Integration of new airline assets in November 2011 brought passenger turnover of Aeroflot Group to a level of 74.6 billion PKM in 2012, which is 61.9% more than in 2011. A total of 27.5 million passengers were carried in the reporting period, which is 67.6% more than in 2011. Growth of passenger turnover and passenger traffic in 2012 throughout the Russian Civil Aviation was 17.4% and 15.5%, respectively. The share of Aeroflot Group on the Russian market reached 37% for passenger traffic and 38% for passenger turnover in 2012.
Aeroflot carried out three-day trades to sell blocks of cargo capacity for the Winter 2012–2013 season to destinations in the Urals, Siberia and the Far East. Additional earnings versus the offered price were more than RUB 92 million.
In 2012 Aeroflot carried its millionth passenger on the route between Moscow and St. Petersburg.
Development of the route network
Aeroflot opened regular and charter services to 23 new destinations in 2012.
Expansion on the Russian market
JSC Aeroflot and JSC Orenair started route network optimization, carrying out large-scale integration of their route network with that of JSC Vladivostok Air.
New regular flights were opened to Nizhnekamsk, Orenburg and Tomsk. A memorandum was signed for basing of Sukhoi SuperJet 100 liners at Bolshoye Savino Airport in Perm.
Aeroflot launched operations in 2012 at a Hub Control Center, which is the most advanced of its kind in Russia and Eastern Europe.
Expansion on the international market:
Rules for access to a number of international destinations were liberalized in 2012:
Italy
On May 2, 2012 the Russian Federal Air Transport Agency (Rosaviatsia) announced a liberalization of flight connections with Italy. Following a decision to appoint second carriers, the parties increased the frequency of flights and the number of destinations. Aeroflot, as the operating carrier on the Moscow — Rome and Moscow — Milan routes, received 14 additional flights, increasing weekly flight numbers to 21.
The parties agreed to expand the list of destinations available for regular flights by designated Russian carriers: Genoa, Verona, Rimini, Bologna, Naples, and Palermo were added to the previous destinations (Rome, Milan and Venice).
The Aeroflot subsidiary, Rossiya Airlines, was appointed as one of the two designated carriers for flights from St. Petersburg to Italy.
Rossiya Airlines obtained a permit for flights to Naples, Palermo and Rimini (two flights a week for each pair of cities). Frequency of flights to Rome and Milan was increased to seven per week.
France
On April 4, 2012 Russia and France agreed to liberalize air passenger services between the two countries. Each country may designate a second carrier for regular flights on the routes Moscow — Paris (Orly) — Moscow and Moscow — Nice — Moscow with frequency of up to 7 flights per week for each of the two routes.
Following the latest decisions, Aeroflot has permission to make up to 34 flights on the Moscow — Paris route and up to 17 flights on the Moscow — Nice route, and has the right to a total of up to 48 weekly flights to France.
Flights from St. Petersburg to Paris are made by Rossiya Airlines. The total agreed flight frequency between Russia and France is 65 + 14 flights (the 14 refer to second carriers for Paris and Nice), 48 of which are for Aeroflot and 7 for Rossiya Airlines.
Aeroflot launched regular flights from Moscow to Bologna, Vilnius, Guangzhou, Dnepropetrovsk, Donetsk, Krakow, Odessa, Kharkiv, Stuttgart, Miami, Tallinn and Tenerife, and to Larnaca from Ekaterinburg.
The route network for the 2012/2013 winter season included flights to 50 countries, of which six were CIS countries (Azerbaijan, Armenia, Belarus, Kyrgyzstan, Uzbekistan, Ukraine). Aeroflot flies to 116 destinations in total, of which 76 are international, including 47 destinations in Europe, 14 in Asia, 7 in the Americas, 5 in the Middle East, and 3 in Africa.
Modernization and expansion of the aircraft fleet
18 new aircraft were brought into operation in 2012, including eight Airbus А330s, six SSJ-100s, three Airbus А321s, and one Airbus А320.
Aeroflot and LLC Avia Capital Services, a subsidiary of State Corporation Rostec, signed a memorandum of understanding in December 2011 regarding lease of 50 Boeing 737s as part of scheduled aircraft fleet expansion.
Raising service quality
Geography of the “Business Pass” ticket-price package for frequent-fliers was expanded in 2012, and a new “Russian Pass” package was launched, which enables foreign customers to purchase tickets for Russian domestic flights to 30 Russian cities at reduced prices.
A cooperation agreement was signed in 2012 with the mobile phone retailer Euroset and the largest Russian bank, Sberbank of Russia, to enhance technologies for purchase of air tickets without commission payment.
An Aeroflot call center started operation in the Far East to provide assistance and feedback capability to passengers.
The Aeroflot Bonus loyalty programme for frequent-fliers was improved, and the number of participants increased to more than 3,340,000.
Aeroflot continued to improve its in-flight services, updating the in-flight menu on a regular basis, enhancing comfort and expanding the entertainment programme.
Expanding use of the latest IT capacities and innovative technology
Aeroflot launched a mobile version of its website, featuring quick booking and air ticket purchase and a large number of other functions for passenger convenience.
Aeroflot is among the most innovative European operators of Airbus А320 aircraft: the Company was the first to start installation and operation of Electronic Flight Bag (EFB) equipment designed by Goodrich/Carlisle in 2012.
As part of its agreement with Sirena-Travel, Aeroflot started using the MySirena charter flight booking module and began to work with the WebMoney Transfer international settlement system.
Aeroflot and SAP AG announced commencement of the second phase of a joint project to implement innovative SAP technologies at Company subsidiaries, branches and divisions.
Aeroflot and Kazan National Research and Technology University reached an agreement on development of a new generation of de-icing fluids.
Improvements to Group management
Shares in Orenair, SAT Airlines and Rossiya Airlines were transferred from LLC Aeroflot-Finance to direct ownership by JSC Aeroflot.
Work was carried out in 2012 to integrate JSC Aeroflot with airline subsidiaries in Aeroflot Group.
Aeroflot continued joint efforts with its subsidiary airlines Donavia and Vladivostok Air to integrate their route networks.
Members of the Donavia and Vladivostok Air bonus programmes were brought into the Aeroflot Bonus programme with due account for their status at the time of transfer.
The Company reached agreement on sale of non-core assets: LLC Airport Moscow (sold in 2012) and CJSC Aerofirst.
Work continued to improve corporate governance mechanisms at Group level in accordance with international best practice.
Training and improvement of staff qualifications, HR policy
Aeroflot signed a contract with the Canadian company CAE Inc. for delivery in 2013 of a new Full Flight Simulator (FFS) for the Airbus А330, and received an FFS for the SSJ-100 from Thales.
The Executive Board of JSC Aeroflot resolved to increase the annual payroll for flight personnel by USD 18 million.
The Aeroflot Aviation School significantly expanded its range of training programmes and has become the largest aviation training center in Russia and the CIS.
Safety
Aeroflot successfully passed scheduled audits, which confirmed compliance with aviation industry safety standards, including a check by the Transport Safety Administration of the Federal Air Transport Agency (Rosaviatsia), a quality management system audit for compliance with ISО 9001:2008, a compliance audit by the US Transportation Security Administration (TSA), as well as assessments under the Safety Assessment of Foreign Aircraft (SAFA) programme at airports in countries, which are members of the European Civil Aviation Conference (ECAC).
Social Responsibility
Aeroflot continued intensive charity work both in Russia and abroad in 2012. The Company repatriated Russians who were involved in the Сosta Сoncordia shipwreck on the Italian coast, and carried assistance to those affected by flooding in the Kuban region of Southern Russia.
Aeroflot provides support to some of the world’s largest sports events. In 2012 the Company arranged free carriage for soccer fans to European Championship matches involving Russian teams, and also carried the Russian Olympic Delegation to the 30th Olympic Games in London.
Main events since the reporting date (2013)
The Aeroflot Board of Directors resolved that the Annual General Meeting of Shareholders should be held on June 24, 2013.
The Company’s twitter was the winner of the “Twitter Profile” category of the Digital Communications Awards, 2013.
Aeroflot announced the results of its International Open Innovations Competition for development of an in-flight entertainmеnt concept. The concept devised by Aero Store (Minsk, St. Petersburg, Ekaterinburg, Chelyabinsk) took first place.
Aeroflot won the prize “Fastest Growing Airline in Eastern Europe”, awarded by Athens International Airport for 2012.
Aeroflot began use of Russia’s first Airbus А330 Full Flight Simulator, manufactured by the Canadian company CAE Inc.
A 52.156% share interest in the Aeroflot Group subsidiary Vladivostok Air, which formerly belonged to LLC Aeroflot-Finance, was transferred to the ownership of JSC SAT Airlines, a 100% subsidiary of Aeroflot. The share transfer was pursuant to a decision by the Aeroflot Board of Directors to create a unified Far Eastern Airline.
Aeroflot’s shareholding in JSC Aerofirst (66.66% of the total number of shares outstanding) was sold in accordance with the programme of non-core asset disposal, approved by the Aeroflot Board of Directors. The decision to sell the shares was taken by the Board of Directors of JSC Aeroflot on December 20, 2012.
On March 21, 2013 Fitch Ratings revised its long-term issuer default rating (IDR) assigned to JSC Aeroflot in foreign and local currency from BB+ to BB-. The long-term rating outlook is Stable.
JSC Aeroflot issued series BO-03 exchange bonds in the amount of RUB 5 billion with a maturity of 3 years from the bond placement start date. The coupon rate is 8.30% per annum.
Aeroflot was a prizewinner at the Wings of Russia Award in three prestigious categories: “Airline of the Year — Domestic Passenger Carrier, Group I”, “Airline of the Year — International Passenger Carrier on Regular Routes”, and “Russian Airline of the Year — Passengers’ Choice”.
Aeroflot subsidiaries also took prizes at the Wings of Russia Awards: Orenair was acclaimed “Airline of the Year — Passenger Charter Carrier” and SAT Airlines was “Airline of the Year — Domestic Passenger Carrier, Group IV”.
