17 July 2003 06:39
WORLD AIRLINE TRANSPORTATION CRISIS CONTINUES, SAYS HEAD OF AEROFLOT
Airlines over the world are still going through a crisis, Valery Okulov, general director of Aeroflot - Russian
Airlines, said on Thursday at a press conference at the central office of Interfax in Moscow.
He said that total losses of the world airline industry in 2001- 2002 are estimated to be $25 billion. Losses of
airlines that are part of the International Air Transport Association (IATA) were $3.8 billion on international lines
last year.
This year Aeroflot had to optimize its flight network, decreasing
the number of flights on routes where passenger turnover was
The war in Iraq and the spread of Severe Acute Respiratory Syndrome (SARS) made the situation worse for airlines,
which have been in crisis since September 11, 2001, said Okulov. He said that last year, the aviation sector had had to
cut just over 400,000 jobs. Airlines had to spend about $5 billion on introducing new safety regulations after the
terrorist acts in the United States.
Okulov said that air traffic control had not suffered losses, as rates for services connected with the airline
industry had constantly gone up. He said that airlines over the world had paid a total of $15 billion for airport and
air navigation services. Airports will become unregulated private monopolies, he said. Aeroflot has not yet been able to
win back transportation after the war in Iraq and the outbreak of SARS
Okulov also said that Aeroflot has not yet been able to win back transportation to America, partly because of the war
in Iraq and the outbreak of SARS. The airline has lost most of its usual transit passengers, who used to fly from the
Near East to Europe, America and Canada.
significantly down. He said that the network model of flights, which Aeroflot uses, was particularly sensitive to all
external influences. Okulov said that Aeroflot is currently restructuring its fleet of Western aircraft. The program,
which involves replacing 27 airplanes with new ones, will by completed in 2004.
Aeroflot increased first-half net profit to Russian accounting
standards by 5% year to $20.93 million, the company PR department
The decrease in leasing payments came into effect as soon as the program was launched. The program will save the
company $90 million per year, owing to the decrease in leasing payments, structural expenses and costs of maintenance
and repair of aviation equipment. Aeroflot reduces profit forecast 14%
Russian flagship airlines Aeroflot has reduced its forecast on net profit to Russian accounting standards for 2003 by
$16 million, or 14%. The airline had previously forecast net profit of $114 million for 2003.
In the first half of this year, we were down $16 million and thus reduced the year's results by this amount,
airlines general director Valery Okulov said.
Aeroflot's revenues in 2002 were $1.564 billion against $1.558
billion in 2001. Pretax profits rose from $10.7 million in 2001 to
reports. The airlines also increased its passenger numbers 2.2% to 2.548 million people. First-half cargo haulage
came to 50,700 tonnes, a 7.2% increase.
To international accounting standards, Aeroflot boosted net profits 340% last year to $89.3 million. Operating profit
rose from $40.1 million in 2001 to $158.8 million.
Company earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) came to $370 million.
$132.9 million last year. Profit per company share increased from $0.018 in 2001 to $0.08 in 2002. Russian national
airlines makes $318 mln under commercial deals in 2002
Russian flagship airlines Aeroflot received $318 million from its commercial agreements last year, particularly those
relating to compensation payments, the company's assistant financial and planning director Mikhail Poluboyarinov
said at a Thursday press conference at Interfax.
The company is not excluding the possibility of making changes to the existing system of compensation payments for
foreign airline flights on Trans-Siberian routes in light with the country's accession to the World Trade
Organization, Aeroflot general director Valery Okulov said at the press conference.
A wait-and-see position is needed now, Okulov said.
The airlines is counting on the opportunity of joining one of two
alliances-Sky Team or Star Alliance. The situation with global
alliances, he said, has changed strikingly of late, he noted. Many
airlines in the alliances, most of all U.S. companies, are now
I don't think that the existing rules [compensation payments) will last for a long time. They are likely to
undergo changes, partly because of joining the WTO, he said.
Okulov noted that the company budget for this year envisions state guarantees for insuring against military risks.
However, he said, these guarantees have not yet been formalized. Aeroflot is hoping to make use of them in the second
half of the year, he said. The airlines had to buy insurance against commercial risks in the first half, he noted, as
last year. Aeroflot will not rush to join any global alliance
Russian flagship airlines Aeroflot will not be in a hurry to join one of the international airlines associations,
company general director Valery Okulov announced at a Thursday press conference at Interfax.
experiencing significant difficulties, he noted.
Before it decides to join an alliance, Aeroflot intends to understand how the situation will develop as regards the
state of other airlines, particularly American ones.
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