Aeroflot could reserve about 35 billion rubles in 2023. on their accounts for possible lease payments to Western owners of their aircraft

Aeroflot could reserve about 35 billion rubles in 2023. on their accounts for possible lease payments to Western owners of their aircraft. Such a conclusion can be drawn from the company’s published condensed financial statements under RAS. Due to sanctions, carriers are now unable to pay foreign lessors. Analysts expect that in the second half of the financial results of Aeroflot, which received a net loss of 1.6 billion rubles. from the beginning of 2023, may improve due to stable passenger traffic with consumer tolerance for rising airfare.

Aeroflot, in its RAS reporting published for the first time in a year and a half, disclosed an increase in cash and cash equivalents to RUB 114.5 billion. for the first half of 2023 against 74.5 billion rubles. at the end of 2022 and 70.7 billion rubles. at the end of 2021 (see Kommersant-Online of August 1). At the same time, the company announced that its short-term liabilities for lease payments since the end of 2021 increased by a similar amount – by about 35 billion rubles, to 105.6 billion rubles.

Kommersant’s interlocutors in the industry and the expert community believe that Aeroflot owes approximately the same amount to its foreign lessors. Russian airlines have been unable to make lease payments since March 2022 due to sanctions, and some have announced that they will reserve these payments in order to settle relations with Western lessors in the future. The relatively small amount of debt in the case of Aeroflot is explained by the deduction of letters of credit that were opened by banks of foreign lessors after the carriers were unable to return the aircraft at their request due to a ban by the Russian government.

Elena Sakhnova, an analyst at the My Investments telegram channel, draws attention to the fact that the share of short-term debt relative to the total debt burden has increased from 10% at the end of 2021 to 16% now. At the same time, Aeroflot’s long-term leasing obligations did not change significantly: at the end of the first half of the year, they amounted to 425 billion rubles. against 349 billion rubles. at the end of 2022 and 437 billion rubles. at the end of 2021. Such a large percentage of short-term liabilities is highly unusual for carriers, she said.

Kommersant’s interlocutor in the Aeroflot group objects to such a conclusion, pointing out that the overall increase in leasing liabilities, including their short-term part, occurred due to currency revaluation. On August 1, the company announced that total leasing obligations at the end of the first half of the year amounted to $5.6 billion, which, with an increase in the average rate of 17 rubles. and gives about 90 billion rubles. growth compared to the end of 2021. The amount of payments under short-term accounts payable was also recalculated at a higher rate.

Without explanations and detailed reporting, RAS data do not give an idea of ​​the actual situation of the group, experts say. For the purposes of a more detailed analysis, says Alexander Gushchin, director of the ACRA corporate ratings group, “I would like to understand the impact of the new lease accounting standard on operating expenses.” In addition, it is more correct to evaluate Aeroflot on the basis of consolidated financial statements, which have not yet been published, he adds.

But, based on the available data, one can be happy for the company, says Igor Smirnov, senior director for corporate ratings at Expert RA: the carrier has demonstrated the possibility of normal functioning in a crisis. However, taking into account the reduction in international destinations, there is a “shortage” in revenue. Mr. Smirnov also notes that during the year Aeroflot will have to repay almost 45 billion rubles. loans, that is, almost half of its debt to banks, which increased sharply during the pandemic. The analyst believes that with a high probability these loans will be refinanced and “it will take a long time to pay off covid debts.”

Analysts are rather optimistic about Aeroflot’s financial results in the second half of the year. The first half of the year for air carriers is weaker due to seasonality, notes Alexander Gushchin. He recalls that in the first half of the pre-COVID 2019, Aeroflot, as now, had both a gross and an operating loss. In the second half of the year, the government will no longer provide state assistance to airlines for passenger traffic, but, according to Elena Sakhnova, these payments in the first quarter amounted to 5 billion rubles for Aeroflot. and did not affect the results too much. “To assess their effect directly is wrong, since without state assistance the carrier would not announce sales, and the result could be comparable,” she notes. Given the strong dynamics of passenger traffic this year, the second half of the year promises to be prosperous for Aeroflot, Ms. Sakhnova believes, adding: “As we can see, passengers are ready for some price increases.”

Aigul Abdullina