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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 invitation to sell or issue or any solicitation of any offer to purchase or
subscribe for, any securities of the Company in any jurisdiction, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on
in connection with, any contract or investment decision.
No reliance may be placed for any purpose whatsoever on the information contained in this document or on assumptions made as to its completeness. No
representation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the
accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents.
This document may include forward-looking statements. These forward-looking statements include matters that are not historical facts or statements regarding the
Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects,
growth, strategies, and the market in which the Company operates. By their nature, forwarding-looking statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements are not guarantees of future
performance and that the Company’s actual results of operations, financial condition and liquidity and the development of the market in which the Company operates
may differ materially from those made in or suggested by the forward-looking statements contained in this document. The Company does not undertake any obligation to
review or confirm expectations or estimates or to update any forward-looking statements to reflect events that occur or circumstances that arise after the date of this
presentation.
Disclaimer
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Agenda
Time Content Speakers
9.30 – 10.00 Registration and Coffee
Management Presentations
10.00 – 10.30 Market Update and Strategy Overview Giorgio Callegari (Deputy CEO for Strategy and Alliances)
10.30 – 10.50 Financial Overview Shamil Kurmashov (Deputy CEO for Commerce and Finance)
10.50 – 11.00 Coffee Break
11.00 – 11.20 Rossiya Airline Dmitry Saprykin (CEO of Rossiya Airlines)
11.20 – 11.40 Pobeda Airline Andrey Kalmykov (CEO of Pobeda Airlines)
11.40 – 13.00 Q&A Session
13.00 – 13.30 Lunch
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AEROFLOT – INTRODUCTION
GIORGIO CALLEGARI DEPUTY CEO FOR STRATEGY AND ALLIANCES
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~130.0 bn
112.1 bn 43.4 mn
PAX
+ 15.0 %
RPK
+ 16.0 %
PASSENGER LOAD
FACTOR
+ 0.5 p.p.
FUEL
COMSUMPTION²
>30.0
- 0.4 % - 0.1 yrs
4.2 yrs 4.1 yrs
FLEET AGE¹
2016 2017Е
gr / ASK gr / ASK
¹ For Aeroflot airline. Average age of Aeroflot Group’s fleet decreased to 6.4 yrs in 2017 from 6.5 yrs in 2016.
² 2017 data for 9 months.
gr / ASK
22.9 22.8
~82.0% 81.5%
• In 2017, Aeroflot has continued improving its performance and operational efficiency.
2017 - Improvements Across the Board
~50.0 mn
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Recognized Level of Excellence
Five Star
Global Airline
Strongest Brand in
Russia and Strongest
Airline Brand in the
World 2017
Best Major Airline in Europe,
Best Business Class globally,
Best Airline in Russia 2017
Best Airline
in Eastern Europe
2011, 2013-2017
Four Star Airline
2016
Aeroflot’s achievements are recognised globally by industry and passengers.
Favourite International
Airline in China,
Flyer Award Ceremony 2017
Official carrier
Europe’s Leading Airline Brand,
Europe’s Leading Airline –
Business Class
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• Russian air transportation market has a significant potential to grow in the coming years: CAGR
for the period of 2016-2025 is estimated at 4.2%, which is faster than the pace of global market
expansion.
Russian Market Development
Note: The histogram depicts market of Russia, which excludes International-to-International transit traffic via Russian points and includes only domestic carriage by Russian-based companies and international carriage
by Russian-based and foreign-based carriers.
25.6
41.8
69.3
108.6 103.4
98.9
116.7
140+
2000 2005 2010 2014 2015 2016 2017E 2025F
Pa
sse
ng
er
tra
ffic
, m
illio
n p
ax
CAGR 14/00
10.9%
CAGR 16/14
-4.6%
+18% CAGR 25/16
4.2%
High growth of Russian air transportation market in 2017 is the consequence of:
– Low base effect after significant competitor left the market in October 2015.
– Materialization of deferred demand for tourist carriages amid macroeconomic
stabilization in Russia.
– Competition for market share on the growing market.
Slower growth of Russian aviation
market in 2018-2025 is the function of:
– Suspension of low base effect after
market normalization.
– The need to grow fares in order to
ensure economic efficiency of the
sector.
2000 – 2017 Growth of Russian Market 2018 and Beyond
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Source: TCH, FAVT, Russian Railways
54.6%
+4.8 p.p.
45.4%
(4.8) p.p.
Air and Rail Carriage Volumes Dynamics Market1 Shares of Air and Rail
Based on passenger traffic, y-o-y comparison 9M 2017, y-o-y comparison in p.p.
Contribution to Market1 Growth
mln PAX (calculation includes only air transportation
and long-haul rail markets)
158 175
0% 11%
9M 2016 Rail Air Transp. 9M 2017
+11%
4%
10%
8% 6%
1% 1% 1%
(3%)
3%
1% 0%
(3%)
4%
1%
(3%)
0%
(11%) (9%) (9%)
(2%)
3%
13%
18% 18% 18% 19%
24%
29%
23% 23%
19% 19%
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Air traffic
Rail traffic
Increase in rail traffic to
Russian holiday resorts
2017 2016
Decreasing demand for
international tourist travel
Recovery of air transportation
(low base effect)
• Active expansion of passenger air transportation at the expense of long-haul rail segment.
• Share of air in total mix of passenger transportation exceeds 60% in September.
Russian Passenger Transportation Market Dynamics
(Air Transportation + Long-haul Rail)
Air transportation grows
faster than long-haul rail
segment from October 2016
1 Market on this slide represents passenger air transportation and long-haul rail markets
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37.8%
11.9% 6.2%
6.6%
21.5%
15.9%
Aeroflot Group S7 Group
Utair Group Ural Airlines
Other Russian carriers Foreign carriers
Broad market recovery… …amid changes in Russian market Market Share1
mln PAX mln PAX 9M 2017, %
75.8
92.1
4.5
8.2
3.6
9M 2016 Domestic International Foreigncarriers
9M 2017
75.8
92.1
4.9 0.8
0.5 1.1
5.4
3.6
9M2016
Aeroflot S7Group
UtairGroup
UralAirlines
OtherRussiancarriers
Foreigncarriers
9M2017
• In 9M 2017 passenger air transportation market in Russia shows a clear trend for recovery amid
growth across all market segments and majority of carriers.
1 Market share calculated excluding International-to-International transit traffic via Russian points.
How Does the Russian Market Grow?
Foreign Carriers Other Russian Carriers
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Aeroflot Rossiya
Aurora Pobeda
43.4
~50
~741
2016A 2017E 2018 2019 2020 2021 2022F
Russian market International transit traffic
~24 mn
incremental
PAX
+48%
Aeroflot Group Traffic Growth Projected Sources of Growth
CAGR: 9.4%
PAX, mn
Contribution of Growth by Segment
50
74 10
14
2017E International Domestic 2022F
PAX, mn
Identifying Sources of Future Aeroflot Group’s Growth
• Aeroflot airline and Pobeda are expected to be the main drivers of Group’s growth in 2017-2022.
• Aeroflot Group’s market share2 is not expected to exceed 50% by 2022.
1 Including International-to-International transit traffic via Aeroflot airline hub in SVO. 2 Market share calculated excluding International-to-International transit traffic via Russian points.
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Expected PAX
in 2022 ~45 mln PAX
~12 mln PAX
~2 mln PAX
~16 mln PAX
Aircraft fleet Narrow-body aircraft
Wide-body aircraft
Narrow-body aircraft Narrow-body aircraft
Target group
Business tourism
Visiting friends and
relatives
Tourism
Visiting friends and
relatives
Tourism
Business tourism
Tourism
Visiting friends and
relatives
Focus airport Moscow:
Sheremetyevo
Vladivoskok
Khabarovsk
Yuzhno-Sakhalinsk
Moscow: Vnukovo
Positioning
Scheduled flights
Network carrier with
premium level of
service
Scheduled flights
Regional carriage in
the Far East
Scheduled flights
Low cost of carriage
on modern aircraft
Strategic focus
Growth of passenger
traffic originating from
Sheremetyevo airport
in order to boost hub
efficiency
Narrow-body aircraft
Wide-body aircraft
Visiting friends and relatives
Tourism
Business tourism
Moscow: Vnukovo / Sheremetyevo
Saint-Petersburg: Pulkovo
Scheduled and charter flights
Optimum relationship between quality and
price
Increase in operational efficiency
Development of Saint-Petersburg market
Satisfying the demand
for LCC carriage
(Moscow and Russian
regions excl. the Far
East
Medium-haul
scheduled operating
programs from the Far
Eastern airports,
social flights to local
Far Eastern airports
Multi-Brand Strategy
Positioning Premium product Mid-price regional / charter product Low-cost product Product for far east
2017 OFFERING:
• Simplified multi-brand product offering to capture customers in every market segment: from
premium to low-cost.
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1.2 1.5 1.9 2.4 2.7
3.6 3.7
7.9
2010 2011 2012 2013 2014 2015 2016 2022F
Key International Transit Markets Key Examples of SVO Competitive Position
CAGR: 13.5%
NEA
SWA
SEA
ME
WE
EE
NA
International Transit Traffic
11.8% 11.6% 10.6% 14.0%
Share of International Transit in Aeroflot Airline PAX
International Transit Traffic (PAX mn)
10.3% 10.5% 13.1% 17.6%
London - Bangkok Madrid - Shanghai
London – Hong Kong New York - Delhi
Source: Great Circle Mapper, www.gcmap.com
Strengthening Position in International Connecting Traffic
• Aeroflot gradually but consistently increases presence in key international markets.
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13
45
2017E 2022F
PREMIUM PRODUCT MID-PRICE REGIONAL / CHARTER PRODUCT
Manufacturer
Number of types
Strategic focus
in fleet
expansion
LOW-COST PRODUCT PRODUCT FOR FAR EAST
Fleet Strategy
Expected fleet
expansion
(annual average
number of a/c1)
• Expansion of Aeroflot Group fleet in line with existing guidelines on network development and
demand expectations to allow profitable growth of business
Five aircraft types Four aircraft types One aircraft type Three aircraft types
202 276
2017E 2022F
+36%
62 66
2017E 2022F
+6%
24 22
2017E 2022F
(8)% >3.5x
1 Average calculated based on aircraft phase-in moment during the year
Expansion of narrow-body
fleet (>85% of new additions)
Strengthening wide-body
segment by adding a new
type (A350)
Maintaining narrow-body aircraft
number (substituting additions)
Expanding wide-body segment
(addition of more Boeing 777)
Accelerated growing of
aircraft numbers
Higher efficiency and
maintaining utilization of
single-type fleet
Optimization of 50-70
seater aircraft numbers
Higher utilization of
existing fleet
Narrow-body
Wide-body
Airbus A320 (Family)
Boeing 737
SSJ 100
Airbus A330
Boeing 777
Airbus A320 (Family)
Boeing 737
Boeing 747
Boeing 777
Boeing 737 Airbus A319
DHC 8
DHC 6
― ―
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Exploring Additional Revenue Opportunities
New routes in the markets of presence :
― Domestic routes: Belgorod, Salekhard, Khanty-Mansiysk
― International routes: Kostanay
Ancillary Revenue New Markets and Segments
New Products
RUB 12.5 bn ancillary revenue in
9M 20171
69.6% share of revenue from
partners under frequent flyer programme in other
(ancillary) revenue
LCC ancillary revenue in 9M 2017
RUB 1.3 bn
• Aeroflot Group strategy pursues opportunities for generating incremental revenue through new market and routes,
as well as an ever-expanding range of value-added ancillary services.
New markets: Portugal (Lisbon)
Pobeda addresses the LCC market segment that previously was underserved in Russia
Aeroflot airline opened service to 5 new destinations
Pobeda has generated new revenue streams for the Group by untapping
new market segment
Hotel revenue
Catering services onboard and Duty Free sales
Other partnerships – Europcar and DreamLines cruise operator
2.4% ancillary revenue
growth in 9M 2017 y-o-y
Partners, including under frequent flyer programme
Baggage fees
Seat upgrades (Space + business)
Third-party refueling services, ground handling and MRO
+
4 new destinations were opened in 2016 (Alicante, Valencia, Lyon, Syktyvkar)
1 Other revenue as reported in IFRS accounts (excluding the line with airline agreements, refuelling services and other revenue). This amount doesn't include income from various fees accounted as part of airline revenue.
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875
65
45
20 1810 7
127
16
Flightinsurance
Virtual GiftCertificate
Medicalinsurance
Hotels Aeroexpress Europecar Guarantiedprice
Cruises Other
Profit Revenue
Online Ancillary Revenue
• Aeroflot airline has achieved significant progress in ancillary revenue generated via online channels.
• Nest year we plan to increase profit from ancillary revenues offered via online channels by 60-70%
Y-o-y change
Aeroflot airline ancillary revenues offered online
+30%
Note: virtual certificate sales calculated net of refunds
+257%
+258%
+110%
+210% +11% +67%
+115% -
/ /
2018 plans
Excess baggage fees
opportunity to purchase on
our web-site
A la carte menu
additional meals for
economy class passengers
Seat selection
seat selection for extra fees
for some fares
Insurance
selling insurance for foreign
passengers
mn RUB
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Sheremetyevo development plan Evolution of key operating indicators (max. theoretical capacity)
• Capacity – 1 mn tones in 2017 (30% of total
airport volume)
Source: Sheremetyevo press-center, aviation explorer, public sources Note:1 According to Airport Research Center; 2 Data for 2017 is presented on the basis of official Aeroflot estimates for minimum transfer time between international inbound flight to terminal F and outbound local flight from terminal D, time for 2018/2026 is presented on the basis of Sheremetyevo airport estimates for minimal transfer time from terminal B through interterminal tunnel; 3 New cargo terminal with capacity of handling up to 380 th. tons per month was launched in September 2017
Sheremetyevo development program overview Key infrastructure objects to be launched in 2018
Sheremetyevo is set to become a prominent passenger and cargo hub
and provide all necessary conditions for long-term cooperation with
Aeroflot
For this purpose, Sheremetyevo developed a long-term modernization
program with the most important stage being the preparation of the
airport for the FIFA World Cup 2018
Modernization program includes construction of the third runway,
introduction of new passenger and cargo terminals as well as
reconstruction of existing premises
Terminal B Interterminal tunnel Runway 3
2018 2026 2017
2018
2019
2021
2024
Terminal C-2
Terminal C Terminal B
Warehouse
Cargo
Terminals
Runway-3
Runway-2
Runway-1
Fuel-filling
Complex
Terminal D
Terminal F Interterminal Tunnel
Terminal E
mm
pax
min
ute
s
th.
tons
per
month
Annual pax
capacity1
Minimum
transfer
time2
Flights per
hour1
Cargo
volumes
34 66 80
80 50 50
50 70 90
230 3803
700
flig
hts
Infrastructure Expansion to Support Future Growth
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Strengthening customer services with a focus on digitalisation
and development of IT systems
Digitalization
Airport services
On-board services
Service marketing
HR and other
Development of commercial IT systems
Development of IT systems for production
NDC (New Distribution Capability) – direct distribution for agents
Cloud-based technology – management via shared pool of resources
Big Data and computer-aided training
Data management
Cyber-defences
Agile and new work methods
Corporate website
Mobile services for customers
Mobile applications for staff
Airport automation
Efficiency of business processes
Business development priorities
• Aeroflot Group continues to implement new technologies and approaches strengthening its
customer services and brand in the global market
[Option 1]
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Relatively Stable Number of
Destinations …
Aeroflot Group Network Development Strategy
• Aeroflot Group continues to pursue a balanced approach to adding new destinations, with a focus on increasing frequencies on scheduled routes across all segments (international and domestic, long- and mid- haul) to improve network quality.
141 142
153
158
137 137
144
153
2014 2015 2016 9M 2017
Summer schedule Winter schedule
# of destinations
… due to Focus on Network Quality
and Frequency …
11.1 11.8
12.4
11.2 11.5
2014 2015 2016 9M 2016 9M 2017
Average scheduled flight frequency1
CAGR: 5.7%
2.8%
… with Further Improvements
Possible Across Segments.
9.8
13.1
12.1
6.8
International Domestic Mid-haul Long-Haul
Average scheduled flight frequency1
1 Average weekly frequency per route for Aeroflot Group excl. Pobeda.
98 abroad
55 in
Russia 9M 2017
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Growth Contribution by Segment
Domestic 46%
International 54%
• Aeroflot will continue focusing on frequencies with a selective approach to adding new destinations (3-8 per
year):
― In 2017, Aeroflot launched services to Lisbon, Kostanay, Belgorod, Salekhard, Khanty-Mansiysk (5 new
destinations).
― In 2018, Aeroflot plans to begin servicing Saransk (a World Cup host city) and up to 3 destinations in
Europe and 1 in CIS (potential addition of Cairo).
• Increase in frequencies on key underserved markets with high transit potential.
Russia
Khanty-Mansiisk+7
Kaliningrad +4
Krasnoyarsk+7
Magnitogorsk +7
Novy Urengoy +7
Novosibirsk +7
Perm +5
Mineralnye Vody+7
Syktyvkar+7
Omsk +7
New routes:
Saransk +14
Total: +79
Europe
Athens +7
Barcelona +7
Budapest +7
Tenerife +1
Bologna +7
New routes:
3 new destinations with 7
flight frequency per each
Total: +50
Middle East
Dubai +7
Antalya+7
Total: +14
Asia
Bangkok +7
Male +1
Total: +8
CIS
Astana+3
New routes:
Kyzylorda +4
Total: +7
Aeroflot Airline Network – Plans for 2018
Increased Frequencies (per Week) on the Following Routes: Operating Growth by Region
4.2% 5.1%
9.0% 9.1% 11.1%
20.6%
CIS Asia Americas Russia EuropeMiddle East
9.5% total growth
PAX growth, y-o-y – for Aeroflot airline
Share of PAX growth, y-o-y
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World Cup Case Study: Brazil 2014 and Germany 2006
Air traffic evolution1 World Cup
12 June – 13 July 2014
9 June – 9 July 2006
Impact on economy
480k of foreign World Cup guests
$13bn injected in Brazil economy
Source: World Bank, public sources, Economic Research Institute Foundation, Deutsche Welle
Note: 1 Passengers carried in the country by the means of air travel; data presented under “impact on economy” are estimations of the third-party sources
$2.3bn invested in airports
$400mm of additional tourism revenue
50k additional jobs created
$2.6bn additional retail sales
95.6
100.4
2013 2014
90.8
99.6
2005 2006
million PAX
12 cities
12 cities
Carriers’ operating data
2013 2014 2015
PAX, million 66.7 67.8 67.8
change, % 3.1% 1.7% 0.0%
PLF 80.8% 83.4% 83.1%
change, p.p. 2.2 2.6 (0.3)
2013 2014 2015
PAX, million 36.6 40.1 38.0
change, % n/a 9.5% (2.0)%
PLF 69.9% 76.9% 77.2%
change, p.p. (0.3) 7.0 0.3
2005 2006 2007
PAX, million 51.3 53.4 62.9
change, % 0.7% 4.2% 17.7%
PLF 75.0% 75.2% 77.4%
change, p.p. 1.0 0.2 2.2
28
• World Cup had mixed effect on airlines in the hosting markets, with short-term increase in demand, but without any changes in strategic trends and company-specific factors.
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Aeroflot and FIFA World Cup in Russia
Routes to World Cup Locations
- routes per week Rossiya routes Aeroflot routes
Volgograd (830k from Moscow) (48k from St. Pete)
Saint Petersburg (4.5mm from Moscow)
Kaliningrad (1.2mm from Moscow) (380k from St. Pete)
Moscow (4.5mm from St.Pete)
Saransk
Rostov-on-Don (1.6mm from Moscow) (255k from St. Pete)
Sochi (3.6mm from Moscow)
(530k from St. Pete)
Samara (1.2mm from Moscow) (225k from St. Pete)
Kazan (1.2mm from Moscow) (135k from St. Pete)
Ekaterinburg (1.9mm from Moscow) (270k from St. Pete)
Nizhny Novgorod
(520k from Moscow) (31k from St. Pete)
sourced by:
• The 2018 World Championship is expected to result in traffic flow growth between city-pairs during the championship (mid-June – mid-July
2018) yet there is still risk of substitution effect (passengers travelling for holidays and fans). Also necessity to host the event at the highest
level will inccur additional expenses.
63
26
15
35
42
13
42
10
14
38
27
13
56
7
49
7 7
42
Aeroflot Efforts
General preparation
Establishment of specially-dedicated working group to
coordinate preparation process and day-to-day routes
allocation for World Cup 2018
1
Operations
Reserve aircraft to be based in the main cities of the World
Cup
3
IT infrastructure
Introduction of advanced IT solutions to automate
processing of personal details of the World Cup guests
4
Staff
Additional training sessions for staff and increased
headcount of english-speaking personnel in call centres and
representative offices
5
Passengers
Transportation of football fans, delegations and athletes
2
Spare parts
Increased warehouse stock of replacement components to
quickly repair aircraft and proceed with scheduled
maintenance works if needed
6
Other preparatory measures 7
68
68
from Moscow:
from Moscow:
from Moscow:
from Moscow:
from St. Pete:
from St. Pete:
from St. Pete:
from St. Pete:
from St. Pete:
from St. Pete:
from St. Pete:
X – weekly # of flights in 2017 summer schedule
(XXmm from …) - 2017E PAX (based on traffic flows on the leg, not a city-pair market)
*
Note: Pobeda also operates services to some host cities, including intra-regional flights. For information on Pobeda’s flights please refer to the respective section of the presentation
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Guidance
Indicator 9M 2017 YTD 2017 Updated Targets 2018 Target
Passenger
Traffic (PAX) +16.8% +14%-15% +11%-12%
Passenger
Traffic (RPK) +18.0% +15%-16% +9%-10%
Capacity (ASK) +16.2% +14%-15% +9%-10%
Passenger Load
Factor (%) 83.7% > 82.0% 82.0%+
Aeroflot Group – operating targets 2017 and 2018
Aeroflot Group – financial targets
Revenue
growth
• 2017: +7%+ yoy growth
• 2018: acceleration to 10-11%+ (ex FX), positive pricing effect
Growth in line with operating
expansion, company will target to
achieve positive impact from yields
(ex FX)
Costs • Pressure from fuel price, cockpit wage indexation
• Selective investment in product improvement
Introduction of IFRS 16 (all lease
recognized on BS, Operating lease
cost migrates to depreciation and
Interest) = EBITDA margin affected.
Currently we are selecting the most
efficient approach to standard
application and analysing PL effects. EBITDA margin
• Normalized level of approx. 10% with possible up and down
deviation based on the macro and market conditions
Indicator Short-mid term 2019 and beyond
St. Petersburg (LED)
Moscow (VKO)
Russia Airlines – Regional Product for Savvy Passengers
Business Highlights
Focus on the mid-price segment
(optimal price & quality combination) 1
2
3
4
5
Strong position in St. Petersburg - second largest
market in Russia
Diversified operations with secondary base at
Moscow’s Vnukovo airport
Focus on regional flights with selective exposure
to key international markets
Strong positions in charter segment – long-term
partnership with Biblio Globus (Russia’s largest
tour operator)
Airport Hubs and Fleet
• Aeroflot Group’s regional business was reorganised in 2016, when Rossiya Airlines merged with
Donavia and Orenair.
• Rossiya Airlines helps the Group capture all market segments and secures presence in the second
largest domestic market – St. Petersburg.
41 routes from LED
31 aircraft based at LED
14 routes from VKO
30 aircraft based at VKO
Base airport Other airports (with P-t-P flights)
2 routes from ROV -
31 aircraft
Based in LED Based in VKO
A320 Family B737
15 aircraft
B777 B747
6 aircraft 9 aircraft
Rostov (ROV)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
Domestic International Total
29.9%
34.5%
35.6%
Moscow
Other domestic regions
International
75.2%
24.8%
St. Petersburg – Second Largest Market in Russia
7.2 7.9 8.3 6.2
7.7
7.1 5.6 5.0
4.0
5.0
2014 2015 2016 9М 2016 9М 2017
Domestic International
13.5 13.3 12.6
10.2
CAGR:
(3.6%)
14.3 +24.2%
9M 2017, by number of seats 9M 2017, number of seats
Foreign carriers
Russian carriers
Pulkovo – Largest Regional Airport High Market Seasonality
Established Links to Cities in Russia and Abroad Strong Market Position with Prospects for Growth
12M 2016, million PAX
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
million PAX
• St. Petersburg is Russia’s largest regional market, with a large tourist component in the international segment, particularly in the summer season, and significant number of business passengers on domestic routes.
• Rossiya is the leading airline in one of the country’s key markets.
31.7%
13.3%
7.7%
5.5%
4.5%
2.3%
10.2%
24.8%
Rossiya
Aeroflot
S7 Group
Ural airlines
Utair
Pobeda
Other Russian carriers
Foreign carriers
Rossiya Network
Rossiya Traffic Decomposition (9M 2017)
Rossiya Airline’s Network (Winter Schedule 2017/2018)
42.1% 20.4% Scheduled
Charter 6.9% 20.3% 7.2%
St. Petersburg Moscow Regions
65.5%
34.5%
Number of Scheduled Routes
3.0%
Average Weekly Flight Frequency per Route
8.3
4.5
2.1
5.3
DomesticScheduled
InternationalScheduled
InternationalCharter
Rossiya Total
Alma-Ata
Arkhangelsk
Barcelona
Paris
Chelyabinsk
Rome
Geneva
Hamburg
Istanbul
Kaliningrad Krasnoyarsk
Samara
Larnaca
Murmansk
Mineralnye
Vody
Milan
Nice
Omsk
Novosibirsk
Prague Orenburg
Surgut
Samarkand
Berlin
Tashkent
Tyumen
Astana
Vienna
Magadan
Khabarovsk
Krasnodar
Petropavlovsk-Kamchatskiy
Yuzhno-Sakhalinsk
Vladivostok
Tel Aviv
Makhachkala
Saint-Petersburg
Perm Yekaterinburg
Simferopol Anapa
Adler
Munich
Düsseldorf
Ufa
Syktyvkar
Rostov
Moscow Kazan
• Scheduled passenger throughput from St. Petersburg forms the majority of Rossiya’s traffic; the airline’s secondary base in Moscow contributes the same level of passenger numbers but with a higher proportion from the charter segment.
46
18 16
41
14
2
from St. Petersburg from Moscow from Russian regions
Summer 2017 Winter 2017/2018
6.8
2.0
4.8
9.0
3.3
5.7
Total International Domestic
9M 2016 9M 2017
18.5
7.2
11.3
26.6
11.9
14.7
Total International Domestic
9M 2016 9M 2017
83.2%
86.1%
81.3%
85.0%
92.0%
79.4%
Total International Domestic
9M 2016 9M 2017
Operating Performance
+32.6%
+66.2%
+18.5%
+43.7%
+64.9%
+30.2%
+1.9 p.p.
+5.9 p.p.
(1.9 p.p.)
million PAX billion ASK %
Passenger Traffic Passenger Capacity Passenger Load Factor
• In 2017 Rossiya significantly grew its operational volumes as capacity increased and demand for
international flights revived.
• High demand and the development of the charter segment supported high passenger load factor.
Note: 2016 data presented pro-forma (incl. operational results of Donavia and Orenair).
24,9%
Scheduled Charter
8.2
21.7
9M 2016 9M 2017
Charter Segment
Highlights Growing Volumes of Charter Segment…
… Leads to Structural Changes in Business Mix
Key partner • Biblio-Globus
Network • Popular international and Russian tourist routes
Fleet • 8 Boeing 737-800 narrow-bodies
• 7 Boeing 747-400 wide-bodies
Results
(9M 2017)
• PAX: 3.1 million (>2.8x y-o-y),
• International + 73.1%
• Domestic + 26.9%
• RPK: 10.1 billion pkm (>2.9x year-on-year)
• PLF: 96.2% (+3.3 p.p. year-on-year)
Contract
terms
• Charter partner pays the cost of providing commercial capacity on the
aircraft to carry passengers, luggage and cargo on each flight (aircraft
capacity price), which includes:
- direct costs of flight operation;
- payment for flight hours based on number of flight hours for the flight
and cost of flight hour for the aircraft type
Length • Contract through 2018
• Plan to extend to 2022
PAX growth, million Revenue growth, RUB billion
RPK, 9M 2016 RPK, 9M 2017
1.1
3.1
9M 2016 9M 2017
>2.8x >2.6x
44,6%
Top 5 Charter Routes by PAX
Total Share of Rossiya’s PAX – 35.4%
• Charter segment has grown significantly, and has almost doubled its share of RPKs to 45%.
thousand PAX
301.1 264.9 253.1
140.2 136.2
Moscow – Antalya
Moscow – Larnaca
Moscow – Sochi
St. Petersburg – Larnaca
Moscow – Phuket
Aircraft Type 31.12.2017
(expected)
31.12.2018
(plan) Change
Airbus A319-100 26 23 (3)
Airbus A320-200 5 6 1
Boeing 737-800 16 16 -
Narrow-body 47 45 (2)
Boeing 747-400 9 9 -
Boeing 777-300 5 10 5
Wide-body 14 19 5
Total fleet 61 64 3
Note: Excluding six An-148 aircraft which were subleased.
Rossiya’s Fleet by Type of Aircraft
Rossiya’s Fleet by Type of Ownership
14.8%
85.2%
Finance lease
Operating lease
Fleet Composition and 2018 Development Plan
• Rossiya’s fleet consists of 61 airliners. The airline plans to add wide-bodies and take a number of narrow-bodies out of operation.
Rossiya Airline’s Fleet Breakdown
77.0%
23.0% Narrow-body
Wide-body
Focus for Rossiya in 2018 and Beyond
• Further development of the route network in the scheduled and tourist segments, with tactical adjustments:
• Increase capacity on domestic routes
• Optimisation of a number of flights in the international segment (reopening of Egypt provides
opportunities)
• Regular passenger flights on available routes to the Far East and South of Russia
• Transfer of Boeing 777-300 wide-bodies used on flights to Far East to SVO (SU code) in late 2018-early
2019 depending on infrastructure availability to promote connecting synergies
• Growth of the wide-body fleet, with five Boeing 777-300ERs added in 2018
• Long-term targets:
• Further increase of operational efficiency: increased flight time per aircraft, cost optimisation including
by fleet renewal
• Development of St. Petersburg base, including long-haul operations and European network
1
2
3
4
5
Graphics source files saved at
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AI\02 Cover A4_Pobeda.ai
\\Iblns001vf\aeroflotcs\02
Presentations\2017\Graphics\
JPEG\02 Cover
A4_Pobeda_1.jpg
Please update these links if
updating or moving the files
13 December 2017
Aeroflot Group Capital Markets Day 2017
Low Cost Carrier - Pobeda
Andrey Kalmykov
Chief Executive Officer
Pobeda Airlines
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5.30” / 13.46cm 0.13” / 0.33cm 0.13” / 0.33cm 5.30” / 13.46cm
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Pobeda – Russia’s First Low-cost
Carrier
> 80 routes in total (2017)
47 routes in Winter Schedule 2017/2018
– 33 domestic destinations
– 14 international destinations
14 unique destinations (cities) for the Group
12 Boeing 737-800NG¹
4 Aircraft delivered in 2017
< 3y Average age of the fleet
¹ As of 30 September 2017; ² Based on 30.09.2017 LTM passenger traffic and average headcount over the period
Network Overview Fleet Overview
Efficiency Metrics
One of the Most fuel efficient LCCs among
European airlines
25 minutes of airplane turnaround time
96.8% passenger load factor in 3Q 2017
6.0k PAX per employee²
Key Highlights (9M 2017)
Top 7 largest airline in Russia
18.7k Flights
3.3mln PAX
RUB 16.0bn in revenues
RUB 6.7bn in EBITDAR
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Pobeda Recognized as One of
the Most Efficient LCC in the Industry
Source: Company data, public data 1 For 12 month ended 31 March 2017; 2 For 12 months ended 30 September 2017, financials are converted at GBP/ EUR exchange rate of 0.87; 3 For 6 months ended 30 September, 2017 ; 4
For 12 months ended 31 December 2016, financials are converted at AED / EUR exchange rate of 4.06.
CASK
(EUR cents) 3.0 3.61 5.82 3.13 3.7 4.14
Single class Yes Yes Yes Yes Yes Yes
Aircraft utilization rate
(hours)
13.1
(15+ in summer
season)
10.4 10.9 13.5 12.1 up to 15.0
Fleet composition &
average age
(years)
B737-800
Avg Age: <3.0
B737-800
Avg Age: 6.5
A319, A320
Avg Age: 7.1
A320, A321
Avg Age: 4.5
B737-800, A320Neo,
A321Neo
Avg Age: 5.9
A320 Family
Avg Age: 3.0
Ancillary revenue
(EUR per PAX) 5.9 14.01 13.52 29.33 10.13 NA
Use of secondary
airports
All International
Flights
Half of Airports are
Secondary
Focused on Primary
Airports Majority of Flights Majority of Flights Majority of Flights
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Key Development Milestones
First flight from
Moscow to Volgograd in
December
Total fleet of 8 aircraft
as of year-end
Pobeda becomes Top-10 airline in
Russia
Seasonal flights to Sochi and
Anapa are conducted from the
regions
Launch of international flight service
Cumulative PAX of 3.1 mln
Total fleet of 12 aircraft as of year-
end
PLF reaches historical high of 96.8% in Q3 2017
Active development of intra-regional flights as well
as international flights from the regions
Addition of 4 aircraft in Q4 2017
Cumulative PAX of c. 4.6 mln expected by the
year-end
Development of international
network and intra-regional flights
Pobeda enters St. Petersburg
market
Cumulative PAX exceeds 4 mln
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Key Operational Highlights (1/2)
Pobeda continuously focuses on increasing the number of
flights of its fleet, driving capacity utilization and operational
efficiency levels
For 9M 2017, Pobeda’s seat load factor reached 95%, one of
the highest levels in the Russian airline space
Number of Flights Capacity & Load Factor
81.2% 88.3% 87.6% 94.5%
20,015 22,460
17,478 15,057
48
3,208
2,212
3,616
20,063
25,668
19,690 18,673
2015 2016 9M 2016 9M 2017
Domestic International
27.9%
(5.2%)
5,729 6,272
4,896 4,558
18
1,334
941 1,504
5,746
7,606
5,837 6,062
2015 2016 9M 2016 9M 2017
Domestic Flights (ASK, mln) International Flights (ASK, mln)
32.4%
3.9%
Source: Company data
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Key Operational Highlights (2/2)
Significant increase in the flight hours due to opening of new
routes and efficient utilization of the fleet
For 9M 2017, daily utilization rate of Pobeda’s fleet reached
13.1 hours (exceeding 15h during peaks) – one of the highest
levels in the industry
Flight Hours Average Daily Flight Hours per Aircraft
41,017
53,892
41,165 42,949
2015 2016 9M 2016 9M 2017
31.4% 4.3%
11.3
12.3 12.5 13.1
2015 2016 9M 2016 9M 2017
9.2% 4.7%
1
Source: Company data 1 Average number of aircraft calculated as number of a/c at the beginning of the period plus number of a/c at the end of the period divided by two
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11,248
19,131
15,723 16,002
2015 2016 9M 2016 9M 2017
Key Financial Highlights (1/3)
Source: Company data
¹ Based on 30.09.2017 LTM passenger traffic and average headcount over the period
Revenue (RUB mln) Operating Expenses (RUB mln)
Revenue growth was primarily driven by volume and increase
in PLF as number of aircraft remained flat in 9M 2017
Growth in operating expenses was mainly attributed to
growth of fuel costs, increase in maintenance expenses as
well as aircraft and traffic servicing costs amid growing
volumes of business
70.1%
1.8%
Pobeda’s Headcount, 30.09.2017
803 total headcount
67 employees per aircraft
6.0k PAX per employee¹
28.2% 28.9% 30.4% 30.5%
18.6% 22.7%
23.8% 23.6% 12.0%
12.1%
12.1% 12.9%
25.2%
25.0%
26.7% 21.0% 10.0%
7.5%
7.5% 10.3%
6.1%
3.6%
1.8% 11,585
14,697
10,516 11,791
2015 2016 9M 2016 9M 2017(0.4)%
Cabin Crew 50%
Cockpit Crew 27%
Ground Crew and Other
23%
Fuel Aircraft, Traffic and Passenger Servicing Staff
Operating lease Maintenance Other
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Body Text
Background
Message Box,
Table Highlight
Heading Boxes
Primary Eight
Chart Colours
Secondary Eight
Chart Colours
5.30” / 13.46cm 0.13” / 0.33cm 0.13” / 0.33cm 5.30” / 13.46cm
2.36” / 5.99cm
1.98” / 5.04cm
0.28” / 0.70cm
0.64” / 1.63cm
2.81” / 7.14cm
3.16” / 8.02cm
The GS logo and IBD identifier must appear
on every slide unless the banker has
obtained approval for their removal. You can
position them in the header or footer and
resize as necessary
Page Setup
Width: 29.7cm (11.69”)
Height: 21.0cm (8.27”)
Prints as A4
Page Setup should
only be changed if
banker requests a
specific size. If this is
the case, note the
banker name and
instructions in this box
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8
Key Financial Highlights (2/3)
Source: Company data
RASK growth was slightly impacted by increasing
competition on domestic routes and promotions aimed at
increasing brand awareness
Pobeda has significant cost advantages over other Russian and
Foreign carriers.
Increase in CASK was mainly driven by higher maintenance as
average age of the fleet increased to 3 years and higher fuel price
RASK (RUB) CASK (RUB)
1.96
2.52
2.69 2.64
2015 2016 9M 2016 9M 2017
0.57 0.56 0.55 0.59
0.37 0.44 0.43 0.46
0.24 0.23 0.22
0.25
0.51 0.48 0.48 0.41
0.20 0.14 0.13 0.20
0.12 0.07 0.03
2.02 1.93
1.80
1.94
2015 2016 9M 2016 9M 2017
28.5% (2.0%)
Fuel Aircraft, Traffic and Passenger Servicing Staff
Operating lease Maintenance Other
33
50
102
255
255
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238
249
33
50
102
0
152
214
102
189
229
0
130
193
185
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229
10
128
33
50
102
77
204
255
163
215
239
Body Text
Background
Message Box,
Table Highlight
Heading Boxes
Primary Eight
Chart Colours
Secondary Eight
Chart Colours
5.30” / 13.46cm 0.13” / 0.33cm 0.13” / 0.33cm 5.30” / 13.46cm
2.36” / 5.99cm
1.98” / 5.04cm
0.28” / 0.70cm
0.64” / 1.63cm
2.81” / 7.14cm
3.16” / 8.02cm
The GS logo and IBD identifier must appear
on every slide unless the banker has
obtained approval for their removal. You can
position them in the header or footer and
resize as necessary
Page Setup
Width: 29.7cm (11.69”)
Height: 21.0cm (8.27”)
Prints as A4
Page Setup should
only be changed if
banker requests a
specific size. If this is
the case, note the
banker name and
instructions in this box
65
193
255
213
223
228
248
99
179
85
113
200
137
221
255
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245
128
214
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237
9
Key Financial Highlights (3/3)
Source: Company data
EBITDAR and EBITDA (RUB mln) Net Income (RUB mln)
Revenue growth was offset by the less favourable fuel cost environment, increased spending on maintenance and staff cost
growing ahead of fleet expansion, resulting in pressures on margins compared to 9M 2016 results
EBITDAR margin, % EBITDA margin, %
NI margin, %
2,587
8,122 8,021
6,703
(328)
4,442
5,214
4,230
2015 2016 9M 2016 9M 2017
EBITDAR, RUB mln EBITDA, RUB mln
23% NM 42% 51% 42% 23% 33% 26%
(80)
3,747
4,339
3,619
2015 2016 9M 2016 9M 2017
20% 28% 23% NM
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0
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102
189
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0
130
193
185
202
210
229
10
128
33
50
102
77
204
255
163
215
239
Body Text
Background
Message Box,
Table Highlight
Heading Boxes
Primary Eight
Chart Colours
Secondary Eight
Chart Colours
5.30” / 13.46cm 0.13” / 0.33cm 0.13” / 0.33cm 5.30” / 13.46cm
2.36” / 5.99cm
1.98” / 5.04cm
0.28” / 0.70cm
0.64” / 1.63cm
2.81” / 7.14cm
3.16” / 8.02cm
The GS logo and IBD identifier must appear
on every slide unless the banker has
obtained approval for their removal. You can
position them in the header or footer and
resize as necessary
Page Setup
Width: 29.7cm (11.69”)
Height: 21.0cm (8.27”)
Prints as A4
Page Setup should
only be changed if
banker requests a
specific size. If this is
the case, note the
banker name and
instructions in this box
65
193
255
213
223
228
248
99
179
85
113
200
137
221
255
194
229
245
128
214
255
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234
237
10
Future Development Plans
Which Will Allow Us To Expand Our Route Network1 Over the Next Years We Plan To
Increase Our Fleet Size…
• 4 Boeing 737-800NG to be
delivered in 4Q 2017
• 29 Boeing 737-800NG to be
delivered in 2018-2022
Saint Petersburg
Moscow
Sochi Makhachkala
Krasnodar
Rostov
Penza Saransk
Belgorod
Nizhnekamsk
Krasnodar
Kutaisi
Leipzig
Verona
Istanbul
Bordeaux
Paderborn
Bremen
Nuremberg
Girona
Reus
Pisa
Bergamo
Memmingen
Cologne
Bratislava
Tivat
Alanya
Paphos Larnaca
Gyumri
Vladikavkaz
Tbilisi
Gelenzhik
Anapa
Nalchik Nazran
Astrakhan
Volgograd
Samara
Ufa
Kazan
Cheboksary
Perm Tyumen
Ekaterinburg
Chelyabinsk
Nab. Chelny
Novosibirsk Krasnoyarsk
Surgut
Almaty
Ulyanovsk
Murmansk
Current Destinations
New Destinations
… Resulting in Strong PAX
Growth Well Above the Market
20
16
= 12
= 45
20
22
F
= 4.3mln
+24% CAGR
=c15.7mln
+25% CAGR
20
16
2
02
2F
Minsk
Low frequency (< 14 flights per week)
Exploiting underserved and smaller markets, including inter-regional routes
Expanding international flights to secondary airports
Network Development Principles
1New destinations shown for 2018
33
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33
50
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0
152
214
102
189
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0
130
193
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229
10
128
33
50
102
77
204
255
163
215
239
Body Text
Background
Message Box,
Table Highlight
Heading Boxes
Primary Eight
Chart Colours
Secondary Eight
Chart Colours
5.30” / 13.46cm 0.13” / 0.33cm 0.13” / 0.33cm 5.30” / 13.46cm
2.36” / 5.99cm
1.98” / 5.04cm
0.28” / 0.70cm
0.64” / 1.63cm
2.81” / 7.14cm
3.16” / 8.02cm
The GS logo and IBD identifier must appear
on every slide unless the banker has
obtained approval for their removal. You can
position them in the header or footer and
resize as necessary
Page Setup
Width: 29.7cm (11.69”)
Height: 21.0cm (8.27”)
Prints as A4
Page Setup should
only be changed if
banker requests a
specific size. If this is
the case, note the
banker name and
instructions in this box
65
193
255
213
223
228
248
99
179
85
113
200
137
221
255
194
229
245
128
214
255
227
234
237
11
Source: Bloomberg, Company data, public data
Note: Peers’ data obtained from Bloomberg on 15.12.2017 (except for passenger traffic). Income (Loss) from Continuing Operations used to derive comparable Net income data after tax. Data
annualized for the last twelve months preceding 30.09.2017 (9M 2017 + 4Q 2016). Pobeda’s financials annualized for the last twelve months preceding 30.09.2017, data converted from RUB
according to respective reporting periods average FX rates for periods used in the calculation (9M 2016, 12M 2016, 9M 2017). Passenger traffic data obtained from carriers’ websites.
LTM, 30.09.2017, in
millions EUR (if not
indicated otherwise)
Year of Incorporation 2014 1985 1995 2003 1990 2003
Passenger traffic
(million passengers,
LTM, 30.09.2017) 4.4 127.1 80.2 26.9 26.8 8.6
Revenue 298 6,942 5,794 1,799 1,294 912
Net Income 49 1,410 350 281 67 149
Market Capitalization,
millions EUR (14.12.2017) n/a 19,393 6,454 4,028 710 1,315
We aim at expansion of Pobeda’s business, which will result in growing contribution of Company to the Group’s operating and
financial results and higher shareholder value
Pobeda’s Peer Group Overview