Tag Archives: airlines

Russia’s Airlines are Crashing

You already know that even in boom times Russia’s airlines were the world’s most dangerous to fly on (see our “air disasters” tag in the sidebar to read all about  it).  How do you think that situation will change now that the airlines are strapped for cash?  The Moscow Times reports:

Aeroflot said Tuesday that profits dropped 55 percent in the first half after prices for jet fuel surged and warned that full-year earnings might be little more than one-quarter of those of 2007.

Net income at the country’s largest airliner fell to $72.2 million from $160.8 million a year earlier. Revenue advanced 28 percent to $2.14 billion as passenger numbers increased 20 percent to 5.4 million, the company said in a statement. Earnings before interest, taxation, depreciation and amortization fell by 34 percent to $216 million. Aeroflot’s fuel expenses jumped 64 percent to $731 million in the half, with operating costs increasing 42 percent to $2 billion. Fuel prices in the country rose 70 percent from November to June, prompting the Federal Anti-Monopoly Service to open price-fixing cases against the five largest oil companies.

“I expected even worse results as high fuel prices have sharply cut profit margins of Russian airlines,” said Alexander Ignatyuk, an analyst at brokerage EnergoCapital. “Aeroflot will only turn the corner when it overhauls its fleet and acquires more fuel-efficient planes, which is still two or three years away.”

The carrier’s shares rose 1 percent on the MICEX, lagging the MICEX Index’s gains of more than 13 percent.

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