Russian Carrier, Aeroflot’s 2Q Earnings Hit By Virus

Russia’s flagship carrier Aeroflot yesterday posted steep losses in the second quarter after coronavirus travel restrictions caused a sharp reduction in flights.Aeroflot, a member of the SkyTeam alliance that includes Air France-KLM, is the leader in the Russian aviation sector.

The carrier said it suffered net losses of 35.8 billion rubles (RM2 billion) between April and June, compared with a net profit of 6.9 billion rubles in the same period last year.

Turnover fell by 85.3 per cent year-on-year to 25.5 billion rubles while earnings before interest, taxation, depreciation and amortisation (EBITDA) fell 1.96 billion rubles into the red against 46.96 billion rubles over the same period last year.The former Soviet carrier, which is nearly a century old, has undergone major reforms in recent years, emerging as one of the world’s most recognisable brands.

But since March, the pandemic has slashed ridership with an 88.8 per cent reduction in numbers from Q2 last year from 15.4 to 1.7 million passengers.

“In the second quarter of 2020, and above all in April and May, most of Aeroflot Group’s fleet was grounded following Covid-related restrictions,” said Andrey Chikhanchin, deputy CEO for commerce and finance.

“Given strong demand for cargo services, we reoriented a number of wide-body aircraft to carry cargo, resulting in strong cargo revenue, which was up 64 per cent” in Q2, he said in a statement.

In August, Aeroflot announced a pause on taking delivery of 10 Airbus A350s by a year or two. The carrier also said it received 70 billion rubles in government support in June.

Despite the pandemic, Chikhanchin pointed to a recovery in the internal market in June after some restrictions were lifted and domestic tourism restarted.

“In July and August domestic operations continued to recover,” he said.

Chikhanchin said the airline group’s passenger capacity was at 41.7 per cent year-on-year in July, but said its low-cost carrier Pobeda had actually increased by 1.6 per cent passenger numbers from last year.

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