Aeroflot Claims Success in 2000

Aeroflot Claims Success in 2000

Aeroflot - Russian Airlines has claimed a successful year in 2000, during which
the airline carried more than 5 million passengers.

Steady growth /3.9 million passengers in 1997; 4.45 million in 1998; and 4.6
million in 1999/ continued through a period of nationwide economic crisis and
against the background of declining passenger traffic in Russia in general.

Aeroflot last year began restructuring its commercial department and route
network under a so-called New Strategy largely based on successful restructuring
programs undertaken earlier by such prominent airlines as SAS.

Following the New Strategy principles allowed Aeroflot to increase its seat-load
factor by 5.8% in 2000, up to 65.2%. The rise was achieved by a better use of
the existing fleet, which saw no new aircraft in the last year.

Today, with 15,000 staff members and 130 offices around the globe, Aeroflot
operates a 105-strong fleet, including 17 Boeings /two 777, four 767, 10 737,
one DC-10-30F/ and 11 Airbuses /all A310s/. The rest are indigenous designs -
six modern Il-96-300 supplemented by older Il-86, Il-76, Il-62, Tu-154 and
Tu-134.

Fleet renewal plans for 2001 are modest. The first Il-96T freighter with Pratt &
Whitney engines and Collins avionics is to deliver sometime this year, some
three years behind the original plan.

At the same time, six additional Il-96-300 airliners with Perm Motors PS-90A
engines /these are offered to Aeroflot on financial lease terms under the scheme
proposed by Ilyushin Finance Co/ will not be available this year.

To bridge the gap until the new aircraft are ready, Aeroflot is going to take on
operating leases one more A310, two Tu-154Ms and three Tu-134s. At the same
time, the number of Il-86, Il-76 and Il-62 airliners will continue to decline.

An ambitious year ahead

And yet Aeroflot has ``plans ambitious enough`` for 2001, according to the
airline`s general director Valery Okulov.

With almost the same fleet in hand, the airline hopes to carry 5.9 million
passengers this year, achieving a 1.0% rise in the commercial load factor, the
latter meaning $22.7 million of extra profit.

The rise is to come from further optimization of the route network and a better
use of the fleet.

Aeroflot managers expect much from optimization and long-term planning. For the
first time in the airline`s history, its summer timetable /2001/ was compiled
and approved half-a-year before implementation.

Currently, Aeroflot maintains scheduled services to 124 destinations in 66
countries around the globe. It is markedly less than, say, four years ago, where
more foreign cities were served on political considerations. Now, with the
commercial aspect being placed above all else, many rarely flown and
non-profitable routes have been closed.

Aeroflot managers say that, unlike before, the current timetable does not have
unprofitable routes, while admitting that there are some routes operating at the
edge of profitability.

Despite the decline in the number of foreign destinations, Aeroflot remains
responsible for 68% of the passenger traffic on international flights generated
by all Russian airlines.

Admittedly, the flag-carrier is responsible for only 11% of the traffic inside
its home country. In the past three years, however, it opened flights to 24 new
destinations in the former Soviet Union. On January 16, Aeroflot is opening
regular service to Uzbeki capital Tashkent, its 36th destination in the CIS.

With help of Deutsche Bank, Aeroflot finally introduced its global depositary
receipts on the international market on December 26, 2000. Before that, the
airline`s shares were only available on the inner market, as they were in
Rubles. It is estimated that up to 15% of Aeroflot shares might be turned into
receipts via Bankers Trust, while the Russian government will likely to hold
51.17% of the airline`s shares in the foreseeable future.

Okulov believes that the future of his company will depend largely on the
Sheremetievo-3 project, meaning construction of a new terminal in the major
Moscow airport.

Worth $200-$250 million, the terminal - its first section - should be open in
2003. With that in hand, Aeroflot will be able to have passengers of both
international and domestic flights served in one terminal, while now these are
separated /Sheremetievo-2 serves international, Sheremetievo-1 domestic
flights/. The Sheremetievo-3 project is viewed as critical for Aeroflot in its
efforts to be included in the proposed global airline alliance led by Air France
and Delta.

By Vovick Karnozov /AeroWorldNet/
www.avia.ru