Aeroflot became the second air carrier profitability of Europe


Despite a two-fold drop in the ruble since the summer of 2014 and the reduction of the tourist flow of the Russian national air carrier Aeroflot four times saw operating profit almost threefold and reduced net loss for 2015. Thus, according to the Australian analytical agencies CAPA, Aeroflot took the second place in the list of the most successful European airlines.

Its financial results for the year of 2015 JSC “Aeroflot” published on Tuesday, March 1. Since then, the course of the company’s shares on the Moscow stock exchange rose nearly 13%, reaching the maximum since February 28, 2014 is the last trading day before the Federation Council allowed Vladimir Putin to use the Armed forces on the territory of Ukraine.

The compiler of the rating the company CAPA was established in 1990 in Sydney as the Centre for Asia Pacific aviation (now just a Center for aviation). She is one of the world’s largest information-analytical portals in the aviation industry.

Thrifty pilots

The main indicator used in the annual ranking of successful companies is the operating margin, the ratio between the revenue and operating profit. With turnover 415,2 billion and operating profit of 44.1 billion rubles, profitability “Aeroflot” on primary activity has grown to 10.3% (from 3.5% in 2014).

Thus, “Aeroflot” is among the three most successful national carriers in Europe with operating margin of over 10%.

This year the rating was headed by the Icelandic carrier Icelandair with an operating margin of 11.9%. The flagship carrier of Iceland is a relatively small company with a turnover and profit five-fold lower than that of “Aeroflot”. Revenue for 2015 was $1.13 billion (+2.4%), and operating profit of $135 million (+71%). Increase downloads and traffic, lowest fuel prices and the role of reykjavík airport as an important hub between Europe and America allowed the company to become the most profitable of all national carriers of the continent.

Followed by the same for Aeroflot is the IAG group combining British Airways and Iberia Airlines, the flag carriers of Britain and Spain respectively. IAG revenue in 2015 amounted to €22.8 billion (+13%), and operating profit rose to €2.33 billion (+68%). Accordingly, the margin amounted to 10.2%. Overall, concern for 2015 was the most successful in the five years of its existence.

“Potentially the fourth player [with double-digit profitability] can become the Greek company Aegean Airlines, which has not released the end of 2015, said analysts CAPA. Last year she was the only member of this club, with a margin of 11.6%”.

If to speak about other European carriers-the giants, the profitability of the Alliance Air France-KLM amounted to only 3.1%. Lufthansa will publish its results on March 17. Worldwide, CAPA predicts the average operating margin in 2015 at the level of 8.2%.

Loophole profitability

The success of “Aeroflot” in 2015 due to devaluation of the ruble, a good strategy and effective cost control, says analyst BCS Mitch Mitchell. “Part of the tickets sold for hard currency, and due to the weak ruble revenue grew faster than passenger traffic,” said Mitchell.

Loukoster “Victory”, launched by Aeroflot in late 2014, was the 5th airline in Russia by passenger traffic in the first year, says analyst. “Demand is high and continues to grow. The company successfully launched in the year of crisis, when consumers began to look carefully at pictures”. He added that personnel costs grew by only 7% year to year, and the company is constantly working to improve fuel efficiency.

On Friday it became known that “Victory” in 2015 achieved a net profit of 37 million USD if the expected losses of 1.5 billion rubles (RAS). Among the reasons for the intensive use of aircraft, saving on fuel and staff.

In addition, the “Aeroflot” a significant proportion of revenue is denominated in foreign currency (about 50%) and the devaluation of the ruble led to the growth of profitability, says analyst IK “Aton” Michael Ganelin. He also added that the management of Aeroflot, among other things, working for many years on reducing the cost to the carrier and the subsidiaries of the group, and it also gives your results.

CAPA analysts emphasize on positive results “Aeroflot” had an impact including the withdrawal from the aviation market of Russia its competitors: “the Story around “Transaero” has just accelerated this consolidation, which “Aeroflot” will surely continue to benefit in 2016″.

The official representative “Aeroflot” stated that it is estimated CAPA statistics on the level of profitability consistent with the development strategy of “Aeroflot”. Any large company has ambitions to become a leader in the industry, he added.