Russia's biggest airline Aeroflot reported on Thursday an improving trend in revenue for its final quarter of 2017 after a 40 percent drop in annual profits. Full-year net profit fell to 23.06 billion roubles ($408.70 million) in 2017 from a record 38.8 billion roubles a year earlier.
Aeroflot had a stronger final quarter with revenues rising 12 percent, thanks to increased yields which were up 1 percent compared to a 5 percent decline during the first nine months. "People are looking for signs that the weakening financials that we saw basically throughout this year are over, and that either financially things are flat or improving", Mitch Mitchell analyst at BCS Global Markets said.
Aeroflot's shares were up 3 percent as of 0830 GMT, after opening slightly lower. Aeroflot's staff costs increased 28 percent during 2017, while fuel costs rose 20.8 percent last year, contributing to a 13.8 percent rise in operating costs to 492.52 billion roubles.
"Higher oil prices and the change in rouble and currency correlation pattern rate put pressure on fuel costs, a key expense item accounting for 24.9 percent of operating costs", Shamil Kurmashov Aeroflot's Deputy CEO for Commerce and Finance said. The 95-year-old firm's revenues rose 7.5 percent to 532.93 billion roubles on the back of record high traffic, which increased 15.4 percent year-on-year. Demand for air travel has picked up in Russia after two years of economic crisis, brought by a fall in oil prices and Western sanctions over Moscow's actions in Crimea and Ukraine.
Passenger traffic in Aeroflot's home market hit a record of 105.5 million in 2017, the highest level since 2014. Many foreign carries, which have quit or reduced their presence in the country during the crisis, have started to come back to Russia. Aeroflot's shares have plummeted 37 percent from their highs of 225 roubles in mid-2017.
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