Aeroflot slips from leadership of Europe's legacy airlines

Premium Analysis

Aeroflot Group is no longer Europe's most profitable legacy airline group. Not all the results from groups have been announced yet, but it looks certain that the crown will pass to IAG. Its 2017 operating margin of 13.1% was comfortably ahead of Aeroflot Group's 7.6%. (Note, however, that the LCC Ryanair regularly generates much higher margins).

Aeroflot Group's margin slipped by 5.2ppts in 2017, the result of a faster fall in unit revenue than in unit cost. Nevertheless, its margin was still at a reasonably healthy level, not far behind Lufthansa's margin and noticeably higher than Air France-KLM's. Over the past decade, Aeroflot's track record of margins has been better than all three.

This report looks at Aeroflot's 2017 profits and its margin track record versus those of Europe's big three legacy airline groups. It also compares data on Aeroflot Group's fleet with Lufthansa Group, IAG and Air France-KLM.

A business model built on a multi-brand strategy, and benefiting from leading the consolidation in the Russian market in recent years, should continue to provide Aeroflot with respectable levels of profitability, in spite of 2017's slip.

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