(Reuters) - Russia’s biggest airline Aeroflot reported a first-quarter net loss of 11.54 billion rubles ($184.49 million) on Wednesday as fuel and staff costs outweighed revenue growth.
In its first ever publication of quarterly results, Aeroflot said the net loss more than doubled from the 5.34 billion rubles reported a year ago.
Aeroflot’s fuel costs surged 24.1 percent due to rising crude oil prices. Staff costs climbed 15.1 percent, contributing to a 14.3 percent increase in operating costs to 123.54 billion rubles.
“An increase in leasing expenses due to significant fleet expansion, as well as our initiatives to improve working conditions and increase salaries for cabin crew, led to a decrease in the overall financial result compared to the same period last year,” Aeroflot’s Deputy CEO for Commerce and Finance Shamil Kurmashov said.
Aeroflot (AFLT) has been buying its fuel at spot prices, after poor hedging in 2015 when it reported a hedging loss of 23.75 billion rubles.
“The unhedged oil (AFLT admits that is too late to hedge this at current levels) is a clear drag and here AFLT fares worse than its peers who customarily hedge 50 percent or more of their oil exposure,” Renaissance Capital analysts said in a note last week.
Aeroflot’s shares, though, were up 5 percent to 138.40 roubles as of 0906 GMT, after the company recommended on Tuesday a larger than expected dividend for 2017.
They are still well below a high of 225 rubles in mid-2017, having lost 41 percent since.
“Aeroflot’s results were expectedly weak and priced in by the market before the publication and now the primary focus is on the news flow, dividend recommendation, new strategy and the share buyback”, VTB Capital analyst Olga Boltrukevich said.
The 95-year-old carrier said on Tuesday it would set “more ambitious strategic goals”, having achieved its long-term 2025 targets to become a top-20 airline globally and top-5 European airline ahead of schedule.
Aeroflot sees transit passengers between Europe and Asia, as well as its low-cost subsidiary Pobeda, as key growth drivers.
Reporting by Anna Pruchnicka; Editing by Mark Potter