AEROFLOT – RUSSIAN AIRLINES INVESTOR PRESENTATION May 2014
\\IBLNS003VF\EAST2013\03 Presentations\Graphics\Template\01 Aeroflot Cover.psd Disclaimer 0/58/129
This communication has been prepared by and is the sole responsibility of the issuer that is the subject of this communication. This communication 148/190/224 is provided for information purposes only. Any offering of any security or other financial instrument that may be related to the subject matter of this communication (a “financial instrument”) will be made pursuant to separate and distinct documentation (an “offering circular”) and in such case the information contained herein will be superseded in its entirety by any such offering circular in its final form. In addition, because this communication is a summary only, it may not contain all material terms and this communication in and of itself should not form the basis for any investment decision. 119/119/119 The information and opinions herein is believed to be reliable and has been obtained from sources believed to be reliable, but no representation or warranty, express or implied, is made with respect to the fairness, correctness, accuracy reasonableness or completeness of the information and opinions. There is no obligation to update, modify or amend this communication or to otherwise notify the recipient if information, opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. 79/115/160 The recipient is strongly advised to seek their own independent advice in relation to any investment, financial, legal, tax, accounting or regulatory issues discussed herein. Nothing contained herein shall constitute any representation or warranty as to future performance of any financial instrument, credit, currency, rate or other market or economic measure. Furthermore, past performance is not necessarily indicative of future results. The issuer disclaims liability for any loss arising out of or in connection with a recipient’s use of, or reliance on, this communication. 255/135/102 Financial instruments that may be discussed herein may not be suitable for all investors and potential investors must make an independent assessment of the appropriateness of any transaction in light of their own objectives and circumstances, including the possible risks and benefits of purchasing any such financial instruments. By accepting receipt of this communication the recipient will be deemed to represent that they possess, either individually or through their advisers, sufficient investment expertise to understand the risks involved in any purchase or sale of any financial instrument discussed herein. If a financial instrument is denominated in a currency other than an investor’s currency, a change in exchange rates 92/155/209 may adversely affect the price or value of, or the income derived from, the financial instrument, and any investor in that financial instrument effectively assumes currency risk. The distribution of this document and availability of these products and services in certain jurisdictions may be restricted by law.
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255/102/0 1 Aeroflot Today – #1 Russian Carrier with a Global 0/58/129 Network
148/190/224 1 #1 airline in one of the fastest growing global markets with leading positions on both domestic and international routes
2 An expanding global network with 1411 destinations in 54 countries (incl. Russia) 119/119/119
3 Best product and customer experience in our markets
79/115/160 4 Multi-brand offering to reach the full customer spectrum and meet demand across geographies
255/135/102 5 Modern, efficient fleet – one of the youngest in Europe
6 Solid track record of delivering positive financial results and shareholder returns 92/155/209 7 Strong financial and organisational platform and clear strategy for future profitable growth 200/200/200
1 Without code sharing.
255/102/0 2 Modern Global Airline, Rich 90-year Heritage 0/58/129
148/190/224 2010-2011: New
1991: 2000: Listed modern terminals 2006: Joined 2014: Launch of Reorganised as on Moscow D & E put into operation SkyTeam Official airline Low Cost Carrier Joint Stock Exchange at Russia’s main airport alliance Company (+25 gates and 17m 119/119/119 passenger capacity), Aeroflot’s hub
1923 1980s 1991 1992 2000 2006 2009 2011 79/115/160 2013 - 2014
255/135/102 1923: Russian 1980s: Flights to 1992: Start of 2009: Restructuring 2011: Acquired 2013 – 2014: civil aviation all continents; fleet programme – new corporate domestic regional Regional airline industry and passenger annual modernisation structure and management carriers Rossiya, integration ongoing. Aeroflot’s traffic of 120m first Airbus and team Vladivostok Air, Creating Aurora 92/155/209 predecessor Boeing 767 (CEO Vitaly Saveliev) Sakhalinskie Aviatrassy, Airlines, a Russian Far established delivered East carrier (merging 2009: further fleet Orenair from Rostec. Vladavia and SAT) modernisation (+24 new Integration begins aircraft) (including Donavia) 200/200/200 Major developments over the past 5 years strengthened Aeroflot’s position and created the platform for future growth
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119/119/119 Strategic Overview: Market Dynamics and Aeroflot’s Approach 79/115/160
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255/102/0 4 Global Air Transportation: 2014 a Rebound Year 0/58/129
Source: Demand: European PAX Growth Accelerating in 2014 Supply: European ASMs1: Risk for 2014? 1) Demand: PAX Growth: c.5.7% 148/190/224 in 2013 vs. 3.7% in 2012 24% 120 000 40% 2) Supply: European ASMs: Risk for 2014? 18% 96 000 30% https://360.gs.com/gs/portal/?st= 12% 1&action=action.binary&d=16411 72 000 20% 685&fn=/document.pdf 119/119/119 6% 5,3% 48 000 10% 3) Jet Fuel Prices: Further 0% Downside in 2014 24 000 0% https://360.gs.com/gs/portal/?st= (6)% 1&action=action.binary&d=16268 0 (10)% 907&fn=/document.pdf (12)% янв-2010 янв-2011 янв-2012 янв-2013 янв-2014 4) Improving EBIT margin: 79/115/160 янв-2005 июл-2006 янв-2008 июл-2009 янв-2011 июл-2012 янв-2014 Europe ASM (LHS) ASM YoY (RHS) http://www.iata.org/whatwedo/Do cuments/economics/IATA-
Jet Fuel Prices: Further Decline Possible in 2014 Improving EBIT Margin of the Air Transportation Industry, % Economic-Briefing-Financial-
Forecast-December-2013.pdf
$3,3 60%
$3,2
2,0% 0,8% 0,7% 1,3%
45% 2,4%
8,0%
255/135/102 $3,1 6,4%
5,7%
4,8% 4,4%
30% 4,1% 3,5%
$3,0 3,4%
3,0%
3,3% 2,8%
$2,9 1,2% 15% 0,1% $2,8
0%
$2,7
$2,6 (15)% (1,8)%
92/155/209 (2,2)%
(4,7)%
Q32013 Q22011 Q32011 Q42011 Q12012 Q22012 Q32012 Q42012 Q12013 Q22013 Q42013
Q12011 2008 2009 2010 2011 2012 2013E 2014E
Q12014E Q22014E Q32014E Q42014E
Jet Fuel Price, $/gal YoY Change North America Europe Asia-Pacific 200/200/200 Positive GDP outlook and accelerating passenger traffic are expected to translate into gradually expanding industry profitability in the mid-term
Source: ATA, IATA, OAG 1 Average seat-miles.
255/102/0 5 Regional Growth Trajectory 0/58/129
Growth Rates for 2013-2032 148/190/224 Global North America Europe Russia and CIS
5,9% 4,7% 119/119/119 3,2% 3,3%
3,5% 4,0% 2,5% 1,8% RPK Growth GDP Growth RPK Growth GDP Growth RPK Growth GDP Growth RPK Growth GDP Growth 79/115/160
Latin America Middle East Asia Pacific
6,4% 5,8% 5,2% 255/135/102 4,5% 4,0% 3,7%
92/155/209 RPK Growth GDP Growth RPK Growth GDP Growth RPK Growth GDP Growth
Regional growth forecast to exceed global trend Regional forecast to lag behind global trend Source of 3bn passengers currently: Number of annual air travellers increased by one third in the last decade, currently approaching 3bn. This trend is http://www.icao.int/Newsroom/Pages/ 200/200/200 set to continue with passenger traffic more than doubling in the next 20 years, with growth pace higher in annual-passenger-total-approaches- emerging markets 3-billion-according-to-ICAO-2012-air- transport-results.aspx Source: Airbus Global Market Forecast 2013-2032
255/102/0 6 Emerging Markets’ Fundamentals 0/58/129
10 Largest Economies in 2030 Global Middle Class by 2032
5,211 148/190/224 757 x2 Other 3,576 578 3 526 x4 Asia Pacific 47,5 MiddleClass¹ 2,228 35,8 432 2 038 856 119/119/119 4,1 North America (millions of of people)(millions 253 10,4 8,7 6,7 6,6 6,3 Global 265 262
5,4 5,2 675 698 675 Europe & CIS UK
GDP($ Nominal) trillion, 2012 2022 2032 World
USA
India
Brazil China
Japan 7,100 7,800 8,400 Population
Russia Turkey
France 2030
Germany % of World 32% 46% 62% 79/115/160 Emerging Markets Developed Markets Population GDP/Capita in 2030 A Global World: Air Transport’s Increasing Distribution
2030 Real GDP/ Capita as a Multiple of 2013: 100 90 2.9x 1.5x 3.1x 1.7x 1.2x 1.3x 1.8x 1.4x 1.3x 2.3x 80 47% 255/135/102 70 69% 63% 101,0 60 50 40 24% 30 83,1 77,3 76,2 (%) Capacity 20 14% 18% 6,9 60,1 56,8 47,1 33,7 28,4 10 10% 12% 22%
Share of World Offered of WorldShare 0
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UK
USA
India
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Brazil
China
Japan
Turkey Russia
France Advanced Advanced Advanced Emerging Developing Emerging Germany 2030 GDP per Capita'000) GDP per ($ 2030 Emerging Markets Developed Markets Advanced Developing Developing Developing Emerging Emerging 200/200/200 Emerging markets’ economic growth, large populations and developing middle class forecast to be the main drivers of air traffic volumes
Source: Euromonitor, Airbus Global Market Forecast 2013-2032
255/102/0 7 Russian Total Passenger Traffic Growth: Significant Strength of the Russian Market \\IBLNS003VF\EAST2013\07 Due diligence\CMD materials\Market Dynamics\Airline Market Statistics - 0/58/129 AR 2013.xlsx \\IBLNS003VF\EAST2013\09 Roadshows\2014 03 Capital Markets Day\Excel\Russian Total Passenger Traffic Growth_01.xlsx Russian Total Passenger Traffic Growth (m PAX)¹ Passengers per Capita Overview2 Trips per capita: US: \\IBLNS003VF\EAST2013\07 Due diligence\CMD materials\Market Dynamics\US PAX per Capita.xlsx 148/190/224 UK 3,2 UK and EU-27: 132,2 139,4 http://epp.eurostat.ec.europa.eu/statistics_explained/in 117,2 124,4 dex.php?title=File:Air_and_sea_passenger_transport,_2 103,7 110,2 USA 2,6 010_and_2011_(1).png&filetimestamp=20121016055836 83,7 88,5 61,5 73,6 78,4 64,4 68,8 EU-27 1,5 119/119/119 35,3 43,7 46,0 48,5 50,8 26,2 … 39,2 41,4 0,7 Russia 2008 2013 2014E 2015E 2016E 2017E 2018E 1,2 Domestic Routes International Routes Today 2025E
Expected Passenger Traffic Flow To/From Selected Regions and Within Russia Russia’s Middle Class is Set to Continue to Grow 79/115/160
Russia 100% United 5.1% Middle States East 5.1% 8.5% 80%
Distribution 60%
255/135/102 South America China 40%
7.7% Income 5.7% 20%
Western Asia³ 0% Europe 6.4% Central Europe 92/155/209 5.6% 1 000 3 000 5 000 10 000 15 000 25 000 35 000 50 000 75 000 5.1% Central 6.5% Russia Europe CIS 2015 2010 2005 2000 Western Europe 6.5% 6.3% CIS Household Annual Income (2005, US$) 5.6% % US 6.3% Passenger Traffic Flow CAGR 2013-2032 Passenger Traffic Within Domestic Market CAGR 2013-2032 5.1% China Middle Asia 7.7% Air travel penetration in Russia is set to catch-up with the levels observed in developed markets. The trend is supported by East 6.4% 8.5% 200/200/200 demand from the Country’s expanding middle class Source: Company data, IMF, Eurostat, RITA, Russian State Statistics Service, Rosaviatsia, Airbus Global Market Forecast 2013-2032 South America 5.7% 1 Total domestic and international carrier’s traffic. Estimates represent Aeroflot November-2013 projections. 2 UK and EU-27 data is as of 2011, US data is as of 2012, Russia data is as of 2013. 3 Includes traffic to/from China.
255/102/0 8 Aeroflot: a Market Leader 0/58/129
Domestic and International Passenger Domestic and International Passenger Traffic in Russia (2013) Largest market share in Russia exceeding the combined market Traffic in Europe: 148/190/224 Market share of the 3 most sizeable competitors \\IBLNS003VF\EAST2013\07 Due Others Position diligence\CMD materials\Market 18% Market size is set to increase as a result of implementing multi- brand strategy Dynamics\Airline Market Statistics - AR
2013.xlsx Well-balanced network 4% 30% 119/119/119 Network SVO hub in Moscow, with special focus on St. Petersburg, Vladivostok, Rostov-on-Don and Sochi
8% The youngest fleet in Russia and one of the youngest in Europe (Aeroflot JSC) Fleet 9% Foreign Airlines Modernisation and simplification of subsidiaries’ fleets aimed at 79/115/160 18% cost optimisation
12%
Russian Passenger Traffic Premium Russian carrier, with quality of services recognised by Premium numerous international and domestic awards Offering — SkyTrax named Aeroflot as the best airline in Eastern 17% 18% 18% 19% 20% 19% 20% 19% 18% 255/135/102 Europe (2013) (winner for multiple times)
18% 18% 33% 32% 28% 24% 25% 22% 48% Aeroflot’s strategy – to be among top 20 global airlines internationally and a leading-carrier domestically by: — Establishing strategic partnerships with global leaders 56% 55% 58% 63% 64% Further 92/155/209 49% 49% 53% — Capitalizing on emerging LCC market in Russia (Dobrolet) 35% Growth — Increasing penetration within regional markets (Donavia, Aurora, Rossiya) 2005 2006 2007 2008 2009 2010 2011 2012 2013 Aeroflot is well positioned to benefit from further consolidation Top 5 Airlines Other Russian Airlines Foreign Airlines 200/200/200 Over the last decade, Aeroflot has transitioned from “one of the many” market players to the market leader
Source: TCH
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LEADING GLOBAL AIRLINE 119/119/119 Top 5 European and top 20 global airline group by revenue and passenger turnover 70m passengers per year, 30m domestically Extensive customer reach and broad market penetration 79/115/160 Sustainable returns to shareholders
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Innovation/ Multi-brand Global Strategic Sustainable Operational 92/155/209 1 Strategy 2 Network 3 Partnerships 4 5 Profitability Improvement
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255/102/0 10 Multi-brand Strategy: Capturing Demand Across 0/58/129 Segments and Geographies
Business Regional Traffic Leisure Price Sensitive 148/190/224
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Regional Business Model: direct flights
(1-1.5 hr flight) Regional jets Business Model: demand- Business Model: high haul - based frequencies, direct frequency direct flights on Business Model: high frequency flights major routes, high fleet Short-haul Regional aircraft utilization, low-cost
Short feeder airlines, direct flights (1.5-2 hr flight) 79/115/160 Regional aircraft Narrow body high-density aircraft (Y class only) Business Model: direct flights, “No-frills” product with
EU Business Model: hub-spoke, Business Model: hub-spoke, demand-based frequencies opportunity to buy ancillary haul - CIS very high frequency demand-based frequencies (tour operators and seat only), services Russia Narrow body (C/Y class) Narrow body (C/Y class) high seasonality Mid Narrow body (Y class) 255/135/102 Business Model: direct flights, North and Central
Business Model: hub-spoke, demand-based frequencies haul
- America high frequency, code-shares (tour operators and seat only), Asia Wide body (C/M/Y class) high seasonality Russia
Long Wide body (C/Y class) 92/155/209
200/200/200 The multi-brand strategy enables Aeroflot to effectively compete in both domestic and international markets by servicing a broad range of customer groups
255/102/0 11 Continued Improvement of Subsidiaries’ Performance 0/58/129
Operating Income / Net Income ($m)1
2012 2013 Change Highlights 148/190/224 Full integration into Aeroflot group completed — Commercial functions transferred to Aeroflot — Standardised product and service offering — Unification of aircraft fleet 16 / 17 (2) / (2) (18) / (19) — Optimisation of organisational structure — Centralisation of maintenance and reliability management 119/119/119 — Unified financial policy, revenue and tax accounting Next step: Ongoing centralisation of procurement with Aeroflot Optimised network and schedule Joint offering on Moscow – St. Petersburg route together with Aeroflot Optimised sales network (integration with Aeroflot sales offices) Unification of fleet composition (phase out of B-737 / improved operating efficiency of other aircraft) (36) / (67) 40 / (21) 76 / 46 79/115/160 Streamlined costs/integrated support functions into Aeroflot Group Optimisation of organisational structure Next steps: further integration of network and revenue management function with Aeroflot and optimisation of aircraft acquisition process Completed Vladavia network optimisation, code-sharing agreement in place, fleet optimisation, (104) / (107) (8) / (63) 96 / 44 MRO, sales and ground handling integrated 255/135/102 Merging Vladavia into Aurora Airlines 49% stake in Aurora Airline disposed to Sakhalin regional administration in January 2014 (4) / (4) (1) / (3) 3 / 1 Next steps: further optimisation of fleet and further improvement of profitability Full integration into Aeroflot group completed — Increased share of tourist passenger traffic (19) / (25) (15) / (17) 4 / 8 — Offering tourist packages, including sale of block of seats — Unified financial policy and tax accounting 92/155/209 Next step: Long-haul fleet expansion Total (146)/(187) 14/(105) 161 / 80 Successful integration and turnaround of 5 subsidiaries via focus on operational optimisation and cost improvement Donavia and Orenair are fully integrated 200/200/200 Aeroflot is on track with integration plan. Key next steps are (1) creating Aurora, the sole airline in the Far East with a 6m potential passenger market (2) transferring Rossiya operations under full commercial management of Aeroflot
255/102/0 12 Dobrolet Project Summary 0/58/129
Product Offering Ticket Pricing Discount 20-40% discount compared to fares of A typical LCC offering to attract price 148/190/224 “traditional” carriers sensitive customers Majority of tickets are non-refundable Substantially different from Aeroflot’s Sales of tickets via direct or online product proposition channels
119/119/119 Aircraft Type Routes Network Product Standardized modern fleet of new and Prices 11 routes in Russia in 2014 Boeing 737-800 NG Expanding to 27 routes by 2016 Simple cabin with increased density of Expansion to CIS and international seats (189 per plane) Network markets from 2016 79/115/160 Fleet Fleet Size and Market Passenger Traffic
8 aircraft in place in 2014 Company 10m passengers by 2018 255/135/102 Expanding to 40 aircraft by 2018 Overview
Corporate Structure Management Team
92/155/209 Stand-alone 100% subsidiary Strong and experienced management Lean organisational structure team led by Vladimir Gorbunov who has Clear governance relationship between significant experience in the Russian the subsidiary and parent company airline industry
200/200/200 Price, safety and schedule are three top priorities for selecting an airline by Russian passengers Dobrolet will serve customers currently outside Aeroflot’s reach
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119/119/119 Network and Fleet
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255/102/0 14 Networks Operated and Key Statistics 0/58/129
Flights Dynamics of Aeroflot JCS by Region (%) Average Flight Frequency per Route of Aeroflot JSC 148/190/224 Europe 7,4% 20121 2013 Change Backup file: Scheduled 12.0 13.2 10.0% CIS 30,3% \\IBLNS003VF\EAST2013\03 Charter 0.8 0.4 (50.0)% Russia 14,8% Presentations\140312 FY 119/119/119 International Scheduled 9.7 10.7 10.3% Asia 4,5% 2013 Results\Excel\Slide 9 Domestic Scheduled 18.2 19.3 6.0% 140217 Network KPIs - North and Central America 39,2% Medium-haul2 14.0 15.3 9.3% 2012_2013_отправка_14021 Middle East and Africa 1,9% Long-haul2 5.2 6.0 15.4% 4.xlsx
79/115/160 3 Total 12,5% Overall 10.0 10.1 1.0%
Key Elements of Network Strategy 2014 Summer Schedule
255/135/102 Further develop the hub structure of Sheremetyevo (6 waves of Total 141 destinations in 54 countries (including Russia) connectivity) New destinations in Russia and CIS countries: Novy Urengoy and Increase network depth (more frequencies per destination served) to Karaganda achieve targeted market share on key routes Increased frequency on large number of domestic and international 92/155/209 Develop a balanced long-haul portfolio of destinations routes
Develop point to point market out of the regional focus cities Improved connectivity of flights to increase transit passenger traffic
200/200/200 Expanding network of routes and increasing frequency across almost all regions and types of routes in response to growing demand Source: TCH, Ministry of Transportation 1 Prior to 2012, average flight frequencies per route were calculated on the basis of arithmetic mean. Due to network expansion and increase of frequencies, methodology changed starting from 2013 – now weighted average is used instead of arithmetic mean. Figures for 2012 were calculated retrospectively; 2 Scheduled flights; 3 Passenger flights including charter flights.
255/102/0 15 Traffic and Capacity Development 0/58/129
(%, 2013 vs. 2012) Source: 148/190/224 \\IBLNS003VF\EAST2013\0 North and Central America Europe Russia and CIS 7 Due diligence\Financial statements disclosure 49,0 % 48,1 % 51,4 % (FY2103 results)\12m13_Financial 119/119/119 21,8 % 17,2 % 20,4 % 18,3 % 18,6 % 17,5 % Report_9.xlsx 1,3 p.p 0,7 p.p Passengers Carries Data: (1,8) p.p \\IBLNS003VF\EAST2013\0 79/115/160 Passengers RPK ASK SLF Passengers RPK ASK SLF Passengers RPK ASK SLF carried carried carried 3 Presentations\140312 FY Middle East and Africa Asia 2013 Results\Excel\Slide 10 Key Operating Data for 13,1 % Group 12m2013 10,3 % 12,1 % 255/135/102 final_140220.xlsx 0,7 p.p. (1,6) p.p.
92/155/209 (21,9) % (22,2) % (20,7) % Passengers RPK ASK SLF Passengers RPK ASK SLF carried carried Growth in passenger turnover and passenger traffic in Russia, Europe and Asia, and continued expansion in North America 200/200/200 Sustaining high seat load factor in a growth environment Pressure on regional performance in Middle East and Africa as a result of political instability
Source: Data presented based on management accounting
255/102/0 16 Summer 2014 Schedule 0/58/129
Increase in Available Seat-Kilometres (ASK) in Summer 2014 compared with Summer 2013
148/190/224 Long-Haul Destinations Mid-Haul Destinations 12% 9% 27%
6% 119/119/119
Domestic International Domestic International
79/115/160 Long-Haul Destinations Mid-Haul Destinations 27% 17% 4% 6% 1% 17% 27% 255/135/102
North and Central America Asia Russia Middle East and Europe Russia CIS Africa
92/155/209 Summer 2013 Summer 2014
In the Summer 2014 season, AeroflotCategory Group 1 willCategory operate 2 flightsCategory 3to 141Category destinations 4 in 54 countries (incl. Russia) Aeroflot and its partner airlines under code share agreements will operate 356 destinations in 66 countries 200/200/200 Transit passenger traffic of JSC Aeroflot in the Summer 2014 season is expected to increase by approximately 17% compared to the Summer 2013 season, reaching c. 5.9m passengers (40% of total passenger traffic)
255/102/0 17 Integrated Approach for a Modern, Safe, Cost Effective 0/58/129 Fleet
1 Fleet Planning 2 Fleet Acquisition 148/190/224 Network requirements drive capacity needs Business case driven decision Short lead time for capacity decisions Maintaining healthy competition among Continuous fleet modernisation aimed at suppliers (manufacturers and lessors) operating and cost efficiencies Maximising transaction benefits 119/119/119 Fleet Unification of fleet at subsidiary airlines to 1 Focus on maximum operating efficiency streamline operations and optimise costs Planning Fleet 2 Acquisition Minimising risk with new aircraft types
79/115/160 4 Operations 3 Financing
Target maximum operating efficiency: fuel and Identifying funding requirements maintenance Differentiated approach to leases to minimise Maximise value from strategic supplier 255/135/102 residual value risk relationships 4 Operations — Operating lease for short-haul aircraft Mandatory technical check every 6 years 3 Financing — Potential use of financial lease for long haul aircraft
92/155/209 Case by case analysis of financing options based on discounted total ownership over the life of aircraft and a number of investment thresholds
200/200/200 Aeroflot’s fleet strategy and its implementation over the last five years laid a solid foundations for safe and cost effective operations today
255/102/0 18 Aeroflot Group Fleet in Operation 0/58/129
Type1 Aeroflot Subsidiaries Total Owned Financial Lease Operating Lease
148/190/224 Boeing B-767 5 3 8 - - 8
Airbus A-330 22 - 22 - 8 14
Tu-204 - 6 6 - 6 - haul - Boeing B-777 5 3 8 - 5 3 Ilyushin Il-96-3002 6 - 6 6 - -
119/119/119 Long McDonnell Douglas MD-11 3 - 3 - - 3 Total 41 12 53 6 19 28
Airbus A-319 10 30 40 - 13 27
79/115/160 haul Airbus A-320 53 15 68 - 1 67 - Airbus A-321 26 - 26 - 21 5 Boeing B-737 4 26 30 - - 30
Medium Total 93 71 164 - 35 129
255/135/102 DHC 8 Series 200 - 2 2 - - 2
haul DHC 8 Series 300 - 4 4 - - 4 - Antonov An-148 - 6 6 - 6 -
Short SSJ-100 10 - 10 - 10 - 92/155/209 Total 10 12 22 - 16 6 Total fleet3 144 95 239 6 70 163 Continued renewal of aircraft fleet, substituting old aircraft with modern fuel-efficient aircraft 200/200/200 Average age of JSC Aeroflot’s aircraft fleet is 5.4 years, one of the youngest fleets in the industry
1 As of 31-Jan-2014. 2 6 aircraft to be phased out in 2014. 3 Excluding 4 Mi-8 helicopters and 1 An-24 aircraft.
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Planned Changes 148/190/224 Winter 2013/14 Fleet Winter 2017/18 Fleet Phased Out Phased In
53 Aircraft 45 Aircraft B-767 Tu-204 A-350 A-330 IL-96 B-777 119/119/119 A-330 Long Haul Tu-2041 B-767 A-350 B-777 MD-11 B-7872 IL-96 MD-11
79/115/160 164 Aircraft 227 Aircraft A-319 A-319 Medium Haul A-320 A-320 A-321 A-321 B-737 255/135/102 B-737
27 Aircraft 59 Aircraft AN-148 AN-148 SSJ-100 SSJ-100 SSJ-100 Q-200 70-80 seats Turboprop Short Haul 15-20 seats Turboprop 92/155/209 Q-200 Q-300 70-80 seats Turboprop 15-20 seats Turboprop Q-300
Total 2393 Aircraft 331 Aircraft 200/200/200
1 Aircraft not in operation. 2 Aeroflot is in negotiations with Boeing on reconfiguration of aircraft to increase capacity. 3 Excluding 4 Mi-8 helicopters and 1 An-24 aircraft.
255/102/0 20 Aeroflot Group Fleet Order and Phase-Out Schedule 0/58/129
Total Aircraft Delivery Schedule in Accordance with Existing Contracts1 Type of Aircraft Delivered as at 31-Jan-2014 2014 2015 2016 2017 Long-haul 53 5 3 5 9 148/190/224 A-330 22 - - - - B-767 8 - - - - B-777 8 5 3 3 - B-787 0 - - 2 9 Ilyushin Il-96 6 - - - - Tu-204 6 - - - - 119/119/119 MD-11 3 - - - - Medium-haul 164 23 12 22 22 A-319 40 0 0 0 0 A-320 68 14 0 5 5 A-321 26 0 0 2 2 B-737 30 9 12 15 15 Short-haul 22 8 12 0 0 79/115/160 An-148 6 0 0 0 0 SSJ-100 10 8 12 0 0 DHC-8 6 0 0 0 0 Total 239 36 27 27 31 Aircraft Phase-Out Schedule1 Type of Aircraft Total Phase-Out: 2014-2017 2014 2015 2016 2017 255/135/102 Long-haul 19 11 3 4 1 B-767 8 5 3 0 0 B-777 2 0 0 1 1 Ilyushin Il-96 6 6 0 0 0 MD-11 3 0 0 3 0 Medium-haul 55 15 8 13 19 92/155/209 A-319 9 2 4 0 3 A-320 20 8 3 6 3 A-321 4 0 0 2 2 B-737 22 5 1 5 11 Short-haul 4 0 2 1 1 DHC-8 4 0 2 1 1 Total 78 26 13 18 21 200/200/200
In 2015-2017, 85 new aircraft will join the fleet By the end of 2014, Aeroflot plans to phase out Il-96, majority of B-767 and А-320 family aircraft, for which the lease term is expiring
1 Excluding 4 Mi-8 helicopters and 1 An-24 aircraft. 255/102/0 21 0/58/129
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119/119/119 Financial Overview
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255/102/0 22 Growing Revenue Units: Trend of a Decade 0/58/129
ASK (bn) and Seat Load Factor (%) Passenger Traffic (m PAX) 148/190/224 77,1% 77,0% 78,1% 78,2% 31,4 69,7% 70,2% 70,9% 70,2% 109,1 27,5 68,2% 68,4% 95,6 16,4 60,0 14,1 119/119/119 50,8 11,6 39,7 43,9 42,6 10,2 11,1 31,7 32,9 34,9 7,3 8,1 8,7
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 79/115/160 ASK (bn) Seat Load Factor (%)
Yield from Passenger Flights, Group ($ cents/pkm) RASK (PAX Revenue/ASK), Group ($ cents/ASK)
11,6 255/135/102 10,4 8,2 9,1 9,1 9,1 9,1 7,3 8,7 8,7 6,7 7,0 7,1 7,1 8,1 6,3 6,1 7,1 5,6 4,9
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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Over the last decade, Aeroflot has tripled the scale of its operations via organic growth and acquisitions of 200/200/200 regional airlines in 2011 Aeroflot achieved sustainable yield and RASK, as it expanded its network and market share
255/102/0 23 Growing Financial Metrics: Trend of a Decade 0/58/129
Revenue (US$m) EBITDAR and EBITDAR Margin 148/190/224 1 602 9 136 8 138 22% 1 238 893 21% 1 065 1 024 20% 21% 18% 5 378 25% 119/119/119 4 603 4 319 723 747 15% 3 808 3 346 618 23% 19% 2 993 462 506 16% 2 159 2 540
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 79/115/160 EBITDAR (US$m) EBITDAR Margin (%)
Operating Profit and Margin Net Income and Net Margin
578 622 255/135/102 499 491 386 388 330 358 297 278 12% 313 241 15% 190 258 253 9% 12% 13% 7% 7% 8% 230 11% 172 6% 166 8% 4% 24 86 3% 92/155/209 7% 8% 7% 9% 3% 1% 2%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Operating Profit (US$m) Operating Margin (%) Net Profit (US$m) Net Margin (%) 200/200/200 Higher passenger traffic, network expansion and cost efficiencies have successfully translated into increased top line revenue and profitability
255/102/0 24 Continuous Quest for Cost Efficiencies 0/58/129
Cost Per ASK ($ cents) 148/190/224 Continuous negotiations with fuel suppliers to 8,32 8,14 1 Fuel achieve more competitive pricing 7,81 Active monitoring of fuel consumption
1,85 1,68 1,50 119/119/119 Focus on increased productivity 0,64 0,74 0,62 2 Labour Optimising team structures to ensure no duplication of roles 1,26 1,51 1,52
0,56 0,62 79/115/160 0,59 Continuous negotiations with maintenance and Maintenance repair service providers to achieve more 1,45 1,30 1,31 competitive pricing
2,45 Aircraft / 255/135/102 2,39 2,28 Decreasing the share of outsourced aircraft / Traffic traffic services in Sheremetyevo airport Servicing 2011 2012 2013
Fuel Labour Continued transfer of subsidiary airline 92/155/209 Maintenance Aircraft and Traffic Servicing operations under management of Aeroflot SG&A Others SG&A Launch of new software to increase administrative personnel productivity 6.1% reduction in CASK since 2011 Stringent control of administrative costs 200/200/200 Reductions are sustainable and supported by a young and efficient fleet, highly productive labour force and ongoing integration of subsidiary airlines
255/102/0 25 1 New Modern Fleet and High Utilisation Rates 0/58/129 Reducing Fuel Costs
Aeroflot Group Fuel Consumption per ASK (gr/ASK) Aeroflot Group Fuel Consumption per RTK (gr/tkm) 148/190/224 (7.1)% (3.8)% (4.2)% 0.3% Source: \\IBLNS003VF\EAST20 28 330 13\09 Roadshows\2014 26 316 317 119/119/119 25 03 Capital Markets Day\Excel\Fuel Efficiency_01.xlsx
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2011 2012 2013 2011 2012 2013 200/200/200 Aeroflot is achieving efficiency gains in fuel costs as new aircraft are put into operation, while old and less fuel-efficient ones are in the process of phase out
255/102/0 26 2 Efficient Workforce Supporting Growing Volumes 0/58/129
Source: Shading Page 200 200 200 Headcount Structure for Airline Operations RPK / Avg. Airlines Headcount (m pkm per employee) \\Iblns003vf\east2013\07
148/190/224 Due diligence\CMDLine 1 1/2 31-Dec-12 31-Dec-13 % materials\Financial119 119 119 9% 2 Cabin crew 10,179 11,020 8% Overview\GroupIn between Line 3,38 Personnel 2013.xlsx1/2 Maintenance and repairs 4,204 4,048 (4%) 3,09 7 119 119 119 119/119/119 Airport services 4,900 5,166 5% 25 Sales and marketing 2,095 1,786 (15%)
Admin and other 4,248 5,237 23% 44 Total 25,626 27,257 6% 2012 2013 79/115/160 Shading 242 242 242 and lines Traffic Revenue / Avg. Airlines Headcount ($ ‘000 per employee) PAX Traffic / Avg. Airlines Headcount (passengers per employee) above and below 1 pt 119 119 119
9% 9% 58 255/135/102 321 1 244 295 1 139 69
92/155/209 82
85 2012 2013 2012 2013
200/200/200 Sizeable improvement in labour productivity has resulted in increasing operational profitability
Note: Presented headcount figures exclude employees of Aeroflot Riga, Sherotel, Aeromar and Aeroflot-Finance
255/102/0 27 Strong Balance Sheet and Comfortable Leverage Level 0/58/129
Source: Debt Overview Debt ($m) Total Debt/LTM EBITDA 148/190/224 \\IBLNS003VF\EAST20 3,9x 13\09 Roadshows\2014 31-Dec-2012 31-Dec-2013 Change 3,6x 2,9 x 3,2 x 2,6x 2,1 x 03 Capital Markets Borrowings 706 410 (42%) Day\Excel\2013-12-31 Debt Overview_01.xlsx 119/119/119 31-Dec-2011 31-Dec-2012 31-Dec-2013 Finance Lease 1,882 2,201 17% Total Debt / EBITDA Net Debt / EBITDA Maturity + Borrowings Liabilities Breakdown by Borrowings and Finance Lease Repayment Schedule ($m) Currency Customs Duties 19 13 (32%) 1 264 \\IBLNS003VF\EAST20 79/115/160 13\07 Due diligence\CMD Pension Liabilities 15 22 47% 419 383 326 219 materials\Financial Overview\Borrowings Total Debt 2,621 2,645 1% and Finance Leases 2014 2015 2016 2017 2018+ 255/135/102 Overview_140305.xlsx Cash and Cash Borrowings Structure Finance Lease Structure 501 578 15% Equivalents by Currency by Currency 12% 4% 92/155/209 Net Debt 2,120 2,067 (3%) 88% 96%
Decrease in net debt as result of higher cash position RUB USD 200/200/200 Declining leverage ratio driven by expanding earnings Well-balanced maturity profile
255/102/0 28 Operating Free Cash Flow and Liquidity 0/58/129
Source: 2013 Operating Free Cash Flow ($m) 148/190/224 \\IBLNS003VF\EAST2013 \03 Presentations\140312 FY 2013 60 1 035 Results\Excel\Free Cash 105 119/119/119 909 Flow Overview_01.xlsx 104 (126) 335 26 794 (141)
578 79/115/160 Undrawn credit lines 430 source: \\IBLNS003VF\EAST2013 \07 Due diligence\CMD 255/135/102 materials\Financial Overview\Borrowings and Finance Leases Profit Before Depreciation Interest Unrealized Net Other Adj. Cash Flows Working Capital Net Cash Flows Net Capital Net Pre-delivery Free Cash Flow Free Cash Flow Income Tax and Expense Foreign Before Working From Operating Changes and From Expenditures Payments for 2013 2012 Overview_140305.xlsx 92/155/209 Amortization Exchange Loss Capital ChangesActivities Before Income Tax¹ Operating Aircrafts Working Capital Activities Changes
Strong cash flow generation over the last 12 months 200/200/200 Cash position of $570m Undrawn credit lines of $496m
1 Includes net income tax paid of $134m.
255/102/0 29 0/58/129
148/190/224
119/119/119 Corporate Governance
79/115/160
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92/155/209
200/200/200
255/102/0 30 Corporate Governance Overview 0/58/129
Corporate Governance Highlights Key Corporate Governance Areas
148/190/224 Key Corporate Governance principles Balanced structure of the Board of Directors with representatives of the Board Structure Government, minority shareholders, management and independent directors – Transparency of operations 3 independent non-executive directors out of 11
– Extensive access to information for shareholders Chairman Non-executive chairman
119/119/119
– Preserving balance between interests of Audit committee chaired by independent non-executive director and includes all groups of shareholders directors with financial experience Committees HR and compensation committee chaired by non-executive director and includes non-executive director Approved internal Code of Corporate 79/115/160 Strategy Committee chaired by independent non-executive director and Governance and Code of Ethics includes non-executive directors
Unified standards of corporate governance Evaluation of Variable compensation based on share price performance versus the market across Aeroflot and subsidiaries Board Performance
255/135/102 Safeguarding interests of minority Transparency shareholders at Aeroflot and subsidiaries level Power to make appointments lies with the Board of Directors on Appointments and Disclosure of total board remuneration and respective methodology Remuneration Corporate Governance awards
92/155/209 – Aeroflot’s chairman and selected directors Shareholders meeting as key governing body and Board of Directors named among best corporate directors in Effective Rights for represent interests of shareholders 2012/2013 in Russia Shareholders Shareholders rights and corporate governance procedures at company level overseen by Deputy CEO and Board member 200/200/200 Aeroflot is committed to constant improvement of corporate governance procedures to meet high standards and international best practices
255/102/0 31 Key Management Bodies Role in Corporate 0/58/129 Governance Board of Directors Role in Corporate Governance Management Board Role in Corporate Governance
Key priorities for the Board are Aeroflot’s day-to-day operations are directed by the CEO and Executive Board 148/190/224 – Ensuring Aeroflot’s long-term sustainable development Management plays an active role in corporate governance – Supervision of Aeroflot’s executive bodies – Uncompromising observance and defence of the rights and interests – More than half of Board of Directors meeting agendas are formed as a result of management’s initiatives and proposals Professional and qualified team of directors with significant experience in airline industry, capital markets and strategic management – Recent audit of corporate governance procedures initiated by the 119/119/119 Active involvement of Board members in Aeroflot’s strategic development management Extensive scope of approving major transactions by the Board D&O insurance for Board members in place
Board of Directors Composition Board Meetings Agenda – Questions Discussed 79/115/160 Executive Directors Mandatory Vitaly Saveliev Non-Executive Questions Dmitriy Saprykin 20% Directors Kirill Androsov 255/135/102 Independent Mikhail Alekseev Directors1 Aleksey Germanovich Initiated by Initiated by Management Marlen Manasov Igor Kogan Directors 20% 60% Igor Lozhevsky Vasiliy Sidorov Roman Pakhomov Sergey Chemezov 92/155/209 HR and Compensation Audit Committee Strategy Committee Committee Chaired by Igor Chaired by Roman Chaired by Aleksey Lozhevsky Pakhomov Germanovich 200/200/200 Both board members and management play an active role in corporate governance and complement each other in developing and implementing Aeroflot’s strategy for the benefit of all shareholders
1 In accordance with the definition of independency governance as per Russian corporate law and code of corporate conduct.
255/102/0 32 0/58/129
148/190/224
119/119/119 Appendix: Supplementary Materials
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200/200/200
255/102/0 33 RASK-CASK peer group analysis 0/58/129
RASK (Passenger Revenue) [$ cents / ASK] 10,99 148/190/224 9,81 9,00 9,37 8,84 8,26 8,79 8,40 7,13 7,57
119/119/119
Aeroflot Air France-KLM Copa Holdings Delta Airlines IAG LatAm Airlines Lufthansa Group Turkish Airlines US Airways
Average peer group RASK 79/115/160 CASK [$ cents / ASK]
12,39 12,15 10,31 255/135/102 9,70 9,58 9,02 9,18 8,83 9,23 7,81 7,93 6,85 6,89 6,56 6,12 6,23 6,16 5,53 4,96 4,28 92/155/209
Aeroflot Air France-KLM Copa Holdings Delta Airlines IAG LatAm Airlines Lufthansa Group Turkish Airlines US Airways CASK CASK ex. Fuel Average peer group CASK Average peer group CASK ex. Fuel 200/200/200 Aeroflot has a room to increase unit revenue to leading global airlines’ level maintaining one of the tightest cost controls in the industry Source: Company data, Bloomberg
255/102/0 34 Operating indicators of Aeroflot Group 0/58/129
Passenger traffic [ths. pax] Passenger turnover [mln. pkm] 3 394 3 453 148/190/224 9 138 3 080 3 018 8 909
3 072 2 703 8 098 8 044 2 610 2 979 2 481 2 803 7 295 2 365 6 929 8 141 2 306 2 649 2 316 7 896 2 256 2 241 6 528 7 510 2 157 6 180 6 392 6 363 6 253 2 022 6 972 119/119/119 2 389 5 650 1 883 2 244 6 506 6 560 2 101 2 044 5 928 5 980 1 984 5 418 5 833 5 848 1 842 4 518 5 381 5 100 1 745 1 620 4 879
79/115/160
Seat load factor [%] Passenger capacity [mln. ask] 10 590 10 665 86,8 10 159 85,6 9 844 255/135/102 84,2 9 447 9 454 85,7 84,1 8 753 8 591 79,7 8 538 8 395 9 380 8 412 78,6 81,7 78,2 9 219 79,2 7 771 8 800 8 920 76,0 76,0 8 281 8 386 74,6 76,1 77,2 8 097 7 128 8 065 8 005 73,2 73,3 75,6 73,1 7 867 92/155/209 73,2 74,6 75,2 72,4 6 168 7 156 72,7 72,8 72,0 72,3 6 776 6 834
200/200/200 Positive trends on most KPI’s 2012 2013 2014 In 3m2014 Aeroflot Group added 12,2% more passengers compared to 3m2013, outperforming Russian market growth rate of 10,3% Source: Aeroflot data 255/102/0 35 Track Record of Profitable Growth with Strong Future 0/58/129 Growth Opportunities
Passenger Traffic Development (m PAX) 148/190/224 Size of Bubble: # Passengers (m PAX)
119/119/119 ~70+
31.4 79/115/160 27.5 16.4 14.1 255/135/102 11.1 11.6 10.2 92/155/209 8.7
2006 2007 2008 2009 2010 2011 2012 2013 2014 2025
200/200/200 Aeroflot delivered impressive growth over the last decade and is envisaging further profitable growth through leadership in the Russian market and consistent improvement in operational efficiency
255/102/0 36 Maintaining Modern Fleet – Among the Youngest in 0/58/129 Europe
Passenger Fleet Structure: JSC Aeroflot1 Average Fleet Age of Selected Airlines (2012)1
148/190/224
139
16 16,2
125 15,0 13,4
16 13,0
12,9
109 11,7
10 13 11,0
9,7
9,5 9,4
94 7
90 88 6
7,1 6,8
9 6,7 6,6
119/119/119 6 6,4 5,4 10 5,3 32 11 9,3 8,4 11 110 6,0 90 102 71 5,7 5,6 5,4
78 AA
47 BA
KLM ANA
TAM
Delta Iberia
79/115/160 United
Qantas Turkish
2008 2009 2010 2011 2012 2013 Lufthansa
Singapore
AirFrance LANAirlines
Airbus Boeing Russian Average Age JSC Aeroflot
ChinaEastern ChinaSouther
255/135/102 Undergone a major fleet transition since 2009 focused on highest safety 5.4 year average fleet age at JSC Aeroflot standards, reliability, passenger comfort and cost efficiency Among the youngest fleets in Europe and one of the most modern Maximising operating and financial efficiencies from Airbus, Boeing and globally Sukhoi aircraft platforms while maintaining healthy competition among 92/155/209 suppliers Ongoing fleet replacement programme targeting at maintaining average age of the fleet at 5-6 years for JSC Aeroflot
200/200/200 Consistent fleet and fuel optimisation focusing on modern and reliable aircraft means Aeroflot is operates one of the most advanced fleets among European airlines
Source: Airfleets 1 Excluding subsidiary airlines.
255/102/0 37 High Quality of Maintenance – Leveraging Own MRO 0/58/129 Facilities Source: Maintenance Man-Hour / Flight Hour Ratio Summary Overview \\IBLNS003VF\EAST2013 (for Aeroflot JSC) 148/190/224 \09 Roadshows\2014 03 Own MRO Facilities Capital Markets (23)% (8)% (23)% Day\Excel\Maintenance — Strong team of 354 qualified engineers and 1,665 technicians costs per hour_01.xlsx — Own maintenance bases at Aeroflot and subsidiary airlines 3,5 3,6 119/119/119 3,3 — EASA certification for Boeing and Airbus aircraft maintenance at 3,2 JSC Aeroflot, Donavia and Rossiya 2,7 2,7 2,6 70 third-party customers at Aeroflot and 23 airlines at subsidiaries’ 2,5 2,4 79/115/160 level
Extending scope of services provided to minimise outsourcing
Improvement in labour efficiency results in more effective 255/135/102 maintenance workflow for the key aircraft types (A320, A330 and B767 families)
92/155/209 A320F A330F B767 2011 2012 2013
200/200/200 Own MRO facilities enable Aeroflot to achieve optimal costs / results balance High quality maintenance improves fleet reliability and average flight hours per aircraft
255/102/0 38 Key Financial Results of Aeroflot Group 0/58/129
148/190/224 $m, Unless Otherwise Stated Q4 2012 Q4 2013 Change FY 2012 FY 2013 Change Revenue 2,117 2,104 (0.6)% 8,138 9,136 12.3% Backup file: RPK1 (m pkm) 18,388 19,910 8.3% 74,617 85,273 14.3% \\Iblns003vf\east2013\03 2 Presentations\140312 FY 119/119/119 Yield ($ cents/pkm) 9.3 8.8 (5.4)% 9.1 9.1 - 2013 Results\Excel\Key 3 EBITDAR 169 27 (84.0)% 1,238 1,602 29.4% Financial Data for Aeroflot Margin (%) 8.0% 1.3% (6.7)p.p 15.2% 17.5% 2.3p.p Group_05.xlsx EBITDA4 17 (131) n/m 671 1,000 49.0% 79/115/160 Margin (%) 0.8% n/m n/m 8.2% 10.9% 2.7p.p Operating Income (67) (228) n/m 358 622 73.7% Margin (%) n/m n/m n/m 4.4% 6.8% 2.4p.p 255/135/102 Net Income (130) (315) n/m 166 230 38.6% Margin (%) n/m n/m n/m 2.0% 2.5% 0.5p.p Operating Free Cash Flow5 578 794 37.4% 92/155/209 Net Debt6 2,120 2,067 (2.5)%
Revenue growth driven by expanding passenger traffic Strong earnings increase as a result of revenue growth, improvement in cost base and profitability of key 200/200/200 subsidiary airlines Increased cash flow generation due to improved profitability 1 RPK = revenue passenger kilometre; 2 Yield = PAX Traffic Revenue / RPK; 3 EBITDAR = EBITDA + operating lease expenses; 4 EBITDA = operating income + depreciation & amortisation + customs duties. 5 Operating Free Cash Flow = net cash flow from operations - net capex on tangible and intangible assets + pre-delivery payments for aircraft. 6 Net Debt = borrowings + finance lease liabilities + pension liabilities + custom duties – cash and short-term investments. 255/102/0 39 Revenue Breakdown 0/58/129
Source: Traffic Revenue Breakdown (FY 2013) Revenue from Scheduled Passengers Carriages ($m)1 148/190/224 \\IBLNS003VF\EAST2013 Y-o-y \03 Presentations\140312 2013 2013 2012 Change Charter Passenger Flights FY 2013 6.7% 41% Results\Excel\Slide 12 Russia 3,000 2,562 17.1% 119/119/119 Revenue Breakdown.xlsx Cargo 3.8% 35% Europe 2,526 2,278 10.9% 79/115/160 17% Asia 1,250 1,050 19.0% Scheduled Passenger Flights 89.5% 255/135/102 4% North America 318 203 56.7%
92/155/209 2% Other2 147 153 (3.9)% Total: $8,087m
200/200/200 Continued focus on regular flights supplemented by selected charter and belly cargo operations
1 Data presented based on management accounting. 2 Includes Central America, Egypt and other international flights.
255/102/0 40 Revenue Units 0/58/129
Yield: PAX Revenue / RPK ($ cents / pkm) RASK: PAX Revenue / ASK ($ cents / ASK) 148/190/224 (5.4)% 0% (5.7)% 0%
9,3 8,8 9,1 9,1 7,0 7,1 7,1 119/119/119 6,6
79/115/160 Q4 2012 Q4 2013 2012 2013 Q4 2012 Q4 2013 2012 2013
Yield ($ cents / pkm)1 RASK ($ cents / ASK)1
255/135/102 10,5 10,4 8,3 8,5 8,1 8,1 6,6 6,6
92/155/209
International Domestic International Domestic
200/200/200 Flat yield and RASK across domestic and international routes supported by leading market position, ability to attract transit passengers and network expansion
1 Data presented based on management accounting.
255/102/0 41 Group Unit Costs 0/58/129
Source: \\IBLNS003VF\EAST2013 Cost Per ASK ($ cent) \09 Roadshows\2014 03 148/190/224 Capital Markets (4.1)% (2.2)% Day\Excel\Maintenance costs per hour_01.xlsx 9,01 0,17 0.08 119/119/119 8,81 8,14 7,81 (0.19) (0.26) 0,01 (0.11) (0.02) (0.20)
79/115/160
255/135/102
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CASK 2012 ∆ in Staff ∆ in Fuel ∆ in ∆ in Other¹ CASK 2013 CASK Q4 ∆ in Staff ∆ in Fuel ∆ in ∆ in Other¹ CASK Q4 Maintenance 2012 Maintenance 2013
200/200/200 Achieved CASK reductions are sustainable and being backed-up by young and efficient fleet, highly productive labour force and ongoing integration of subsidiary airlines
1 Other costs include other operating costs (excluding fuel and maintenance costs), depreciation and amortisation and other net expenses / (income).
255/102/0 42 Cost Analysis 0/58/129
FY 2013, $m Q4 2013 Y-o-y Change FY 2013 Y-o-y Change Source: 148/190/224 \\Iblns003vf\east2013\03 29.2%29,2% Fuel 607 0.7% 2,485 8.6% Presentations\140312 FY 2013 Results\Excel\Cost Opex (ex. Fuel) Analysis_03.xlsx 19.5%19,5% Aircraft, Traffic and 406 4.4% 1,659 14.3% 119/119/119 Passenger Servicing
16.7%16,7% Staff 420 22.4% 1,424 14.7%
7.9%7,9% 79/115/160 SG&A1 227 14.6% 674 10.7%
7.5%7,5% Maintenance 198 23.0% 640 9.8%
255/135/102 7.1%7.1% Operating Lease 158 3.3% 602 6.2%
33,9%.9% D&A 86 19.4% 335 24.5%
92/155/209 8.2%8,2 % Other Expenses 230 (13.5%) 696 (9.7%)
Total Opex 2,332 6.7% 8,514 9.4%
200/200/200 Revenue 2,104 (0.6%) 9,136 12.3% Cost structure allowing for operating leverage and economies of scale
1 Includes sales and marketing expenses and administration and general expenses.
255/102/0 43 Group Operating Income Analysis 0/58/129
Annual Operating Income Evolution, y-o-y basis ($m) Source: 148/190/224 \\\IBLNS003VF\EAST201 3\03 Presentations\140312 FY 70 29 82 2013 119/119/119 899 Results\Excel\Operating 31 Income Overview_01.xlsx (311)
(182) 79/115/160
622 (207) (66) (82)
255/135/102 358
x 1.7
92/155/209 Operating Air Carriage Air Carriage Other Revenue Fuel Fuel Carriage Fuel Price Staff Costs Aircraft, Traffic D&A³ Other Operating Operating Income 2012 Volume Tariff Consumption Volumes and Passenger Costs Income 2013 Rate¹ Servicing²
200/200/200 Profitability expansion driven by operating leverage as revenue growth surpassed operating costs increase
1 Based on g/ASK; 2 Aircraft, traffic and passenger servicing due to carriage volumes growth. 3 D&A mainly due to new finance lease aircraft deliveries.
255/102/0 44 Group Net Income 0/58/129
Aeroflot Group Net Income ($m) Source: 148/190/224 \\\IBLNS003VF\EAST201 3\03 Presentations\140312 FY 2013 39% 119/119/119 Results\Excel\Operating 281 Income
Overview_01.xlsx (21) (2) 24 230 (17) (3) 25 0,4 79/115/160 5 166 (63)
255/135/102 Total net loss of subsidiary airlines of $105m
92/155/209 JSC Rossiya Donavia Orenair Aurora Vladivostok Sherotel Aeromar Aerofirst² Other Group Group Aeroflot Airlines Air¹ (including Net Net minority) Income 2013 Income 2012
200/200/200 Key subsidiary airlines generated total net loss of $105m as compared to $187m loss last year, as a result of continuous cost optimisation and business processes centralisation
1 Vladivostok Air is 52% owned by Aurora; 2 Aero first financial results before disposal . 3 Aero first net assets and goodwill write off.
255/102/0 45 Aeroflot Group Structure 0/58/129
JSC Aeroflot
Airlines Service companies 148/190/224
CJSC Aeromar JSC Sheremetyevo JSC Donavia 100% 51% 8.96% 49% In-flight catering Base airport
119/119/119 JSC Orenair 100% CJSC AeroMASh-AB 45% CJSC Transport 3.85% Aviation Security Clearing House
OJSC Rossiya 75%-1 share Airlines 79/115/160 Alt Rejser LLC Aeroflot-Finance 100% 99.99% Travel Agency Financial Services Aurora Airlines1 100%
CJSC Sherotel JSC Vladivostok Air 52.16% 100% 255/135/102 Hotel Services
LLC Dobrolet2 100%
Aeroflot Aviation 100% 92/155/209 School
200/200/200 Ongoing subsidiary airline integration and streamlining of the corporate structure
Note: Aeroflot Group consolidates all entities: JSC Aeroflot and all subsidiaries 1 Previously was operating as SAT Airlines. In January 2014, 49% stake disposed to Sakhalin regional administration. 2 Legal entity established, ongoing preparatory work before launch.
255/102/0 46 Aeroflot Shareholding Structure and 0/58/129 Privatisation Update
Aeroflot Shareholding Structure1 Privatisation and Listing Update 148/190/224 Aeroflot is on the list of Russian state-controlled SC Rostec companies potentially to be privatised in 2014-2016 Treasuries 3.5% 119/119/119 6.0% — Final decision has not been issued by the Russian Government Private Individuals 9.4% Aeroflot shares are traded on MICEX (Ticker: Aeroflot)
79/115/160 Russian Federation Aeroflot GDRs are traded over-the-counter on the (State Frankfurt Stock Exchange (Ticker: AETG) Legal Entites Ownership) (incl. 51.2% 255/135/102 Institutional In January 2014, Aeroflot launched Level 1 ADR Investors Programme as part of its efforts to gain access to a 29.9% wider pool of investors
92/155/209
200/200/200
Source: Company fillings 1 As of 06-May-2013.
255/102/0 47 THANK YOU!
For additional information please contact Aeroflot Investor Relations Team: Website: http://www.aeroflot.ru/cms/en/about/shareholders_and_investors E-mail: [email protected] Phone: +7 495 258 0686 Fax: +7 499 500 6963
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