Aeroflot revenue falls 85% in Q2, all hopes on domestic flights

Aeroflot, major Russian airline group, announced their second-quarter 2020 results, and they are on par with the rest of the industry with significant year-to-year revenue fall, 92% passenger turnover decrease and 26 billion rubles ($357 million) net loss.

Six-month net loss is over 42 billion rubles ($575 million), and although Aeroflot is not always profitable, this number is rather distant from 6M 2019 net loss of just over 14 billion rubles ($190 million). 

Nevertheless, the company’s press release retains an optimistic outlook. As the COVID-19 pandemic in Russia is on a gradual decrease, the domestic flights are steadily recovering, and passenger turnover inside Russia increased almost four times between May and June 2020, with insignificant increase in international passenger traffic. 

As of late July 2020, there are no restrictions on domestic travel within Russia, while all entering foreigners have to provide a negative COVID-19 test certificate issued no earlier than 72 hours before the flight, and all returning Russian citizens have to undergo the test within 3 days after the arrival.

Financial results somewhat coincide with Aeroflot’s hope of relying on the domestic market to survive the pandemic. In a conversation with the Russian Prime Minister Mikhail Mishustin back in May 2020, the company’s CEO Vitaly Savelyev assured that Aeroflot is set to recover faster than all of its competitors due to the lack of restrictions within Russia, and will tailor its restructuring accordingly. 

The firm announced an ambitious strategy to almost double their passenger turnover by 2023 and repeated the claim in mid-July 2020, promising to restructure Aeroflot into a five-star airline and leave the domestic market to its fast-growing low-cost subsidiaries like Pobeda and Rossiya. 

It is unclear if the plan will succeed and if the growing but fairly small domestic market will be able to support the airline for the foreseeable future.

Read more: Aeroflot doubles down on ultra-ambitious plans

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