Aeroflot expects state guarantees in $940 million loan
Aeroflot Group received a $107 million (RUB7.9 billion) government subsidy and expects to obtain the state guarantees for securing two loans worth $940 million (RUB70 billion).
The announcement comes following the airline’s latest financial results issue, which revealed that Aeroflot losses were lower than previously anticipated. Aeroflot is included in the list of major Russian state-owned companies that receive additional government’s support to smooth out the losses caused by COVID-19. As the carrier revealed in a financial report on August 31, 2020, Russia has already provided the airline with a subsidy worth $107million (RUB7.9billion).
In a half-year financial results report, Aeroflot Group revealed that its revenue decreased by 52% in comparison to 2019. The net loss totalled less than $8 million (RUB58.3 million) in 2020. As the revenue from passenger flows declined, the Group found other ways to reduce the loss.
“With almost no revenue from passenger transportation we needed to think out of the box. Given strong demand for cargo services we reoriented a number of wide-body aircraft to carry cargo, resulting in strong cargo revenue, which was up 64.0% in second quarter year-on-year,” stated in the report.
Aeroflot cut some costs and started payment deferral negotiations among suppliers. These steps helped to limit net loss to $523 million (RUB35.8 billion) in the second quarter of 2020. According to Vedomosti, Aeroflot covered its cash gap with loans from commercial banks, increasing its debt up to $660 million (RUB48.5 billion) in June 2020.
In June 2020, following a meeting with Vitaly Savelyev, the CEO of Aeroflot Group, Russia’s Prime Minister Mikhail Mishustin said that Aeroflot would receive state guarantees for two loans worth $940 million (RUB70 billion).
"I signed an order to provide the company with state guarantees for loans of 70 billion rubles," Mishustin was quoted in a statement by Vedomosti.
As of yet, it is not clear if the promised state aid has already reached the airline group. But it seems that Aeroflot losses related to COVID-19 turned out to be significantly lower than the requested state aid. According to Vedomosti, the carrier still wanted to receive a state guarantee from the government in case of future financial difficulties.
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