Aeroflot: strong profit growth in 9M2013. LCC subsidiary Dobrolet complements the team in early 2014

Aeroflot Group enjoyed strong growth in traffic, revenues and profits over the first three quarters of 2013, succeeding both in growing RASK and lowering CASK and bringing the prospect of improving its FY2013 operating margin, after two years of falling profitability. It has led the consolidation of the Russian airline sector, integrating and reshaping newly acquired subsidiaries, and now appears to be reaping the benefits of this government-backed process.

The next phase in the group's progress will be the planned launch in northern spring 2014 of its LCC subsidiary Dobrolet. LCCs have not previously been a feature of the Russian market, but this is changing on international routes. easyJet is now well established from London and Manchester to Moscow; Wizz Air flies from Budapest to Moscow; and Ryanair has obtained permission to fly from Dublin to Moscow and St Petersburg from Mar-2014.

Legislation allowing elements of the LCC business model in the domestic market is expected to be passed by the end of this year and Aeroflot is investing USD100 million in Dobrolet to take advantage of this.