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Aeroflot GroupInvestor Presentation
September 2018
2
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
3
Top-20 airline group globally, one of Europe’s leading airlines, #1 airline in Russia with leading positions on both domestic and international routes
Global network with 169 unique destinations (300+ routes) in 53 countries serviced by one of the youngest fleet globally1
Multi-brand offering to appeal to a broad customer spectrum across geographies
Superior product and customer experience (Aeroflot airline awarded Four Star Airline status by Skytrax)
Efficient operating model underpinned by effective yield and cost management
Experienced management team and international standards of corporate governance
1
2
3
4
5
6
Aeroflot – One of the Largest Airline Groups in the World
Note: Network statistics are based on summer 2016 schedule. Youngest average fleet among airlines with fleet over 100 aircraft as of October 2016.
Celebrating
95 years
in
the world’s sky
Market
Update 01
In the 1960s, flight attendant uniforms were styled in warm gray shades and the jacket was fastened with three shiny half-round buttons.
The flight attendant uniform in the 1970s consisted of a jacket with white trim and buttons with the Aeroflot logo.
5
40.9%
11.8%5.9%6.5%
15.3%
19.6%
42.5%
12.0%6.3%
6.2%
14.4%
18.6%
24.9
7.13.9 3.6
9.311.9
AeroflotGroup
S7 Group Ural Airlines UTair Group ForeignCarriers
Others
7.0 7.7
5.7 6.2
12.7 13.9
Q2 2017 Q2 2018
12.7 13.8
10.2 11.1
23.024.9
6M 2017 6M 2018
15.6 17.2
15.8 18.0
31.435.2
Q2 2017 Q2 2018
International Routes
Domestic Routes
27.8 30.7
26.2 30.1
54.060.8
6M 2017 6M 2018
Russian Air Transportation Market Overview
Source: TCH, Company estimates
Note: Incl. foreign carriers’ traffic.
Passenger Traffic: Market vs Aeroflot Group Change in Airlines’ Passenger Numbers
mln PAX, 6M 2018
6M 2017
Market Share (PAX)
6M 2018
+1.9
+0.6+0.2
+1.9
Increase in PAX million
Source: TCH, Rosaviatsia, Company estimates / 1 UTair Group includes UTair, Utair-Cargo and Turuhan
Foreign Airlines Other Russian Airlines
-1.6 p.p.
9.6%
10.1%
8.9%
10.1%
14.4%
15.7% Total Market 14.1%
19.2% International 17.5%
12.0% Domestic 10.0%
Russian Air Transportation Market (million PAX)
inc. PAX of Russian and Foreign Carriers and int. transit PAX
Aeroflot Group (million PAX)
10.4%
14.8%
8.5%
7.9%
Market Dynamics Net of Aeroflot Group
• Aeroflot Group continued to deliver growth on further recovering market increasing PAX by 8.2% in 6M 2018 with
acceleration in Q2 2018.
12.5%
“Clean” Market Share of Aeroflot Group (Net of Intl.-Intl. Transit Traffic)
40.3% Aeroflot Group 38.7%
1
+0.6
+1.6
12.3%
8.2%
6
42.5 %
36.1 %
20.7 %
15.3 %14.4 %
12.2%
7.4%
12.7%10.8%
9.9%
25.7% 20.5% 16.4% 12.9% 12.2%
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
International Domestic
Passenger Traffic (Russian and Foreign Carriers) Capacity (Russian and Foreign Carriers)
Capacity Trends
Change in PAX traffic y-o-y, % Change in ASK y-o-y, %
• 6M 2018 are marked by further market recovery on the back of higher demand in both international and domestic segments and active capacity additions by market players.
Source: SRS for foreign carriers, Rosaviatsia for domestic carriers before 2018, FAVT for
domestic carriers in 2018, Company calculations. ASK is calculated based on published
RPK and PLF data
Source: TCH, Company calculations
Total market
13.0 %
21.8 %
14.6 %
16.9 %
30.2 %
21.0%
17.2%
11.9%
10.6%
9.0%
Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018
Foreign carriers Russian carriers
Aeroflot Group
Overview 02
A dark blue uniform was used in winter in the 1970s. It had a collarless jacket with five contrasting buttons and a white turtleneck-style blouse.
An elegant summer dress was designed in the 1970s for flights to hot countries.
8
0.69 0.73
65.3%
Aeroflot Group Multi-Brand Strategy
• Flagship carrier
• Premium product (4 Stars)
• High income and middle class
• Hub and spoke model
• Regional and leisure product
Focus on domestic flights
• Selected international routes,
mostly out of VKO airport in
Moscow
• Charter operations
Premium
Regional and Charter
Regional / Far-East
Low Cost
Business Model Focus Airport PAX Contribution1Brand PAX Growth
6M 2018
15.2 16.2
16.2
+6.4%
4.9 4.8
2.1
3.2
(3.8)%
+50.8%
+5.7%
6M 2017 6M 2018
6M 2017 6M 2018
6M 2017 6M 2018
6M 2017 6M 2018
19.1%
12.7%
2.9%
4.8
3.2
0.7
• Moscow
(Sheremetyevo)
• Saint-Petersburg
(Pulkovo)
• Moscow (Vnukovo)
• Vladivostok,
Khabarovsk,
Yuzhno-Sakhalinsk
• Moscow (Vnukovo)• Short and mid-haul flights
• Mostly domestic segment,
selected international
routes
• Point-to-point carriage
• The Far East airline flying on
short- and mid-haul direct
international and domestic
routes
• Flights to remote cities (local
flights)
• Simplified multi-brand product offering to capture customers in every market segment: from premium to low-cost.
• Aeroflot and Pobeda – key engines of the Group – both increased traffic by c1.0 million PAX
1 PAX contribution as of 6M 2018. Absolute number of passengers in million in green circle
9
91.6%
94.3%
93.1%93.1%
93.7%93.4%
Q1 Q2 6M
2017 2018
985.7 1,108.1
2,093.7
1,401.71,754.7
3,156.4
Q1 Q2 6M
2017 2018
Network
• Operating from Vnukovo airport (3rd Moscow airport by PAX)
• Network comprising 62 routes (38 unique for the Group)
• Additional expansion to international destinations (10 countries)
Fleet
• 20 Boeing 737-800 NG (30.06.2018)
• Plans for 4 more aircraft to be delivered in 2018
• Single class cabin
• 189 seats per plane
Key features
and
achievements in
6M 2018
• 3.2 million PAX in 6M 2018 (+50.8% y-o-y)• 6M 2018 PLF of 93.4% (+0.4 p.p. y-o-y)• International RPK is 26% of total Pobeda traffic• Active development of intra-region flights, and international flights from the regions
2022 Goals• 45 aircraft• c. 15-16 mln PAX
Improving Load Factor
Overview of Pobeda
• Pobeda, the only Russian LCC, is a timely value proposition to cost conscious passengers.
Pobeda Airline: Acceleration of Growth
Growing Passenger Flows
thousand PAX
Pobeda’s Network (Summer 2018)
Routes from Moscow Routes from Rostov
Gelenzhik
Rostov
Nazran
Makhachkala
Astrakhan
Volgograd
Kazan
Perm
Ufa
Chelyabinsk
EkaterinburgTyumen
Surgut
Novosibirsk
Bergamo
Bratislava
Cologne
Memmingen
Girona
Samara
Cheboksary
LarnacaPaphos
Tivat
Nab. Chelny
Saint Petersburg
Nalchik
Moscow
Vladikavkaz
Routes from St.-Petersburg
PLF, %
Tbilisi
Route from Makhachkala
Routes from Ekaterinburg
Krasnoyarsk
Gyumri
Anapa
Sochi
Alanya
Pisa
Routes from Sochi
Route from Krasnoyarsk
Baden-Baden
Istanbul
Ulan-Ude,
Irkutsk
42.2%
58.4%
50.8%
+1.5 p.p.
-0.6 p.p.
+0.4 p.p.
Karlovy Vary
Leipzig
Reus
Venice
Kaliningrad
Batumi
10
Corporate Strategy: New Vision
2025 Strategic Target 2009 2017 Achievement
TOP-20 airlines by
PAX globally
TOP-5 airlines by
PAX in Europe
Over 70 million
passengers 11.1 mn 50.1 mn
To be achieved
by 2022
Over 30 million
domestic passengers4.9 mn 27.6 mn
To be achieved
by 2022
Source: Air Transport World, Company estimates.
Note: 2009 traffic number for Aeroflot and subsidiaries (Nordavia and Donavia). Aeroflotstandalone – 8.6 mn PAX.
* Among traditional carriers excluding LCCs.
68 19
5*15
• Aeroflot Group plans to set new strategic goals with particular focus on transfer traffic and
regional hubs driven by active development of its premium and LCC products.
2025 Strategic Goals New Sources of Growth
Increasing depth and width of the network with increased focus
on connecting passengers.
Increasing population mobility, stimulation of passenger traffic and
opening of new markets
Improving efficiency of
operations, relocation of
Moscow operations
from VKO to SVO
New Strategic Approach:
Transfer traffic + LCC + Regional hubs
Network
Strategy 03
Passengers were especially delighted by the uniform of the 1970s, which consisted of a deep red French style suit, Russian shirt, felt hat and gloves.
A new summer uniform was introduced in the late 1980s – a light blue dress with a white collar symbolizing summer and the light blue sky.
12
Aeroflot routes
Rossiya routes
Aurora routes
Average Scheduled Flight Frequency per Route (Aeroflot Group ex-Pobeda)
• Moderate growth of destinations, focus on increase in frequencies on scheduled routes.
• Aeroflot Group operates flights to 169 unique destinations in 53 countries (in 2018 summer schedule, incl. Russia
and new destinations launched in the high season).
Aeroflot Group Network
(6M 2018, y-o-y)
Note: 1 Scheduled flights of Aeroflot Group (excluding Pobeda LCC)
9.8%8.8%
11.3%8.2%
20.4%
# of Flights Evolution by Region1
Increase in Group frequencies by 9.8% was predominantly supported by expansion of the number of frequencies indomestic segment (+11.3%) and in the sector of long-haul routes (+20.4%).
Los Angeles
MOSCOW
Malaga
Alicante
Amsterdam
Brussels
Stockholm
AthensAntalya
Barcelona
Belgrade
Bologna
BudapestParis
Copenhagen
DresdenDusseldorf
Rome
Frankfurt
Geneva
Hannover
Hamburg
Helsinki
Heraklion
Istanbul
Larnaca
London
Lyon
Madrid
Munich
MilanNice
Oslo
Bucharest
Prague
Riga
Thessaloniki
SofiaSplit
Stuttgart
Berlin
Tbilisi
Tenerife
Tivat
Tallinn
Venice
Vienna
Valencia
Kaunas
Warsaw
Zagreb
Zurich
Lisbon
Havana
Washington
New York
Miami
Male
Phuket
Ho Chi Minh City
Geographic Network
MOSCOW
Anapa
Abakan
Adler
Arkhangelsk
Astrakhan
Barnaul
Chelyabinsk
Belgorod
Magadan
Gelenzhdik
Khanty Mansiysk
Irkutsk
Kemerovo
Kaliningrad
Khabarovsk
Krasnoyarsk
Krasnodar
SamaraKazan
Saint Petersburg
Murmansk
Magnitogorsk
Mineral Waters
NizhnekamskNizhny Novgorod
Nizhnevartovsk
Novokuznetsk
New Urengoy
Novosibirsk
Perm
P. Kamchatsky
Orenburg
Rostov
Saratov
SyktyvkarSurgut
Simferopol
Salekhard
Stavropol
EkaterinburgTyumen
TomskUfa
Yu. Sakhalinsk
Volgograd
Voronezh
Vladivostok
Yakutsk
Aktobe
Almaty
Shymkent
Yerevan
Bishkek
Atyrau
Baku
KaragandaChisinau
KostanayMinsk
Aktau
SamarkandTashkent
Astana
Beirut
Dubai
Teheran
Tel Aviv
Bangkok
HanoiHong Kong
Guangzhou
Delhi Shanghai
Tokyo
Beijing
Seoul
Ulan Bator
Sochi
Frankfurt
Dalian
Harbin
Busan
Antalya
BarcelonaBurgas
Paris
Dusseldorf
Rome
Hamburg
Varna
Larnaca
Munich
MilanNice
Prague
Rimini
Berlin
TivatIstanbul
Vienna
Makhachkala
Orly
Omsk
Minsk
Chisinau
5.9 %
18.3 %
3.2 %
15.8 %
3.1 %
8.4 %
4.2 %
Total
Middle East
CIS
North and CentralAmerica
Asia
Europe
Russia
11.59.8
13.1 12.2
6.6
12.610.7
14.613.2
7.9
Scheduled International Domestic Medium-haul Long-haul
6M 2017 6M 2018
13
Denpasar
(Indonesia)
3 flights per week
Nalchik (Russia)
7 flights per week
• In Summer 2018 Aeroflot continued to increase frequencies both on the routes with already high capacity
deployed as well as underserved routes.
• Starting from Winter 2018/2019 schedule the Group targets 14 new destinations to be launched in Russia,
Europe, and Asia.
Network Expansion – Summer 2018 and Winter 2018/2019
Increased frequencies in
Summer 2018 (examples)
New destinations
launched in Summer 2018
Naples (Italy)
7 flights per week
Verona (Italy)
7 flights per week
Burgas (Bulgaria)
7 flights per week
Kyzylorda
(Kazakhstan)
4 flights per week
Cairo (Egypt)
3 flights per week
Saransk (Russia)
14 flights per week
1
2
3
4
5
6
Weekly frequency in summer schedule 2017
Addition in weekly frequencies starting from summer schedule 2018
St.Pete–London
(LGW)
7 flights per week7
New destinations to be launched in Winter 2018/2019
season
Vladikavkaz
(Russia)
7 flights per week
Nazran (Russia)
7 flights per week
Grozny (Russia)
7 flights per week
Izhevsk (Russia)
14 flights per week
Destination in
Central Asia
Makhachkala
(Russia)
14 flights per week
Colombo (Sri Lanka)
5 flights per week
Gothenburg
(Sweden)
7 flights per week
Ljubljana (Slovenia)
7 flights per week
Dublin (Ireland)
7 flights per week
56
42
35
38
35
7
7
7
4
7
Yekaterinburg
Rostov
N.Novgorod
Kaliningrad
Ufa
35
28
28
14
14
7
7
7
14
7
Prague
Rome
Milan
Istanbul
Antalya
1
2
3
4
5
6
7
8
9
10
11
12
13
14Destination in
South Asia
Osh (Kyrgyzstan)
7 flights per week
14
12.4 12.5 13.1 13.0 13.7
22.9 23.124.2
23.724.3
16.1 16.217.0 16.8
17.6
16.0x 19.1x 21.2x 20.7x 22.3x
2015 2016 2017 6M 2017 6M 2018
International Domestic Combined
3.6 3.74.4
2.0 2.1
2015 2016 2017 6M 2017 6M 2018
14.0% 13.1% 13.6% 13.0% 12.8%
16.7% 16.9% 17.5% 17.3% 15.8%
13.5% 12.1% 11.8% 12.0%11.1%
44.2%42.1%
42.9% 42.2%39.7%
2015 2016 2017 6M 2017 6M 2018Domestic - DomesticInternational - Domestic / Domestic - InternationalInternational - International
Average weekly frequency per route – Aeroflot airline
Increase in International – International Traffic
Aeroflot Airline Domestic and International Transit
Considerable share of transit of Aeroflot airline in Sheremetyevo
4.6%
5.3%
Growth
6M 2018
2.7%
… Results into a Flexible Approach to Transit Flows
• Increasing flight frequency improves connectivity and supports Aeroflot’s traffic growth in Sheremetyevo airport.
• Advantageous geographical positions and Group’s efforts support traffic growth on key European and Asian
destinations.
Growing Connectivity of Aeroflot Airline’s Flights1 ...
Total Aeroflot airline int. – int. transit traffic, million PAX
Pickup in point-to-point demand combined with expanding capacitiesresulting in growing international transfer volumes
5.8%
… Backed by Convenient Location of Aeroflot Hub
Source: Company data, IMF, Eurostat, RITA, Russian State Statistics Service, Rosaviatsia.1 Data for Aeroflot airline’s own flights; Aeroflot adopted new frequency per route and connectivity ratio calculation methodology and previous periods were recalculated retrospectively
Connectivity ratio
From/To Paris London Vienna Stockholm Rome
TokyoVia Moscow 15:00 15:05 13:45 13:15 14:55
Via Dubai 18:30 18:55 17:15 17:45 17:30
ShanghaiVia Moscow 14:05 14:10 12:50 12:20 14:00
Via Dubai 17:25 17:50 16:10 16:40 16:25
Hong KongVia Moscow 15:00 14:40 13:20 12:50 14:30
Via Dubai 18:30 17:10 15:30 16:00 15:45
Moscow
Shortest
geographical
distance
Operating Results
and Yields 04
A uniform consisting of a dark blue plaid skirt and vest captured the spirit of the 1980s.
In 1994, the renowned fashion designer Valentin Yudashkin created a new uniform: a black suit with a red vest, white shirt and bow tie.
16
Operating Data – Q2 & 6M 2018
Indicator Unit
Aeroflot airline Aeroflot Group
Q2
2017
Q2
2018Y-o-Y
6M
2017
6M
2018Y-o-Y
Q2
2017
Q2
2018Y-o-Y
6M
2017
6M
2018Y-o-Y
Passenger Traffic th PAX 8,230 8,829 7.3% 15,246 16,223 6.4% 12,660 13,871 9.6% 22,962 24,856 8.2%
International Routes th PAX 4,253 4,452 4.7% 8,007 8,351 4.3% 5,668 6,171 8.9% 10,245 11,059 7.9%
Domestic Routes th PAX 3,977 4,377 10.1% 7,239 7,872 8.7% 6,993 7,699 10.1% 12,717 13,797 8.5%
Passenger Turnover mn pkm 22,742 23,951 5.3% 42,801 44,926 5.0% 32,459 35,244 8.6% 59,392 63,987 7.7%
International Routes mn pkm 14,805 15,427 4.2% 28,565 29,752 4.2% 18,992 20,365 7.2% 35,523 37,932 6.8%
Domestic Routes mn pkm 7,937 8,524 7.4% 14,236 15,175 6.6% 13,466 14,879 10.5% 23,869 26,054 9.2%
Passenger Capacity mn ASK 27,484 30,206 9.9% 53,289 57,625 8.1% 39,209 43,358 10.6% 73,719 79,982 8.5%
International Routes mn ASK 18,168 19,906 9.6% 35,891 38,818 8.2% 22,895 25,457 11.2% 43,741 47,961 9.6%
Domestic Routes mn ASK 9,316 10,300 10.6% 17,398 18,807 8.1% 16,314 17,901 9.7% 29,977 32,020 6.8%
Passenger Load Factor % 82.7% 79.3% (3.5) p.p. 80.3% 78.0% (2.3) p.p. 82.8% 81.3% (1.5) p.p. 80.6% 80.0% (0.6) p.p.
International Routes % 81.5% 77.5% (4.0) p.p. 79.6% 76.6% (3.0) p.p. 83.0% 80.0% (3.0) p.p. 81.2% 79.1% (2.1) p.p.
Domestic Routes % 85.2% 82.8% (2.4) p.p. 81.8% 80.7% (1.1) p.p. 82.5% 83.1% 0.6 p.p. 79.6% 81.4% 1.7 p.p.
Tonne-Kilometres mn tkm 2,304 2,410 4.6% 4,335 4,522 4.3% 3,217 3,482 8.3% 5,899 6,340 7.5%
International Routes mn tkm 1,508 1,566 3.9% 2,907 3,018 3.8% 1,888 2,023 7.1% 3,539 3,775 6.7%
Domestic Routes mn tkm 796 843 6.0% 1,429 1,504 5.3% 1,329 1,460 9.9% 2,361 2,565 8.6%
Revenue Flights flights 60,238 67,149 11.5% 115,745 127,381 10.1% 92,508 102,475 10.8% 174,858 191,013 9.2%
International Routes flights 29,876 32,758 9.6% 57,905 63,017 8.8% 38,520 43,070 11.8% 72,285 79,939 10.6%
Domestic Routes flights 30,362 34,391 13.3% 57,840 64,364 11.3% 53,988 59,405 10.0% 102,573 111,074 8.3%
Flight Hours hours 172,911 190,834 10.4% 334,934 365,411 9.1% 252,280 279,969 11.0% 477,239 521,923 9.4%
17
Operating Data – July & 7M 2018
Indicator Unit
Aeroflot airline Aeroflot Group
July
2017
July
2018Y-o-Y
7M
2017
7M
2018Y-o-Y
July
2017
July
2018Y-o-Y
7M
2017
7M
2018Y-o-Y
Passenger Traffic th PAX 3,301 3,621 9.7% 18,546 19,844 7.0% 5,327 5,987 12.4% 28,289 30,842 9.0%
International Routes th PAX 1,717 1,835 6.9% 9,724 10,186 4.8% 2,409 2,644 9.7% 12,655 13,703 8.3%
Domestic Routes th PAX 1,584 1,787 12.8% 8,823 9,658 9.5% 2,917 3,342 14.6% 15,634 17,139 9.6%
Passenger Turnover mn pkm 9,087 9,745 7.2% 51,888 54,672 5.4% 13,796 15,207 10.2% 73,188 79,194 8.2%
International Routes mn pkm 5,885 6,214 5.6% 34,450 35,966 4.4% 7,871 8,467 7.6% 43,394 46,399 6.9%
Domestic Routes mn pkm 3,202 3,531 10.3% 17,438 18,706 7.3% 5,926 6,739 13.7% 29,795 32,794 10.1%
Passenger Capacity mn ASK 10,188 10,914 7.1% 63,477 68,539 8.0% 15,175 16,669 9.8% 88,894 96,651 8.7%
International Routes mn ASK 6,711 7,148 6.5% 42,603 45,966 7.9% 8,781 9,513 8.3% 52,523 57,474 9.4%
Domestic Routes mn ASK 3,476 3,766 8.3% 20,874 22,573 8.1% 6,393 7,156 11.9% 36,371 39,177 7.7%
Passenger Load Factor % 89.2% 89.3% 0.1 p.p. 81.7% 79.8% (1.9) p.p. 90.9% 91.2% 0.3 p.p. 82.3% 81.9% (0.4) p.p.
International Routes % 87.7% 86.9% (0.8) p.p. 80.9% 78.2% (2.7) p.p. 89.6% 89.0% (0.6) p.p. 82.6% 80.7% (1.9) p.p.
Domestic Routes % 92.1% 93.8% 1.7 p.p. 83.5% 82.9% (0.6) p.p. 92.7% 94.2% 1.5 p.p. 81.9% 83.7% 1.8 p.p.
Tonne-Kilometres mn tkm 903 964 6.7% 5,239 5,486 4.7% 1,343 1,481 10.3% 7,243 7,821 8.0%
International Routes mn tkm 588 622 5.8% 3,495 3,640 4.2% 767 830 8.1% 4,306 4,605 6.9%
Domestic Routes mn tkm 316 342 8.4% 1,744 1,846 5.9% 576 652 13.1% 2,937 3,216 9.5%
Revenue Flights flights 21,853 24,604 12.6% 137,598 151,985 10.5% 34,331 38,667 12.6% 209,189 229,680 9.8%
International Routes flights 10,691 12,061 12.8% 68,596 75,078 9.4% 14,242 16,260 14.2% 86,527 96,199 11.2%
Domestic Routes flights 11,162 12,543 12.4% 69,002 76,907 11.5% 20,089 22,407 11.5% 122,662 133,481 8.8%
Flight Hours hours 62,396 69,070 10.7% 397,330 434,481 9.4% 93,770 104,522 11.5% 571,009 626,445 9.7%
18
6M 2018 Operating Data by Region (Scheduled Routes)
• Strong operating performance on the scheduled routes was partially offset by selective adjustments
in network due to internal and external reasons
Source: Data presented based on management accounting for scheduled flights of Aeroflot Group (excluding charter flights)
Americas Russia CIS
Europe Middle East Asia
Performance of North and Central Americanmarket was supported by addition of 3rdfrequency to NY and increased ASK to otherdestinations, which weighted on PLF.
Russian market is continuing to show consistentgrowth in 2018 with strong PLF performance onthe back of efficient capacity management.
Group KPIs in CIS came under pressure as aresult of subsidiaries’ operating programoptimization while Aeroflot airline showed steadygrowth on all key routes including Kazakhstan.
European market performance benefited fromlaunch of additional frequencies to keydestinations and from new destinations opening,putting slight pressure on PLF.
Operating performance of the region significantlyaffected by stronger competition on key routes aswell as increased frequencies to Istanbul, Antalyaand Dubai backed by strong demand to theregion
Passenger traffic on key regional destinationsstable or trending towards growth (China), highernumber of frequencies to Male supportive foroverall performance of the region.
9.6 % 8.5 %
16.9 %
(5.9) p.p.
Passengerscarried
RPK ASK PLF
9.6 % 10.6 %7.7 %
2.1 p.p.
Passengerscarried
RPK ASK PLF
0.2 %
(2.7)%(0.8)%
(1.6) p.p.
Passengerscarried
RPK ASK PLF
10.0 %11.3 %
14.4 %
(2.1) p.p.
Passengerscarried
RPK ASK PLF
4.9 % 4.3 %
8.6 %
(3.1) p.p.Passengers
carriedRPK ASK PLF
1.9 % 1.2 %2.7 %
(1.2) p.p.Passengers
carriedRPK ASK PLF
19
3.44
3.773.623.67
4.163.93
Domestic International Total
2.83
3.072.96
3.05
3.243.16
Domestic International Total
3.27
3.643.483.42
3.933.71
Domestic International Total
2.59
2.90
2.772.78
3.032.92
Domestic International Total
6M RASK (PAX Revenue / ASK)6M Yield (PAX Revenue / RPK)
Aeroflot Group Scheduled Flights Revenue Units
• RUB dynamics and changing mix of operations at subsidiaries’ level due to rapid expansion of LCC affected RUB
yields in Q2 and 6M 2018.
Note: Data presented based on management accounting figures, scheduled flights revenue is used for calculations.
RUB
% Y-o-Y increase
RUB
2017 2018
Q2 Yield (PAX Revenue / RPK)
RUB
Q2 RASK (PAX Revenue / ASK)
RUB
6.6%
8.6%7.8%
6.6%
10.4%5.7%
4.6%
6.5%
7.4%
5.7%8.0% 4.6%
20
0.4%
(0.0)%
1.1% 1.1%1.8%
4.1%
2.1%
4.1% 3.7%
3.0%
1.7%
8.1%
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
(9.5)% (7.3)%
(4.2)% (4.2)% (2.6)% (1.8)% (0.1)%
4.5%
9.8%6.2%
8.8%
23.8%
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
(6.1)%
(4.8)%
(2.3)% (2.4)%
(1.3)%
0.0% 0.4%
4.4%
7.8%
5.1%
6.2%
18.1%
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Aeroflot Airline International Yield
Aeroflot Airline Domestic Yield
Aeroflot Airline Yield Dynamics (Monthly)
RUB/RPK, Change y-o-y in %
RUB/RPK, Change y-o-y in %
Aeroflot Airline Total Yield
• Aeroflot airline yields showed improvement on a monthly basis throughout 2017 (y-o-y) and in 2018 yield dynamics
entered positive zone in both international and domestic segments
• In 6M 2018 international segment was the main driver of Aeroflot growth: yields were in higher single-digit growth
mode during the period and in June yield dynamics reached +23.8% y-o-y supported by additional demand
associated with FIFA World Cup.
RUB/RPK, Change y-o-y in %
Source: Company calculations, data presented based on management accounting figures for Aeroflot airline standalone; immaterial deviations vs. historical data may occur due to
adjustments in Revenue Management System (RMS)
Note: Overall monthly yield performance of Aeroflot airline is consistent with the Group performance. Immaterial deviations of 1-2 p.p. in specific months can be the case, but yield
performance trends are similar for the airline and the Group.
2017 2018 2017 2018
2017 2018
21
Sales abroad31.6%
Online32.8%
Call center and own branches
3.5%
Sales in Russia32.1%
Q2 2017 Q2 2018 Y-o-Y Region 6M 2017 6M 2018 Y-o-Y6M 2018, % of
sch. revenue
44,726 53,126 18.8% Russia 75,288 87,085 15.7% 40.3%
28,470 34,738 22.0% Europe 50,832 60,090 18.2% 27.8%
15,280 16,903 10.6% Asia 31,367 34,368 9.6% 15.9%
5,560 6,074 9.2% CIS 9,618 10,538 9.6% 4.9%
6,481 7,771 19.9%North and Central
America11,478 12,936 12.7% 6.0%
5,564 6,250 12.3% Middle East 9,833 10,952 11.4% 5.1%
106,080 124,862 17.7% Total 188,416 215,969 14.6% 100.0%
Aeroflot Group Traffic Revenue Analysis
1 Data presented based on management accounting2 Data presented based on management accounting for Aeroflot airline and routes of subsidiary airlines under commercial management of Aeroflot
6M 2018
6M 20182
Traffic Revenue Breakdown by Type
Scheduled Traffic Revenue by POS
Revenue from Scheduled Passengers (RUB mln)1
• In 6M 2018 revenue from scheduled passengers grew by 14.6% mainly driven by revenue growth on Russian,
European and Asian markets.
Total Passenger Revenue (Scheduled + Charter, RUB mln)
Q2 2017 Q2 2018 Y-o-Y Segment 6M 2017 6M 2018 Y-o-Y6M 2018, %
of revenue
46,108 55,044 19.4% Domestic 77,824 89,823 15.4% 38.7%
67,486 80,412 19.2% International 122,975 142,529 15.9% 61.3%
113,594 135,456 19.2% Total 200,799 232,352 15.7% 100.0%
Sheduled Passenger Flights
89.8%
Charter Passenger Flights 6.8%
Cargo 3.4%
Aircraft
Fleet 05
The summer uniform of the 1980s took on the typical look of this time – a short-sleeve cropped jacket with bold shoulders. At that time, Aeroflot was transporting more than 120 million passengers per year. This achievement was entered in the Guinness Book of Records.
The scarlet uniform returned in the early 1990s.
23
140 150 165189
224 241
5.2
4.14.4 4.2 4.1 4,0
2013 2014 2015 2016 2017 30.06.2018
Aircraft Average Age
232 251 247289
325350
7.77.0
6.4 6.5 6.2 6,1
2013 2014 2015 2016 2017 30.06.2018
Aircraft Average Age
• Aeroflot operates the youngest fleet in the industry among airlines with active fleet of 100+ aircraft
• Aeroflot achieved significant progress in fleet renewal both for Aeroflot airline and for the Group
Aeroflot Group Fleet in Operation 1
Aeroflot Airline Fleet in Operation 1
Average Age of the Fleet 2
1 Excludes planes out of operation 2 Average Fleet Age of Selected Airlines with Active Fleet of 100+ Aircraft according to FlightGlobal data (as of July 2018) excluding planes out of operation
Aeroflot Group Fleet Evolution
4.0
4.8
5.0
5.3
5.5
5.5
5.6
5.8
5.9
5.9
5.9
6.4
6.4
6.5
6.6
6.6
6.7
7.5
9.8
10.7
10.8
10.8
12.8
13.8
14.8
14.8
16.5
Hainan Airlines
Shandong Airlines
Xiamen Airlines
Sichuan Airlines
Spirit Airlines
China Eastern Airlines
Azul
Emirates Airline
IndiGo
Qatar Airways
LATAM Airlines Chile
Shanghai Airlines
Lion Air
Etihad Airways
Garuda Indonesia
EasyJet Europe
Singapore Airlines
Japan Airlines
Qantas
American Airlines
Lufthansa
Air France
British Airways
Jazz
United Airlines
Delta Air Lines
24
1 Excluding An-24 and An-148 not operated by the airlines of the Group2 Excludes planes out of operation
Aeroflot Group Fleet Breakdown
• Well-balanced fleet structure in line with Group’s strategy
Breakdown by Company 2Breakdown by Aircraft 2 Breakdown by Ownership Type 2
Narrow-body
(medium-haul)67%
Narrow-body
(regional) 17%
Wide-body16%
Aeroflot69%
Rossiya18%
Aurora7%
Pobeda6%
Operating88%
Finance10%
Owned2%
Aircraft TypeOperated by Lease type
OwnedTotal as of Total as of Change vs.
Aeroflot Subsidiaries Finance Operating 30-Jun-18 31-Dec-17 31-Dec-17
Wide-body 39 17 18 38 - 56 52 4
Airbus A330 22 - 8 14 - 22 22 -
Boeing 777 17 8 10 15 - 25 21 4
Boeing 747 - 9 - 9 - 9 9 -
Narrow-body (medium-haul) 157 78 18 217 - 235 222 13
Airbus A319 - 36 9 27 - 36 36 -
Airbus A320 79 5 - 84 - 84 80 4
Airbus A321 37 - 9 28 - 37 38 -1
Boeing 737 41 37 - 78 - 78 68 10
Narrow-body (regional) 45 14 - 53 6 59 51 8
DHC 8 - 11 - 5 6 11 11 -
DHC 6 - 3 - 3 - 3 3 -
SSJ 100 45 - - 45 - 45 37 8
Total fleet1 241 109 36 308 6 350 325 25
25
Fleet Expansion Strategy
• Aeroflot Group continues to intelligently manage capacity additions and develop its fleet taking into account market
trends and opportunities.
331
409
2017 2018E 2019E 2020E 2021E 2022E
Aeroflot Group Fleet as at Year-end2
Number of aircraft
Delivery/Phase-out Schedule1
+ 25 aircraft + 12 aircraftNet additions (1)
Type of 6M 2018 (Actual)Current
fleet(1)
Q3-Q4 2018
aircraftDelivery Phase out Delivery Phase
out
Wide-body (long-haul) 4 - 56 2 -
A-330 - - 22 - -
B-777 4 - 25 2 -
B-747 - - 9 - -
Narrow-body (medium-haul) 22 (9) 235 14 (8)
A-319 - - 36 - (3)
A-320 9 (5) 84 2 (4)
A-321 3 (4) 37 2 -
B-737 10 - 78 10 (1)
Narrow-body (regional) 8 - 59 5 (1)
SSJ-100 8 - 45 5 -
DHC-8 - - 11 - (1)
DHC-6 - - 3 - -
TOTAL 34 (9) 350 21 (9)
1 As of 30.06.2018, not including aircraft leased or subleased to other operator (1 An-24 and 5 An-148 ). Phase-out plans for Q3-Q4 2018 include aircraft in finance lease that will be phased out according to the existing plan.
2 According to existing strategy. Not including aircraft leased or subleased to other operator.
325
Financial
Results 06
The renowned Russian fashion designer, Victoria Andreyanova, created a dark blue uniform in 2004.
A dark blue uniform for flights in autumn and winter was introduced in 2010 and ranked first in international ratings for being the most stylish and elegant flight attendant uniform.
27
Revenue and Cost Management Strategy in Challenging
Environment
• In order to deliver results and support profitability despite fuel price headwinds Aeroflot focuses both on
exploring revenue opportunities and strict cost control, including dedicated cost cutting initiatives.
Active revenue management
Exploiting ancillary revenueopportunities
Focus operational efficiencyand network synergies
Cost cutting programmes
Specific efficiency initiatives
Efficiency based strategy
Initiativesto
improvefinancial
performance
Ma
na
gin
g r
eve
nu
e
Con
tro
lling c
osts
3
2
1
3
2
1
2,600
3,000
3,400
3,800
4,200
4,600
5,000
Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18
Hurricane Harvey, growth by 14%
Brent oil price dynamics
(RUB per barrell)
Revenue and Cost Management Strategy
Source: Bloomberg
OPEC decision on cutting crude production, growth by 15% US and Saudi Arabia joint
sanctions against Iran, growth by 10%
US sanctions against Russia, growth by 16% within two days US sanctions
against Russia, growth by 8%
within one week
28
Focus on Revenue and Cost Efficiencies
• Aeroflot has long-term commitment and track records of improving operational and financial efficiency achieved
via various means - from fundamental principles of business strategy to dedicated efficiency programmes.
• Active phase of revenue generation and cost-cutting initiatives launched in 2018 targets to partially absorb
pressure on the Group’s costs coming from macroeconomic factors (fuel and exchange rates).
2018 initiatives to further strengthen already efficient
revenue management
New services to extract more
ancillary revenue (2018-2019)
Improving operational efficiency
supported by new markets
2018 cost optimization initiatives
Examples:
• Optimization of SG&A and marketing budgets
• Negotiating discounts with all counterparties and service providers (including fuel)
• On-board service and catering: optimizing budgets, loading efficiency (incl. food, water, amenity kits)
Company’s strategy is efficiency based
Examples:
• Multibrand approach
• Standardized modern and fuel efficient fleet
• Effective fuel supply management
• Development of hub in SVO
Strategic initiatives that particularlytarget efficiency
Examples:
• IT solutions for optimization of fuel loading
• Optimization of loading processes for
consumables
• KPI based remuneration
Efficiency Based Strategy
Long-Term Efficiency Initiatives
Active Phase of Cost-Cutting
Initiatives on the revenue side Initiatives on the cost side
More revenues in core business
Examples:
• Increased day-to-day control over PLF and profitability
• Optimization in booking classes and within fare families
• Fuel surcharge
Additional services to enhance passengers’ convenience
Examples:
• Paid seat selection for lower booking classes
• Introduction of paid upgrades
• Selling baggage online
Focus on efficiency of operations
Examples:
• On-time performance
• Decrease in MCT to improve connectivity
• New routes will improve transfer potential of the network and increase utilization
29
Q2 2017 Q2 2018 ChangeRUB mln
(where applicable)6M 2017 6M 2018 Change
12,660 13,871 9.6% Passenger Traffic (mln PAX) 22,962 24,856 8.2%
131,735 153,880 16.8% Revenue 234,860 265,822 13.2%
113,594 135,456 19.2% Traffic Revenue 200,799 232,352 15.7%
32,315 35,596 10.2% EBITDAR1 46,057 46,363 0.7%
24.5% 23.1% (1.4) p.p. EBITDAR1 margin 19.6% 17.4% (2.2) p.p.
16,539 14,354 (13.2)% EBITDA 15,403 6,622 (57.0)%
12.6% 9.3% (3.3) p.p. EBITDA margin 6.6% 2.5% (4.1) p.p.
8,229 6,315 (23.3)% Net income / (loss) 2,890 (5,228) n/m
Financial Highlights: Q2 and 6M 2018
• Financial results of 6M 2018 are explained by continuing pressure of macroeconomic factors –
fuel and exchange rate dynamics.
• Fuel cost pressure was partially offset by yield trends as well as cost-cutting initiatives.
1 EBITDAR = EBITDA + operating lease expenses.
30
234,860 16,420
11,022 3,235 285 265,822
6M 2017 Volume Currency Pricing Other 6M 2018
234,860
27,553 4,000 995 (1,586) 265,822
6M 2017 ScheduledPassenger
Flights
CharterPassenger
Flights
Cargo OtherRevenue
6M 2018
Revenue Growth Decomposition
• Positive contribution of volume and pricing as well as support from FX were the main factors influencing revenue.
• Primary driver of revenue growth was expansion of scheduled passenger flights across all segments, notably in
Russia, Europe and Asia
Revenue by Key Factors
RUB mln
13.2% 13.2%
Revenue by Business Segments
RUB mln
7.0% 4.7% 1.4%+ + 11.7% 1.7% 0.4% (0.7)%+ + +
Growth in operating metrics:RPK + 7.7%PAX + 8.2%
Depreciation ofRUB in 6M 2018y-o-y by c2% vs.USD and byc15% vs. EUR Growth across geographies:
Russian revenue + 15.5%International revenue +13.7%
Cargo volumes +10.6%
Charter RPK up by 8.6% y-o-y
+ 0.1%
Mainly driven by lower ground handling and maintenance and refueling services revenue from third-parties
Domesticyield up by4.6%,internationalup by 8.0%
31
Q2 2017 Q2 2018Change
y-o-y
Change
ex. FX
& NRE
Operating Expense
(RUB mln If not stated otherwise)6M 2017 6M 2018
Change
y-o-y
Change
ex. FX
& NRE
% of Total OpEx
(6M 2018)
28,790 43,843 52.3% 44.4% Fuel 56,217 77,885 38.5% 36.0% 29.3%
90,312 98,720 9.3% 6.0% Opex (ex. Fuel) 170,946 188,216 10.1% 8.8% 70.7%
24,807 26,726 7.7% 2.0%Aircraft, traffic and passenger
servicing45,961 48,634 5.8% 2.1% 18.3%
19,736 20,255 2.6% 6.6% Staff 38,324 41,659 8.7% 10.8% 15.7%
15,776 21,242 34.6% 25.2% Operating lease 30,654 39,741 29.6% 27.0% 14.9%
7,503 11,790 57.1% 47.7% Maintenance1 15,682 20,259 29.2% 26.0% 7.6%
8,336 7,918 (5.0)% (8.2)% SG&A2 14,507 14,078 (3.0)% (4.7)% 5.3%
3,906 3,037 (22.2)% (22.2)% D&A and customs duties 7,706 6,901 (10.4)% (10.4)% 2.6%
10,248 7,752 (24.3)% (23.3)% Other expenses3 18,112 16,944 (6.4)% (4.9)% 6.4%
119,102 142,563 19.7% 15.3% Total Opex 227,163 266,101 17.1% 15.6% 100.0%
Operating Costs
• In 6M 2018 operating costs were significantly impacted by expansion of operations, fuel price increase and growing fleet of
the Group. FX dynamics also affected key operating expenses lines.
1 Normalized change in Maintenance expenses (including change in maintenance reserve) in 6M 2018 amounts to +26% y-o-y, in Q2 2018 +42% y-o-y.2 Includes sales and marketing expenses and administration and general expenses.3 Other expenses include Global Distribution Systems cost, reserves accrual and reversal, catering expenses, banks’ commissions and other operating income and loss.
32
3.08
0.00
0.21 0.04 (0.02) 0.08 (0.02) (0.02) (0.03)
3.33
(0.06)0.02
3.28
3.08
Reported CASK6M 2017
Staff Fuel Maintenance Aircraft, Trafficand Passenger
Servicing
OperatingLease
D&A and CD* Admin & Sales& Marketing
Other Costs Reported CASK6M 2018
FX NRE** CASK 6M 2018ex. FX and
NRE**
Reported CASK6M 2017
Group Unit Costs
• Cost per ASK increased by 8.0% from RUB 3.08 in 6M 2017 to RUB 3.33 in 6M 2018 on the back of fuel, maintenance
and operating lease expenses pressure.
* Customs duties** NRE includes insurance refund for the aircraft and recovery of part of the provision created for compensation under long-term motivation programs
Q2 2017 Q2 2018 Change Operating Expense per ASK (CASK), RUB 6M 2017 6M 2018 Change
0.73 1.01 37.7% Fuel 0.76 0.97 27.7%
2.30 2.28 (1.1)% Opex (ex. Fuel): 2.32 2.35 1.5%
0.63 0.62 (2.6)% Aircraft, Traffic and Passenger Servicing 0.62 0.61 (2.5)%
0.50 0.47 (7.2)% Staff 0.52 0.52 0.2%
0.40 0.49 21.8% Operating Lease 0.42 0.50 19.5%
0.19 0.27 42.1% Maintenance 0.21 0.25 19.1%
0.21 0.18 (14.1)% SG&A 0.20 0.18 (10.6)%
0.10 0.07 (29.7)% D&A and Customs Duties 0.10 0.09 (17.5)%
0.26 0.18 (31.6)% Other Expenses 0.25 0.21 (13.8)%
3.04 3.29 8.2% Total Opex 3.08 3.33 8.0%
6.6%(1.3)%8.0%
33
2018
56.6 56.8 57.1 60.9 62.3 62.8 USD/RUB
69.1 65.7 66.9 71.8 77.0 75.9 Brent (USD)
42 273
32 671
30 000
40 000
50 000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 6M(WA)
2018 2017
• Efficient fuel procurement: 1-year supply contracts in
airports across Russia
• Majority of fuel purchased in Russia and almost all
fuel at international airports supplied at formula-
linked price - Jet fuel priceIntl = NW Europe (FOB
Rotterdam) price x Discount x FX rate2 x 1.183 +
Storage/Fuelling/Supply fees (if any of these applicable)
• Increasing average fuel price.
Weighted average fuel purchase price of $710/ton
(RUB 42,273/ton) in 6M 2018 vs $563/ton
(RUB 32,671/ton) in 6M 2017 (29.4% y-o-y increase in
RUB terms)
Fuel Cost Management
• Aeroflot is achieving efficiency gain in fuel costs as new aircraft are put into operation
• Oil price and RUB fluctuations led to further upward pressure on jet fuel price in 6M 2018
Flight Hours
9.4%
Fuel Consumption per ASK Fuel Consumption per RTK
Aeroflot Airline Jet Fuel Price
(thousand hours) (gr/ASK) (gr/RTK)
(RUB per tonne of jet fuel)
1
Source: Bloomberg, Company data1 Weighted average price for 6M
Comments
2 USD/RUB exchange rate as per the Central Bank of Russia3 Assuming 18% VAT rate
(1.4)% (0.4)%
477
522
6M 2017 6M 2018
22.8 22.5
6M 2017 6M 2018
284.7 283.5
6M 2017 6M 2018
34
Headcount Overview
• Improvement in labour productivity has resulted in increase of key performance indicators in 6M 2018.
• Aeroflot Group headcount increased by 6.7% vs. June 30, 2017.
Traffic Revenue / Average Airlines’ Headcount PAX Traffic / Average Airlines’ Headcount
5.4%
(million RUB per employee, annualized to 30.06.2018) (passengers per employee, annualized to 30.06.2018)
Aeroflot Group Headcount by Category
7.1%
1 Aeroflot Group headcount table excludes Aeroflot Aviation School headcount amounting to 181 employees as at 31.12.2017 and 196 employees as at 30.06.2018.
31-Dec-2017 30-Jun-2018 %
Cabin crew 11,259 11,821 5.0 %
Airport services 7,034 7,163 1.8 %
Technical maintenance and repair 4,702 5,068 7.8 %
Flight crew 3,846 3,981 3.5 %
Tickets and services sales, advertising 1,903 1,918 0.8 %
Other airline personnel (inc. airlines’ head office) 5,430 5,582 2.8 %
Other non-airline subsidiaries’ personnel 4,696 4,968 5.8 %
Total1 38,870 40,501 4.2 %
13.8
14.8
30.06.2017 (LTM) 30.06.2018 (LTM)
1,4361,514
30.06.2017 (LTM) 30.06.2018 (LTM)
Flight crew9.8%
Cabin crew29.2%
Technical maintenance and
repair12.5%
Tickets and services sales,
advertising4.7%
Airport services17.7%
Other airline personnel
13.8%
Other non-airline personnel
12.3%
35
15,403
16,420
3,235 285
11,022 (4,906)
(20,264)
(3,329)
(958)(8,279)
(4,070)
676 1,385
6,622
(1,305)
5,317
Reported
EBITDA 6M
2017
Volume Pricing Other FX benefit on
revenue
FX drag on
costs
Fuel* Staff* Aircraft,
Traffic and
PAX*
Operating
Leases*
Maintenance* Admin &
Sales &
Marketing*
Other OPEX* Reported
EBITDA 6M
2018
NRE** Adjusted
EBITDA 6M
2018
(RUB mln)
EBITDA Evolution
* Excluding currency impact
** NRE includes insurance refund for the aircraft and recovery of part of the provision created for compensation under long-term motivation programs
• Positive FX impact was observed on revenue side on the back of weakening RUB, which outpaced pressure on
operating costs.
• Key drivers of EBITDA adjustment along with the growth in size and scale of operations were increase in jet
fuel price and operating lease costs growth.
Net volume and price effect
∑=(34,839) RUB mln
Total effect on revenue
∑=30,962 RUB mln
Total effect on costs
∑=(39,745) RUB mln
Net volume and price effect
∑=19,939 RUB mlnNet FX effect
∑=6,116 RUB mln
Volume effect(4,792) RUB mln
Price effect(15,154) RUB mln
36
53,289
61,788
3,120
(5,358)
6,394
2,874 363
6,274
10,545
31,354
41,901
(5,750)(569)
15,160 (573)
Profit BeforeIncome Tax
D&A InterestExpense
UnrealizedNet FX Loss
Other Adj.Before
WorkingCapital
Changes
Cash FlowsFrom
OperatingActivitiesBefore
WorkingCapital
Changes
WorkingCapital
Changesand Income
Tax
Net CashFlows FromOperatingActivities
CapitalExpenditures
ProceedsFrom Sale of
PPE
DepositPlacementand Return
Net Pre-delivery
Payments forAircraft
Net LeasingDeposits for
a/c inOperatingLease and
Other
Free CashFlow 6M
2018
Free CashFlow 6M
2017
Operating and Free Cash Flows
• Strong Operating and Free Cash Flow generation in 6M 2018 on the back of growing business volumes and solid
operating performance.
(RUB mln)
Billion RUB 6M 2018
Other adjustments before working capital changes, incl. 6.3
Effect from revenue hedging (finance lease hedge accounting) 3.0
Change in provisions 4.2
Other (0.9)
(13.8)%
1 Change in provisions line mainly consists of provision for regular repairs and maintenance
Billion RUB 6M 2018
Working capital changes and income tax, incl. 31.4
Change in accounts receivable and prepayments (6.2)
Change in accounts payable and accrued liabilities 38.5
Change in expendable spare parts and inventories (1.6)
Change in tax and restricted cash 0.7
37
Pobeda Financial Results
Increasing PAX Traffic RASK dynamics
Increasing ASK CASK dynamics
2.20 2.28
6M 2017 6M 2018
2.1
3.2
6M 2017 6M 2018
Million passengers RUB
Growing Revenues of LCC Segment
2.092.27
6M 2017 6M 2018
PAX up by 50.8% in 6M 2018 RASK up by 3.5% in 6M 2018
ASK up by 60.6% in 6M 2018 CASK up by 8.3% in 6M 2018
Q2 2017 Q2 2018 Change RUB mln 6M 2017 6M 2018 Change
4,991 8,656 73.4% Revenue 8,268 13,736 66.1%
1,905 2,396 25.8% EBITDAR1 2,043 2,629 28.7%
38.2% 27.7% (10.5) p.p.EBITDAR
margin24.7% 19.1% (5.6) p.p.
1,093 948 (13.2)% EBITDA 408 66 (83.8)%
21.9% 11.0% (10.9) p.p.EBITDA
margin4.9% 0.5% (4.6) p.p.
874 911 4.2% Net income 400 175 (56.2)%
17.5% 10.5% (7.0) p.p. Net margin 4.8% 1.3% (3.5) p.p.
Note: based on managerial accounts transformed under IFRS standards1 Calculation based on Total Revenue of the Company
• Pobeda has demonstrated solid results backed by strong demand and active expansion of the fleet
in 6M 2018.
Billion ASK RUB
1
3.8
6.0
6M 2017 6M 2018
38
RUB mln 31-Dec-2017 30-Jun-2018 Change
Borrowings 3,181 3,524 10.8%
Finance Lease Liabilities 100,689 92,632 (8.0)%
Pension Liabilities 922 943 2.2%
Total Debt 104,792 97,099 (7.3)%
Cash and Short Term
Investments54,909 97,755 78.0%
Net Debt 49,883 (656) n/m
Leverage and Liquidity
• Net Debt turned negative as at 30.06.2018 due to decrease in finance lease obligations as well as accelerated
growth in cash position.
• Cash position of RUB 98.0 billion and undrawn credit lines of RUB 91.7 billion
1 31-Dec-2017 exchange rate - 57.60 RUB per USD , 30-Jun-2018 exchange rate - 62.76 RUB per USD 3 Not including interest; future payments in dollars converted into roubles at exchange rate of 62.76 RUB per USD2 Net debt does not include capitalised operating lease expenses; based on annualized EBITDA 4 From 01-Jan-2018 interest on bank deposits is included in Cash and Short Term Investments
Debt Profile1 Net Debt / LTM EBITDA2
Debt breakdown by currency Finance Lease Repayment Schedule (RUB billion)3
Borrowings Finance Lease
30-Sep-2017 31-Dec-2017 31-Mar-2018 30-Jun-2018
48,925 49,883 29,470 (656)
54,147 56,015 49,420 47,234
RUB mln
Net Debt 2
EBITDA 2
4
0.7
0.9 0.9
0.6
30-Jun-2017 30-Sep-2017 31-Dec-2017 31-Mar-2018 30-Jun-2018
n/m
88%
12%
RUB USD
2%
98%
8.1
14.2 14.0 14.1
42.2
2018 2019 2020 2021 2022+
Appendix 07
40
0.17
2.28
0.65 0.43
3.83
2.97
1.41
0.81
UK USA Turkey Russia
39.2 46.3
52.6 56.4
62.6
2013 2014 2015 2016 2017
110.7 103.1 97.9 101.4 102.3
2013 2014 2015 2016 2017
… from airlines on domestic routesRailways facing increasing competition…
Notes: (1) Total local and foreign carriers’ traffic
Sources: FAAT, Aeroflot estimates
Russian Air Transportation Market: Room for Growth
Total CAGR 4.5%
International – (1.3)% | Domestic – 12.4%
Despite fast growth of the recent years,Russian airline industry still haspromising growth prospects comparedto European & US markets
ChangeFY16-17
31.7%
11.0%
(5.1)%(6.9)%
3.6%
10.9%
10.8%
17.9%
RZD long-haul rail traffic (mln PAX) Domestic air traffic (mln PAX)
(2) Airline PAX per capita per year, as of 2017
Sources: FAAT, Aeroflot estimates
0.17
Domestic PAX per capita
2.28
0.65 0.43
x.xx
(5.0)%
13.6%
20.3%
• Russian market is well positioned for long-term growth on the back of still low penetration, additional potential from
ongoing structural changes and increasing propensity to travel by air as well as advantageous geographical
location.
Russian Total Passenger Traffic Growth, mln PAX(1) Trips per Capita (2)
0.8%
7.3%
Long-distance rail routes low over 10mln PAX in the recent 5 years andover 30 mln PAX over a decade
Domestic air traffic growth at a muchhigher pace than other means oftransportation
39.2 46.3 52.6 56.4 62.6
64.4 65.5 54.7 46.461.1
103.7111.8 107.3 102.8
123.7
0.0
50.0
100.0
150.0
2013 2014 2015 2016 2017Domestic Routes International Routes
41
40
80
Sheremetyevo development planEvolution of key operating indicators (max. theoretical capacity)
Source: Sheremetyevo press-center, aviation explorer, public sourcesNote:1 Actual passenger traffic of 2017 2 According to IATA Methodology
New Terminal B Highlights New infrastructure objects launched in 2018
Terminal B Interterminal tunnel Express train
20262017
2018
2019
2021
2024
Terminal C-2
Terminal CTerminal B
Warehouse
Cargo
Terminals
Runway-3
Runway-2
Runway-1
Fuel-filling
Complex
Terminal D
Terminal FInterterminal TunnelTerminal E
mm
pax
Annual pax
capacity
Flights per
hour2
55
90
flig
hts
Infrastructure Expansion to Support Future Growth
• Aeroflot has started transferring domestic flights to the new Terminal B starting from May. The Company plans to transfer all
domestic flights to the new terminal by the beginning of Winter 2018/2019 season.
Capacity – 20 mln PAX (4,200 PAX per hour)
Size – 110 thd sqm
New technologies implemented in the new terminal
Connected to terminal E via interteminal tunnels
1
42
Key Operating Data of Subsidiary Airlines
Indicator UnitRossiya Airline Pobeda Airline Aurora Airline
6M 2018 Y-o-Y 6M 2018 Y-o-Y 6M 2018 Y-o-Y
Passenger Traffic th PAX 4,751 (3.8)% 3,156 50.8% 726 5.7%
International Routes th PAX 1,834 10.6% 690 72.0% 183 2.2%
Domestic Routes th PAX 2,916 (11.0)% 2,466 45.7% 543 6.9%
Passenger Turnover mn pkm 12,318 2.2% 5,641 61.2% 1,102 5.7%
International Routes mn pkm 6,443 10.3% 1,471 72.5% 267 0.0%
Domestic Routes mn pkm 5,876 (5.4)% 4,169 57.6% 835 7.7%
Passenger Capacity mn ASK 14,760 (2.4)% 6,037 60.6% 1,560 1.1%
International Routes mn ASK 7,172 10.1% 1,582 65.3% 390 3.2%
Domestic Routes mn ASK 7,588 (11.9)% 4,455 58.9% 1,170 0.4%
Passenger Load Factor % 83,5% 3.8 p.p. 93,4% 0.4 p.p. 70,6% 3.1 p.p.
International Routes % 89,8% 0.2 p.p. 93,0% 3.8 p.p. 68,5% (2.2) p.p.
Domestic Routes % 77,4% 5.3 p.p. 93,6% (0.8) p.p. 71,3% 4.9 p.p.
Flight Hours hours 91,897 (2.2)% 42,794 59.0% 21,821 1.9%
43
3.423.55 3.50
3.703.95 3.84
Domestic International Total
2.832.95 2.90
3.07 3.16 3.12
Domestic International Total
3.263.46 3.383.45
3.763.63
Domestic International Total
2.60
2.812.72
2.812.97 2.91
Domestic International Total
6M RASK (Scheduled + Charter PAX Revenue / ASK)6M Yield (Scheduled + Charter PAX Revenue / RPK)
Aeroflot Group Blended Flights Revenue Units
• RUB dynamics and changing mix of operations at subsidiaries’ level affected RUB yields in Q2 and 6M 2018.
Note: Data presented based on management accounting figures, scheduled and charter flights revenue is used for calculations
RUB
% Y-o-Y increase
RUB
2017 2018
Q2 Yield (Scheduled + Charter PAX Revenue / RPK)
RUB
Q2 RASK (Scheduled + Charter PAX Revenue / ASK)
RUB
8.0%
9.8%8.8%
7.8%
11.1% 7.2%
5.7%
7.4%
8.1%6.7%8.5% 5.7%
44
2.64
2.912.80
2.90
3.042.99
Domestic International Total
6M RASK ex. Pobeda (PAX Revenue / ASK)6M Yield ex. Pobeda (PAX Revenue / RPK)
Aeroflot Group Scheduled Flights Revenue Units
• RUB dynamics and changing mix of operations at subsidiaries’ level affected RUB yields in 6M 2018.
Note: Data presented based on management accounting figures, scheduled flights revenue is used for calculations.
RUB
% Y-o-Y increase
RUB
2017 2018
3.27
3.643.483.42
3.933.71
Domestic International Total
2.59
2.90
2.772.78
3.032.92
Domestic International Total
6M RASK (PAX Revenue / ASK)6M Yield (PAX Revenue / RPK)
RUB RUB
4.6%
6.5%
7.4%
5.7%8.0% 4.6%
3.403.66 3.563.66
3.973.85
Domestic International Total
7.6%8.1%
9.8%
6.6%8.4%4.5%
45
Statement of Comprehensive Income
RUB mln, unless otherwise stated 2013 2014 2015 2016 2017 6M 2017 6M 2018
Traffic revenue 257,546 277,354 359,205 433,966 474,916 207,982 240,530
Other revenue 33,410 42,417 55,968 61,914 58,018 26,878 25,292
Revenue 290,956 319,771 415,173 495,880 532,934 234,860 265,822
Operating costs (271,161) (308,503) (371,066) (432,626) (492,523) (227,163) (266,101)
Operating profit / (loss) 19,795 11,268 44,107 63,254 40,411 7,697 (279)
Sale and impairment of investments, net - - (9,159) (2,935) (144) (70) 107
Finance income 2,686 2,471 15,811 19,802 7,127 4,783 2,124
Finance costs (8,814) (28,399) (28,556) (9,443) (8,225) (4,159) (4,369)
Hedging result - (1,723) (23,746) (12,310) (5,613) (2,748) (2,984)
Share of results of associates 37 31 (17) 12 170 34 43
Result from disposal of subsidiaries - - - (5,099) - - -
Profit / (loss) before income tax 13,704 (16,352) (1,560) 53,281 33,726 5,537 (5,358)
Income tax (6,369) (794) (4,934) (14,455) (10,666) (2,647) 130
Profit / (loss) for the period 7,335 (17,146) (6,494) 38,826 23,060 2,890 (5,228)
EBITDAR 51,026 48,673 103,118 137,567 121,808 46,057 46,363
EBITDA 31,849 24,839 58,703 78,004 56,015 15,403 6,622
Traffic revenue growth 16.4% 7.7% 29.5% 20.8% 9.4% 7.6% 15.6%
Revenue growth 15.0% 9.9% 29.8% 19.4% 7.5% 4.9% 13.2%
Operating profit margin 6.8% 3.5% 10.6% 12.8% 7.6% 3.3% -
EBITDAR margin 17.5% 15.2% 24.8% 27.7% 22.9% 19.6% 17.4%
EBITDA margin 10.9% 7.8% 14.1% 15.7% 10.5% 6.6% 2.5%
46
Assets (RUB mln) 31.12.2013 31.12.2014 31.12.2015 31.12.2016 31.12.2017 30.06.2018
Cash and cash equivalents 18,660 26,547 30,693 31,476 45,978 87,785
Short-term financial investments 272 961 5,917 6,319 8,931 9,970
Accounts receivable and prepayments 55,691 56,769 76,317 78,172 92,932 83,106
Expendable spare parts and inventories 4,927 6,516 7,447 10,040 12,811 14,407
Property, plant and equipment 88,777 116,044 104,494 104,897 97,932 89,347
Prepayments for aircraft 12,318 29,241 35,291 27,830 13,089 10,545
Deferred tax assets 2,174 18,540 21,632 12,252 10,396 10,716
Goodwill 6,660 6,660 6,660 6,660 6,660 6,660
Other assets 19,705 16,440 26,743 21,661 34,601 50,070
Total Assets 209,184 277,718 315,194 299,307 323,330 362,606
Liabilities (RUB mln)
Accounts payable and accrued liabilities 36,249 48,952 54,751 49,868 67,953 98,847
Unearned traffic revenue 16,334 22,469 28,691 39,044 43,695 80,056
Short-term loans and borrowings 5,029 17,343 54,085 9,309 - 175
Long-term loans and borrowings 8,377 6,860 14,375 11,058 3,181 3,349
Finance lease liabilities 63,348 132,366 145,020 107,143 84,674 15,333
Provisions for liabilities 1,655 4,845 6,917 10,791 16,949 21,272
Other liabilities 23,712 58,388 47,475 31,325 39,579 106,029
Total Liabilities 154,704 291,223 351,314 258,538 256,031 325,061
Hedge reserve (383) (48,657) (64,720) (34,187) (25,159) (29,242)
Retained earnings 61,122 45,584 39,755 77,198 81,476 63,358
Total Equity 54,480 (13,505) (36,120) 40,769 67,299 37,545
Total Liabilities and Equity 209,184 277,718 315,194 299,307 323,330 362,606
Condensed Statement of Financial Position
47
Statement of Cash Flows
RUB mln, unless otherwise stated 2013 2014 2015 2016 2017 6M 2017 6M 2018
Operating cash flows before working capital changes 32,944 31,603 64,269 81,994 65,330 19,326 10,546
Change in accounts receivable and prepayments (3,014) 4,658 (2,251) (6,191) (27,816) (16,516) (6,197)
Change in expendable spare parts and inventories (1,019) (1,831) (1,216) (2,809) (2,672) (870) (1,596)
Change in accounts payable and accrued liabilities 4,345 8,452 14,705 13,387 24,964 49,106 38,521
Operating cash flows after working capital changes 33,256 42,882 75,507 86,381 59,806 51,046 41,274
Income tax paid (4,260) (6,863) (6,041) (13,943) (13,019) (761) (644)
Net cash flows from operating activities 28,945 35,977 69,664 73,647 47,432 50,288 41,900
Cash flows from investing activities:
Purchases of PPE and intangible assets (4,410) (6,160) (9,196) (10,222) (7,681) (2,445) (5,750)
Prepayments for aircraft (7,154) (21,361) (22,708) (18,806) (7,931) (166) (2,750)
Return of prepayments for aircraft 7,783 9,620 7,828 29,362 26,274 11,909 17,910
Net cash flows from/(used in) investing activities (3,599) (18,492) (38,770) 10,331 14,369 11,500 11,388
Cash flows from financing activities:
Repayment of loans and borrowings (14,579) (9,870) (36,267) (72,991) (17,417) (3,145) (44)
Repayment of finance lease principal (9,795) (15,629) (19,455) (27,024) (15,513) (5,591) (9,893)
Net cash used in financing activities (21,782) (14,673) (28,075) 80,495 46,821 (12,181) (12,009)
Net increase in cash and cash equivalents 3,590 7,887 4,146 783 14,502 49,579 41,807
Cash and cash equivalents at the end of the period 18,660 26,547 30,693 31,476 45,978 81,055 87,785
48
Reported and Adjusted Net Loss Analysis
• One-off effects had limited influence on Aeroflot Group 6M 2018 financial results.
6M Adjusted Net Loss Build-Up (RUB mln)
(5,228)
(7,099)1,092 (228)
(1,257)
(500)
(978)
Reported Net Loss6M 2018
Discounting of receiptof lease deposits
Change in the fairvalue of investmentsin equity securities
FOREX on PDP Insurance refund(aircraft)
Recovery of part ofthe provision created
for compensationunder long-term
motivation programs
Adjusted Net Loss6M 2018
49
BALANCE SHEET
Balance sheet
line
IAS 17 IFRS 16
Finance
leases
Operating
leasesAll leases
Assets -
Liabilities $$ - $$$$$$$
Off balance sheet
rights/ obligations-
$$$$$
INCOME STATEMENT
P&L line
IAS 17 IFRS 16
Finance
leases
Operating
leasesAll leases
Revenue
Operating costs (excluding
D&A)- Expense -
EBITDA
Depreciation and amortisation Depreciation - Depreciation
Operating profit
Finance costs Interest - Interest
Profit before tax
• IFRS 16 will replace IAS 17 and is mandatory
applicable starting January 2019
• All lease contracts will be recognized on balance
sheet
• Operating lease will be divided between depreciation and interest,
implying increase in EBITDA
• Adoption of the standard may increase volatility of companies’ PL
• Aeroflot is analysing the implications of the new standard and
solutions to avoid increased volatility
• Introduction of IFRS 16 will materially change financial statements of all companies with rental liabilities.
• Aeroflot will introduce IFRS 16 starting from 1 January 2019 and is currently preparing for its implementation
and analyzing potential effect and solutions to minimize volatility.
IFRS 16 (Accounting of Leases)
33
50
Board of Directors
Executive Board
Personnel and Remuneration
Committee
(7 members)
General Meeting of Shareholders
Board of Directors
Audit Committee
(4 members)
Strategy Committee
(10 members)
Corporate Governance
NameAudit
Committee
Personnel and
Remuneration
Committee
Strategy
Committee
Mikhail Poluboyarinov Chairman of the Board of Directors
Vitaly Saveliev
Lars Erik Anders
BergstromMember Member Member
Sergey Chemezov
Alexey Germanovich Member Member Member
Igor Kamenskoy Member Chairman Member
Dmitry Peskov Member Member
Roman Pakhomov Member Chairman
Vasily Sidorov Chairman Member Member
Yuri Slyusar Member
Mikhail Voevodin Member Member
Board of Directors
The Board of Directors is currently composed of 11
members. The Board’s composition is well balanced
from members’ background perspective, number of
independent, non-executive and executive directors
Incorporated in Russia, PJSC Aeroflot is subject to
Russian corporate governance regulations and follows
Russian Corporate Governance Code
Independent director according to the Russian Corporate Governance Code
51
Aeroflot Group Legal Structure
Airlines Ancillary Companies
PJSC Aeroflot(1)
JSC Rossiya Airlines 75%-1 sh.
LLC Pobeda Airlines 100%
JSC Orenair (2) 100%
JSC Donavia (2) 100%
JSC Aurora Airlines 51%
CJSC Aeromar
In-flight catering51%
LLC Aeroflot-Finance
Financial services100%
JSC Sherotel
Hotel services100%
Aeroflot Aviation School
Education services100%
Notes:
(1) The Group as of June 30, 2018; Aeroflot Group consolidates all entities: PJSC Aeroflot and all subsidiaries.
(2) Non-operating entities
• Over the past years the Group structure was refined with a focus on aviation assets and disposal of non-core assets, which is
in compliance with the Group's strategy to streamline the core business
• PJSC Aeroflot also owns 45.0% of JSC AeroMASh-AB (Aviation security), 2.43% of JSC Sheremetyevo International Airport
(base airport), 3.85% of PJSC Transport Clearing House (mutual settlements between agencies and airlines) and 49.0% of LLC
Transnautic Aero (cargo sales, in liquidation)
A-Technics
Maintenance 100%
