Russia’s biggest airline is taking over Transaero contracts for 16 Boeing 737-800 and Airbus A321 single-aisle aircraft and will also begin operating as many as 19 Boeing 747 and 777 wide-bodies that were already in service with its competitor, which folded last year as a weaker ruble weighed on demand.
The narrow-body purchase means the main Aeroflot brand is unlikely to need as many new planes as envisaged in a fleet plan in May, Deputy Chief Executive Officer Giorgio Callegari said in an interview. The unit is also reviewing its order for 22 A350s from Airbus and has reached terms with Boeing over the same number of 787 Dreamliners which it said in 2015 were no longer wanted.
Far East Flights
The five 777s and eight to 14 747-400s that Aeroflot is taking from Transaero will be deployed mainly on routes to Russia’s Far East, where the defunct operator had an extensive network serving locations including Khabarovsk, Vladivostok, and the Kamchatka peninsular, Callegari said.
They’ll be operated by the Rossiya arm, around which Aeroflot is consolidating regional operations, though some of the jets will also provide charter services in collaboration with Russian tour operators. The company isn’t interested in four brand-new 747-8s that Transaero ordered, some already built, he said.
Among the A350s ordered by Aeroflot, eight were due to be -800 variants, a type Airbus will no longer make, so that taking only the 14 larger -900 planes would be one solution, Callegari said. Discussions are under way and planes wouldn’t be required until 2018, when Russia hosts the soccer World Cup and Moscow’s Sheremetyevo airport is due to have been expanded.
Transaero’s demise accelerated a process of consolidation among Russian carriers that’s likely to leave the country with two or three network carriers and a handful of discount operators within five years, Callegari said, compared with the 150 companies holding air operating certificates in 2011.
Of Russia’s top carriers by market share, Aeroflot and Rossiya ranked No. 1 and 2 in 2015, with the company’s Pobeda discount arm in fifth. S7, or Siberia Airlines, UTair Aviation PJSC and Ural Airlines JSC were third, fourth and sixth.
Aeroflot actively resisted buying Transaero outright and the carrier “is not actively pursuing additional consolidation,” said Callegari, who was in London for a ceremony at which it was awarded a four-star grade from ratings firm Skytrax, putting it on a par with British Airways and Deutsche Lufthansa AG.
The Deputy CEO said Aeroflot’s 2016 operating result will likely match the 44 billion rubles ($665 million) reported last year, when it was pushed to a net loss by fuel-hedging positions and costs from obligations to carrying people who booked with Transaero. That could indicate Aeroflot will post a profit on a net basis as its hedges unwind. All units will be positive except Rossiya, which has integration costs, and passenger numbers should grow 10 percent, he said.
No dividend will be paid for last year because of the net loss, based on a policy set by the carrier’s controlling government shareholder.
Callegari declined to comment on whether the company could be privatized this year, saying the matter is one for the state. “I’m sure that there are debates in the government,” he said.