities 745 802 7.6 % Total Debt 233,729 165,353 (29.3)% 30-Sep-2015 31-Dec-2015 30-Jun-201
Slide 35: Operating and Free Cash Flows
Operating and Free Cash Flows (RUB mn) 9M 2016 9M 2016 Other Adj. Before Working Capital Changes*, incl. 21.2 bn Total WC +2.3 bn Effect from revenue hedging (finance lease hedge accounting) 6.6 bn Accounts receivable -15.0 bn Realized loss on currency swap closed in 1Q 2016 4.0 bn Disposal of inves
Slide 36: Agenda
1. Market Update 2. Monthly Traffic Statistics 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 36
Slide 37: Russian Air Transportation Market: Room for Growth
Russian Air Transportation Market: Room for Growth Russian Total Passenger Traffic Growth, mn PAX(1) Trips per Capita (2) Despite fast growth of the recent years, Total CAGR 8.8% Russian airline industry still has 3.54 International – 5.8% | Domestic – 12.5% (4.1)% promising growth prospects compare
Slide 38: Transformation of the Company
Transformation of the Company Aeroflot in 20091 Aeroflot Now Change6 Not-integrated Subsidiaries2 Multi-brand Product Offering Business From multiple Middle-price Regional model disintegrated Premium regional / charter3 Low-cost (Far East) subsidiaries to product-focused business model Aeroflo
Slide 39: Integration Update
Integration Update 1 2 3 New … require additional fleet to … and provide with ability to hire routes… service enlarged network… more employees B777 B747 4.3k 36 employees routes B737 А321 Initial Plans Initial Plans Initial Plans • New slots and designations for 56 routes • Aeroflot Group planned to
Slide 40: Key Operating Data of Subsidiary Airlines
Key Operating Data of Subsidiary Airlines Rossiya Orenair Donavia Aurora Pobeda Total Passenger Traffic, 9M 2016 6,103 491 209 1,051 3,261 11,116 thousand PAX 9M 2015 3,850 2,301 1,203 868 2,163 10,385 Y-o-Y 58.5% (78.6)% (82.6)% 21.1% 50.7% 7.0% Passenger Turnover, 9M 2016 13,645 1,494 268 1,718 5,
Slide 41: Statement of Comprehensive Income
Statement of Comprehensive Income RUBm, Unless Otherwise Stated 9M 2015 9M 2016 Change Traffic revenue 268,562 334,563 24.6% Other revenue 40,948 46,743 14.2% Revenue 309,510 381,306 23.2% Operating costs (272,702) (314,380) 15.3% incl. Staff costs (40,643) (48,118) 18.4% Depreciation and amortisati
Slide 42: Condensed Statement of Financial Position
Condensed Statement of Financial Position Assets (RUB mn) 31-Dec-15 30-Sep-16 Change Cash and cash equivalents 30,693 52,121 69.8% Short-term financial investments 5,917 8,469 43.1% Accounts receivable and prepayments 76,317 84,454 10.7% Expendable spare parts and inventories 7,447 9,462 27.1% Defer
Slide 43: Board of Directors
Board of Directors Corporate Governance Board of Directors Personnel and Audit Strategy Name Remuneration Committee Committee Committee General Meeting of Audit Committee Shareholders (4 members) Kirill Androsov Chairman of the Board of Directors Vitaly Saveliev Personnel and Remuneration Board of D
Slide 44: Aeroflot Group Structure
Aeroflot Group Structure PJSC Aeroflot(1) Airlines Ancillary Companies JSC Rossiya Airlines 75%-1 sh. CJSC Aeromar 51% In-flight catering JSC Donavia (2) 100% LLC Aeroflot-Finance 99.99% Financial services JSC Orenair (2) 100% JSC Sherotel 100% Hotel services JSC Aurora Airlines 51% Aeroflot Aviatio
Slide 45: Investor Relations Contacts
Investor Relations Contacts Address: 119002, Russia, Moscow, Arbat St. 10 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru 45