+4.2% +3.5% +4.9% 82.4% +7.4% 85.2% Airline Industry Overview
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2019 24 25 2019 Annual Report Airline Industry Annual Report Overview Scheduled passenger traffic grew by 3.7% to 4.5 billion people. 01 01 02 02 Global airline industry According to IATA’s estimates, global passenger Overall industry’s revenue was Global scheduled passenger traffic Global passenger load factor turnover was up 4.2% year-on-year in 2019. USD 838 billion according to IATA’s Scheduled passenger traffic grew by 3.7% to +4.2% estimates, up 3.2% year-on-year. 4.5 billion PAX 82.4% 4.5 billion people. Passenger flights accounted for the bulk of STRATEGIC REPORT STRATEGIC Global passenger turnover continued REPORT STRATEGIC to grow, although at a slower pace ... the industry’s revenue, their share standing 2019 4.5 2019 82.4 03 Passenger turnover growth slowed down compared to at 67.6%. 3.7% 0.5 p. p. 03 04 2018. Industry development was affected by slowing 2018 4.4 2018 81.9 04 economic growth, weaker global trade activity amid The industry’s operating expenses climbed 7.0% 0.4 p. p. trade wars, and geopolitical tensions in a number of 3.8% year-on-year to USD 796 billion, +4.9% 2017 4.1 2017 81.5 regions. Another significant negative factor was the driven by higher traffic and slower growth ... with Asia Pacific airlines 7.3% 1.1 p. p. Boeing 737 MAX grounding. of fuel costs. The fuel costs were 23.7% leading the regional growth ... 2016 3.8 2016 80.4 of the total industry’s operating expenses 7.0% (0.1) p. p. Asia Pacific and European airlines were the main driver (vs 23.5% in 2018). of its growth. 2015 3.6 2015 80.5 +7.4 % Average global jet fuel price in USD per 7.2% 0.7 p. p. Global capacity expanded by 3.5%, slower than barrel was down 10.6% in 2019, however … the fastest-growing national markets – Passenger numbers Growth rate Passenger load factor Change demand. As a result, passenger load factor rose to Russia the EBIT margin continued to decline a record high of 82.4%. to 5.1% (vs 5.7% in 2018). Profitability Source: IATA. Source: IATA. levels still vary by region, with the highest According to CAPA (Centre for Aviation) estimates, the level of 9.6% in North America, 4.7% in % percentage of global LCC capacity measured in seats +7.8 Europe, 3.5% in Asia Pacific, 3.6% in Latin Global revenue Global EBIT margin rose to 32.9% in 2019, up 0.4 p. p. year-on-year. and China. America and 1.0% in Africa. Europe has the largest share of LCC seats, at 41.7% USD 838 billion 5.1% of total passengers carried by the region’s airlines. It is +3.5% The 2019 global airline industry’s net profit followed by Latin America with 39.6%, North America was estimated by IATA at USD 25.9 billion, with 30.4% and Asia Pacific with 29.7%. Capacity expanded slower down 5.1% year-on-year. North America 2019 838 2019 5.1 than demand ... 3.2% contributed more than half of the global net Consolidation and further optimisation processes profit, while in Latin America, Africa and the 2018 812 2018 5.7 continued in the global airline industry. A total of Middle East the airline industry was loss- 7.6% 23 carriers went out of business in 2019. making in 2019. 2017 755 2017 7.5 82.4% 6.5% ... resulting in a record-high global 2016 709 2016 8.5 passenger load factor ... (1.6)% 2015 721 2015 8.6 (6.1)% 85.2% Revenue Growth rate ... led by European carriers. Source: IATA. Source: IATA. PJSC Aeroflot PJSC Aeroflot 2019 26 27 2019 Airline Industry Overview continued Annual Report Annual Report Russian airline industry 01 Global EBIT margin in 2019 by region, % Global net profit in 2019 by region, % The total size of the Russian market, A key growth driver in the domestic flights Passenger traffic in Russia Passenger traffic in Russia 01 including air transportation by foreign segment is the market stimulation effect (including foreign carriers) (excluding foreign carriers) 02 02 North America North America carriers to and from Russian airports, from Pobeda low-cost carrier, as well as 9.6 16.9 totalled 147.2 million passengers, government-sponsored regional flights. million PAX million PAX up 7.5% year-on-year. 147.2 128 .1 Europe Europe The international flights segment continued 74.1 73.1 55.1 73.1 4.7 6.2 2019 147.2 2019 128.1 Russian airlines carried 128.1 million to demonstrate accelerated growth. 7.5% 10.3% Latin America Asia Pacific passengers, up 10.3% year-on-year, with Russian airlines carried 55.1 million 68.1 68.8 47.4 68.8 3.6 4.9 their total passenger turnover up 12.6% passengers on international routes in 2018 137.0 2018 116.2 10.7% to 323.0 billion RPK. Passenger load 2019, up 16.3% year-on-year. Average 10.6% STRATEGIC REPORT STRATEGIC Asia Pacific Africa 61.1 62.6 42.5 62.6 REPORT STRATEGIC 3.5 (0.2) factor remained broadly flat at 83.9% passenger load factor for Russian airlines 2017 123.7 2017 105.1 03 (up 0.1 p. p. year-on-year). on international routes was 84.9%, 20.3% 18.6% 03 Africa Latin America 46.4 56.4 32.2 56.4 up 0.3 p. p. year-on-year. 2016 102.8 2016 88.6 04 1.0 (0.4) 04 The Russian market growth in 2019 (4.1)% (3.8)% 54.7 52.6 39.5 52.6 Middle East Middle East was driven by development of low-cost Higher international traffic was driven by 2015 107.2 2015 92.1 (5.2) (1.5) products and initiatives by legacy carriers, demand stimulation and increased air (4.1)% (1.2)% such as non-refundable and baggage- travel accessibility as a result of active new Source: IATA. Source: IATA. free fares, no in-flight catering, paid capacity expansion by the main players International Domestic Growth rate International Domestic Growth rate seat selection, etc. Besides, continued in the first half of the year, as well as flights flights flights flights digitalisation and simplification of the international transfer development. Sources: Transport Clearing House, Federal Air Transport Source: Federal Air Transport Agency. interface between passengers and airlines Agency. promote social mobility. Foreign carrier traffic was down 8.2% year- Jet fuel and crude oil prices Global net profit on-year in 2019, mainly due to flight Passenger turnover in Russia Available seat-kilometres in Russia The suspension of Boeing 737 MAX schedule adjustments after higher (excluding foreign carriers) (excluding foreign carriers) deliveries gave Russian carriers an capacities had been allocated for the USD per barrel USD billion 77.0 /65.0 25.9 opportunity to balance their excess Russia-hosted 2018 World Cup, as well billion RPK billion ASK capacity and hold back its growth in the as competition from Russian airlines which 323.0 385.0 2019 77.0 2019 25.9 second half of 2019. had increased their capacities while having 65.0 187.6 135.4 220.9 163.9 a lower cost base. 2019 323.0 2019 385.0 2018 86.1 2018 27.3 In 2019, airlines carried 73.1 million 12.6% 71.6 12.4% passengers on domestic flights, which Including foreign airlines, 74.1 million 160.9 126.1 190.1 152.3 2018 286.9 2018 342.4 2017 66.7 2017 37.6 was 49.6% of the total passenger traffic. passengers were carried on international 10.6% 54.9 9.8% Average passenger load factor was 82.6%, routes in 2019, up 8.8% year-on-year. 144.8 114.6 170.0 142.0 2017 259.4 2017 311.8 2016 52.1 2016 34.2 down 0.2 p. p. year-on-year. 20.3% 44.6 17.3% 111.5 104.1 134.8 131.0 2016 215.6 2016 265.8 2015 66.7 2015 36.0 (5.0)% (6.6)% 53.9 127.6 99.2 155.2 129.6 2015 226.8 2015 284.6 (6.0)% (5.9)% Jet fuel Brent Source: IATA. Source: IATA. International Domestic Growth rate International Domestic Growth rate flights flights flights flights Source: Federal Air Transport Agency. Source: Federal Air Transport Agency. PJSC Aeroflot PJSC Aeroflot 2019 28 29 2019 Airline Industry Overview continued Annual Report Annual Report Air cargo market 01 Four largest players accounted for Passenger load factor in Russia Passenger traffic growth* in 2019: Russian airline industry players by total Russian air cargo market volume Russian air cargo market 01 65.5% of the total passenger traffic in the (excluding foreign carriers) Russian vs foreign carriers passenger traffic in 2019 (including foreign carriers) by volume in 2019, % 02 02 Russian market in 2019. The structure of the market remained virtually unchanged % % million PAX thousand tonnes year-on-year. 84.9 7.5 147.2 1,248.9 8.1 Aeroflot Group’s 2019 market share 938.6 310.3 Aeroflot Group 2019 1,248.9 79.7 81.1 83.2 83.8 83.9 9.9 8.2 5.9 6.9 7.5 15.2 8.1 amounted to 41.3% of the Russian market 60.7 (1.9)% 12.5 measured by passenger traffic (vs 40.7% in 85.2 84.9 11.6 980.0 292.6 15.2 84.6 9.9 2018 1,272.6 1.9 44.8 2018).