Last year Aeroflot confirmed its reputation as a company, which is not only efficient and profitable but also of strategic importance for Russia.

The figures in this Annual Report present a detailed picture of our Company’s successes, in terms of both operations and financial results — successes of which we are justifiably proud. Our business represents millions of passengers transported, billions of roubles of profit obtained and tens of billions of passenger-kilometers flown. But Aeroflot also carries out functions, which are of criticial importance for Russia’s social and economic development and for the protection of its national interests.

Aeroflot approached its 90th anniversary with a range of impressive new achievements, and the improvement of main results last year strengthened our position as a key national asset. This position is not merely a function of our ownership by the Russian government, which remains the largest shareholder of Aeroflot. Regardless of our ownership structure, Aeroflot, as the leading Russian airline, will keep its status as the backbone of the Russian air transport sector and as the national flag carrier.

Aeroflot is carrying out the largest consolidation project in the Russian civil aviation sector. The level of efficiency and integration of Aeroflot Group rose substantially during 2012, and the Group is moving resolutely towards its target status as one of the biggest carriers in Europe and the world, confirming and strengthening Russia’s standing among the leading air transport nations.

Several important milestones along that road have already been attained: Aeroflot is now one of the Top 5 airlines in Europe by a number of main indicators measuring operations and product quality, and the Company’s financial ratings are among the best in the airline sector worldwide (a large number of other airlines are still in crisis, and several of them are on the verge of bankruptcy).

Aeroflot strengthened its competitive positions in service quality last year, and this was particularly visible in European operations. The Company became more up-to-date, expanding its use of new technologies in all areas of the business.

Business success is not the only yardstick for measuring the importance of a corporation in its home country. Aeroflot is also a company with strong traditions of social responsibility. During 2012 we took an active part in Russian government programmes of subsidized passenger transport, and pursued projects to help children, people with disabilities and war veterans. Aeroflot was also thanked by the Association of Managers for its part in dealing with the natural disaster in Krasnodar Territory. We view these actions as a valuable asset, which encourages Russian society to view Aeroflot as “its own” company — to be relied on in any situation. By helping people we also help ourselves, expanding our potential customer base.

During the reporting year Aeroflot concentrated the resources, which it will need in order to achieve the ambitious targets, which the Russian Government and society have set for the country’s transport sector in the future.

Russian civil aviation is increasing its passenger numbers at rates, which are two times higher than the international average: preliminary estimates suggest that passenger growth in Russia will remain at 15% this year. There are also signs of a qualitative breakthrough in Russia’s airline sector, supported by design of a Government programme for development of the transport system in 2013-2020 and strong support for the national aerospace industry. A “roadmap” has been prepared for development of the domestic route network and work on draft laws for reform of civil aviation regulation has been in hand since last year. Aeroflot is taking an active part in these initiatives, since the success of our corporate strategy depends on the existence of a strong legislative base.

For a company to be successful, its management must think and proceed proactively and boldly, anticipating events. The challenge is not only to take due account of the current environment, but to create that environment and, thereby, to create the future. There principles were taken by Aeroflot managers as a guide for action in 2012.

Strategic decisions were made for the creation of a united Far East carrier within Aeroflot Group and also for creation of the Group’s own low-cost airline. In practical terms these decisions will not only enable Aeroflot to take best advantage of promising niches in Russian airline business, but also improve transport access for regions with strong economic potential, make air travel more affordable and boost population mobility. These are important conditions for raising labour productivity in Russia and thereby ensuring successful development of the economy. At the same time, Aeroflot will continue forceful development of its passenger transport business in the premium segment, competing on equal terms with the international heavyweights.

By building a strong aviation group, Aeroflot is defining its future as a part of global sustainable development. This is a considered strategy, which strengthens the Company’s market positions and boosts its capitalization, while also making Russia a key global air transportation market.

We have always been the largest airline in Russia, but we also need to obtain and justify a reputation as the indisputably best Russian carrier by all main parameters. This is a necessary condition for further achievements on global markets.

Major challenges and major opportunities lie ahead. I am certain that we will rise to them by working together, taking bold but well-judged decisions, taking full account of national interests, and working closely with Government. I count on your active support in carrying out projects, which will earn Aeroflot a place among the leaders of the world air transport industry.

Chairman of the Board of Directors
JSC Aeroflot
Kirill Androsov