Aeroflot (MCX: AFLT) — the largest Russian aviation holding in terms of the number of flights and total passenger traffic. The holding includes Aeroflot companies, Rossiya and low-cost carrier Pobeda.
24 September, the company published the operating results of the holding for August and the first 8 months of 2021. Results were mixed.. If domestically, indicators have updated historical highs, then in the international direction, the business recorded one of the worst performance in its history.
Let me remind you, that the coronavirus epidemic and restrictive measures dealt a serious blow to the Russian and international air travel industry. The most difficult situation was in April-July last year., when the flight was completely closed.
In 2020, passenger air travel in the world hit 66% compared to 2019. In Russia, the fall was slightly weaker - by 53%. Of course, and Aeroflot, which takes about 43% in the domestic air travel market, hit hard by the crisis. The company carried out an additional issue in the amount of 80 billion rubles, due to which the shares of the current shareholders were diluted, and also recorded a net loss of 123.2 billion rubles.
I propose to consider the operating indicators of Aeroflot for 8 months of the current year and compare with the results of similar periods of previous years, to evaluate, how the company is recovering from the crisis and is it possible to return to the pre-pandemic level.
Disclaimer: if we write, that something went up or down by X%, then by default we mean a comparison with the report data for the same period last year, unless otherwise stated.
Key operating indicators
Passenger traffic. The dynamics of the total passenger traffic has been steadily growing since February and by the end of August it almost reached 5.55 million people, which was a record result since September 2019.
But if we consider separately domestic and international flights, then everything is different here. Passenger traffic on domestic flights has not only recovered, but also exceeded the highs of previous years. In the summer peak of the tourist season, the holding carried a record number of passengers.
Against, the situation on the international market looks alarming. The fall here turned out to be deeper, and recovery is much slower. Restrictions still apply in many areas, and the general epidemic situation in the world is still very unstable.
Starting around November 2020, Aeroflot's international passenger traffic began to grow monthly, but remains still very far from the historical highs of past years. For comparison: this summer, passenger traffic on international routes was five times lower, than the summer of 2019.
From January to August, the passenger traffic of the airline increased by 53%, up to 29.3 million people, of which 24.9 million people were on domestic flights and only 4.4 million people were on international flights.
Following the first 8 months, international passenger traffic was at a multi-year low, internal passenger traffic, vice versa, at the maximum, exceeding the results of the dock period.
In the structure of passenger traffic 46,2% fell on the airline "Aeroflot - Russian Airlines", 32,1% — to the low-cost "Pobeda", and 21,7% - on the air carrier "Russia".
Passenger traffic of Aeroflot group for 8 months of 2021, thousands of people
| Interior | International | General | |
|---|---|---|---|
| 2017 | 18 515,2 | 15 037,3 | 33 552,4 |
| 2018 | 20 491,2 | 16 351,0 | 36 842,2 |
| 2019 | 22 664,7 | 18 380,9 | 41 045,5 |
| 2020 | 14 346,7 | 4759,9 | 19 106,6 |
| 2021 | 24 949,3 | 4376,6 | 29 325,9 |
Passenger turnover. Passenger turnover shows a similar trend., who grew up on 37%, up to 62.9 billion pkm. About 77% of the total passenger turnover accounted for domestic flights. For comparison: in pre-crisis 2019, the share of the domestic market was only 41%.
Passenger turnover in the Aeroflot group for 8 months of 2021, million pkm
| Interior | International | General | |
|---|---|---|---|
| 2017 | 35 664,0 | 51 222,7 | 86 886,7 |
| 2018 | 39 590,7 | 54 922,3 | 94 513,0 |
| 2019 | 43 789,1 | 61 873,2 | 105 662,4 |
| 2020 | 28 355,1 | 17 520,0 | 45 875,1 |
| 2021 | 48 643,4 | 14 263,4 | 62 906,7 |
Chair occupancy. For the first 8 months of 2021, seat occupancy increased to 81,1% - this is much more, than in the crisis year 2020, but worse than 2017-2019. On domestic lines, employment this year amounted to 84%, and on international 73,8%.
Total seat occupancy for 8 months of 2021
| 2017 | 83,4% |
| 2018 | 83,3% |
| 2019 | 82,4% |
| 2020 | 72,5% |
| 2021 | 81,1% |
83,4%
Cargo. Except passengers, Aeroflot transports various cargoes and mail. The company ranks first in civil cargo flights in Russia and transported 175.8 thousand tons of cargo this year compared to 140.7 thousand tons in the same period last year.
Freight and mail transported for 8 months of 2021, thousand tons
| 2017 | 167,6 |
| 2018 | 190,3 |
| 2019 | 199,7 |
| 2020 | 140,7 |
| 2021 | 175,8 |
167,6
Flights. The number of flights increased from 156.7 thousand to 208.2 thousand flights. At the same time, the number of international flights decreased by 28% - from 38.7 thousand to 28 thousand, and internal - grew by 53%, from 118.1 thousand to a record 180.2 thousand flights.
The number of flights in the Aeroflot group for 8 months of 2021, thousand flights
| Interior | International | General | |
|---|---|---|---|
| 2017 | 142,8 | 100,8 | 243,6 |
| 2018 | 155,9 | 112,6 | 268,5 |
| 2019 | 172,8 | 125,2 | 298 |
| 2020 | 118,1 | 38,7 | 156,7 |
| 2021 | 180,2 | 28 | 208,2 |
Park. At the end of August 2021, the total fleet of the holding amounted to 349 aircraft, of which 202 aircraft belong to Aeroflot, 103 - "Russia", and 44 - loukosteru «Pobeda». The total flight time in the park has recovered from 416.2 thousand to 519.7 thousand hours, but still far from pre-docian indicators.
Plaque in the park for 8 months of 2021, thousand hours
| 2017 | 665 |
| 2018 | 731,9 |
| 2019 | 819,5 |
| 2020 | 416,2 |
| 2021 | 519,7 |
665
What's the bottom line?
As can be seen from the operating data, recovery of Aeroflot's performance after the crisis is slow. Furthermore, the results of the company in the international direction were even worse than last year. The epidemic situation in Russia and the world remains tense, and restrictions on flights between many countries are still in effect, which negatively affects international air traffic. Besides, affected by the devaluation of the ruble and the fall in incomes of the population, because of what travel was unavailable for many people.
The company seeks to compensate at least part of the losses from the decline in passenger traffic and passenger turnover on international routes by increasing air travel within Russia. In this way, Aeroflot set a new record for domestic flights. Russians have become more likely to choose domestic resorts for recreation, which favorably affects the development of domestic tourism. First of all, the Pobeda low-cost airline benefits from this, which specializes in low cost air travel due to its business model. For 8 months of this year, "Pobeda" increased the number of flights by 79%, passenger traffic - on 82%, and the occupancy of the seats - up to 93,9%, which is one of the best in the industry.
It is worth noting, that up to 2020, the bulk of business revenue came from international air travel, due to the higher average ticket price. Therefore, the company is unlikely to be able to fully compensate for the loss in income only at the expense of the domestic market.. It is worth expecting a return of financial indicators to pre-crisis levels after the final stabilization of the situation on the international air travel market and the lifting of restrictions on flights between countries.
