PJSC Aeroflot (“the Company”, Moscow Exchange ticker: AFLT) today announces its financial results for the fourth quarter (Q4) and twelve months (12M) ending 31 December 2020 in accordance with Russian Accounting Standards (RAS). RAS results are presented on a non-consolidated basis.

Key results in accordance with RAS, RUB million

Comments on Q4 and 12M 2020 RAS financial results

• The spread of the coronavirus (COVID-19) has had an unprecedented impact on the global markets and airlines. Global economic pressure had an impact on the Russian Federation as well. The Government of the Russian Federation has taken measures to support both corporates and citizens providing medical care, social and financial support. Significant support measures were also taken in relation to Russian airlines.
• The negative impact of the pandemic has put pressure on the financial and economic performance of PJSC Aeroflot. Revenue for 12M 2020 was RUB 229,766 million, a decrease of 58.4% year-on-year. After a sizable reduction in the air traffic in March and April 2020, a trend towards a decrease in the revenue decline rate has been formed: in Q4 2020 revenue decreased by 59.2% year-on-year vs. decrease of 67.4% in Q3 and 85.0% in Q2. Q4 2020 revenue was supported by the continued restoration of international flights through frequency increases and resumption of flights to a number of destinations, as well as by active growth in revenue from cargo transportation segment (an increase of 78% compared to Q4 2019). The volume of cargo and mail transported increased by 55.6% in Q4 2020 quarter-on-quarter, mainly due to an increase in freight traffic in the international segment by 130.7%. Significant growth was recorded in the segment of personal protective equipment, pharmaceuticals and vaccines transportation amid continued use of the fleet for all-cargo and cargo-passenger carriage. As a consequence of softer demand, lower passenger load factors in 12M 2020 pressured revenue per available seat-kilometer (RASK) indicators despite the yield dynamics.
• In Q4 2020 the seasonal decline in demand was complemented by a “second wave” of coronavirus infection, which affected the dynamics of operating indicators. Gradual restoration of the international flights program continued alongside with capacity adjustments in domestic segment in line with demand, which made it possible to avoid excess supply and additional costs: the number of flights on international routes increased by 93.5% in Q4 2020 quarter-on-quarter, while the number of flights in domestic segment decreased by 16.2% vs. Q3 2020. Due to the opening of a number of international destinations, the growth of passenger traffic in the international segment amounted to 55.6% vs. Q3 2020.
• Cost of sales in 12M 2020 amounted to RUB 331,734 million, a decrease of 38.9% year-on-year. The negative impact of foreign exchange rates (the average US dollar to RUB exchange rate in 12M 2020 increased by 11.5% year-on-year, the euro to RUB exchange rate grew by 13.8% year-on-year) on the costs amounted to RUB 14.9 billion. Large-scale cost optimization measures taken by the Company's management, restructuring of lease payment schedules and approval of optimized payment terms with counterparties, coupled with a reduction in the volume of operations, helped to reduce both fixed and variable costs.
• Timely measures taken by the management to reduce the capacity allowed to significantly decrease variable costs which depend on the volume of operations. In particular the cost of aviation fuel decreased by 63.8% year-on-year, airport services expenses were lower by 54.7%, catering costs were down by 64.8%. Fixed operating costs were also reduced as a result of additional optimization measures. Due to the increased focus on passenger safety and countering the spread of the coronavirus infection, the Company allocated RUB circa 0.8 billion to additional pre-flight preparation and aircraft disinfection procedures as well as to supplying passengers with personal protective equipment.
• As a result of the optimization measures, the Company achieved a total reduction of 37.2% in SG&A for 12M 2020 year-on-year (including remuneration of management, general business, consulting, marketing expenses, as well as the costs of booking systems).
• On the back of the deepest crisis in the history of aviation with almost complete halt of international traffic in the second and third quarters and anti-epidemic measures in the Russian regions, which led to significant pressure on demand, the Company's net loss for the year amounted to RUB 96.5 billion. Optimization initiatives, equity and debt capital raise, and government support measures ensured the retention of qualified personnel and the production base of PJSC Aeroflot, as well as secured a high level of flight safety in an extremely difficult pandemic environment. Thanks to optimisation initiatives and the capacity deployment based on demand and operational and financial efficiency in the second half of 2020, it was possible to secure additional revenues, particularly from cargo transportation, avoid excessive costs and thus partially minimise the negative impact of the crisis on the financial result of the year.