Aeroflot debts deepen as rouble raises leasing costs and sales slide

(Reuters) – Russia’s Aeroflot said on Tuesday its total debt rose by more than a third during the first nine months of 2020 as a weaker rouble raised its leasing costs and revenue fell.

FILE PHOTO: The logo of Russia’s flagship airline Aeroflot is seen on an Airbus A320 which landed after an inaugural trip at the Marseille-Provence airport in Marignane, France, June 1, 2019. REUTERS/Jean-Paul Pelissier/File Photo/File Photo

Russia’s central bank warned last week that airlines facing debt servicing problems due to the coronavirus crisis and the rouble weakness may need additional government support.

Moscow has not imposed a complete lockdown during a second wave of the coronavirus and some international travel routes are gradually being restored, with Aeroflot resuming flights to Seoul, Belgrade and Tokyo in October and November.

Aeroflot’s debt rose 36.1% to 780.55 billion roubles ($10.3 billion) by the end of the third quarter, when many passenger planes around the world remained grounded by the pandemic.

In October, Aeroflot announced plans to raise at least 80 billion roubles in a secondary public offering (SPO) in Moscow for general corporate purposes and deleveraging.

Despite cutting operating costs, excluding aircraft fuel, by almost a third in July-September to 77.42 billion roubles, Aeroflot reported a third quarter net loss of 21.1 billion roubles, compared to a 29.1 billion rouble profit a year ago.

Aeroflot earlier said a fall in passenger traffic slowed to 45.3% in the third quarter from nearly 90% in April-June.

The airline said it expected the fourth quarter to be “soft” but saw its domestic business recovering to 2019 level by April.

Aeroflot’s low-cost airline, Pobeda, which mostly operates domestic flights, in October reported a 10.6% rise in passenger traffic compared with a 47.1% drop for the group.

In September, the International Air Transport Association said that 2020 passenger traffic will drop 66% globally amid renewed coronavirus outbreaks and restrictions.

($1 = 76.1004 roubles)

Source: Read Full Article