Change of mix leaves revenues flat (430 words)

Published: 2/19/2001

Transaero has reported carrying 430,000 passengers in 2000 (25% less than the 572,000 carried in 1999). This decline in passenger numbers is due to the reduction of unprofitable domestic routes flown during 2000, with a sharper focus on destinations within the CIS and beyond. These cuts produced a 24% reduction in flights during 2000, leaving 6000 flights flown. Despite the overall decline, the airline reported good traffic growth on routes to the UK in particular, where the Moscow-London route saw an increase in passenger numbers of 230%. Significant growth was also experienced on Germany and Kazakhstan destinations. Flights to Israel were robust at the beginning of the year, but slowed considerably as a result of instability in the country later in the year. Seat load factors overall remained unchanged on 1999 (at 64%) although arguably returning significantly improved revenues with the change of mix. The airline also reported that Sheremetyevo Airport's increased record for regular flights was reflected in the 1% rise - from 87% in 1999 to 88% in 2000 - in aircraft leaving and arriving on time. The improved quality of the airline's business despite rising costs is evident in the preliminary profit for 2000 of Rb280m (122% increase on the Rb126m recorded in 1999). In $ terms, profit should increase 95% from $5 m to almost $10 m. The company's total revenues are forecast to increase by 14%, to Rb2.5bn from Rb2.2bn, with an insignificant fall of 0.4% in $ terms from $89.2m to $88.8m. Operating costs increased 7% to Rb1.6bn from Rb1.5bn, but decreased 7%, in $ terms, from $60.8m to $56.9 m. Transaero is considering a transfer of operations from Sheremetyevo Airport to Domodedovo Airport, after being based at Moscow's major airport for over 10 years. The reason for the move is the level of service offered and the airport's failure to match Transaero's quality standards; a view supported by the passengers, when polled, indicating high marks for onboard service but low marks for airport service. The airline believes that the recent opening of the new international terminal at Domodedovo Airport after reconstruction, offers a marked improvement in passenger service on the ground. Talks are currently underway between the two parties and a conclusion is expected within a couple of months. Transaero's current fleet consists of 1 Airbus A-310-300, 1 IL-86, 2 Boeing-737-700 and Boeing-737-200. In the first half of 2001 the company plans to take up an operating lease for 1 more Airbus A-310.

Article ID: 2367