Aeroflot Ar 2014 en

Annual Report
CONTENTS
1 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1 Letter from the Chairman of the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1 Letter from the Chief Executive Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1. About Aeroflot Group . . . . . . . . . . . . . . . . . . . . . . . 8

1.1. Aeroflot Today . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.2. Key Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.3. Awards and Industry Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2. Air Transportation Market and Aeroflot Group Market Position

2.1. International Air Transportation Market . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2. Russian Air Transportation Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3. Business Overview
3.1. Group Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.2. Development Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.3. Operating Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.4. Subsidiaries and Affiliates Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.5. Route Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.6. Aircraft Fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
3.7. Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
3.8. Safety and Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
3.9. Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
3.10. Brand Development and Service Quality Improvement . . . . . . . . . . . . . . . . . . . . 71
3.11. Information Technology and Innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
3.12. Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
4. Corporate Social Responsibility

4.1. HR Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
4.2. Charity and Social Programmes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
4.3. Environmental Programmes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
5. Corporate Governance and Securities

5.1. Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
5.2. Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
6. Risk Management . . . . . . . . . . . . . . . . . . . . . . . . 122
7. Financial Results . . . . . . . . . . . . . . . . . . . . . . . . . 128

7.1. Overview of Financial Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
7.2. Statement of Managements Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . 140
7.3. Independent Auditors Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
7.4. IFRS Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 142
8. Appendixes . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
8.1. Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
8.2. Material and Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 194
8.3. Transactions by Executive Bodies Members . . . . . . . . . . . . . . . . . . . . . . . . . 196
8.4. Presidential and Governmental Instructions
and Directives Execution Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
8.5. Observance of the Russian Corporate Governance Code . . . . . . . . . . . . . . . . . . . 206
About Aeroflot Group

8.6. Disposal of Non-core Assets During the Year . . . . . . . . . . . . . . . . . . . . . . . . 213
8.7. Aeroflot Group Operating Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
8.8. Terms and Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
8.9. Aeroflot Offices in Russia and Abroad . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
aeroflot.ru 8.10. Contact Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
1
2014. A year of flying high
highlights
Market share of Aeroflot

Group by number of
verage age of Aeroflot airline Regular routes
passengers excluding foreign
fleet in operation General Partner for the XXII of Aeroflot Group
carriers Aeroflot ranks among the Top 5
European air carriers in terms Olympic and XI Paralympic
of passenger turnover and its Winter Games in Sochi
Aeroflot Group's in the segment of Air Transport
growth rate, according to
revenue in FY 2014 Passenger Services
the Airline Business
37.3% 34.7 Top 5 90.1 4.1 319.8

261
The world's
most punctual 291 23.6
mln bln years bln RUB air carrier mln
Aeroflot Group's Aircraft in Aeroflot Group Aeroflot is the world's most

passenger turnover fleet at the end of the year punctual air carrier, according
(billion passenger-kilometres) to the May and November
2014 data from the US-based
statistics agency FlightStats
Total number Aeroflot was named Best East Passengers carried

of passengers carried European Carrier at Skytrax by Aeroflot airline
by Aeroflot Group World Airline Awards
2 3
Letter from
the chairman
of the Board of
Directors
Dear shareholders,
2014 was a challenging year for the whole of the air transpor- We launched a classic low-cost carrier as part of Aeroflot The status of national carrier is measured not just by the scope our low-cost offering, continue to optimise our route network
tation sector. Commercial aviation operations were strongly Group, now operational under the Pobeda brand; of Aeroflots activities and its productive capacities. Not only and develop advantageous international partnerships.
affected by a number of high-profile events that will also in large We made a significant contribution to the Olympic Winter does Aeroflot have the youngest fleet of any of the worlds major
measure determine the future course of the industry. Games in Sochi and shared the global success of that carriers, it is also the biggest partner of Russias aircraft-build- Aeroflot will continue to position itself as a premium global
greatest of sporting events with all of Russia, as befits the ing industries and the chief consumer of the innovative Sukhoi carrier able to compete with other recognised leaders on the
Aeroflot and other Russian carriers encountered particularly national carrier; Superjet 100. As of the start of 2015 Aeroflot had 16 of these global marketplace.
serious headwinds in the second half of the year. Most signifi- aircraft in its fleet, and intends to acquire a total of 50. In addi-
cant among these were the slowdown in the Russian economy External economic factors put pressure on Aeroflot Groups tion, we plan to acquire 50 of the advanced MC-21 (YAK-242) In 2015 and 2016 we fully intend to realise our potential to
and weaker consumer demand for flights, alongside the sharp financial results for the year. Despite this, the Group reported airliners, and are already making preparations to incorporate deliver on our strategy for the benefit of the state, all of our
depreciation of the ruble and a decline in the international tour- a substantial operating profit, thanks to our continued focus them into out fleet. shareholders and the whole of Russia.
ist market. The major external factors were the escalation of on operational efficiency and cost control.
the crisis in Ukraine, increased geopolitical tensions and the Aeroflot provides affordable air connections to Russian regions
imposition of economic sanctions against Russia. A particular burden of responsibility fell on the management including the Far East, Kalingrad region and Crimea. Developing
team, which took over the reins at Aeroflot six years ago with domestic and regional air transportation is a core priority for
It was inevitable that this would have an effect on Aeroflots a crisis-management brief, and today is demonstrating those Aeroflot as the national carrier and for the whole of Aeroflot
operational and financial results, and also on the Russian same skills once again. Group.
aviation sector as a whole. But one result outweighs all the
others Aeroflot remained highly resilient during a testing The optimal growth strategy for Aeroflot is defined in close The national carrier strategy is fully in line with our cor-
time and remains of systemic importance to the industry as collaboration between the Board of Directors, its committees porate social responsibility policy. In addition to subsidised
the undisputed sector leader. and the companys senior management team. As part of its flights, Aeroflot runs a number of projects to help children,
work to implement Aeroflots Development Strategy, the Board and sponsors sports teams and activities. The company has a
In 2014 Aeroflot not only stood firm in the face of a gathering of Directors meets monthly for detailed consideration of key long-standing tradition of deep gratitude to veterans of World
storm, but also made significant progress in a number of key issues, prepared with active involvement of the committees WarII and makes special provisions for them including an
areas: and factoring in authoritative research and expert opinion. In annual programme of free tickets. In 2014 Aeroflot launched
2014 the Board held 16 meetings, nine in-person and seven preparations for the 70th anniversary of the end of the war and
We recorded the highest passenger volumes in the Rus- with absentee voting. More than 140 items were considered and this year is running a number of programmes in recognition of
sian aviation industry, and set a new record for passenger more than 200 resolutions adopted. The Groups Long-Term this auspicious date.
numbers; Development Programme for 2015-2020 was approved. Other
We strengthened our position as a global leader in passen- measures to develop best corporate governance practices at In 2014 Aeroflot Group continued to deliver on its Develop- Kirill Androsov
ger service, including being voted Best Airline in Eastern JSCAeroflot included the approval of a draft road map to ment Strategy and underscored its future potential. We plan to
Europe for the third time at the prestigious Skytrax World introduce key provisions of the Corporate Governance Code, diversify the Groups activity by segment and further develop Chairman of the Board of
Airline Awards; which have begun to be implemented. Directors, JSCAeroflot
4 5
Letter from the

Chief Executive
Officer
Dear shareholders,
The key outcome of 2014 for us was that Aeroflot retained its War, which we will be marking this year in appropriate Aeroflots fleet the youngest of any major airline anywhere In the present circumstances, alongside continued growth of
indisputable position as Russias leading carrier and remained fashion. in the world operating more than 100 aircraft continued to productivity, priorities that are becoming of particular impor-
on course to deliver dynamic growth in an extremely challeng- Active involvement in the XXII Winter Olympic Games and grow. As of 31 December 2014, Aeroflot had a fleet of 150 tance for Aeroflot include developing tried and tested business
ing environment. XI Winter Paralympic Games in Sochi. In addition to mak- aircraft with an average age of 4.1 years. solutions, innovation across all areas of our activity, and adopt-
ing a direct financial contribution to the organisation of ing a creative approach.
Despite the challenges we have faced, we have maintained our this global event one of symbolic importance for Russia With the commercial aviation sector particularly sensitive to
record of setting new records for passenger volumes every year Aeroflot added extra capacity to ensure seamless con- the effects of the crisis, optimisation of our route network took This will create a sure foundation for Aeroflot to continue mak-
and growing faster than the market. In 2014 Aeroflot carrier nections to Sochi from Moscow and Frankfurt. Flights on on particular importance. Aeroflot substantially upgraded its ing strides towards its main strategic goal to enter the top
23.6 million passengers, which is 13% more than in 2013. In these two routes carried almost 140 thousand passengers, network during the year, and as of 31 December 2014 we ranks of global carriers and to give Russia the strong fleet the
total, the companies of Aeroflot Group carried 34.7 million pas- including athletes, fans and tourists. operated flights to 134 destinations in 55 countries. In total, country deserves as an aviation powerhouse.
sengers, an increase of 10.7% on the previous year. Successful lobbying to improve the regulatory environ- Aeroflot Group offers 291 regular destinations in 56 countries.
ment for commercial aviation. A number of legislative One of our major priorities as a premium carrier is improving
In terms of passenger numbers, Aeroflot Group controls 37.3% amendments were introduced, including the removal of passenger service with an emphasis on using the latest technol-
of the Russian market. The Group is particularly strong on the ban in Russias Air Code on Russian airlines employing ogy. According to research by Routehappy, Aeroflot is among
domestic routes, where growth rates are above the global aver- foreign pilots. the top 10 airlines globally in terms of on-board Wi-Fi Internet
age. We are therefore continuing to deliver on Aeroflots core access for passengers.
goal as the national carrier: to make air travel more accessible In 2014 Aeroflot was for the second year in a row (and third
to all Russians and to increase social mobility. time overall) named Best Airline in Eastern Europe at the World We recorded an excellent flight safety indicator of 99.972% in
Airline Awards by Skytrax, a leading consulting company. Dur- 2014, putting Aeroflot among the safest airlines globally. More-
According to Airline Business, which publishes authoritative ing the year the Company garnered more than 30 Russian and over, according to FlightStats, Aeroflot was twice the worlds
rankings of airlines around the world, Aeroflot is one of Europes international awards, and took top spots in leading rankings. most punctual airline during 2014, in May and November.
five largest carriers by RPKs and growth rates for the third year
running, as well as by ASKs. We continued making progress on Aeroflots development as a Our success has been all the sweeter for having been achieved
multi-brand group and deeper integration. In 2014 we began in the face of a number of extremely negative factors the
For Aeroflot, 2014 was marked by a number of significant work on consolidating the Group into a system with a single depreciation of the ruble and deterioration in the Russian econ-
events including: commercial administrative centre; operational integration was omy, heightened geopolitical risks, the escalation of the Ukraine
strengthened; and the process of introducing high standards crisis and the imposition of Western sanctions. Amid adverse
Launch of a low-cost carrier as part of Aeroflot Group. Fol- of performance and technology was intensified. Particularly a conditions for the sector, Aeroflot was able to report the best
lowing the enforced shuttering of Dobrolet in late summer unified booking IT-platform is in service and the online check-in financial results achievable and to minimise losses. In 2014 Vitaly Saveliev
after the EU imposed sanctions over flights to Crimea, the system covers flights of the subsidiary companies. Aeroflots revenue under IFRS grew by 9.9% to RUB319.8
project was resurrected in September under the Pobeda billion. We maintained operational profitability, recording an Chief Executive Officer,
brand. The name of the new airline was chosen in honour operating profit of RUB 11.3 billion and EBITDAR of RUB 48.7 JSCAeroflot
of the 70th anniversary of the end of the Second World billion.
6 7
1 About Aeroflot Group
THE RECIPE
FOR SUCCESS
Egypt
A mix of aspirations, goals and ideas like islands
in the sea that, taken together, form an archipelago
1.1 Aeroflot today
37.3%
Aeroflot
Aeroflot Group is Russias largest carrier and one of Europes leading air- airline
lines. In 2014 the Group accounted for 37.3% of the Russian market by
passenger numbers1. Some 34.7 million people used the Groups services
during the year, including 23.6 million passengers who flew with our flag- market share
ship airline Aeroflot. of aeroflot group Donavia Rossiya
airline airline
The Groups parent company is JSCAeroflot. Other companies in the Group

include Rossiya, Donavia, Orenair, Aurora airlines and the low-cost carrier
Pobeda. This multi-brand strategy means the Group can successfully grow
its presence in all key market segments across both domestic and interna-
34.7 Aeroflot
Group
tional routes. million passengers
carried by aeroflot
Leadership in global air transportation industry is one of the key strategic groups airlines
targets of Aeroflot Group. The Group is successfully implementing a profit- Orenair Pobeda
able growth strategy built around the following core priorities: airline airline
high rates of business growth;

increasing the Groups investment attractiveness; Aurora
building a high-performance hub-and-spoke model; airline
growing a fleet of modern aircraft;
balanced route-network development;
improving the quality of passenger service.
The Groups route network includes regular flights to 291 des- Management. The Group was included in the state list of strate-
Aeroflot Group is a global leader in passenger service, which has been rec- tinations in 56 countries, with the network of Aeroflot airline gic companies by Presidential Order No. 1,009, dated 4August
ognised by numerous global awards. comprising 134 regular destinations in 55 countries. Aeroflot is 2004. Aeroflots ordinary shares trade on the Moscow Exchange
a member of the SkyTeam global alliance, which boasts a com- under the ticker AFLT and are included in its top Level 1 quo-
A key competitive advantage for the Group is its modern fleet of aircraft. bined route network serving 1,052 destinations in 177 countries. tation list. Outside Russia, shares of Aeroflot trade over the
Aeroflot airlines fleet is the youngest of any major carrier anywhere in the counter as Global Depositary Receipts (GDRs) on the Frankfurt
world2, with an average age of 4.1 years (for Aeroflot Group as a whole 51.17% of shares of JSCAeroflot are held by the Russian Stock Exchange. A Level 1 American Depositary Receipt (ADR)
the figure is 7.0 years). As of the end of 2014, the Group had a fleet of 261 Federation through the Federal Agency for State Property programme was launched in January 2014.
aircraft, 150 of which were operated by Aeroflot airline.

Note
1. Excluding foreign carriers. In this Annual Report, the terms JSCAeroflot, Aeroflot and the Company refer to the parent company of Aeroflot Group: Joint Stock Company Aeroflot
2. Carriers operating more than 100 aircraft. Russian Airlines. Aeroflot Group or the Group refer to Aeroflot and its affiliates.
10 11
1.2 Key events
Aeroflot Groups multi-brand Aeroflot has become the first Russian airline to introduce Aeroflot was the first Russian and CIS company to equip Aeroflot signed up to the Anti-Corruption Charter of the
platform development Airbus 320 airliners equipped with new aerodynamic its flight attendants with iPad Mini-based CrewTablets with Russian Business.
wing tips called sharklets. new dedicated mobile technology applications from SITA. Aeroflot recertified the compliance of its quality manage-
Aeroflot Group launched a low-cost carrier Pobeda, which Aeroflot continued to supplement its fleet with the extend- Aeroflot signed a R&D cooperation agreement with the ment system with ISO 9001:2008 (Quality Management
took its first flight from Moscow to Volgograd on 1 Decem- ed full version of Sukhoi Superjet 100. In December 2014, Moscow State Technical University of Civil Aviation. Systems) and ISO 14001:2004 (Environmental Manage-
ber 2014. the Company got hold of its 16th SSJ100. ment Systems) requirements.
As a part of the Groups ongoing consolidation, Aeroflot introduced online registration for outbound flights
JSCAeroflot has taken over commercial management of Winter Olympic Games in Sochi from Moscow operated by subsidiary carriers Rossiya and
all the flights operated by Rossiya airline and most of those Enhancing the quality Orenair.
operated by Orenair. of passenger services Aeroflot became a general partner and official carrier Aeroflot introduced single tariffs for own flights to the
of the XXII Winter Olympic and XI Paralympic Games in cities of the Russian Far East, Kaliningrad and Simferopol
The Company introduced a new top-tier platinum level and Sochi, which brought about the triumphant victory of the from 2 April through the end of 2015.
Balanced approach to the route a new corporate identity for its Aeroflot Bonus loyalty pro- Russian team. An unparalleled Aeroflot campaign occasioned by the 70th
network development gramme. For the first time in its modern history, Aeroflot From 20 January to 18 March 2014, Aeroflot operated anniversary of the victory in World War II allowed war
Bonus Platinum enables the Company to offer its clients 500 return flights from Moscow to Sochi providing trans- veterans to take free flights to a wide range of destinations,
In 2014, Aeroflot Group continued to develop the route some options that truly live up to the first class service portation for 133,887 people. On top of that, the Company including those in Europe.
network and improve its efficiency based on demand requirements. operated 20 return flights from Frankfurt to Sochi carrying
trends and strategic significance of destinations. It Aeroflot Bonus Frequent Flyer Programme enlisted coop- a total of 2,915 passengers.
launched flights to 22 new destinations, with nine of those eration of the global car rental operator Europcar.
operated domestically. To deliver on Aeroflots Internet On Board Programme
Aeroflot signed a comprehensive memorandum of coop- the Company enabled Wi-Fi access aboard 11 wide-body Events after
eration with the Air FranceKLM Group on the occasion aircraft. At the end of 2014 Internet access was available the reporting period
of the 60th anniversary of the flight from Moscow to Paris to passengers on 30 aircraft.
operated by Air France. Aeroflot and Sukhoi Civil Aircraft Company signed a
purchase and sale agreement for 20 Sukhoi Superjet
Cutting edge technology 100s, the Russian aviation industrys flagship airliner. The
Building an advanced and highly and innovation drive agreement is a follow-on to the existing firm contract for
efficient aircraft fleet the delivery of 30 airliners.
Aeroflot launched an upgraded version of its official web- Company decided to increase social spending on pilots by
In 2014, the Group added seventeen Airbus A320, eight- site at www.aeroflot.ru. Functional navigation by optimising 27.3%. The salaries and social benefits offered to Aeroflot
een Boeing 737, two DHC-8, two DHC-6, six Boeing 777- home menu features was materially improved. As a result, pilots are unmatched elsewhere in the global civil aviation
300ER and six Sukhoi Superjet 100, expanding its fleet by the website has become more user friendly and intuitively industry.
a total of 22 aircraft. accessible for passengers.

12 13
1.3 AWARDS AND INDUSTRY

RECOGNITION
Ratings Awards
According to the Airline Business, Aeroflot ranked among The Beijing News, Chinese capitals leading newspaper, Best East European Carrier Prize at Skytrax World Airline Letter of acknowledgement and Combating Fraud com-
the Top 5 European air carriers in terms of passenger named Aeroflot Best Travel Brand 2014 in China. Awards. memorative sign at the AntiFraud Russia 2014. Prevention
turnover and its growth rate for the third straight year. and Counteraction 5th International Conference.
According to the US travel search engine Routehappy, CondeNast Traveller Readers Choice Award as the Best
According to the May 2014 and November 2014 surveys Aeroflot ranked among the Top 10 international air carri- Russian Airline. Movement Formula Award (national prize awarded for
by the US-based FlightStats, Aeroflot is the worlds most ers with Wi-Fi on board. achievements in transport and transport infrastructure) for
punctual air carrier. Travel.ru Star Award as the Best Russian Airline in 2014. the Best Passenger Logistics Solution.
Aeroflot made it to the Top 10 Companies of the Year
Aeroflot earned seven out of seven possible stars in the inthe media rating made by Medialogia. National Prize for Marketing Achievements at Kotler Innovation Time Prize for the Best Innovation Project
global safety rating made by Airlineratings.com, interna- Awards. (Transport and Engineering Subcategory).
tional industry rating review website. Aeroflot made it to the Top 10 Employers for Russian
university graduates in the rating made by Future Today, Best Unisex Bag in Europe and Africa and Childrens Top Brands for Travel Award by Travellers Choice.
Global Travel Newspaper Korea, South Koreas leading Russias largest HR agency for graduates. Goody Bag or Give Away (Under 6 years) at Travelplus
travel industry resource, named Aeroflot South Koreas Airline Amenity Bag Awards. Growth Fundamentals 2014 (national prize awarded for
Best International Airline in 2014. contribution to the development of small and medium-
EF Education First ICE Awards for Outstanding Achieve- sized businesses) for the Programme of the Year.
ments in the Internationalisation of Business and Society.
Vision Awards Platinum Medal (Top Prize) for the Best
Best Airline for Business Travellers, according to the Rus- Annual Report in the Transport and Logistics Air and
sian Business Travel & MICE Award. Railway Companies category, according to the League of
American Communications Professionals (LACP).
Best Russian Airline, according to the National Geographic
Traveller Awards 2014. Best Annual Report of the Company with the Market
Capitalisation of RUB 10 to 100 billion, according to 17th
Best.ru Prize as the Best Company in the Transport Indus- Annual Report Awards sponsored by Moscow Exchange
try (Best.ru Prize is a public exposure award set up by the and RCB Group.
news agency Anews.com).

14 15
2 AIR TRANSPORTATION MARKET
AND AEROFLOT GROUP
MARKET POSITION
OPPORTUNITIES
Russia, Tatarstan Republic

FOR GROWTH
Supported by expertise, sector experience
and our modern fleet of aircraft
2.1 International air

transportation market 2.2 Russian air
transportation market
5.9% 111.8
Despite the challenging environment in some of the worlds regions, inter- It was a challenging year for civil aviation in Russia. The industry saw some
national air transportation market continues to grow steadily. By and large, pre-crisis turbulence with key macroeconomic indicators losing their momen-
2014 was a successful year for the worlds aviation industry, with the global tum. Despite the negative trends, however, the Russian market continued to
passenger turnover increasing by 5.9%, according to the IATA. Scheduled increase in global outperform the other regions. million passengers
passenger traffic grew by 5.1% up to 3.3 billion passengers. Asia Pacific passenger turnover Russian air
and Middle East were the foremost contributors to the international market according to IATA In 2014, total passenger traffic (including foreign carriers) in Russia rose transportation market
growth. by 7.8% up to 111.8 million passengers. The key growth driver here was the (including foreign
domestic traffic, which increased by 18.0% to 46.3 million people. Interna- carriers)
Industry-wide operating results saw slight improvements with the load factor
rising by 0.3 p.p. from 79.6% in 2013 to 79.9% in 2014. 751 tional passenger traffic went up by 1.8% to 65.5 million people.
241.4
In 2014, Russian airlines witnessed their passenger traffic grow by 10.2%
Industry-wide revenue totalled USD 751 billion, up 4.7% y-o-y. Traditionally, billion usd to 93.2 million people due to both increased domestic and international
passenger flights account for the largest part of the industrys income, their global air passenger traffic (46.9 million passengers, up 3.6%). Russian carriers total
share standing at 80%. Cargo flights only account for 8.0% of transportation transportation passenger turnover rose by 7.2% to 241.4 billion passenger-kilometres, billion passenger-
as compared to 11.5% in 2007. The industrys expenses rose by 3.0% up to industry revenue whereas the number of available seat kilometres grew by 6.8% to 302.5 kilometres passenger
USD 713 billion. Fuel costs remain rather high, their share reaching 28.2% billion PKM due to the load factor increasing by 0.3 p.p. to 79.8%. turnover of the Russian
of the industrys overall expenses in 2014. According to the preliminary carriers
IATA estimates, net income stood at USD 19.9 billion in 2014, reaching the The significant 2014 growth in domestic traffic resulted from the ongo-
highest level over the last ten years. ing structural changes in the Russian market: air transportation is becom-
ing more accessible and passengers tended to give preference to air trips.
The Middle East continued to deliver the highest growth rates. On the back Another driver was the robust growth of internal tourism in Russia, including
of the 11.4% increase in capacities, the passenger turnover here rose by during and after the XXII Olympic and XI Paralympic Winter Games in Sochi.
12.9% in 2014. The main driver behind this growth is the continued expan-
sion of the regions airlines into international markets, including through The slowdown in international passenger traffic in 2014 was due to the chal-
acquisition of European carriers assets. lenging macroeconomic environment and sharp exchange rate fluctuations
specifically. The said factors sparked off a crisis in the travel industry too,
Asia Pacific ranked second in terms of growth, with passenger turnover driving a number of large tour operators into bankruptcy and affecting the
rising by 7.0% amid the 7.6% increase in capacities. One of the growth airlines which focused on this particular market segment.
drivers here was an increase in regional domestic passenger traffic with
China leading the charge.
AIR TRANSPORTATION MARKET AND AEROFLOT GROUP MARKET POSITION

Russian market passenger Russian market passenger
traffic dynamics, million passengers traffic dynamics, million passengers
The American market exhibits moderate growth rates of 2.7%. The main rea- (including foreign carriers)* (excluding foreign carriers)
son behind the tepid growth is the market maturity: North America accounts
24.3% 26.3%
for 60% of the global industrys net income. Favourable economic environ-
13.6% 14.5% 15.5%
ment and economic growth here are driving the traffic up. 13.1% 12.6% 14.2%
10.2%
7.8%
With capacity growth constrained to 4.6%, passenger turnover in Europe 103.7

111.8
went up by just 5.4%. Low-cost companies and Turkish carriers were major 80.1
91.6
39.2
46.3 84.6
93.2
70.5 74.0
contributors to the air industry growth. 32.7
35.4
57.0
64.1 39.2
46.3
29.2 35.4
64.4 65.5 32.7
56.2 29.2
47.3 45.3 46.9
41.2 38.6
27.7 31.4
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
International routes Domestic routes Growth rate (y-o-y) International routes Domestic routes Growth rate (y-o-y)
Source: Federal Air Transport Agency of the Russian Federation. Source: Federal Air Transport Agency of the Russian Federation.
* Please note that in this and other charts, tables and text of the Annual report immaterial deviations in the calculation of percentage changes, subtotals and totals
are explained by rounding.
18 19
Russian market passenger Russian market passenger

turnover dynamics, billion RPK turnover capacity dynamics, billion ASK Companys footprint in this promising segment in 2014, Aeroflot including foreign carriers went down from 27.0% in 2013 to
(excluding foreign carriers) (excluding foreign carriers) Group set up a new low-cost subsidiary, Pobeda. 26.1% in 2014. The drop was however offset by the share of
domestic traffic growing from 35.7% in 2013 to 38.1% in 2014.
30.8%
24.3% The Russian air transportation industry is highly consolidated Aeroflot Groups closest competitors are Transaero (11.8%), S7
17.4% 14.8% 15.8% 13.3% with five largest players accounting for 64.9% of the total pas- Group (9.0%) and UTair Group (8.4%).
13.4% 15.0%
7.2%
6.8% senger traffic (share of the Russian market including foreign
carriers). Aeroflot Groups leadership in the market remains The Groups market share in terms of passenger turnover was
302.5
250.0
283.2 undisputed. Its market share was 31.1% in 2014 as compared flat standing at 37.3% excluding foreign carriers. It is followed
225.2 241.4
188.1
216.0
97.9
103.8 116.3 to 30.3% in 2013. Aeroflot Groups share of passenger traf- by Transaero with a market share of 19.5% and S7 Group
195.8
88.9
147.1
166.8
71.5
77.9
81.1
92.3
179.4 186.3 fic excluding foreign carriers amounted to 37.3% in 2014 with 8.8%.
66.4 152.0
59.6
124.3
147.3 152.6
107.0 123.8 vs. 37.1% in 2013. The Groups share of international traffic
87.5 100.4
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
International routes Domestic routes Growth rate (y-o-y) International routes Domestic routes Growth rate (y-o-y) 2014 Monthly passenger traffic Dynamics:
Russian vs. foreign carriers
Source: Federal Air Transport Agency of the Russian Federation. Source: Federal Air Transport Agency of the Russian Federation.
15.7% 14.7%
13.8%
10.3% 11.9%
10.3%
8.9% 8.6% 13.1% 8.0%
PASSENGER load factor evolution, % 6.0%
11.7% 11.6% 6.3%
(excluding foreign carriers)
10.2% 11.3% 7.9% 2.3%
8.5% 7.6% 6.9%
9.5% 5.2%
82.1% 3.5%
81.8% 81.9% 2.0% 2.2% 2.1%
81.8% 1.1%
81.1% (0.4%) (0.4%)
(2.2%) (2.2%)
79.5% 79.8%
Russian market excluding foreign carriers
78.3% (7.2%) (7.9%)
78.2%
77.2% Russian market including foreign carriers
76.4% (12.6%)
Foreign carriers
(16.8%)
75.0%
73.5% International routes January February March April May June July August September October November December
73.0%
71.9% Domestic routes
Source: Transport Clearing House, Federal Air Transport Agency of the Russian Federation.
Total Note: year-on-year percentage change.

2010 2011 2012 2013 2014
2014 Monthly passenger traffic dynamics:

Source: Federal Air Transport Agency of the Russian Federation.
Aeroflot Group vs. Russian market
15.7% 16.0%
14.6% 14.7%
Economic sanctions and exchange rate fluctuations caused (down 7.1%). This ensued from the decline in the number of 13.8%
a plunge in business activity, which was compounded by a passengers travelling to Ukraine. 11.9%
11.6%
slowdown in outbound tourism and resulted in deceleration 10.7%
10.2% 10.3% 9.9%
11.9% 9.5% 9.2%
of international traffic growth throughout the year as well as With the sluggish growth of real household income, the low-cost 9.2%
8.0%
10.3%
predetermined decline in the number of passengers carried segment of the air transportation market appears to be gaining 8.9%
9.5%
8.6%
by foreign airlines. Foreign carriers started to scale down their momentum. Ensuring transportation without any additional ser- 8.0%
operations in Russia in 1H 2014 hitting the bottom in Q4, when vices allows operators to cut costs by up to 40%. This enables Aeroflot Group 6.0% 6.3%
their passenger traffic decreased by 12.1% y-o-y. In December, airlines to offer competitive fares generating ancillary revenue Russian market excluding foreign carriers
the decline hit 16.8%. At a regional level, the greatest drop in from fees charged for extra on-board services. To expand the 2.3%
international traffic was between Russia and CIS destinations
January February March April May June July August September October November December
Source: Transport Clearing House, Federal Air Transport Agency of the Russian Federation.
Note: year-on-year percentage change.
20 21
Russian air transportation market
by total passenger traffic
(including foreign carriers)
31.1%
Aeroflot Group
18.4%
Other carriers
16.7%
Foreign carriers
4.6% 11.8%
Ural Airlines Transaero
8.4% 9.0%
UTair Group S7 Group
Air cargo market
51.3
Evolution of the Russian passenger Russian air transportation market
air transportation market by total passenger traffic According to the IATA, the global air cargo market volume is estimated at 51.3
(including foreign carriers) million tonnes. In 2014, global cargo turnover increased by 4.3%, whereas
the industrys earnings went up by 1.6% to USD 62 billion.
18.4%
31.1% million tonnes
19.0% 20.0% 19.0% 18.0% 16.7%
Aeroflot Group Russian airlines share of the global air cargo market was 2.0%. Russian global air cargo
25.0% 22.0% 18.0% 18.0% 18.4% Transaero carriers transported around 1 million tonnes of cargo, up 3.5% y-o-y. The market volume
63.0% 64.0% 64.9% S7 Group cargo turnover of Russian carriers grew by 2.8% y-o-y to 5.1 billion TKM.
55.0% 58.0%
5.1
Utair Group
16.7% Russian carriers international cargo traffic rose by 7.5% to 735.9 thousand
Ural
Airlines tonnes, or 70% of their total cargo traffic. Domestic cargo traffic however
Foreign
went down by 5.0% to 300.6 thousand tonnes.
2010 2011 2012 2013 2014 carriers billion TKM
11.8%
Foreign carriers Other Russian carriers 4.6% Other In 2014, Volga-Dnepr Group led the Russian air cargo market. Aeroflot came cargo turnover
carriers second with 166.3 thousand tonnes of cargo and mail. Russias top 5 airlines ofRussian air
8.4%
Top 5 airlines 9.0%
(Volga-Dnepr Group, Aeroflot Group, Transaero, S7 Group and UTair Group) carriers
account for 83.6% of the total cargo traffic.
Russian air transportation market Russian air transportation market
by total passenger traffic by total passenger turnover
(excluding foreign carriers) (excluding foreign carriers)
22.1% 20.3% Russian air cargo market volume, Russian air cargo market breakdown
37.3% 37.3% Thousand tonnes
Aeroflot Group Aeroflot Group
Transaero Transaero 16.4%

1,036.5 53.8%
978.8 988.4 1,001.4
S7 Group S7 Group 926.4 Volga-Dnepr Group
5.5% 300.6
296.8 314.7 316.8
5.5% Utair Group Utair Group 2.4%
263.4 Aeroflot Group
Ural Ural 735.9 4.7% Transaero
Airlines Airlines 663.0 682.0 673.7 684.6
8.6%
S7 Group
10.1% Other Russian Other Russian
6.7%
carriers carriers Utair Group
Other

8.8%
10.8% carriers
14.2%
19.5%
2010 2011 2012 2013 2014
16.0%
International routes Domestic routes
AEROFLOT GROUP MARKET SHARE EVOLUTION AEROFLOT GROUP MARKET SHARE EVOLUTION
(including foreign carriers) (excluding foreign carriers)
41.4%
38.1% 38.4% 38.1%
35.7%
32.5%
28.5% 30.0% 36.4%
35.7%
32.5%
21.2% 21.4%
28.5% 27.0% 26.1%
21.2% 21.4%
19.2% 19.9% 37.1% 37.1% 37.3%
30.0% 30.3% 31.1%
24.7% 25.6%
20.0% 20.5%
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
International routes Domestic routes All routes International routes Domestic routes All routes
24 25
3 BUSINESS OVERVIEW
CROSSING
BORDERS AND
OVERCOMING
BARRIERS
Russia, Irkutsk Region

Building the geography of success:
291 routes to 56 countries
3.1 Group
Structure 3.2 Development
Strategy
Strategy 2025
Aeroflot Group develops through the implementation of a multi-brand plat- Aeroflot Groups strategic goal is to rank among the Top 20 To achieve the strategic goals under the Long-Term Aeroflot
form, which helps each subsidiary to occupy a specific market niche ruling airlines globally and lead the charge in the Russian market by Group Development Programme 2020, key strategic pro-
out intra-group competition. Aeroflot adopted a phased approach to the seizing new opportunities and chances to: grammes and focus areas that would help foster and develop
Group structure optimisation focusing on asset consolidation and roll-out a sustainable competitive edge were identified. Among those
of uniform standards and cutting-edge technological solutions across the set up strategic partnerships with global aviation leaders; programmes and focus areas are:
entire range of subsidiaries. Subsidiary and Affiliate Management Strategy grow in the new low-cost segment of the Russian market
is an essential part of JSCAeroflots Development Strategy. (Pobeda airline); cost cutting initiatives;
expand the Companys footprint in the regional markets development of an operating hub at Sheremetyevo;
Aeroflot Groups core assets as at 31 December 2014 were as follows*: (Donavia, Aurora and Rossiya airlines). promotion of strategic partnerships;
innovation driven development;
By 2025, Aeroflot Group is planning to: productivity improvement;
growth in the low-cost segment.
b ring its passenger traffic up to 70 million passengers per
year;
join the ranks of the worlds largest air carriers by making
it to the Top 5 European airlines;
OJSC Rossiya become the leader in service quality among the European
Airlines
air carriers.
CJSC Aeromar
JSC Donavia
75% - 1
share
51%
LLC Aeroflot-Finance
100%
JSC Orenair
JSC Aeroflot
99.99%
100%
Strategic priorities
JSC Aurora
51% Service Air
Airlines Airlines CJSC Sherotel
100% The Groups key priorities are closely linked to the development multi-brand platform allows the Group to adjust the subsid-
Companies
of a highly efficient network (hub) model for operated flights, iaries growth and pricing strategies to the new economic
further fleet upgrade with state-of-the-art high performance air- environment without affecting the value of the key brand;
52.16% craft, development and differentiation of the companies through integration of subsidiaries improves efficiency, rationalises
100% implementation of the multi-brand platform and completion of costs and provides opportunities for growth in the most
JSC Vladivostok Air **
100% 100% subsidiaries integration into the Group structure: profitable segments;
Aeroflot
Aviation School alliance strategy improves and strenghthens the Groups
100%
single hub model maximises flexibility in the manage- competitive edge in the key transport markets;
LLC Pobeda Alt Reiseburo ment of the aircraft fleets capacity and ensures optimum cost cutting initiatives enhancing Groups competitive
Airlines*** efficiency in the core business; advantage.
LLC Dobrolet****
high quality network secures the Groups competitive edge
even in the event of selective adjustments of capacity;
high performance aircraft fleet high performance aircraft
fleet, obsolete aircraft phase out and unified fleet ensures
flexibility and economic efficiency;
* JSCAeroflot also controls interests of 45.0% in CJSC AeroMASH-AS, 8.96% in JSC Sheremetyevo International Airport, 3.85% in CJSC Transport Clearing
BUSINESS OVERVIEW
BUSINESS OVERVIEW
House and 49.0% in TRANSNAUTIC Aero GmbH (in liquidation).
** JSC Aeroflot holds a stake in JSC Aurora Airlines. JSC Vladivostok Air is controlled by JSC Aurora Airlines. Operational business of JSC Vladivostok Air was
transferred to JSC Aurora Airlines.
*** LLC Budgetniy Perevozchik as of 31.12.2014. In the beginning of 2015 entitys name was changed to LCC Pobeda Airlines.
**** LLC Dobrolet is a non-operational legal entity established in order to develop LCC project in 2013. In 2014 a new legal entity was created to operate LCC
business.
28 29
Multi-brand
platform
Aeroflot Groups business strategy is structured around a multi- Subsidiary airlines Aurora, Donavia and Rossiya, operate
brand platform enabling each of the Groups companies to pur- regional and cross-regional flights. They focus on geographi- SHORT-HAUL FLIGHTS MEDIUM-HAUL FLIGHTS LONG-HAUL FLIGHTS
sue growth in its focus segment. The platform allows Aeroflot cal areas with higher price sensitivity by primarily offering their
Group to effectively enhance its footprint in the key domestic passengers flights from the base region with adjustable flight
and international market segments. frequency and a potential to serve the transfer traffic depend- Regional flights Short-haul flights EU, CIS, Russia North and Central Americas, Asia, Russia
ing on the demand growth. Orenair was focusing on the tourist (flight time of (flight time of 1.5-2.0
1.01.5 hours) hours)
The Groups companies differentiate in terms of positioning and charter segments. The drop in demand in these segments
and focus on different markets. Aeroflot addresses needs of the required tactical adjustment to the companys business-model.
premium passenger segment by offering best-in-class services, Pobeda airline targets the low-cost segment. Business tourism
an extended high frequency route network, access to the route
network of partners from the SkyTeam Alliance and convenient Operating a number of companies with diverse business models Business model: Business model: Business model: utilisation of hubs, Business model: utilisation of hubs, high
connecting flights for international transfer passengers. and implementing uniform product standards allows the Group direct flights high flight frequency, increased flight frequency flight frequency, code sharing
to offer customers a wide spectrum of service classes ranging direct flights agreements
Regional aircraft
Narrow-body aircraft, classes C and Y
Aeroflot Russian Airlines competitive positioning: from premium to tourist with each subsidiary retaining the focus /narrow-body Regional aircraft / Wide-body aircraft, classes C, M and Y
on a dedicated market segment. aircraft narrow-body aircraft
high frequency route network;
leadership in the international air carriage market (exten-
sive flight geography);
hub model (transfer traffic service);
young aircraft fleet;
focus on the premium passenger segment (convenient
flight schedules, best-in-class services);
Regional transportation
leadership in innovation (development, application and
implementation of cutting-edge technologies); Business model: demand-driven flight Business model: utilisation of hubs,
highest flight safety. frequency, direct flights demand-driven flight frequency
Regional aircraft
Narrow-body aircraft, classes C and Y
Low-cost
flights
Tourism
To attract the price sensitive passenger segment, Aeroflot set up a higher density of seating with reduced aisle spaces and Business model: direct flights, Business model: direct flights,
a new low-cost carrier (LCC). The launch of this new LCC was a non-reclining seats; demand-driven flight frequency (package demand-driven flight frequency (package
part of the Groups strategy to grow in the new budget-friendly use of the Companys website as the key sales channel; tours and flights only), highly seasonal tours and flights only), highly seasonal
segment. LCCs often generate new passenger traffic and stimu- extra charges for comfortable seating, checked in bag- Narrow-body aircraft, class Y Wide-body aircraft, classes C and Y
late overall traffic growth rather than taking passengers from gage, priority boarding and in-flight meals.
other carriers (about 5080% of the passengers taking the first
LCC-operated flight on the route are there for the first time). During the initial phase the airline will operate flights to the
most popular destinations in the European part of Russia. In
*
Budget flights develop on the traditional low-cost business two to three years, LCCs route network is expected to include
model based on the global best practices. Ticket prices are international destinations.
lower than those offered by legacy carriers. Low unit costs
are possible due to Low-cost flights
Business model: high frequency of direct flights for the key routes, high load factor, low cost base
the high utilisation rate and improved fuel efficiency of the
new aircraft fleet; Narrow body-aircraft with high seating capacity, class Y only
economies of scale on fuel supply contracts; Lean offering with an option to purchase extras
BUSINESS OVERVIEW
BUSINESS OVERVIEW
* Due to the turbulence in the tourist services market, Orenburg airlines business model underwent tactical transformation in 2015.
30 31
Strategy
service quality and development
strategy programmes
To achieve the strategic goal of becoming the leading pro- Companys main goal is increase customer satisfaction pri- Aeroflot Groups strategy is set forth in a number of documents ensure the high quality of passenger services (procure
vider of best-in-class services among the European carriers, marily by means of a tailored approach, and identification of with various planning horizons, all of which were approved uniforms for flight attendants, provide advertising facilities,
the Company prioritises customer relationship management, potential opportunities and threats. by the Companys Board of Directors. The documents are as develop websites, set up business lounges at non-base
marketing optimisation and improvements in service quality follows: airports, etc.);
through the establishment of a client database that would Analysis of the customer relationship database provides a upgrade aircraft (continue the project to integrate elec-
aggregate data on customer preferences, relationship his- higher degree of accuracy in client segmentation based on 1. Strategy 2025 Key Focus Areas of JSCAeroflots Develop- tronic devices for pre-flight and in-flight management of air
tory, process development and optimisation and analysis of the customer value and estimated customer needs in terms ment Strategy (Minutes No. 1 of 13 July 2011) navigation information on Airbus 320 Family and A330
the outcome. of product and service offering. Strategy 20152020 Progress in Implementation of (Electronic Flight bag EFB), install ozone filters on 320
Aeroflot Groups Strategy (JSCAeroflot Board Minutes Family);
No. 18 of 15 May 2014); construct new facilities (deliver on the projects for a new
Strategy 20152017 Aeroflot Groups Long-Term hangar for aircraft servicing);
Development Programme (Minutes No. 5 of 25 Septem- develop IT systems (maintain the existing and develop new
ber 2014). information systems, procure communication, telephone
Technology and 2. Aeroflot Groups Long-Term Development Programme and computer equipment);
innovation strategy 20152020 (Minutes No. 8 of 2 December 2014; deliver on R&D goals (invest in R&D projects to ensure
approved as a sub-item of Progress in Implementation of innovative development for the Company);
Aeroflot Groups Strategy 2025 (Long-Term Development provide software solutions (develop the SAP system,
To ensure the implementation and in-house utilisation of the technology and cutting-edge product and service offering that Programme)). maintain and develop the Companys website, commercial,
state-of-the-art technologies, the Group is running the Innova- would meet the global standards. production, office and other systems);
tive Development Programme, which incorporates Aeroflot The Group is implementing the strategy through a number of provide other types of investment in property, plant and
Groups key innovation directions and initiatives coupled with The R&D plan is an essential part of the Companys innovative programmes designed to ensure long-term growth and efficient equipment (deliver on fire safety initiatives, procure work-
mid- and long-term innovation KPIs up to 2020. Drawing on drive. It is being implemented primarily through cooperation development. Among the key programmes upholding Aeroflots wear, ensure seamless operation for a number of business
the R&D and innovation policies announced by the Russian with academic and research institutions and Russia-based growth and development strategy are: units).
Government the Programme seeks to provide a wide range small and medium-sized businesses.
of initiatives aiming to design, develop and implement new Innovative Development Programme, The new version of Management Incentive Programme was
Investment Programme, adopted by JSCAeroflots Board of Directors on 2 December
Management Incentive Programme, 2014 (Minutes No. 8). The Programme covers the employees
Cost Cutting Programme, whose remuneration is KPI-based. The remuneration is paid
Corporate Governance Improvement Programme. at the end of the year for meeting the net income target and
depends on the amount JSCAeroflots General Meeting of
Marketing Innovative Development Programme 2020 was adopted Shareholders allocates as a percentage of the total net income
strategy by JSCAeroflots Board of Directors (24 June 2011, Minutes for this particular purpose. The Programme sets the maximum
No.16) and a Task Force on Private-Public Partnership in Inno- remuneration pool, which is subsequently distributed among
vation under the Government Commission for High Technolo- the employees based on their individual contribution to the
The update of JSCAeroflots Marketing Strategy 20152020 market segmentation identified priority segments, defined gies and Innovation (28 June 2011). The Programme defines year-end financial results.
relied on a comprehensive research exercise, involving: communication tools and techniques, and revealed new the key focus areas of the Companys innovative development.
opportunities to engage the customer in a dialogue. For further information on the Programme, see Information Cost Cutting Programme was implemented in 2014 to
trend analysis drilled down the distinctive features and technologies and innovation section of the Annual Report. improve the Groups competitiveness and operating efficien-
drivers of services consumption showcasing the impact The results enabled Aeroflot to come up with a set of marketing cy. It provides for a number of initiatives designed to reduce
of demographic, economic, social and other underlying initiatives contributing to the achievement of the Companys Investment Programme 2015 was adopted by JSCAeroflots Aeroflots operating costs. The first stage involves both low-cost
processes on the rise of business opportunities; strategic objectives and Aeroflots market positioning as the Board of Directors on 2 December 2014 (Minutes No. 8). It initiatives intended to deliver quick wins and more complex
competitor analysis provided a detailed study of competi- national air carrier in Russia and a competitive player globally. serves to address the air carriers strategic objectives and solutions requiring significant financial resources and more
tor offerings evidencing that Aeroflots in-flight product ensure the development of its business units. Investments in time. The second stage focuses on supplementary solutions pro-
offering not only matches the offering of the worlds lead- property, plant and equipment and financial investments in viding a material economic impact. In the midterm, the Company
ing airlines, but also far outstrips it by certain criteria; software for 2015 are designed to: is planning to roll out operating expenses cutting initiatives in
the Groups airline subsidiaries.
ensure maintenance and repair operations (procure tools
and equipment to ensure maintenance for all types of Corporate Governance Improvement Programme is
aircraft, and invest in hangar facility development); linked to the implementation of Corporate Governance Code
ensure ground handling at the airport (procure equipment as approved by the Board of Directors of the Bank of Russia
BUSINESS OVERVIEW
BUSINESS OVERVIEW
and custom machinery for aircraft ground handling); on 21 March 2014. For further information, see Corporate
develop a training platform (purchase and install new Governance section of the Annual Report.
full flight simulator FFS B737 NG, connect simulators in
operation to additional visual airport databases, etc.);
32 33
3.3 Operating
results
Aeroflot Group
Aeroflot Groups passenger Aeroflot Groups passenger turnover
34.7
In 2014, Aeroflot Group demonstrated an upward trend in its key operating traffic (million PAX) (billion PKM) and passenger load factor (%)
results against a backdrop of steadily growing domestic market. The Group
78.1% 78.2% 77.8%
carried a total of 34.7 million passengers, which is 10.7% more than in 2013. 34.7 77.1% 76.8%
31.4
Passenger turnover grew by 5.6% reaching 90.1 billion passenger-kilometres million passengers 17.1
27.5 17.4
(PKM), with the available seat-kilometres (ASK) increasing by 6.2% to 115.8 carried by aeroflot 85.3
90.1
16.0
billion, thus leading to a slight decrease in the passenger load factor by 0.4 GROUPS AIRLINES 74.6
56.1
55.1
percentage points (p.p.) to 77.8%. 16.4 50.3

14.1
17.6 46.1
9.4
39.2
26.0%
7.9 14.0
The total number of passengers carried by Aeroflot Group on scheduled 11.5 25.2
30.6
35.0
and charter domestic routes in 2014 increased by 26.0% to 17.6 million. 6.2 7.0
15.5
24.3
29.2
14.0
Passenger turnover rose by 19.9% to 35.0 billion PKM with the available
seat-kilometres growing by 16.2% to 43.6 billion, driving the passenger load increase 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
IN AEROFLOT GROUPS
factor up by 2.5 p.p. to 80.2%. As a result, the share of domestic flight pas- Domestic routes International routes Domestic routes International routes Passenger load factor
PASSENGER traffic
sengers increased from 44.6% to 50.8% of the total number of passengers on domestic routes
carried by the Group in 2014. Source: Federal Air Transport Agency of the Russian Federation. Source: Federal Air Transport Agency of the Russian Federation.
Strong domestic growth was driven by the ongoing structural changes in the
Russian market, with air transportation becoming more accessible and pas- In 2014, the total number of passengers carried by Aeroflot Aeroflot Group continued to focus on Asian destinations, where
sengers tending to give preference to air trips. Another driver was the robust Group on scheduled and charter international routes decreased its passenger traffic grew by 6.3% to 2.3 million people. The
growth of internal tourism in Russia, including during and after the XXII by 1.7% to 17.1 million. Passenger turnover went down by 1.8% passenger turnover growth lagged behind the capacity growth
Olympic and XI Paralympic Winter Games in Sochi. The Group was consist- to 55.1 billion PKM, with the available seat-kilometres growing of 14.3%, which resulted in passenger load factor going down
ently increasing the flight frequency and capacity on its most popular routes. by 1.0% to 72.2 billion, which decreased the passenger load by 2.8 p.p. The outrunning growth in capacity was due to the
factor by 2.1 p.p. to 76.3%. As a result, the share of international replacement of Boeing 767, able to seat 218 to 309 passen-
flight passengers declined from 55.4% to 49.2% of the total gers, with Boeing 777 equipped with 402 passenger seats,
number of passengers carried by the Group in 2014. on a number of flights to Asian destinations. However, the
Group managed to gradually improve the passenger load fac-
Aeroflot Groups operating performance by region (regular and charter flights)
These trends were driven by macroeconomic changes along tor throughout 2014.
with the national currency devaluation and their impact on the
Region Passengers carried Passenger turnover Available seat-kilometres
(million PAX) (billion PKM) (billion ASK)
Passenger load factor (%) consumer behaviour and passengers preferences, specifically In 2014, Aeroflot Group carried 1.7 million passengers to vari-
in the tourist segment. ous destinations in the Middle East, up 0.6% y-o-y. The outrun-
Change, Change, Change, Change,
2014 2013 2014 2013 2014 2013 2014 2013
% % % p.p. ning growth in capacity in this region was again due to the
The greatest decline was seen on international charter flights, deployment of new types of aircraft on flights to Turkey and
Russia 17.6 14.0 26.0% 34.9 29.1 19.9% 43.4 37.4 16.2% 80.4% 77.9% 2.5
while operating results for regular flights remained stable. greater seat capacity on flights to Israel.
Europe 7.6 7.2 6.6% 17.2 16.0 6.9% 23.3 21.6 8.0% 73.7% 74.4% (0.8)
Passenger traffic in Europe, the Groups second largest market, North American destinations saw an increase in Aeroflot
CIS 2.6 2.8 (7.7%) 4.9 5.2 (7.4%) 6.3 6.8 (7.8%) 77.0% 76.7% 0.4
grew by 6.6% to 7.6 million passengers against a backdrop of Groups passenger traffic by 0.6% to 0.8 million passengers
Asia 2.3 2.2 6.3% 15.1 13.7 10.2% 20.2 17.6 14.3% 75.0% 77.8% (2.8) less intense competition from international air carriers due to while its passenger turnover and available seat-kilometres went
Middle East and Africa 1.7 1.7 0.6% 4.7 4.4 5.2% 6.1 5.5 10.2% 77.0% 80.6% (3.7)
their optimised programmes and frequency of flights to Rus- down slightly due to the Groups optimised operations in the
sian destinations. region and cancellation of a number of commercially inefficient
America 0.8 0.8 0.6% 6.9 6.9 (0.5%) 8.7 8.7 (0.2%) 79.3% 79.5% (0.2) flights to Toronto, Cancun and Punta Cana.
Total regular The decrease in the CIS passenger traffic by 7.7% to 2.6 million
32.7 28.6 14.1% 83.5 75.4 10.7% 107.9 97.6 10.6% 77.4% 77.3% 0.1
flights passengers was primarily due to a number of flights to eastern
Charter flights 2.1 2.8 (25.3%) 6.5 9.8 (33.6%) 8.0 11.5 (30.8%) 82.1% 85.6% (3.5)
Ukraine being cancelled as a result of geopolitical tension in
BUSINESS OVERVIEW
BUSINESS OVERVIEW
the region. However, the operating results benefited from new
Total passenger destinations to CIS, including newly launched flights to Kara-
34.7 31.4 10.7% 90.1 85.3 5.6% 115.8 109.1 6.2% 77.8% 78.2% (0.4)
flights
gandy (Kazakhstan), Tbilisi (Georgia) and Chisinau (Moldova).
34 35
Operating results in cargo

Aeroflot Airline and mail segment
In 2014, Aeroflot airline the Groups key business unit car- On scheduled and charter international routes, the number of In 2014, the total cargo traffic of Aeroflot Group decreased In 2014, Aeroflot airlines flights carried 145.3 thousand tonnes
ried 23.6 million passengers, up 13.0% y-o-y. passengers increased by 1.4% to 12.5 million. Passenger turno- primarily due to the fact that since 2013 Aeroflot airline has sus- of cargo and mail, down 17.7% y-o-y. Domestic cargo and mail
ver grew by 5.1% reaching 42.7 billion PKM, with the available pended its cargo fleet operations switching almost entirely to traffic rose by 9.0% reaching 63.8 thousand tonnes. The decline
Its passenger turnover grew by 11.4% to 67.1 billion PKM, seat-kilometres increasing by 7.3% to 56.2 billion, leading to a passenger fleet belly cargo operations. Cargo and mail volumes in total cargo volumes transported by the Company in 2014
while the available seat-kilometres increased by 12.3% to 85.8 slight decrease in the passenger load factor by 1.6 p.p. to 75.9%. transported by Aeroflot Group went down by 18.7% to 166.3 was due to the sharp fall in the international cargo traffic which
billion, leading to a slight fall in the passenger load factor by The share of international flight passengers decreased from thousand tonnes mainly because of a decline in the internation- dropped by 30.9% to 81.5 thousand tonnes. Revenue tonne-
0.6 p.p. to 78.2%. 58.8% to 52.8% of the total number of passengers carried by al cargo traffic (by 30.8% to 84.3 thousand tonnes). Domestic kilometres increased by 6.0% to 6.7 billion while the revenue
the Company in 2014. cargo traffic, however, went down insignificantly by only 0.9% load factor fell by 1.3 p.p. to 63.1%.
The total number of passengers carried by Aeroflot airline on to 82.0 thousand tonnes. In the reporting period, cargo/mail
scheduled and charter domestic routes increased by 29.4% to The above factors account for changes in Aeroflot airlines oper- tonne-kilometres increased by 1.9% to 8.8 billion TKM while
11.1 million. Passenger turnover rose by 24.6% to 24.4 billion ating results, while also affecting the Groups overall regional the revenue load factor went down by 0.9 p.p. to 63.8%.
PKM, while the available seat-kilometres grew by 23.1% to 29.6 performance.
billion, which increased the passenger load factor by 1.0 p.p.
to 82.5%. The share of domestic flight passengers rose from
41.2% to 47.2% of the total number of passengers carried by
Aeroflot in 2014.
Aeroflot airlines passenger traffic Aeroflot airlines passenger turnover Aeroflot Groups cargo and mail Aeroflot Groups revenue tonne-kilometres
(million PAX) (billion PKM) and passenger load factor (%) operations (thousand tonnes) (billion TKM) and REVENUE LOAD factor (%)
78.8% 65.2% 64.7%

63.3% 62.3% 63.8%
78.2% 223.8
77.9% 204.6
77.5% 153.1
23.6 77.2% 170.6 168.5 121.8 166.3
20.9 8.8
12.5 8.7
17.7 67.1 121.5 121.5 7.9
12.3 60.2 84.3
5.7 5.3
14.2 10.7 50.5 42.7 5.4
40.6 5.1
11.3 42.0
8.7 34.9 4.5
34.7
7.1 28.6 82.8 3.5
11.1 82.0 3.0
23.6 70.7
8.6 3.5
7.0 24.4 49.1 3.0
5.5 19.6 47.0 2.5
4.2 13.4 15.6 1.5 1.6
11.1
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
Domestic routes International routes Domestic routes International routes Passenger load factor Domestic routes International routes Domestic routes International routes Revenue load factor
Aeroflot airlines operating performance by region (regular and charter flights) Aeroflot airlines cargo and mail Aeroflot airlines revenue tonne-kilometres
operations (thousand tonnes) (billion TKM) and REVENUE LOAD factor (%)
Passengers carried Passenger turnover Available seat-kilometres

Passenger load factor (%)
(million PAX) (billion PKM) (billion ASK)
63.8% 64.4%
Region 63.2% 63.1%
193.9 62.2%
Change, Change, Change, Change, 176.5
2014 2013 2014 2013 2014 2013 2014 2013
% % % p.p. 163.4 160.6 147.7
118.0 145.3
121.1 6.7
Russia 11.1 8.6 29.5% 24.4 19.6 24.7% 29.6 24.0 23.2% 82.6% 81.6% 1.0 120.3
81.5
6.3
5.7
4.3 4.2
4.7
CIS 1.7 1.9 (9.5%) 2.9 3.0 (1.6%) 3.7 3.7 (1.0%) 78.5% 79.0% (0.5) 4.1 4.1
3.3
2.9
Europe 6.5 6.1 7.2% 14.5 13.4 8.0% 19.5 18.1 7.7% 74.2% 73.9% 0.3 63.8
58.5
46.2 2.5
42.3 40.3 2.0
Asia 2.1 1.9 10.5% 14.8 13.3 11.6% 19.7 16.8 17.1% 75.1% 78.8% (3.7) 1.2 1.4 1.6
Middle East and Africa 1.3 1.3 1.0% 3.6 3.4 6.5% 4.6 4.2 8.9% 78.6% 80.3% (1.7) 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
BUSINESS OVERVIEW
BUSINESS OVERVIEW
America 0.8 0.8 0.6% 6.9 6.9 (0.5%) 8.7 8.7 (0.2%) 79.3% 79.5% (0.2) Domestic routes International routes Domestic routes International routes Revenue load factor
Total regular
23.6 20.6 14.6% 67.1 59.5 12.8% 85.8 75.6 13.4% 78.2% 78.7% (0.5)
flights
Total passenger
23.6 20.9 13.0% 67.1 60.2 11.4% 85.8 76.5 12.3% 78.2% 78.8% (0.6)
flights
36 37
3.4 Subsidiaries and

Affiliates Operations
Aeroflot Group AIRLINEs 28.3% 22.3% 9.7% 7.6 p.p.
performance indicators 28.3% 22.3% 9.7% 7.6 p.p.

1.7 2.4 3.3 73.9%
3.0 66.3%
1.4 2.0
In 2014, Aeroflot Groups airlines continued to strengthen their positions in relevant segments of the
1.7 2.4 3.3 73.9%
air transportation market. 3.0 66.3%
1.4 2.0
As part of the airline companies integration in 2014, the Group went on restructuring its fleet and
optimising its subsidiaries route network. Both passengers and the Group benefit from flight opera- Donavia
tions under Aeroflots single SU code. A single IT-platform enables easy on-line ticket booking while Passengers carried
(million PAX)
Passenger turnover
(billion PKM)
Available
seat-kilometres
Passenger
load factor (%)
bringing down air carriers expenses and providing wider opportunities for interline and code-sharing Donavia (billion ASK)
agreements with third parties.13.0% 11.4% 12.3% (0.6 p.p.) Passengers carried Passenger turnover Available Passenger
(million PAX) (billion PKM) seat-kilometres load factor (%)
(24.8%) (39.0%) (44.0%)
(billion ASK)
6.1 p.p.
13.0% 11.4% 12.3% (0.6 p.p.)

(24.8%) (39.0%) (44.0%) 6.1 p.p.
23.6 67.1 85.8 78.8% 78.2%
20.9 60.2 76.4 1.4 2.9 4.2 75.0%
68.9%
1.1
23.6 67.1 85.8 78.8% 78.2%
1.4 2.9 1.8 4.2 75.0%
20.9 60.2 76.4 2013 2.3 68.9%
1.1
2014
2013 1.8
Aeroflot 2.3
Change Aurora*
Passengers carried Passenger turnover Available Passenger 2014
(million PAX) (billion PKM) seat-kilometres load factor (%) Passengers carried Passenger turnover Available Passenger
Aeroflot (billion ASK) (million PAX) (billion PKM) seat-kilometres load factor (%)
Change Aurora* (billion ASK)
Passengers carried Passenger turnover Available Passenger
(million PAX) (billion PKM) seat-kilometres load factor (%) Passengers carried Passenger turnover Available Passenger
(billion ASK) (million PAX) (billion PKM) seat-kilometres load factor (%)
(billion ASK)
13.1% 10.5% 11.5% (0.7 p.p.)
13.1% 10.5% 11.5% (0.7 p.p.) 0.1 0.1 0.2 78.0%
5.2 10.1 13.4 76.3% 75.6%

4.6 9.2 12.0
0.1 0.1 0.2 78.0%
5.2 10.1 13.4 76.3% 75.6%

4.6 9.2 12.0
Pobeda**
Rossiya Passengers carried Passenger turnover Available Passenger

Pobeda** (billion ASK)
Rossiya (billion ASK)
Passengers carried Passenger turnover Available Passenger 10.7% 5.6% 6.2%
(billion ASK) (0.4 p.p.)
(3.4%) (22.9%) (19.6%)
(billion ASK) (3.4 p.p.)
10.7% 5.6% 6.2% (0.4 p.p.)
34.7 90.1 109.1 78.2% 77.8%
(3.4%) (22.9%) (19.6%) (3.4 p.p.) 31.4 85.3 115.8
3.1 11.0 13.4 82.0%

3.0 78.6%
34.7 90.1 109.1 78.2% 77.8%
10.8 31.4 85.3 115.8
8.5
3.1 11.0 13.4 82.0%

3.0 78.6%
8.5 10.8
Aeroflot
Group
BUSINESS OVERVIEW
BUSINESS OVERVIEW
Orenair Passengers carried Passenger turnover Available Passenger
Aeroflot (billion ASK)
Passengers carried Passenger turnover Available Passenger Group
Orenair Passengers carried Passenger turnover Available Passenger
(billion ASK)
(billion ASK)
(billion ASK) * Including Vladivostok Airs operating results.
** Including Dobrolet airlines operating results.
38 39
Rossiya airline ORENAIR AIRLINE

Passengers carried (million PAX) Passenger turnover (billion PKM) Passengers carried (million PAX) Passenger turnover (billion PKM)
5.2 10.1 3.2 10.5 11.0

4.6 9.2 3.1 3.0
4.2 8.8
7.2 2.4 2.5 8.5
3.1 3.5 7.2 7.5
6.2
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
Passenger load factor (%) Available seat-kilometres (billion ASK) Passenger load factor (%) Available seat-kilometres (billion ASK)
13.4 13.4
12.0
87.4% 83.4% 85.7% 82.0% 78.6% 12.3
75.3% 75.3% 77.5% 76.3% 75.6% 11.3 10.8
9.5 9.0
8.3 8.2
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
Rossiya is one of the largest Russian air carriers and the market on-line ticket booking while bringing down air carrier expenses Orenair is based at the Orenburg Airport as well as Domodedo- Route network
leader in the North-West of the country. Based in St.Petersburg, and providing wider opportunities for interline and code-shar- vo and Vnukovo airports located in Moscow. In 2014, it oper-
the company makes most of its flights from the Pulkovo Airport. ing agreements with third parties. ated both charter flights to most popular tourist destinations In 2014, a number of Orenairs flights were operated under
abroad and scheduled flights. The carriers business model is Aeroflots commercial management, including flights from/to
Operating results Other information currently under review due to the decline in the tourist market. the Vnukovo Airport to Yekaterinburg, Kazan, Krasnodar, Kras-
Since the beginning of 2015, Orenair has re-focused to sched- noyarsk, Mineralnye Vody, Novosibirsk, Omsk, Orenburg, Perm,
In 2014, Rossiya carried a total of 5.2 million passengers, up The operations optimisation programme run by Rossiya airline uled passenger flights, mainly to destinations within Russia. Rostov-on-Don, Samara, Simferopol and Chelyabinsk. During
13.1% y-o-y. The passenger turnover increased by 10.5% to over the recent years gained industry attention and acclaim. the year, the company operated international charter flights
10.1 billion PKM. The outstripping growth of the available seat In 2014, the company received a number of industry awards Operating results between major Russian cities and popular tourist destinations.
kilometres by 11.5% to 13.4 billion led to a slight decrease in and was rated among the most punctual Russian airlines as The key destinations in terms of the number of passengers
the passenger load factor (by 0.7 p.p. to 75.6%.). well as the safest air carrier according to Airlineratings.com. In 2014, Orenair carried a total of 3.0 million passengers, carried were resorts in Turkey and Egypt. Since the beginning
down 3.4% y-o-y. Its passenger turnover decreased by 22.9% of 2015, most of Orenairs flights have been taken under com-
Aircraft fleet In March 2014, Rossiya airline joined Aeroflot Bonus Frequent to 8.5 billion PKM, while the passenger load factor amounted mercial management of Aeroflot airline.
Flyer Programme. Passengers were offered to convert the to 78.6%. The companys performance was influenced by the
As at 31 December 2014, Rossiya airlines fleet numbered 36 scores accumulated under Rossiya airlines own programme decline in the tourist flight market followed by a decrease in Aircraft fleet of ORENAIR AIRLINE
comfortable modern aircraft, including sixteen Airbus A319, into Aeroflot Bonus miles. the charter flight segment.
eleven Airbus 320, three Boeing 767 and six An-148. In 2014, Aircraft type 2014 2013 Change
it was expanded to add another two Airbus A320. Aircraft fleet

Boeing 737 24 21 3
Route network
Aircraft fleet of Rossiya airline
As at 31 December 2014, Orenairs fleet consisted of 27 air- Boeing 777 3 3 -
craft, including 24 Boeing 737 and three Boeing 777. In 2014, Total 27 24 3
In 2014, Rossiya airline operated scheduled flights to 75 desti- Aircraft type 2014 2013 Change it was expanded to include three Boeing 737 aircraft.
nations, including 24 domestic and 51 international routes (21
An-148 6 6 -
of them to the CIS countries). Its flight schedule is set up so as
to accommodate maximum flight connections at the Pulkovo Airbus A319 16 16 -
Airport.
Airbus A320 11 9 2
In summer 2014, all flights of Rossiya airline were taken under Boeing 767 3 3 -
Aeroflot airlines commercial management, unlocking substan- Total 36 34 2
tial benefits for the company. A single IT-platform enables easy
BUSINESS OVERVIEW
BUSINESS OVERVIEW
40 41
Donavia airline AURora airline
Passengers carried (million PAX) Passenger turnover (billion PKM) Passengers carried (million PAX) Passenger turnover (billion PKM)
1.6 5.0 4.8

1.7 2.4 2.4 1.5
1.4 1.4
1.4 1.4 2.0 1.1 3.4
2.9
0.9 1.0 1.3 1.4
1.8
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
Passenger load factor (%) Available seat-kilometres (billion ASK) Passenger load factor (%) Available seat-kilometres (billion ASK)
74.4% 75.0% 6.8 6.9

3.3 70.3% 68.9%
79.1% 3.1 3.0 66.7%
68.7% 69.0% 73.9% 5.1
66.3% 4.2
1.9 2.1
2.3
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
Donavia is a major air carrier in southern Russia based at air- Route network Aurora is Aeroflot Groups regional air carrier focused on secur- Other information
ports of Rostov-on-Don, Krasnodar, Sochi and Mineralnye Vody. ing transport accessibility and accommodating the demand
The company operates scheduled and charter flights to various In 2014, Donavia operated scheduled flights to 30 destinations, for flights in the Russian Far East and Siberia. It is based at In April 2014, Aurora was named Airline of the Year Domestic
destinations in Russia, CIS and other countries. including 18 domestic and 12 international routes (8 of them airports of Vladivostok, Yuzhno-Sakhalinsk and Khabarovsk. Passenger Carrier at the Wings of Russia Awards (winner in
to the CIS countries). Aurora aims at contributing to the economic development of the groups IIIIV for airlines with the domestic passenger turnover
Operating results Russian Far East, increasing mobility of the population as well ranging from 0.05 to 1 billion passenger-kilometres).
as enhancing cooperation synergies among Aeroflot Groups
In 2014, Donavia carried a total of 1.7 million passengers, Aircraft fleet of Donavia airline
airlines. In February 2014, Aurora airline joined Aeroflot Bonus Fre-
up 28.3% y-o-y. Its passenger turnover increased by 22.3% quent Flyer Programme.
to 2.4 billion PKM while the passenger load factor rose by Aircraft type 2014 2013 Change Aurora airline was established in 2013 as a result of amalgama-
7.6p.p. to 73.9%. tion of SAT Airlines and Vladivostok Air, members of Aeroflot
Airbus A319 10 8 2
Group since 2011. A 51% stake in the company is held by Aircraft fleet of Aurora airline
Aircraft fleet Boeing 737-400 - 2 (2) JSCAeroflot; the remaining 49% interest was transferred to
Total 10 10 - the Sakhalin Region in January 2014. Aircraft type 2014 2013 Change
As at 31 December 2014, Donavia fleet comprised 10 Airbus

Mi-8** (helicopter) 3 3 -
A319. In 2014, it was expanded to include two new Airbus A319 Operating results*
(two-class configuration) which replaced Boeings737-400 that An-24*** 1 1 -
were phased out. In 2014, Aurora airline carried a total of 1.1 million passengers, DHC 6-400 2 - 2
down 24.8% y-o-y. Its passenger turnover decreased by 39.0%
DHC 8-200 3 2 1
to 1.8 billion PKM. The decline was due to restructuring and
optimisation of the air carriers fleet and route network, which DHC 8-300 4 3 1
increased the passenger load factor by 6.1 p.p. to 75.0%. Airbus A319 6 3 3
Aircraft fleet Airbus A320 1 6 (5)
Boeing 737 5 4 1
As at 31 December 2014, Aurora fleet comprised 25 aircraft,
Tu-204 - 6 (6)
including seven Bombardier DHC 8-200/300, two Bombardier
DHC 6-400, five Boeing 737, six Airbus A319, one Airbus A320, Total 25 28 (3)
as well as three Mi-8 helicopters and one An-24 airliner.
Route network
In 2014, Aurora airline continued to invest much effort into

optimising its route network. During the year, the company
BUSINESS OVERVIEW
BUSINESS OVERVIEW
operated scheduled flights to 24 destinations, including 11
domestic and 13 international routes.
* Including operating results of JSC Aurora Airlines (SAT Airlines before September 2013) and JSC Vladivostok Air.
** As at 31 December 2014, one aircraft is out of operation, with two others leased out.
*** The aircraft is leased out.
42 43
Pobeda airline Non-core assets
Pobeda was established within Aeroflot Group in Septem- Operating results Aeroflot airlines non-core assets include property and prop- As for service assets with a low impact on Aeroflot airlines
ber2014. The company draws on the traditional low-cost erty rights (such as shares, participation interests, immovable core business, the cost of participation and its relevance is
business model based on the global industry best practices. It The total number of passengers carried by the low-cost car- property) which do not relate to air transportation services, but evaluated based on non-production criteria (pursuit of non-
is based at the Vnukovo Airport in Moscow. rier (including passengers carried by Pobeda and Dobrolet) can be closely related to Aeroflots end product development. commercial objectives, industry profile, goodwill, etc.) These
amounted to 107.4 thousand. The passenger turnover reached assets are disposed of if the benefits derived from participation
In 2013, Aeroflots Board of Directors made a decision to found 134.0 million PKM, while the load factor was 78.0%. JSCAeroflot Board of Directors adopted the Companys Pro- prove insignificant.
a new low-cost carrier in order to strengthen the Companys gramme for non-core assets disposal on 26 July 2012 (Min-
leadership in the fledgling low-cost carrier segment. The air Aircraft fleet utes No. 1). Pursuant to the resolutions made by the Board The Company analyses its real estate assets to identify their
carrier is aimed at increasing mobility of the population and of Directors on 31 January 2013 (Minutes No. 9), 21 June best and most efficient use for the purpose of its business and
inter-accessibility among the Russian regions. As at 31 December 2014, the carriers fleet numbered eight 2013 (Minutes No. 16) and 18 September 2014 (Minutes No. commercial operations.
new narrow-body one-class Boeing Next-Generation 737-800 4), the Programme for non-core assets disposal was expanded
Dobrolet air carrier was registered in October 2013 and aircraft. to include items of Aeroflot airlines immovable property. The JSCAeroflot exited from the charter capital of LLC Aeroflot-
received an air operators certificate issued by the Federal Programme includes non-core assets register, eligibility cri- Riga and LLC AM-Terminal as part of the Programme in 2014.
Air Transport Agency (Rosaviatsia) in May 2014. The carrier Route network teria, information on encumbrances, book and market value, In addition, the Companys office property asset was sold in
launched its flights on the Moscow Simferopol route in June approach to selecting assets for disposal as well as methods, Kiev (Ukraine). For more details on non-core assets disposed
2014. The route was chosen due to the strong demand for this As at 31 December 2014, the air carriers own route network procedures and timelines for assets disposal. of by JSCAeroflot in 2014, please see Appendix 8.6 to this
resort destination in summer and the lack of train connection in covered 11 destinations, including flights to major industrial cit- Annual Report.
the region. Over less than two months of its operations, Dobrolet ies of the Ural region and Siberia (Yekaterinburg, Perm, Chely- Service (non-core) assets with a significant impact on Aeroflot
carried 67.8 thousand passengers. The air carrier ensured a abinsk, Tyumen, Surgut) and Southern Russia (Vladikavkaz, airlines core business are treated based on: In 2014, a number of projects were implemented to develop
high passenger load factor of 92.3% from the very first flights. Sochi, Mineralnye Vody) as well as cities of European Russia the Groups subsidiaries and affiliates CJSC Aeromar, CJSC
It had to suspend its flights on 4 August 2014 due to the eco- (Volgograd, Belgorod, Samara). comparing benefits derived from participation (discounts, Sherotel and JSC AeroMASH-AB. A branch of Sherotel and
nomic sanctions enacted by the European Union. Despite the reduction in prices and tariffs, improvement of Aeroflot the first business lounge of Aeroflot Group were opened at the
suspension of flights, the projects first results proved its high airlines product quality) against the costs incurred; Vnukovo Airport, new branches of Aeromar and AeroMASH-AB
potential. Thanks to Aeroflot Groups timely and efficient follow- monitoring efficiency of corporate control. were established in Simferopol, and CJSC Aeromars sales were
up effort, the project was relaunched only four months after the launched on board Aeroflot airlines aircraft.
suspension of Dobrolets flights. On 1 December 2014, Pobeda Assets are disposed of if the benefits derived from participation
airline (LLC Byudzhetny Perevozchik)* operated its first flight prove inefficient and the corporate control insufficient.
from Moscow to Volgograd.
Operating results Aircraft fleet of Pobeda airlinE
Indicator 2014 Aircraft type 2014 2013 Change
Passengers carried (thousand PAX) 107.4 Boeing 737 8 - 8
Passenger turnover (million PKM) 134.0 TOTAL 8 - 8
Available seat-kilometres (million ASK) 171.8
Passenger load factor (%) 78.0%

BUSINESS OVERVIEW
BUSINESS OVERVIEW
* The legal entitys name as at 31 December 2014 was LLC Byudzhetny
Perevozchik. It was renamed LLC Pobeda Airlines early in 2015.
44 45
3.5 Route
Network
Aeroflot Groups route network

development strategy
Aeroflot Group implements a policy of balanced route network flight connections by adopting a wave-system structure in
development based on a multi-brand model ensuring maximum flight schedules, which contributes to passengers comfort
coverage of the air transportation market and the Groups foot- and enhances the Companys value proposition. Flights to new
hold in various price and regional market segments. destinations are launched based on the analysis of demand,
competition and potential efficiency of new routes.
The route network management strategy relies on increasing
frequency of flights to most popular destinations and improving
Aeroflot Group
As at 31December2014, AeroflotGroups route network cov- from Krasnodar to Khujand and Simferopol;
ered 291scheduled flight routes to 56countries. The number from Rostov-on-Don to Simferopol;
of routes remained almost unchanged in 2014, merely down from St Petersburg to Minsk and Surgut;
0.7% y-o-y. from Khabarovsk to Magadan;
from Yuzhno-Sakhalinsk to Harbin and Seoul;
The total number of routes decreased by 26.6% due to the from Anapa to Novosibirsk and Ufa;
decline in the charter flight segment and the Groups revised from Barnaul to Anapa and Hannover;
charter segment strategy. from Yekaterinburg and Novosibirsk to Hannover;
from Sochi to Kazan, Munich and Frankfurt;
Changes in the number of routes within Russia resulted from from Chelyabinsk to Munich;
the increase in the number of routes serviced by scheduled from Moscow to Karagandy, Chisinau, Novy Urengoy
flights in Russia by 6.9% to 109routes due to a steady increase andTbilisi.
in domestic demand. The number of international routes
decreased by 4.7% to 182 due to the optimisation of the route At the same time, due to a drop in demand for international
network and cancellation of inefficient routes. flights caused by external factors, the Group ceased opera-
tions on a number of economically inefficient routes. During
During 2014, air carriers of Aeroflot Group launched sched- the reporting period, flights were cancelled to 24 destinations,
uled flights to the following 22 new destinations, including nine including 19 international ones. The following routes were
domestic ones: cancelled:
Number of Aeroflot Group routes
2014 2013 Change

Route
Scheduled Charter Total Scheduled Charter Total Scheduled Charter Total
Total 291 351 572 293 576 773 (0.7%) (39.1%) (26.0%)
International 182 292 436 191 471 606 (4.7%) (38.0%) (28.1%)
Domestic 109 59 136 102 105 167 6.9% (43.8%) (18.6%)

BUSINESS OVERVIEW
Long-haul 36 50 78 35 89 115 2.9% (43.8%) (32.2%)
Medium-haul* 255 301 494 258 487 658 (1.2%) (38.2%) (24.9%)
* In this section of the Annual Report medium-haul routes and flights include short-haul and regional air transportation services.
46
SWEDEN
FINLAND
RUSSIA
NORWAY Helsinki Saint Petersburg

Oslo Stockholm
Tallinn
ESTONIA
Riga LATVIA Moscow

DENMARK Copenhagen
LITHUANIA
Vilnius
NETHERLANDS Hamburg
Minsk
IRELAND UNITED KINGDOM Amsterdam GERMANY
Berlin
Hannover POLAND Warsaw
Frankfurt
London Dusseldorf
Brussels Dresden Prague Krakow*
Karlovy Vary Kiev
Paris Kharkiv*
UKRAINE
Vienna
Stuttgart
Munich Dnepropetrovsk*
Zurich Budapest Donetsk* Rostov-on-Don
MOLDOVA
FRANCE Geneva Innsbruck
ROMANIA
SLOVENIA SERBIA Odessa
Milan Zagreb Belgrade
Venice Pula Bucharest Krasnodar
Chisinau
Nice Bologna CROATIA Mineralnye Vody
MACEDONIA
Split
Rimini BULGARIA Varna Sochi
Tivat GEORGIA
Barcelona Dubrovnik Sofia Bourgas Tbilisi
Rome ITALY MONTENEGRO
SPAIN
ALBANIA AZERBAIJAN
PORTUGAL Istanbul Yerevan
Thessaloniki TURKEY Baku
Madrid GREECE ARMENIA
Athens
Antalya
Malaga Rodos
Larnaca
Heraklion
LEBANON
CYPRUS Beirut
Tel Aviv
ISRAEL
Tenerife Cairo
EGYPT
ROUTE NETWORK
OF AEROFLOT GROUP
Aeroflot airline's routes
Aeroflot subsidiaries' routes

BUSINESS OVERVIEW
*Flights suspended or canceled in 2014.
47
Murmansk
RUSSIA
Arkhangelsk
SWEDEN
FINLAND Novy Urengoy Yakutsk
Syktyvkar Surgut
NORWAY Saint Petersburg Nizhnevartovsk Magadan
Perm Tomsk Krasnoyarsk

Nizhny Novgorod Tyumen
Nizhnekamsk Ekaterinburg
Kazan Omsk Kemerovo Petropavlovsk-
Chelyabinsk Novokuznetsk
Kaliningrad Moscow Novosibirsk Kamchatsky
Samara Ufa Magnitogorsk Abakan
POLAND Barnaul Chita
UNITED KINGDOM Astana Pavlodar Irkutsk
GERMANY Orenburg Ulan-Ude
UKRAINE Blagoveshchensk Khabarovsk
CANADA Ust-Kamenogorsk
FRANCE SWITZERLAND Volgograd Karaganda
Rostov-on-Don
KAZAKHSTAN Ulan Bator Harbin Yuzhno-
Stavropol Astrakhan MONGOLIA
UZBEKISTAN Sakhalinsk
Almaty
Toronto* Mineralnye Vody
ITALY Krasnodar Tashkent Bishkek
GEORGIA Vladivostok
New York Simferopol Tbilisi Urgench Fergana Namangan KYRGYZSTAN
PORTUGAL SPAIN Anapa Sochi Navoi Osh Beijing
Baku
Yerevan AZERBAIJAN Bukhara
USA GREECE Gelendzhik ARMENIA Khudzhand Dalian REPUBLIC JAPAN
Washington TURKEY Karshi Dushanbe CHINA OF KOREA
LEBANON Seoul
Samarkand Tokyo
CYPRUS ISRAEL Tehran TAJIKISTAN Busan
Los Angeles IRAN
Shanghai
Delhi
Dubai
INDIA
Miami UNITED Guangzhou
EGYPT ARAB
Havana DOMINICAN Hanoi Hong Kong
CUBA EMIRATES
Cancun* REPUBLIC THAILAND
MEXICO Punta Cana*

VIETNAM
Bangkok
Ho Chi Minh City

Phuket
Male MALDIVES
ROUTE NETWORK
OF AEROFLOT GROUP
Aeroflot airline's routes
Aeroflot subsidiaries' routes
*Flights suspended or canceled in 2014.

from Sochi to Dushanbe and Novosibirsk; increased number of flights across Russia which rose by 19.3%.
from Kaliningrad to Samarkand; The growth also benefited from a greater number of flights to
from St Petersburg to Alicante, Hurghada, Karlovy Vary, Europe and the Middle East adding 5.6% and 13.9% respec-
Naples, Nukus, Odessa, Pafos, Thessaloniki, Sharm tively. The number of international flights to America decreased
el-Sheikh; slightly (down 1.7%) due to the cancellation of some North and
from Vladivostok to Blagoveshchensk, Magadan and Latin American flights. The number of flights to the CIS countries
Krasnoyarsk; remained practically unchanged compared to 2013 (up 0.4%)
from Khabarovsk to Tashkent and Tokyo; due to a greater number of flights to Belarus and Kazakhstan
from Yuzhno-Sakhalinsk to Petropavlovsk-Kamchatsky; offset by a reduced number of flights to Ukraine. The decline
from Moscow to Goa, Hurghada, Sharm el-Sheikh, Salz- in the number of flights to Asia (down 9.8%) was due to the
burg and Eilat. restructuring of the route network of Aurora Airlines based in
the Russian Far East.
In addition, flights to the following seven destinations were
either suspended or cancelled in 2014: Throughout the year, the Group continued increasing the fre-
quency of flights in accordance with its route network manage-
from Moscow to Krakow, Toronto, Cancun, Punta Cana, ment strategy. As a result, the average frequency of scheduled
Donetsk, Kharkov and Dnepropetrovsk. flights went up from 9.6 to 11.1 flights per route per week. The
increase was due to a higher frequency of both domestic flights
In 2014, the total number of regular flights grew by 11.3% (up 14.0%) and international flights (up 12.8%). Medium-haul
y-o-ydue to the increase in carrying capacity on the most popu- flights saw the highest rise in flight frequency (up 16.2%) while
lar routes and the changes in Aeroflot Groups route network the frequency of long-haul flights grew less actively (up 11.2%).
mentioned above. The key driver behind the growth was the
Change in the number of Aeroflot Change in the number of Aeroflot Group

Group scheduled routes scheduled flights by region
(0.7%) Total
Total 11.3%
(4.7%) International routes

Middle East and Africa 13.9%
Domestic routes 6.9%

-4,7% (9.8%)
Asia
Long-haul routes 2.9%
(1.7%) America
(1.2%) Medium-haul routes
Europe 5.6%
Russia 19.3%
CIS 0.4%
Average frequency
of Aeroflot Group flights
16.2% 16.2%
14.0%
12.8%
11.2%
15.5
13.6
11.8
11.1 10.2
9.6
BUSINESS OVERVIEW
(65.3%) 8.4
7.4
6.3
5.6
1.2
0.4
Scheduled Charter International Domestic Medium-haul Long-haul

flights flights scheduled flights scheduled flights scheduled flights scheduled flights
2013 2014
49
Aeroflot airline
As at 31 December 2014, Aeroflot airlines network covered In 2014, the total number of regular flights grew by 11.4% y-o-y The most significant increase in the frequency of flights per While increasing the flight frequency, Aeroflot airline also
134 scheduled flight routes to 55 countries. The number of due to the increase in capacity on the most popular routes week was achieved on routes from Moscow to Simferopol, worked on optimising its passenger flight schedule through
scheduled routes grew in 2014 by 2.3% y-o-y. and the changes in Aeroflot airlines route network mentioned Bucharest and Antalya (over 70%) as well as from Moscow departure and arrival sequencing. As a result, the flight con-
above. The key contributor to the growth was the increased to Orenburg, Gelendzhik, Dresden, Irkutsk and Guangzhou nection ratio went up by 6.3 to 13.5 in 2014 as compared to
The total number of routes, including charter ones, was 143, number of domestic flights (up 24.8%). The growth also ben- (over 50%). 12.7 in 2013.
down by 8.3% y-o-y as the Company more than halved the efited from the increased number of flights to Europe and the
number of charter flights. Throughout the year, the number of Middle East adding 4.1% and 10.1% respectively. The increase
international routes in the scheduled flight segment decreased in flights to Asia (up 2.8%) was due to a higher frequency of Change in the number of Aeroflot Change in the number of Aeroflot airline
by 2.2% to 90 while the number of domestic routes grew by flights to the most popular Asian destinations. The number of airline scheduled routes scheduled flights by region
12.8% to 44. international flights to America decreased slightly (down 1.7%)
due to the cancellation of some North and Central American
During the reporting period, Aeroflot airline continued develop- flights. The CIS segment saw a decrease in the number of flights
Total 2.3%
ing its route network launching scheduled flights to four new by 10.2% resulting from the cancellation of flights to eastern
destinations from Moscow, including flights to one Russian Ukraine throughout the reporting period, while also benefiting (2.2%) International routes Total 11.4%
destination (Novy Urengoy) and three destinations in the CIS from new flights launched to Kazakhstan and the Republic of
countries (Karagandy, Chisinau and Tbilisi). The flight from Belarus. 12.8% Middle East and Africa 10.1%
Domestic routes
Frankfurt to Sochi was launched before the Olympic Winter
Games. Flights were closed to 12 destinations, including flights In 2014, Aeroflot airline continued increasing the frequency of (3.2%) Long-haul routes Asia 2.8%
from Moscow to Ukraine (Donetsk, Kharkov and Dnepropetro- scheduled flights. As a result, the average flight frequency went
vsk) the Middle East (Hurghada, Sharm el-Sheikh and Eilat), up by 9.1% from 13.2 to 14.4 flights per route per week. The Medium-haul routes 4.0% (1.7%) America
Europe (Salzburg and Krakow) and North and Latin America increase was due to a higher frequency of both domestic flights
(Toronto, Cancun and Punta Cana). (up 5.5%) and international flights (up 8.2%). The frequency of Europe 4.1%
medium-haul flights grew faster than that of long-haul flights

(up 10.0% and 3.5% respectively). Russia 24.8%
(10.2%) CIS
Number of Aeroflot airline routes
Route 2014 2013 Change
Scheduled Charter Total Scheduled Charter Total Scheduled Charter Total

Average frequency
of Aeroflot airline flights
Total 134 16 143 131 47 156 2.3% (66.0%) (8.3%)
9.1% 10.0%
International 90 7 95 92 32 112 (2.2%) (78.1%) (15.2%) 8.2%
5.5%
3.5%
Domestic 44 9 48 39 15 44 12.8% (40.0%) (9.1%)
20.3
18.8
Long-haul 30 1 31 31 2 32 3.2% (50.0%) (3.1%) 15.3
16.8
14.4
13.2
10.9 11.5
Medium-haul 104 15 111 100 45 124 4.0% (66.7%) (10.5%) (74.1%)
1.7 6.2 6.4
0.4
Scheduled Charter International Domestic Medium-haul Long-haul

flights flights scheduled flights scheduled flights scheduled flights scheduled flights
2013 2014
BUSINESS OVERVIEW
BUSINESS OVERVIEW
50 51
Connecting
passenger traffic
Thanks to the developed route network of Aeroflot Group, pas- connecting passenger traffic, reaching 10.7% of the total In the reporting period, Donavia launched a large campaign to cancelled, while the frequency of flights from Vladivostok to Beijing
sengers can use transfer services in addition to direct flights domestic passengers carried in 2014. The shares of connect- tap into the market of Krasnodar. During the year, the company was reduced to one flight per week. Since 2014, flights between
between destinations. In terms of the business, the connecting ing passenger traffic between Russia and other countries and launched daily flights from Krasnodar and Rostov-on-Don to Vladivostok and Harbin have been operated only in the high sum-
passenger traffic parts into three groups: domestic connecting international connecting passenger traffic grew insignificantly, Simferopol and from Krasnodar to Yekaterinburg, increased mer season. Once Aurora Airlines was incorporated, flights from
passenger traffic, traffic between Russia and other countries achieving 16.7% and and 11.8% of total airlines traffic. the frequency of its flights connecting Kransnodar and Sochi Khabarovsk to Tashkent were cancelled due to the fleet restructur-
and international traffic. Aeroflot airline serves the bulk of the up to two flights per day and flights from Krasnodar, Rostov- ing. In December 2014, Aurora Airlines launched regional flights
Groups connecting passenger traffic. The well-developed route network, high frequency of inter- on-Don and Sochi to Yerevan became daily. Direct flights from from Vladivostok to remote sparsely populated urban localities in
national flights, a hub based at the Sheremetyevo airport in Krasnodar to Yekaterinburg the capital of the Ural Federal the Primorye Territory: Kavalerovo, Plastun, Terney, Amgu, Svet-
Connecting passengers accounted for 39.2% of Aeroflot air- Moscow and membership in the SkyTeam Alliance all sharpen District, as well as more frequent service from Sochi to Yeka- laya, Samarga and Yedinka.
lines total passenger traffic in 2014 as compared to 35.5% in Aeroflot airlines advantage in the competition for international terinburg enabled the company to meet a growing demand
2013. This was mainly driven by the growth in the domestic connecting passengers. for flights from the Ural region to resorts in the Krasnodar Orenair airline
Territory. Flights from Rostov-on-Don and Mineralnye Vody to
the Sheremetyevo airport were gradually replaced with flights In 2014, Orenair airline operated both charter flights to most
Aeroflot airline key transit routes Share of connecting passengers
operated by Aeroflot airline. popular destinations abroad and scheduled flights. The Orenairs
in Aeroflot airline total passenger traffic route network was transformed most radically due to a decline
Aurora airline in the international tourist market. Since January 2015, most
39.2% Orenairs flights have been transferred under commercial man-
35.5%
32.7% During the year, Aurora airline operated scheduled flights to 24 agement of JSCAeroflot.
Berlin
Moscow
destinations, including 11 domestic and 13 international routes. In
London 11.8%
Paris Prague Beijing
11.6%
addition to scheduled flights connecting Russian cities in Siberia Pobeda airline
Seoul
Kiev Erevan 10.6%
Los Angeles
New York
Milano
Rome
Hanoi
Shanghai and the Far East, Auroras aircraft operate scheduled flights of
Tel Aviv 16.7%
16.0% social importance along regional air routes to Okha, Shakhtersk, As at 31 December 2014, Pobeda airlines own route network
15.0%
Yuzhno-Kurilsk and Iturup in the Sakhalin Region. covered 11 destinations, including flights to major industrial
cities of the Ural region and Siberia (Yekaterinburg, Perm,
10.7%
7.1% 7.9% Auroras route network was restructured to optimise the com- Chelyabinsk, Tyumen, Surgut) and Southern Russia (Vladi-
panys routes and redistribute a number of flights between Aurora kavkaz, Sochi, Mineralnye Vody) as well as cities of European
2012 2013 2014
Airlines and Aeroflot. Notably, long-haul flights from Moscow to Russia (Volgograd, Belgorod, Samara). In January 2015 ticket
Domestic Russia Other Countries International the Russian Far East were made by Aeroflots own aircraft. Oper- sales launched for flights between Moscow and Makhachkala.
ating programme to most popular destinations in South Korea The flights are operated from the Vnukovo airport located in
(Seoul and Busan) was extended. Due to a low demand, flights Moscow.
from Vladivostok to Tokyo and from Khabarovsk to Tokyo were
Groups Subsidiary Airlines Route

Network Optimisation
FARE policy
In 2014, the Group continued optimising subsidiaries route hub. The airline continued to increase the frequency of its
networks. Thus, the frequency of flights was increased for long- flights and provided additional carrying capacities for high- The Group pursues a policy of price differentiation as its air- Throughout the reporting period, the challenging economic
term promising markets of direct and transfer passengers and a potential markets of direct and transfer passengers including lines offer their services to different customer categories. This environment, a lower air travel demand and tougher competi-
schedule was set up to provide for maximum flight connectivity. routes to Arkhangelsk, Murmansk, Kaliningrad and Simfer- approach enhances the competitive edge of the Groups value tion in the key markets held down prices. In the second half
opol. It also increased flight frequency from St. Petersburg proposition. The Group bases its pricing policy on economic of the year, the sharp rouble depreciation forced the Group to
In line with the hub model strategy, in 2014, a number of air- to the Vnukovo and Domodedovo airports. Rossiya Airlines viability, the market environment and applicable regulatory review EUR-denominated prices for international flights down-
ports became base airports for the Groups subsidiaries in the flights became even more convenient once a new schedule requirements. wards to support the demand as prices in rouble terms soared.
following regions: was introduced in Pulkovo to provide for maximum flight RUB-denominated prices for domestic flights did not increase.
connectivity. Organic growth of the network relied on the new The Groups airlines launch special campaigns to offer their Sticking to a consistent price policy amid the violent foreign
Northwestern Federal District for Rossiya Airlines; routes from St. Petersburg to Minsk and Surgut. To cut opera- passengers discounts in low seasons to boost demand. The exchange fluctuation helped the Group to maintain its customer
Southern Federal District for Donavia; tions in the charter flight segment, the company cancelled the companies also provide air transportation services subsidised loyalty and a stable passenger load factor.
Far Eastern Federal District for Aurora. discrete schedule of flights to tourist destinations based on by state-run programmes.
travel agencies requests and decided to cancel charter and
Rossiya airline block charter flights.
BUSINESS OVERVIEW
BUSINESS OVERVIEW
In 2014, Rossiya airline operated scheduled flights to 75 Donavia airline
destinations, including 24 domestic and 51 international
routes (21 of them to the CIS countries). In 2014, Donavia operated scheduled flights to 30 destinations,
including 18 domestic and 12 international routes (8 of them
The primary objective of Rossiya airline route network opti- to the CIS countries).
mization in 2014 was creation of the Northwestern transport
52 53
Licences, designations, authorisations

and permits for increasing flight frequency
In 2014, the Federal Air Transport Agency (Rosaviatsia) issued three new permits for international passenger charter three agreements with Cubana, Iran Air and Middle East flights in booking systems (unlike under the usual codeshare
the following permits to Aeroflot Groups airlines managed by flights from Rostov-on-Don to Budapest, Plovdiv and Sofia. Airlines, under which Aeroflot airline is only an operating procedure, which identified flights by the dual code and flight
JSCAeroflot: partner; numbers of both partners). This form of cooperation enables
to Aurora airline four agreements with Adria Airways, Air Malta, Bangkok JSCAeroflot to implement a comprehensive centralised man-
to Aeroflot airline Airways and Royal Air Maroc, under which Aeroflot airline agement model for Groups strategic topics, including sales,
a permit to increase the frequency of scheduled interna- is only a marketing partner; revenue management and fleet planning. A total of 7 million
two new permits for scheduled international passenger tional passenger flights from Khabarovsk to Seoul; four agreements with Donavia, Rossiya, Aurora and passengers flew by Aeroflot Groups commuter flights in 2014.
flights from Moscow to Tbilisi and Tel Aviv; Orenair based on a commuter transport model with the
twelve additional permits to increase the frequency of Pursuant to CEOs order to launch scheduled flights by Groups airlines. The key priorities of Aeroflot airlines cooperation with its part-
scheduled international passenger flights from Moscow to JSCAeroflot, the flights were launched on six new routes in ners under codeshare agreements remain as follows:
Antalya, Vilnius, Dusseldorf, Yerevan, Miami, Male, Beijing, 2014: from Moscow to Karaganda, Chisinau, Novy Urengoy, In the reporting period, Alitalia, Air France, Czech Airlines, KLM,
Phuket, Riga, Istanbul, Tallinn, and Tbilisi; Rostov-on-Don, Tbilisi and Tel Aviv (these flights used to be Air Baltic and Air Serbia were among the major international increasing its presence in promising markets;
one new permit for charter international passenger flights chartered). Scheduled flights were also operated between Sochi partners of Aeroflot airline in terms of volumes under codeshare gaining a foothold in the markets with certain restrictions;
from Moscow to Barcelona. and Frankfurt am Main before and during Sochi 2014 Winter agreements, while Nordavia and Aeroflot Groups companies further improvement of the existing route network, also by
Olympic Games. were Aeroflots key Russian codeshare partners. increasing the marketing flight network;
to Rossiya airline more efficient use of the fleet.
Regular permits for Aeroflot, Donavia and Rossiya airline expir- In 2014, Rossiya airline went on to use the commuter transport
ten additional permits to increase the frequency of sched- ing in 2014 were reissued for another five years. model of codeshare cooperation managed by JSCAeroflot so as In 2015, Aeroflot airline is planning to enter into codeshare
uled international passenger flights from St Peterburg to further develop Aeroflot Groups business. The new transport agreements with Garuda Airlines and Saudi Arabian Airlines,
to Antalya, Kiev, Milan, Namangan, Tel Aviv, Hurghada, Aeroflot, Donavia and Rossiya airline cancelled a number model contributed to the subsidiarys further integration into its partners under the SkyTeam Alliance.
Sharm el-Sheikh and Urgench; ofunused permits in order to increase the permit usage rate. Aeroflot Groups single route network.
four new permits for international charter flights from With the support of the Russian Ministry of Foreign Affairs, Under codeshare agreements, Aeroflot Groups subsidiaries use
StPeterburg to Barcelona, Malaga, Palma de Mallorca and JSCAeroflot was designated as a regular carrier on the fol- the commuter transport model to manage their flight load. The
Tel Aviv. lowing 7 routes: model shows a uniform SU code of Aeroflot airline for all joint
to Donavia airline from Vladivostok to Seoul, Busan and Tokyo;

from Moscow to Chisinau, Tbilisi and Tel Aviv; and
one new permit for scheduled international passenger from Khabarovsk to Tokyo.
flights from Krasnodar to Khojend; Cooperation under
three additional permits to increase the frequency of With the support of the Russian Ministry of Foreign Affairs, interline agreements
scheduled international passenger flights from Krasnodar Donavia was designated as a regular carrier on the route from
to Yerevan, from Rostov-on-Don to Tashkent and from Krasnodar to Khojend.
Sochi to Tashkent; As at the beginning of 2015, Aeroflot airline has interline agree- Under interline agreements, the Company carried over 500
ments with 170 airlines, including 9 Russian carriers and 9 thousand passengers on its own flights and flights of partners
companies from the CIS. In 2014, two interline agreements during the reporting period.
were signed while three of such agreements were terminated
due to mergers, acquisitions, bankruptcy and other reasons.
Cooperation under
codeshare agreements
In 2014, Aeroflot Group continued developing cooperation with Codeshare agreements with Icelandair and Bangkok Airways Membership
its partners under codeshare agreements. came into force in 2014. As at the beginning of 2015, Aeroflot
airline had codeshare agreements with 29 international and in the SkyTeam Alliance
A total of 870 thousand of Aeroflot airlines passengers were Russian airlines, including:
carried by its partners under codeshare agreements in 2014.
18 agreements with Air France, KLM, Alitalia, Finnair, Delta Aeroflot airline continues to actively develop cooperation with Argentinas, Aeromexico, Air Europa, Air France, KLM, Alitalia,
During the last year, the number of marketing flights operated Air Lines, Czech Airlines, TAROM, Estonian Air, LOT Polish other members of the SkyTeam global alliance. In 2014, the num- China Airlines, China Eastern and China Southern Airlines, Czech
by Aeroflot airline increased from 256 to 278. Codeshare Airlines, Bulgaria Air, Korean Air, Air Serbia, MIAT, Air Bal- ber of passengers carried by the Company within the framework Airlines, Delta Air Lines, Kenya Airways, Korean Air, Middle East
BUSINESS OVERVIEW
BUSINESS OVERVIEW
agreements help Aeroflot airline to broaden its flight cover- tic, Air Europa, Kenya Airways, China Eastern and China of the SkyTeam Alliance totalled 442 thousand passengers under Airlines, Saudi Arabian Airlines, TAROM, Vietnam Airlines, Xiamen
age by adding both new flights to partners base airports and Southern Airlines. Under the above agreements, Aeroflot codeshare and interline agreements. Airlines and Garuda Indonesia. The latter joined the alliance in
direct flights from Moscow. airline is both an operating and marketing partner; March 2014.
As at the beginning of 2015, the global alliance included the
following 20 members: Aeroflot Russian Airlines, Aerolineas
54 55
3.6 Aircraft
Fleet
Key principles
of fleet development
4.1
Membership in the SkyTeam Alliance enables Aeroflot airline passengers per month. The project will be implemented in the Aeroflot Group operates a balanced aircraft fleet and keeps on upgrading it
to expand its route network while offering unique services to its Sheremetyevo airport in 2015. in line with its multi-brand business development strategy.
clients. A survey shows that SkyTeam accounted for 20.1% of
the global air transportation market in 2014, ranking the worlds Once the first stage of SkyPriority programme has been com- Over the last few years the Group has invested much effort in standardisation years average age of
second largest global alliance. pleted in 930 airports used by the SkyTeam Alliance, its members and upgrade of the fleet to improve its operating efficiency. In 20112014, Aeroflot airlines fleet
went on to implement the second stage of the programme aimed the types of aircraft in operation reduced from 18 to 11, and we keep on
SkyTeam performance in 2014 provided the alliance with a at offering additional privileges to most profitable passengers. working to bring the aircraft range down to 9 types in the mid-term.
competitive advantage over Star and OneWorld global alliances. Aeroflot airline is gradually implementing Fast Track service (pass-
SkyTeam offers its clients best-in-class service at all times. port control and security checks).
Aeroflot Group aircraft fleet evolution
In the scope of SkyTransfer programme, SkyTeam Care & Assis- The Company is actively involved in the SkyTeam Alliances initia-
tance Policy and Customer Rebooking Policy were adopted in tives, which proves the efficiency of its membership. Aircraft types 2011 2014
January 2014.
Aeroflot airline is cooperating with other alliance airlines in the SSJ100 SSJ100
The first stage of PNR Servicing project for airlines using the cargo business through SkyTeam Cargo, a unique alliance of 12
An-148 An-148
Amadeus platform was completed in June 2014. Aeroflot airline freight carriers.
also signed a letter of intent with Sabre Holding Corporation. The Yak-42 An-24
project is to be completed at the end of 2015.
An-12 DHC-8-200/300
Short-haul
In 2014 new opportunities were discovered as part of the one- An-24 DHC-6-400
time check-in initiative. This initiative enabled one-time check-in
An-26
48 hours before departure for all SkyTeam airlines, including
Aeroflot airline. DHC-8-200/300
Tu-134
To improve connecting passenger service and mitigate the risk of
missing the flight, air carriers are required to report on their opera- Airbus A319/320/321 Airbus A319/320/321
tions carried out in the hub of the SkyTeam Alliance. According to
Boeing 737 (Classic) Boeing 737 (Classic)
the above reports, the connecting traffic grows by 600 thousand middle-haul
Boeing 737 (NG) Boeing 737 (NG)
Tu-154
fares for employees Airbus A330 Airbus A330
Boeing 767 Boeing 767
Since 2006, Aeroflot airline has been a member of the ZED/ SkyTeam Alliance partners, under agreements for providing dis- Boeing 777 Boeing 777
long-haul
MIBA FORUM a non-profit organisation providing guidelines counted fares to their employees. Throughout 2014, nearly 13 Il-96
for offering discounts to airlines staff travelling for personal thousand employees of JSCAeroflot benefited from discounted
and business purposes. The membership of ZED/MIBA FORUM fares for flights of Aeroflots partners and about 37 thousand Tu-204
includes over 230 airlines. In 2014, the biggest Australian car- people employed by Companys partners became passengers MD-11
rier Qantas and an Indian air carrier Jet Airways became part- of Aeroflot airline
ners of Aeroflot airline, offering discounted fares to their clients. Total 18 types 11 types
Today, Aeroflot airline cooperates with 70 companies, including
BUSINESS OVERVIEW
BUSINESS OVERVIEW
56 57
Long-haul
AIRCRAFT FLEET* Medium-haul
Short-haul
BOEING 777-200ER 3 BOEING 777-300ER 10
Length, m 63.73 Length, m 73.86

Wingspan, m 60.93 Wingspan, m 64.8
Seating capacity 364 Seating capacity 402
Maximum take-off weight, kg 297,556 Maximum take-off weight, kg 317,515
Engines PW 4090 Engines GE 90-115BL
Flight range, km 14,305 Flight range, km 11,200
AIRBUS A330-300 17
Length, m 63.7
Wingspan, m 60.3
Seating capacity 296-302
Maximum take-off weight, kg 230,000
Engines RR TRENT 772B
Flight range, km 9,500
BOEING 767-300ER 3 AIRBUS A330-200 5

Seating capacity 218-309 Seating capacity 241
Engines CF6-80C2 Engines RR TRENT 772B
Flight range, km 10,00010,700 Flight range, km 11,200
BUSINESS OVERVIEW
* As at 31 December 2014. Excluding three Mi-8 helicopters, one An-24 aircraft and five Il-96.
58
Long-haul
AIRCRAFT FLEET* Medium-haul
Short-haul
AIRBUS A321 26
Length, m 44.51
Wingspan, m 34.1
Seating capacity 170
BOEING 777-200ER 3 BOEING 777-300ER 10 Engines CFM 56-5B
Flight range, km 3,800

Engines PW 4090 Engines GE 90-115BL
AIRBUS A320 75 BOEING 737-500 3 N-148 6 SSJ100 16
Length, m 37.57 Length, m 31.01 Length, m 29.13 Length, m 29.94

Wingspan, m 34.1 Wingspan, m 28.88 Wingspan, m 28.91 Wingspan, m 27.8
Seating capacity 140-180 Seating capacity 110 Seating capacity 75 Seating capacity 87
Maximum take-off weight, kg 75,500 77,000 Maximum take-off weight, kg 57,833 Maximum take-off weight, kg 42,550 Maximum take-off weight, kg 45,880
Engines CFM 56-5A/5B Engines CFM 56-31 Engines D-436-148 Engines Power Jet SaM146
Flight range, km 4,000 5,550 Flight range, km 4,500 Flight range, km 3,500 Flight range, km 2,400
AIRBUS A330-300 17
Length, m 63.7 DHC 8-300 4

Wingspan, m 60.3
Seating capacity 296-302 BOEING 737-800 38
Engines RR TRENT 772B Length, m 25.7
Flight range, km 9,500 Wingspan, m 27.4
Length, m 39.5 Seating capacity 50
Wingspan, m 35.8 Maximum take-off weight, kg 18,997
Seating capacity 158-189 Engines PW123
Maximum take-off weight, kg 79,015 Flight range, km 1,550
Engines CFM 56-7B
Flight range, km 4,500-5,765
BOEING 767-300ER 3 AIRBUS A330-200 5 BOEING 737-200 2 AIRBUS A319 39 DHC 6-400 2 DHC 8-200 3
Length, m 54.9 Length, m 33.84 Length, m 15.77 Length, m 22.2

Wingspan, m 47.6 Wingspan, m 34.1 Wingspan, m 19.81 Wingspan, m 25.9
Seating capacity 218-309 Seating capacity 116-138 Seating capacity 19 Seating capacity 37
Maximum take-off weight, kg 186,880 Maximum take-off weight, kg 70,000 Maximum take-off weight, kg 5,670 Maximum take-off weight, kg 16,466
Engines CF6-80C2 Engines CFM 56-5A/5B Engines PT6A-34 Engines PW123
Engines RR TRENT 772B Engines PW JT8D
Flight range, km 10,00010,700 Flight range, km 3,500 6,800 Flight range, km 400 Flight range, km 1,713
* As at 31 December 2014. Excluding three Mi-8 helicopters, one An-24 aircraft and five Il-96.
Groups effort to satisfy the growing demand by developing, Rossiya, Donavia and Aurora airlines use Airbus A320 air-
standardising and optimising the aircraft fleet in 20112014 craft for their regular flights offering passengers a uniform
decreased the average fleet age of the Aeroflot Group and Aero- standardised product. However, Auroras aircraft fleet differs
flot airline. In this period, the average age of passenger aircraft from the others as the company develops local flights and oper-
in operation dropped from 10.4 to 7.0 years for Aeroflot Group ates turboprop aircraft for this purpose. Orenair and Pobeda
and from 5.3 to 4.1 years for Aeroflot airline (as at the year- operate Boeing 737-800 aircraft for their charter and low-cost
end). The greatest achievement was made in 2014 when the flights, and flights to tourist destinations. The premium market
average fleet age of Aeroflot airline decreased from 5.2 to 4.1 segment is an exception as Aeroflot decided to use both Boeing
years to become the lowest among the companies operating and Airbus aircraft for the medium-haul flights. As for the long-
over 100 aircraft. haul flights, operating efficiency is the key to choosing between
Boeing or Airbus aircraft depending on a particular market
Aeroflot Group approaches the aircraft fleet management by segment, we use either Airbus A330 (c250300 seats) or Boe-
using one aircraft type or family in the relevant market sector ing 777-300ER (c400 seats). The diversified fleet of Aeroflot
(segmented either by product or traffic). This approach max- Group allows more favourable terms of aircraft acquisition
imises efficiency of the fleet standardisation. For instance, and operation.
Aeroflot Group Aeroflot airline

PASSENGER FLEET in operation PASSENGER FLEET in operation
10.4
8.8
7.7 7.0
5.3 5.2 5.2
4.1
251
222 232
209
150
140
125
109
2011 2012 2013 2014 2011 2012 2013 2014
Aircraft fleet Average age Aircraft fleet Average age

BUSINESS OVERVIEW
59
Aircraft fleet
of Aeroflot Group
261
As at 31 December 2014, Aeroflot Group had 261 aircraft, including 10 Aircraft fleet of Aeroflot Group
short-haul turboprops (An-24, Bombardier DHC 8-200/300 and Bombardier
DHC 6-400), 22 short-haul jets (SSJ100, An-148), 183 medium-haul jets Type of aircraft Aircraft fleet as at
31 December 2013
Change 2014 Aircraft fleet as at
31 December 2014
Owned Operating
lease
Financial
lease
(Boeing 737 and Airbus 320), 43 long-haul jets (Boeing 767, Boeing 777, aircraft Phased in Phased out
Airbus 330 and Il-96), and three helicopters (Mi-8). in the Groups
fleet Short-haul 25 10 - 35 4 25 6
Following expiry of the lease period in 2014, Aeroflot Group phased out five Mi-8*(helicopter) 3 - - 3 3 - -
Boeing 767-300ER aircraft, six Airbus A320 aircraft and five Boeing 737
aircraft. Therefore, the Group does not operate Boeing 737-400 aircraft An-24** 1 - - 1 1 - -
any more. Six Tu-204, three Airbus A320 and three MD-11 aircraft were DHC 6-400 - 2 - 2 - 2 -
returned to the leasing company prior to expiry of the lease period. Com-
mercial operation of Il-96 aircraft was ceased, with one aircraft subsequently
sold. Five aircraft were re-distributed within the Group. 22
net increase
DHC 8-200
DHC 8-300
2
3
1
1
-
-
3
4
-
-
3
4
-
Expansion of operations by Aeroflot Group resulted in 5.0% increase in An-148 6 - - 6 - - 6

in aeroflot group
flight hours totalling 815.4 thousand hours in 2014 due to expancion of SSJ100 10 6 - 16 - 16 -
fleet
operating programme.
Medium-haul 162 40 19 183 - 146 37
Airbus 319 39 5 5 39 - 26 13
Airbus 320 67 17 9 75 - 74 1
Aeroflot Group fleet Aeroflot airline fleet
by type of aircraft by type of aircraft Airbus 321 26 - - 26 - 5 21
Boeing 737-200 2 - - 2 - - 2
Boeing 737-400 4 - 4 - - - -
13.4% 10.3%
Boeing 737-500 2 1 - 3 - 3 -
Boeing 737-800 22 17 1 38 - 38 -
70.1%
Short-haul
65.8% Short-haul
Long-haul 52 6 15 43 5 20 18
Boeing 767 8 - 5 3 - 3 -
Airbus A330-200 5 - - 5 - 5 -
16.5% 23.9% Airbus A330-300 17 - - 17 - 9 8
Medium-haul Medium-haul u-204-300 6 - 6 - - - -
Boeing 777-200ER 3 - - 3 - 3 -
Long-haul Long-haul
Boeing 777-300ER 4 6 - 10 - - 10
Il-96 6 - 1 5 5 - -
MD-11 3 - 3 - - - -
Total 239 56 34 261 9 191 61

BUSINESS OVERVIEW
BUSINESS OVERVIEW
* As at 31 December 2014, one aircraft is out of operation, with two others leased out.
** The aircraft is leased out.
60 61
Aircraft fleet Fuel

of Aeroflot airline efficiency
As at 31 December 2014, Aeroflot airline had 155 aircraft, jets were transferred to subsidiaries while three MD-11 were The low age of aircraft fleet offers passengers a more attrac- Apart from more efficient engines, new airliners boast other
including 16 short-haul aircraft (SSJ100), 102 medium-haul returned to the leasing company prior to the expiry of the lease tive value proposition through more comfortable cabins, pleas- properties reducing fuel consumption. In 2014, Aeroflot was
aircraft (96 Airbus 320 family and six Boeing 737 jets), and period, and one Il-96 was sold. Long-haul Boeing 767-300ER ant interiors and availability of modern in-flight entertainment the first Russian airline to put in operation the most advanced
37 long-haul aircraft (22 Airbus 330, 10 Boeing 777 and and Il-96 aircraft were put out of operation entirely. systems. Airbus A320 jets with sharklets, which improve aerodynamic
five Il-96 jets). properties of the aircraft and, subsequently, its fuel efficiency.
Expansion of operations by Aeroflot airline yielded a 9.0% From the economic point of view, fuel efficiency is a key advan-
In 2014, five Boeing 767-300ER and four Airbus A320 aircraft increase in flight hours totalling 554.7 thousand in 2014. tage of the low-age fleet since fuel costs account for a major Specific fuel consumption across Aeroflot Group decreased
were phased out following the lease expiry; three Airbus A319 part of operating expenses in any airline. As for Aeroflot Group, by 5 grammes (1.4%) y-o-y to 308 grammes per tonne-kilo-
fuel costs made 28.3% of its operating expenses in 2014. In metre (TKM) in 2014. Specific fuel consumption of Aeroflot
addition, the low-age fleet in operation optimises maintenance airline decreased in the same year by 5 grammes (1.7%) to
Aircraft fleet of Aeroflot airline
expenses and reduces negative impact on the environment, 302 grammes per TKM.
thus contributing to the overall positive economic effect.
Type of aircraft As at 31 December 2014 As at 31 December 2013 Change
Short-haul 16 10 6
Aeroflot Group specific fuel Aeroflot airline specific fuel
SSJ100 16 10 6 consumption (g/TKM) consumption (g/TKM)
Medium-haul 102 93 9
Airbus A319 7 12 (5) 315 313 308 313 319

308 307 302
Airbus A320 63 52 11
Airbus A321 26 26 -
Boeing 737 6 3 3
Long-haul 37 40 (3)
Airbus A330 22 22 - 2012 2013 2014 2010 2011 2012 2013 2014
Boeing 767 - 5 (5)
Boeing 777 10 4 6
Il-96 5 6 (1)
MD-11 - 3 (3)
Total 155 143 12

BUSINESS OVERVIEW
BUSINESS OVERVIEW
62 63
3.7 Maintenance
and Repair
900
Aeroflot Group has an efficient aircraft maintenance and repair system ser- In 2014, FL Technics and S7 Engineering won a tender for the The most notable developments made by Aeroflot Group in the
vicing the fleet of Aeroflot airline, its subsidiaries and third-party customers. maintenance of narrow-body aircraft frames. Partnerships with aircraft maintenance and repair field in 2014 were as follows:
leading market players enable Aeroflot Group to keep the fleet
The organisational structure of JSCAeroflot includes the following divisions A-CHECKs performed in good condition and optimise maintenance costs. new equipment received, including equipment for the line
related to aircraft maintenance and repair: by aeroflot engineers maintenance of Boeing 737, A-checks of Boeing 777 and
In 2014, engineers of JSCAeroflot performed, apart from daily 4C checks of Airbus A330;
Aircraft Maintenance Department maintaining aircraft of Aeroflot and checks, over 6,600 weekly checks, about 900 A checks and aircraft and engines upgraded, including installation of an
14,600
other airlines; over 180 heavy checks (B, C and D checks). on-board Wi-Fi/GSM system on ten Airbus A330 aircraft;
Airworthiness Department responsible for airworthiness of aircraft new maintenance operations introduced, including in-
operated by Aeroflot, technical condition of the fleet throughout The number of take-offs serviced by Aeroflot engineers at the house testing, maintenance and repair of the flight data
the entire aircraft life cycle, development and implementation of mandatory checks Sheremetyevo base airport increased by 10% y-o-y to exceed recorders and solid state cockpit voice recorders (SSCVR)
JSCAeroflots strategy and policy covering aircraft operation, including and modifications 91,000. by Honeywell and L3-com, in-house processing of flight
fleet renewal, modernisation and upgrade; performed data from oeing 737-800 recorders, and thermographic
Quality Assurance Department developing a quality management sys- In 2014, over 14,600 mandatory checks and modifications inspection of the Groups and third-party aircraft;
tem for the aircraft maintenance and airworthiness. were performed on aircraft, with Airbus A320 jets accounting a monitoring programme introduced for RENT-700
for 80% of them. engines (Airbus A330) and SAM146 engines (SSJ100).
Aircraft of the subsidiaries are serviced under maintenance contracts with oeing 737 and oeing 777 engines have been monitored
Aeroflot and operated under sublease agreements. We concentrate our The Company keeps on reducing idle time and labour intensity. since March 2014;
effort on centralising the aircraft maintenance function for Aeroflot and its Following 2014, labour intensity per flight hour decreased by in-house maintenance of EFB devices, smoke detectors
subsidiaries. approximately 10% to 2.36 man hours and other components manufactured by Honeywell, Air-
bus, Teledyne Controls and Zodiac Aerospace for Airbus
Aeroflots maintenance policy provides for strict compliance with require- In 2014, Aeroflot engineers organised over 50 aircraft accept- A320 and A330 airliners started;
ments of the states of registry, aircraft lease agreements, and maintenance ance and return checks, including subsidiaries. All MD-11 air- certificates obtained for the maintenance of new com-
programmes. craft phased out in 2013 and the last Boeing 767 were returned ponents manufactured by Honeywell, Airbus, Teledyne
to the leasing company. Controls, Zodiac Aerospace and Thales avionics;
Aircraft maintenance and repairs are performed either in-house (by Aeroflot training projects launched to maintain the Airbus A320
Group) or outsourced to third-party vendors. For instance, line maintenance and A330 oxygen dispensing equipment and obtain main-
of Airbus A330 and 320, Boeing 777 and Sukhoi Superjet airliners is per- tenance certificates for the oxygen dispensing equipment
formed by the in-house division located at the Sheremetyevo base airport. Labour intensity per flight
manufactured by Zodiac Aerospace.
The same division performs periodic maintenance of Airbus A320 jets. hour of Aeroflot Airline
aircraft*, man hour
Line maintenance of Boeing 737-800NG is performed by the engineers of

Volga-Dnepr Technics Moscow. In 2015, we plan to begin maintaining these
aircraft in-house. 3.34
3.03
Since hangar facilities are not sufficient for the periodic maintenance of Air- 2.65
2.36
bus A330, Boeing 777 and Boeing 737-800NG, these aircraft are maintained
by STARCO, Boeing Shanghai and S7 Engineering respectively.
The maintenance division of JSCAeroflot plans to perform the first C check

on SSJ100 in 2015.
2011 2012 2013 2014
Aeroflot Group continues its cooperation with Lufthansa Technik AG. In

2014, JSCAeroflot and Lufthansa Technik AG signed a long-term aircraft
maintenance and repair agreement on more favourable terms. It took effect
BUSINESS OVERVIEW
BUSINESS OVERVIEW
in January 2015 to supersede the previous agreement. * Excluding Il-96, Boeing 767 and MD-11 put
out of operation.
64 65
3.8 Safety
and Security
Aviation and transportation

security
99.972%
Flight safety In 2014, Aeroflot continued implementation of an action plan As a member of the SkyTeam Alliance, the Company has long
to maintain a high level of aviation and transportation security, been engaged in the flight safety, aviation security and quality
Flight safety and aviation security have always been a top priority for Aeroflot. passenger and staff safety in close cooperation with airport assurance initiatives of the alliance. In 2014, the SkyTeam Avia-
The Company has an integrated management system for flight safety and safety level security services, airlines and law enforcement authorities. tion Security Committee focused on the development of flight
aviation security to ensure compliance with IOSA, ISAGO, ISO 9001:2008, of AEROFLOT AIRLINE safety management, data sharing and KSPI analysis systems.
ISO 14001:2004 and the Federal Aviation Rules of the Russian Federation. flights In the reporting period, the Company passed all regular aviation
security inspections, including: During the 2014 XXII Winter Olympic and XI Paralympic Games
Aeroflot continued its comprehensive safety effort into 2014. The safety in Sochi, Aeroflot airline was directly involved in implementation
level of Aeroflot flights in 2014 reached 99.972% to hit the highest range certification audit for the compliance of Aeroflot airline and monitoring of the aviation security action plan at the Sochi
(99,900% 100%) on the safety assessment scale. integrated management system with ISO 9001:2008 international airport. The security initiative also covered many
(Quality Management Systems) and ISO 14001:2004 other airports in the Aeroflot route network.
In 2014, as part of the Safety Assessment of Foreign Aircraft (SAFA) Pro- (Environmental Management Systems); no deviations and
gramme, the European Civil Aviation Conference (ECAC) carried out its regular non-compliances were found following the audit; In an effort to maintain a high level of aviation security, the
inspection of Aeroflot aircraft. Following the inspection, flight safety in the scheduled inspection of Aeroflot airline core facilities at Company operates a canine team and develops innovative solu-
company was recognised to be in full compliance with all the applicable the Sheremetyevo international airport by the Department tions for the dangerous substance detection, with many of them
regulations. of Airport Operations at Rosaviatsia; already applied and functioning. The work is ongoing to patent
security inspection of US-bound flights by the US Trans- a group of inventions covering a polygraph system for objective
Throughout the year, Aeroflot as an active member of the IATA Fuel Quality portation Security Administration (TSA) at the Shereme- olfactometry and accuracy verification methodology in detect-
Pool (IFQP) took part in regular fuel inspections. In addition, Aeroflot par- tyevo airport; all US-bound flights were declared compliant ing explosives and other target substances with sniffer dogs.
ticipated in ground handler audits as a member of the ISAGO Audit Pool. with the aviation security requirements.
To assess and improve flight safety, Aeroflot carried out internal audits of its In 2014, the Company continued its multi-year management
corporate operating divisions and organised the IATA TALS-01 SMS for effort at the Aviation Security Committee with the Russian Asso-
Airlines training for the staff. Employees are encouraged to inform the man- ciation of Air Transport Operators, and took part in improving
agement of any safety issues on the condition of confidentiality. Throughout the Russian transportation security legislation.
the year, much effort was made to minimise the risks of unlawful interference,
disruptive passenger behaviour and environmental hazards, including bird
strikes. To reduce the number of incidents in the reporting period, we devel-
oped a new methodology of assessing the risk of ground handling operations.
BUSINESS OVERVIEW
BUSINESS OVERVIEW
66 67
3.9 Sales*
Domestic sales
27.0%
Sales at the Group airlines are effected through their websites and sales Sales in Russia are effected through authorised agents (under 37.8% to 40.1% while sales through agents and sales offices
offices, agents and, as regards the flights under commercial management, direct agency agreements), third-party booking systems (Trans- decreased from 31.1% to 22.4% and from 8.7% to 7.7% respec-
through Aeroflots website. Pobeda Airlines sell tickets independently either port Clearing House (TCH) and BSP Russia), sales offices, and tively; Internet sales (including call centre) sales grew from
through their website or on-line booking systems. share of sales Aeroflot website. 22.4% to 29.8%.
outside russia
In 2014, the Group continued optimising the structure and efficiency of In the reporting period, sales were influenced by an on-going The Company worked on developing each of the sales channels
ticket sales. integration of subsidiaries into Aeroflot Group. All flights of during the year. In 2014, Aeroflot changed its incentive pro-
22.7%
Rossiya airline and a part of Orenair flights were shifted to full gramme for agents in Russia to reduce the agency fee expenses
Aeroflot Group sells tickets through a variety of domestic and international commercial management of Aeroflot to further integrate the as compared to 2013. The Company supported promotion cam-
channels, including the official Aeroflot website. In 2014, agents accounted sales channels. paigns, and organised familiarisation and invitation tours for
for the largest share in sales (69.9% ) while Internet sales (including call share of sales agents and other events.
centre) and sales offices accounted for 22.7% and 7.4% respectively. Internet sales The highest sales in Russia are generated in Moscow (64.0% of
total sales), St Petersburg, Khabarovsk, Vladivostok, Petropav- To stimulate sales and improve agent loyalty, Aeroflot also pro-
lovsk-Kamchatsky and Yuzhno-Sakhalinsk. Sales channels were moted its products by leading joint marketing campaigns with
redistributed as follows: the share of BSP/TCH increased from Biletix and Anywayanyday booking sites.
Breakdown of Aeroflot Breakdown of Aeroflot Breakdown Breakdown of Aeroflot Group Domestic sales
Group revenue Group revenue in 2014 of Aeroflot Group revenue revenue from domestic sales of Aeroflot Group
from domestic sales (EXCLUDING Moscow) by channel
11%
69.9%
22.7%
48%
18.4% 22.7% 29.3% 36.0% 37.8% 40.1%
28.6%
27.0%
70.7%
64.0% 24%
31.1%
22.4%
53.0%
50.3%
7.4%
29.8%
22.4%
8.7% 7.7%
6%
2013 2014 2013 2014 2013 2014
5%
6%
Internet sales + call centre Sales through agents Agents and branches in Russia Vladivostok BSP / TCC
Sales abroad Sales through offices Own sales offices and agents in Moscow St. Petersburg Agents
Sales in Russia Internet sales + call centre Khabarovsk Internet sales + call centre
Petropavlovsk- wn sales offices

Kamchatsky
Yuzhno-Sakhalinsk
Other
BUSINESS OVERVIEW
BUSINESS OVERVIEW
* In this section Groups sales include revenue of Aeroflot airline and subsidiaries under 100% commerical managment.
68 69
Brand Development
3.10 and Service Quality

Improvement
International sales
1.6
International sales are effected through the network of inde- Most sales are effected through BSP/ARC channels their The Company strives to strengthen its leadership by promoting the brand of
pendent IATA agents within BSP and ARC settlement systems, share grew from 74% to 79% in 2014 while online sales Aeroflot as an air carrier offering the highest safety and comfort on board,
authorised agents (under direct agency agreements), Aeroflot declined from 10% to 5%. Sales through own offices and new aircraft and a broad route network. Recognised as the Best Airline in
website, and sales offices. authorized agents remained at the previous years level. Eastern Europe by Skytrax, Aeroflot is a top-rated global industry leader by billion USD
quality of services. AEROFLOT brand
International sales of Aeroflot are consolidated to a consider- Throughout the year, Aeroflot concentrated its effort on value
able extent the Top-20 countries account for 82% of total strengthening relations with the international agency network According to Brand Finance, the value of Aeroflot brand increased by 9% in
sales. In 2014, the key sales regions were Western Europe by optimising agency terms, offering special rates to sales 2014 to reach USD 1.6 billion or, with Group subsidiaries included, USD1.7
1.7
(40%), Southeast Asia (23%), CIS and Baltic states (16%). The agents and leading joint marketing campaigns. billion. The Aeroflot brand has consistently retained its position in the Top-20
highest sales growth in 2014 was demonstrated by South Korea most expensive brands in the aviation industry.
(+52.0%), Israel (+51.7%) and China (+21.3%).
Throughout the year, the Company led a series of marketing and image- billion usd
In the reporting period, Aeroflot continued its expansion into building campaigns both in Russia and overseas to improve corporate image value of Groups
the Southeast Asian markets by joining BSP Singapore and and brand awareness, increase sales and customer loyalty. The New Year airlines brands
BSP Philippines through IBCS and authorising new agents Travel light show in St Petersburg, Vladivostok, Orenburg, Simferopol and
to sell passenger flights in China and Vietnam. Regional sales Rostov-on-Don was one of the most notable image projects in 2014.
growth was supported by the development of both direct and
connecting flights. Top Flight Performance, another image-building campaign, covered our
priority markets in Europe (UK, Germany and France), with key Asian mar-
kets (China, South Korea and Japan) targeted by Top Flight Comfort. These
Breakdown of Aeroflot Group revenue International sales of Aeroflot
campaigns emphasised our key competitive strengths and announced stra-
from international sales in 2014 Group by channel tegic partnership with Manchester United, introducing the Company to mil-
lions of football fans around the globe and improving brand awareness and
4.7%
confidence in the Company among a wider audience. Aeroflot has been an
40.0% 7% 7% official sponsor and carrier of Manchester United since 8 July 2013. As part
5%
22.9% Western Europe
10%
9% Own sales offices of this partnership, the Company organised other campaigns during the year,
9%
Eastern Europe 79% Internet
including Aeroflot Asia Cup 2014, a football championship in Russia, China,
74%
South Korea and Japan.
CIS and Baltic Agents
America BSP / ARC

Tactical press advertising in Europe, USA, India and the Baltics was focused
South-East Asia on promoting the route network, connecting flights, and certain products
Middle East and Africa and services.
11.1%
5.4% 2013 2014

15.9%
BUSINESS OVERVIEW
BUSINESS OVERVIEW
70 71
Marketing In-flight and airport

research passenger services
In 2014, Aeroflot carried out extensive marketing research on According to the mystery passenger audit carried out in asso- Aeroflot strives to outperform global quality standards of in- In-flight entertainment
key domestic and international markets. The results obtained ciation with Romir Monitoring Standard in 2014, our compli- flight and airport passenger services. We keep on improving
laid a foundation for a new marketing strategy of Aeroflot air- ance with Aeroflots customer service standards exceeded the in-flight catering and entertainment systems and offering new We continued upgrading in-flight entertainment systems by
line. The accumulated consumer data allowed for a more pre- previous year level and reached 92%. services to make the flight as comfortable as possible. The pri- installing the Voyager interactive flight map on Boeing 737
cise customer segmentation and deepened our understanding ority is given to high technology for instance, 30 wide-body and duty-free digital catalogues on Boeing 777, and activating
of the price segments as communication targets to improve our In addition, Aeroflot takes part in IATA Airsat, a customer sat- Aeroflot aircraft offer their passengers in-flight Wi-Fi. Starting Panasonic eX1 and eXW entertainment systems on Boeing 737
position of the global air carrier. isfaction survey involving major air carriers in Europe, Middle from 2014, Aeroflot cabin crews use iPad Mini-based CrewTab- aircraft. Outdated DG players are planned to be replaced with
East and Asia, and SkyTeam Customer Experience Research lets. The project is supported by SITA, a telecom service pro- modern lightweight tablets in 2015.
In December 2014, we launched Siebel CRM system that will covering all member airlines. vider, and improves quality of in-flight services.
help us maintain relations with existing and prospective cus- Further improvement of passenger service quality remains a
tomers, collect marketing data, highlight customer segments In 2014 Aeroflot airline developed a new marketing strategy for In-flight meals top priority for Aeroflot.
requiring attention, interact with customers through preferred 20152020 incorporating the detailed customer segmentation,
channels, and analyse effectiveness of our marketing effort. customer needs and specifics of each segment. Aeroflot regularly improves its in-flight meals, which are devel- Quality of service across the Group
oped in association with reputable world-class professionals,
Our Net Promoter Score (NPS) assessed jointly with Bain & in a strive to respond to ever-changing preferences and tastes Throughout the year, all subsidiaries of the Group worked hard
Company grew in 2014 by 9 p.p. y-o-y to reach 67%. of its passengers. The Company has always been in the top to bring passenger services in compliance with Aeroflot quality
ranks of air carriers offering best in-flight meals. In 2014, we standards. The work included a service quality audit at Donavia,
continued our effort to improve in-flight catering by enhancing Rossiya Airlines and Aurora Airlines, branding of in-flight and
NPS index dynamics
the economy class menu, offering business class passengers airport passenger services, and development of web-based
hot breakfast on 6+ hours flights, and replacing wine in cartons services.
with wine in glass bottles in economy class.
67%
56%
58% In-flight comfort
52%
44%
Aeroflot passengers are offered extra in-flight comfort products,
including amenity kits and bedding on 8+ hours flights in the
economy class, and pillows on less than three-hour flights in the
business class. Aeroflot amenity kits won the Travelplus Airline
Amenity Bag Awards in two categories at once.
2010 2011 2012 2013 2014

BUSINESS OVERVIEW
BUSINESS OVERVIEW
72 73
SkyPriority
Service quality improvements implemented by subsidiaries in 2014

Starting from 2013, Aeroflot as a member of SkyTeam Alliance included in the passenger service standards of Aeroflot and its
Airline In-flight services Airport services Web services
has been leading a SkyPriority initiative offering accelerated subsidiaries. In 2015, we plan to roll out SkyPriority and Fast-
completion of departure formalities to frequent flyers who are Track Security services in alliance hubs for business class pas-
Donavia Pillows offered to business Special-purpose car to SNS account to expand prioritised during the check-in, luggage drop-off, passport con- sengers and golden members of the Frequent Flyer Programme.
class passengers on flights to/ transport passenger with passenger coverage trol and boarding.
from Moscow reduced mobility in the Rostov-
Porridges for breakfast offered on-Don airport
to business class passengers; Transfer services for In 2014, the SkyPriority initiative was introduced in all alliance
menu cards on Rostov to unaccompanied minors airports of Aeroflot route network. SkyTeam requirements were
Moscow flights travelling by Aeroflot
Snacks (crackers and wafers) Self-service check-in kiosks in
replaced with cakes in the Rostov-on-Don and Mineralnye
economy class Vody airports
New catering technology for
business class passengers Aeroflot Bonus
Training course for the cabin
crew and ground staff on
Passenger Care and Disruptive
Passengers Aeroflot Bonus is the largest frequent flyer programme in Rus- In the reporting period, a project was launched to introduce a
sia, CIS and Western Europe. Its 15th anniversary in 2014 was CRM system and a new loyalty programme to improve efficiency
Rossiya Space+ service introduced New Aeroflot business lounge celebrated by organising the Light Award event and Flight in of Aeroflot Bonus.
More blankets in Boeing 767 opened in St Petersburg Pursuit of Dream on-line contest. The number of programme
economy class Changes in luggage allowances members increased by 13.7% y-o-y to exceed 4.5 million people. The number of programme partners continues growing. For
and cabin luggage policies
instance, InterContinental Hotels Group, The Rezidor Hotel
(introduction of the piece
concept) Aeroflot Bonus offers an opportunity to earn free miles when Group, Rixos Hotels, Grecotel, Lotte Hotels and Resorts, Radis-
flying with Aeroflot Group and SkyTeam Alliance, paying with son Blu, Park Inn by Radisson, and Europcar joined the Fre-
Aurora Stepwise branding of check-in co-branded cards and using partner services around the globe. quent Flyer Programme in 2014. Now Aeroflot Bonus members
and boarding areas, ticket Free miles can be used to book a premium flight, upgrade your can earn miles for staying in more than 9,000 hotels all over
counters and flight boards travel class, book a room, rent a car or buy other goods and the world.
services offered by programme partners. Free miles can also
Orenair New blankets in the economy German-speaking passenger Rent-a-car service on the be donated to charity as part of the Miles of Mercy project. Plans for 2015 are to complete the roll-out of the CRM system
and business classes; amenity service at the information and company website
In addition, programme members are given access to on-line and new loyalty programme, expand the partnership network
kits in the business class booking centre
services via their personal account, offering extra travel plan- and develop on-line services for Aeroflot Bonus members.
ning opportunities.
To enjoy more options, programme members can upgrade Aeroflot Bonus members, thousand
their Standard Membership to Silver or Golden Membership.

In 2014, a new Platinum Membership was introduced to give
4,551
more priorities to programme members, including personal
assistance, concierge service and invitations to social events. 4,002
3,359
In 2014, the Aeroflot Bonus Frequent Flyer Programme was re-

branded, including the design of cards, communication materi- 2,293
2,724
als, programme pages and personal accounts on the corporate

website. The programme coverage was extended to include
flights of Aurora and Rossiya Airlines. A promo campaign was
BUSINESS OVERVIEW
BUSINESS OVERVIEW
organised to stimulate direct sales through Aeroflot website
flights booked on the website received 15% extra free miles. 2010 2011 2012 2013 2014
74 75
3.11 Information Technology

and Innovations
Information
technology
30
As an industry leader, Aeroflot Group implements a comprehensive informa- Single Payment Gateway at a single point and enable users to view bookings and provide
tion technology and innovation programme to sharpen its competitive edge data to receive bonus miles after the flight. The plans for 2015
on the global air transportation market. The share of tickets sold through the Single Payment Gateway are to continue development of the Aeroflot Bonus Frequent
aircraft offer on the Company website, mobile applications and payment Flyer Programme by automating connection to new services,
Cutting edge technologies and R&D activities help us maintain high safety IN-FLIGHT WI-FI and agents continued to grow in 2014. issuing new cards and improving quality of passenger services.
levels, comply with time schedules, improve passenger services and stream- internet access
line business processes at Aeroflot and all subsidiaries of the Group. E-Commerce Platform In 2014, Aeroflot launched its own hotel booking service on
the corporate website to make travel planning easier for the
Aeroflot focuses on the introduction of innovative IT solutions in all areas of In 2014, Aeroflot launched an E-Commerce Platform project customers. Website visitors can book accommodation in over
its operation. Top priority is given to advanced technologies in the plans to to develop and introduce a management system for the tour 500,000 hotels worldwide.
develop airline services in 2015. We pay special attention to a wider use of package distribution, with a number of hotel booking initiatives
on-line tools, including development of the corporate website and software undertaken. With a new application for iPads and its updated version for
applications and installation of in-flight Wi-Fi systems. iPhones launched in the reporting period, Aeroflot Bonus mem-
The platform will facilitate sales of tickets and services through bers were provided with extra functionality. The application now
the call centre, agents and sales offices, and: supports TouchID fingerprint validation technology for secure
Breakdown of R&D costs Breakdown of R&D costs
access to the Aeroflot Bonus account.
by researcher, % BY NATURE, % offer a new on-line product package and on-line booking
3%
and selling processes to retail, corporate and group clients Booking, Flight Information and Contacts sections of the iPad
9% and on-line agents; version were revamped, with input parameters and search
58% 37% 30%
connect other service providers to enhance product pack- results displayed on the same screen and filters added to mini-
Universities Operations ages in each customer category; mise switching between screens. Special Offers and Mileage
10%
Research organizations Management
support the on-line redemption project and improve the Calculator sections were redesigned and received their own
offering for Aeroflot Bonus members. search interface. Pages containing information about luggage
Small and medium- In-flight service
sized enterprises allowance, animal transportation, travel classes, etc. are now
Commerical
Remote interaction channels (official website, accessible without Internet connection.
Safety and security mobile applications and call centre)
16%
Environment In 2015 the mobile website and Aeroflot applications users
and energy saving
In 2014, Aeroflot worked on improving quality of passenger will be offered additional flight booking options enabling pas-
5%
services and increasing sales through the website, call centre sengers to book flights with multiple destinations. These options
32%
and mobile applications. will be available on the mobile website and in mobile applica-
tions for iOS (iPhone and iPad), Android and Windows Phone.
In May 2014, Aeroflot launched an updated version of its web-
site www.aeroflot.ru. Its design and navigation were revised to In 2015, we plan to introduce a payment option through the
become plain and laconic, making the search easy and book- call centre (IVR) with cards supporting 3DSecure/SecureCode
ing more convenient for passengers. In addition, the Company technology, making call centre services more convenient on
upgraded the SabreSonic Web on-line booking platform to the those markets where the 3D procedure is obligatory.
latest version.
Personal accounts of Aeroflot Bonus members were re-

designed to accumulate all necessary information and services
BUSINESS OVERVIEW
BUSINESS OVERVIEW
76 77
Research
and development
Tablets for the cabin crew Hub management Aeroflot Groups Innovative Development Programme pro- To improve environmental safety of pre-flight aircraft mainte-
vides for a number of research and development initiatives nance in 2014, a new approach was developed to the disposal
Aeroflot is the first Russian and CIS airline that commenced to In the reporting period, Aeroflot launched Netline/HUB, a hub implemented either in house or in association with third par- of spent anti-icing fluids and separate collection of solid waste.
equip its cabin crew with iPad Mini-based CrewTablets. The management solution by Lufthansa Systems, to monitor and ties. Among these initiatives was a loop system for automatic The new approach will save resources and reduce negative
tablets have pre-installed professional software developed by manage transfer passengers in the base airport. connection to standby power supply developed and tested in impact on the environment.
SITA, improving quality of in-flight passenger services. 2014. The utility model of this system improved power supply
Internet on Board reliability at minimal cost.
With the CrewTablet, the flight attendant can identify the
passenger, his/her needs and other related information in As part of the Internet on Board project, six Boeing 777 and Other initiatives in 2014 were targeted at improving quality
a few seconds. In addition, these devices allow switching five Airbus A330 were equipped with in-flight Wi-Fi systems in and efficiency of staff training and included a study of desktop
over to the digital workflow without hard copies of reports the reporting period. As at the year-end, a total of 30 airliners virtual reality in training and testing air traffic controllers to
and manuals. offered Wi-Fi connectivity to Aeroflot passengers. manage aircraft take-off, taxiing and landing, and a study of
desktop virtual reality in training and testing airport ground
vehicle drivers.
Canine team
Innovation development
and research
The Company continued its research initiatives in improv- In 2014, Aeroflot airline and the Russian Federal Customs
In 2014, Aeroflot Group continued implementing its Innova- In 2014, Aeroflot was an active participant of innovative events, ing aviation security with involvement of sniffer dogs. In the Service (FCS) signed a canine team cooperation agreement
tive Development Programme providing for a number of R&D including the Open Innovations forum, VUZPROMEXPO-2014: reporting period, Aeroflot launched a project to develop a pilot providing for the development of training programmes and joint
projects to be carried out by Aeroflot and Group subsidiaries. National Science as a Basis of Industrialisation, and Innova- hardware and software package that measures and analyses training sessions at the FCS training centre for customs officers
tive Practice: Science plus Business congress organised by physiological parameters of a sniffer dog to improve detection and members of Aeroflot canine team on olfactory detection
All innovation projects are financed with corporate funds. In Lomonosov Moscow State University. results, and patented its new method of detecting explosives and other detection techniques.
2014, Aeroflot airline spent 0.3% of its revenue on research and and other target substances.
development (according to the Russian accounting standards).
R&D projects are carried out in association with universities,
research organisations, and small and medium businesses.
Innovative
projects
In 2014, the Company launched a pilot version of the automated In 2014, Aeroflot obtained a license from Rosaviatsia to use
document management system to become one of its most sig- FPT B777-200ER/300ER procedure trainer designed for the
BUSINESS OVERVIEW
BUSINESS OVERVIEW
nificant achievements in the innovative field. The system is an crew to be trained in Boeing 777 systems and operating pro-
automated supplier verification solution that expedites audits of cedures. The training enables pilots to master all flight modes
Aeroflots existing and potential partners, eliminates functional and improve piloting skills.
overlap, reinforces control over supplier activities to sharpen
the competitive edge of the Company.
78 79
3.12 Procurement
Procurement activities at Aeroflot airline comply with Federal 96.1% of all tenders were organised on-line. In monetary terms, Optimisation of fuel procurement at Aeroflot airline is in the To minimise fuel procurement expenses of Aeroflot Group,
Law No. 223-FZ On Procurement of Goods and Services by 44.15% of all supplies was procured via on-line bidding pro- competence of the Procurement Department and the Bidding bidding processes at Aeroflot airline and subsidiaries are
Certain Legal Entities of 18 July 2011, Aeroflot Procurement cess (+3.66% y-o-y), complying with the requirements of the Commission and is subject to approval by the Fuel Committee. consolidated.
Policy and other procurement-related regulations adopted by Federal Agency for State Property Management (Instruction
the Russian Government. No. GN-13/1206 of 21 January 2011).
Procurement transparency, no discrimination and unreason- Each tender received an average of 3.92 bids (+11.6% y-o-y).
able restrictions, and ability to procure from a wide pool of This testifies to transparency and competitive nature of the
quality bidders are top priorities for Aeroflot airline in its strive tenders organised by the Company, and growing interest of Procurement from small
to enhance procurement efficiency and reduce costs. potential suppliers towards them.
and medium ENTERPRISES
The procurement process in the Company is organised in line
with the best practices, including on-line bidding. In 2014,
Procurement processes at Aeroflot airline provide for a broad 1352 On Specifics of SME Participation in the Procurement of
involvement of small and medium businesses (SME). Over 20% Goods and Services by Certain Legal Entities of 11 December
of all supplies in 2014 was procured from SME. The Company 2014. Aeroflot airline is currently developing an SME coopera-
is committed to support SME by facilitating their access to cor- tion programme and a list of goods and services to be procured
porate tenders in accordance with Government Resolution No. from small and medium businesses.
Fuel
procurement
Transparent competitive procedures and formula-based pricing and their subsidiaries specialising in aircraft fuel sales (RN-
optimise fuel costs, which has always been a major expense Aero, Gazpromneft-Aero, Gazpromneft-Aero Sheremetyevo, Advisory board
item for the Company. Fuel pricing formulas are devised in the Lukoil-Aero, etc.) to avoid an unjustified rise in fuel prices or AND independent audit
bidding process. The share of fuel procured at formula-based an artificial supply shortage.
prices in 2014 reached 80% in Russian and 96% in foreign of procurement efficiency
airports. Russian airports where fuel supplies are monopolised In addition, pursuant to Government Resolution No. 350
and fuel is sold at the price approved by the Flight Schedule On Procurement of Oil and Related Products at Commodity
and Tariff Centre are the only exception. Exchanges of 5 June 2007, Aeroflot airline procures at least In its pursuit of procurement transparency, the Company estab- experts who make proposals on procurement efficiency, trans-
15% of annual fuel supplies at St Petersburg International lished an advisory board in charge of independent audit of parency, fair competition, advanced technologies and broader
Pursuant to the order of the Deputy Prime Minister and Item 3 Mercantile Exchange. procurement efficiency. The Advisory Board includes repre- SME access. Proceedings of the Advisory Board are published
of the Meeting Minutes No. IS-P9-25pr of 21 November 2011, sentatives of public organisations, academia and procurement on Aeroflot airline website.
Aeroflot airline focuses on direct cooperation with vertically
integrated oil producers, such as Rosneft, Gazprom and Lukoil,
BUSINESS OVERVIEW
BUSINESS OVERVIEW
80 81
4 CORPORATE
SOCIAL
RESPONSIBILITY
WE
ANSWER TO
EVERYONE
Russia, Irkutsk Region

We embark on our journey together, understanding our
role in society while actively seeking to participate in
important social and charity projects
4.1 HR POLICY
HR policy
18,981
Aeroflot Group actively contributes to society by increasing peoples mobility Aeroflot airlines HR policy is designed to expand the Companys Aeroflot airline is active in addressing the industrys understaff-
and accessibility of Russias regions. Aeroflot airline and its subsidiaries local and global market footprint, win passengers and clients ing issue. After the ban on employment of foreigners for Russian
work to benefit a wide range of stakeholders, primarily its passengers and trust and provide career and personal growth opportunities for air crew positions was lifted, the Company started recruiting
employees. JSCAeroflot HEADCOUNT all employees. The Company is constantly working on attract- best-in-class international pilots. Aeroflot airline is also attract-
ing and retaining highly-qualified personnel, on their training, ing promising Russian professionals.
The Company keeps in touch with the general public. In 2014, it established improving performance and creating staff reserve based on
32,439
its own Public Council an advisory body embracing prominent public figures the Companys strategic priorities. Special attention is paid to Aeroflot airlines HR Department works in close cooperation
to assist the airline in defining its key policies with a strong social focus. The improving employee loyalty and creating favourable working with its subsidiaries HR divisions on a variety of tasks, includ-
council is made up of artists, educators, doctors, athletes, media personali- environment. Aeroflot airline is currently the industrys leading ing coordination of staff lists and organisational structures
ties, business people and representatives of public entities and professional Aeroflot group headcount employer aiming to continue that way and to be setting the HR and alignment of local organisational structures with that of
associations. During the year the council convened to discuss flight pricing standards in the air travel field for years to come. Aeroflot airlines HR function.
and industry-wide aircraft staff shortages.
In 2014, Aeroflot airlines headcount was up 6.1% to 18,981 As at 31 December 2014, the total headcount of Aeroflot Group
Aeroflot airline complies with HR, health, safety and environmental protection employees due to flight volume growth and aircraft fleet expan- was 32,439 employees, a 6,5% increase y-o-y.
legislation, striving to meet top global standards of corporate social responsi- sion. The top gainers were flight attendants and airport service
bility. In September 2014, Aeroflot airline ranked second in social responsi- employees, adding 8.4% and 6.4%, respectively. The average
bility in the rating by the Agency for Political and Economic Communications. age of the airlines employees continued to decrease in 2014
and reached 38.6 years (compared to 38.8 years in 2013).
Employee turnover rate went down from 8.5% to 7.7%.
JSCAeroflot employee headcount by business activity
Employees by business activity As at 31 December 2014 As at 31 December 2013 Change
Flight crew 2,003 1,935 3.5%
Cabin crew 5,669 5,229 8.4%

JSCAeroflot Personnel breakdown by category JSCAeroflot Personnel breakdown by age
Technical maintenance and repairs 2,239 2,166 3.4%
Selling tickets and services,

1,500 1,418 5.8%
advertising
5% 22%
Airport services 4,275 4,019 6.4%
Other personnel 3,295 3,124 5.5% 56% 55%

Total 18,981 17,891 6.1% Management
4050 years
39% 23%
Workers up to 40 years
Corporate Social Responsibility

Professionals 50+ years
84 85
Employee Social programmes

training for Company employees
Training and professional development of its staff is one of for Aeroflot airlines line station personnel, including online Aeroflot airline implements a socially responsible HR policy, The Company regularly takes part in sports and other public
Aeroflot airlines strategic priorities where it applies unique professional development courses. In order to train engineering making sure its employees get a fair salary and generous events. In 2014, Aeroflot airline sports teams participated in
technologies and makes large capital investments. personnel, the Company makes use of state-of-the-art mainte- social benefits. The Companys social programmes are aimed a volleyball tournament on the 69th anniversary of the WWII
nance training devices for Airbus 320 and 330. at creating favourable conditions for fostering professionalism, Victory Day, in an international football tournament for airline
In 20122014, Aeroflot airline arranged for training of almost leadership and loyalty among the employees. teams and in an international hockey Nation Cup Prague tour-
78 thousand employees both in-house and externally. In 2014 During 20152017, a training centre is scheduled to come on nament among airlines and airports held in the Czech Republic.
alone, over 26 thousand employees completed their training stream at Aeroflot airline facilities under an agreement with In 2014, the Company hosted a Staff Conference to have a uni- In July 2014, the airlines mountaineers traversed the Swiss
courses. the Irkut Corporation to re-train air and cabin crew members fied employee representative body established. The employers Alps. In April, Aeroflot airline celebrated Aeroflot Day by host-
for MC-21 airliners. representatives and employees reached a decision to extend ing the traditional Runway award ceremony at Gostiny Dvor.
Department for Aviation Personnel Training Aeroflot airlines collective bargaining agreement to 1 Decem-
Aeroflot Aviation School ber 2017, keeping all the aviation-specific benefits and privi- The Company provides non-financial incentives to recognise its
In 2014, the Department for Aviation Personnel Training out- leges intact. Aeroflot airline spends over RUB 3 billion annually most successful employees. In 2014, 50 employees of Aeroflot
performed its targets, with about eight thousand attendees In 2014, Aeroflot airlines Aviation School provided instruction on the implementation of social package-related programmes. airline received Government Awards of the Russian Federa-
completing their training programmes (55% increase y-o-y). to more than 14,000 aviation professionals. In the reporting tion, Russian Federation Presidential Certificates of Honour,
The Department arranges re-training for new aircraft, flight period, the school focused mainly on ground-service of aircraft Aeroflot airlines key social programmes are: awards of the Russian Ministry of Transport and other govern-
simulator training, passenger and cargo flight management at the apron, flight attendant training in Russian and foreign ment agencies. Also, over 1,500 employees received corporate
training and a course on SABRE booking. It also organises aircraft, aviation security, regulations for hazardous cargo rest cures for employees and their families; awards.
training programmes for aircraft, engineering and ground-sup- transportation and foreign languages. non-state pension provision;
port personnel. In 2014, 169 pilots were re-trained for various corporate transport and parking;
types of aircraft. External training season tickets to fitness clubs for employees;
home purchase support to Aeroflot airlines air crew;
Aeroflot airlines capabilities for training air and cabin crew Over 4,000 professionals completed courses at external edu- home lease for key people;
members are the best in Russia and the CIS and some of the cational institutions and training centres in 2014. Those were financial assistance to current and former employees;
more advanced in Europe overall. Aeroflot airline organises primarily compulsory production personnel training and gen- daycare spending compensation for employeess kids.
training not just for its own employees, but for other airlines eral training programmes. As part of Aeroflot airlines 2014
staff as well. All the equipment is certified by the competent pilot recruitment programme, 50 candidates were selected for
Russian (Federal Air Transport Agency) and European (Euro- targeted training at Ulyanovsk Higher Civil Aviation School and
pean Aviation Safety Agency) civil aviation bodies. Saint Petersburg State University of Civil Aviation. Sochi-2014 project
In 2014, the Company installed and commissioned Boeing Aeroflot airline scrupulously chooses educational institutions
737NG door trainer, Boeing 777-200ER/300ER specialised to partner with on a constantly-improving mutually beneficial Aeroflot airlines volunteers actively participated in organising relays. The Company ran an incentive programme to award
flat panel trainer and A320 cabin emergency evacuation train- basis. The Company organises internship for students to sub- 2014 XXII Olympic Winter Games in Sochi. Over 40 of Aeroflot tickets to the Olympics opening and closing ceremonies and
er. Full flight simulators A320 (series 5000), A320 (series 7000) sequently offer them career opportunities. In 2014, Aeroflot airlines torch-bearers ran the Olympic and Paralympic torch sports contests to the best employees.
and A330-200 also underwent EASA certification in the report- airline established a scholarship for students of civil aviation
ing period. schools.
In 2014, the Department was authorised to launch 28 new Health and safety
training programmes for engineering and ground-support
personnel. It also introduced new forms of distance learning
Transport industry, like mining and processing industries, has The year 2014 saw systematic work to ensure safe working
the biggest share of jobs exposed to harmful and hazardous conditions, with a focus on health and safety training, mon-
working conditions, which makes health and safety matters a itoring the working conditions and health and safety status,
foremost priority. Aeroflot airline has a certificate confirming preventing occupational injuries and diseases.
its compliance with regulatory occupational safety require-
ments No. 001, valid through 21 September 2016. In 2009, the
Company introduced annual inspections of health and safety

certification work.
In 2014, Aeroflot airline carried out a special assessment of

working conditions at 4,415 workplaces as per Federal Law
No. 426-FZ On Special Assessment of Working Conditions of
1 January 2014.
86 87
4.2 Charity and social

programmes
Support
for WWII veterans
Aeroflot Group strives to leverage its industry leadership to help of Aeroflot airlines policy as a national airline is supporting Comrades in Arms Discount tickets for selected social groups
the society, concentrating its efforts on the vulnerable social sports and especially international events that boost Russias
groups. The Group implements a number of charity and social reputation. In 2014, Aeroflot airline carried out its annual Comrades in In 2014, Aeroflot airline kept taking part in the publicly sub-
programmes in all the regions of operation. The cornerstone Arms campaign aimed to support WWII veterans and help them sidised travel programme for residents of the remote Russian
travel to Europe and remote Russian cities free of charge. The regions. Discount return tickets were made available for trav-
Company also organised a variety of festivities for the veterans el between Moscow and cities in the Far East (Vladivostok,
and keeps providing them with financial support. Khabarovsk, Petropavlovsk-Kamchatsky, Yuzhno-Sakhalinsk,
Yakutsk, Chita and Blagoveshchensk), along with flights
Helping children between the Far East cities and European Russia with a lay-
over in Moscow.
Miles of Mercy Train of Hope
2014 marked the sixth year of the Miles of Mercy charity pro- In 2014, Aeroflot airline, for the ninth time, took part in the
gramme that Aeroflot airline had established as one of the national charity campaign, Train of Hope, organised by Radio
Support
ways to provide assistance to children with serious illnesses. Russia as part of its Childs Question social project. The purpose for Russian sports
The campaign enables participants of the Aeroflot Bonus pro- is to draw the attention of society, business representatives,
gramme to contribute their bonus miles to the accounts of char- executive government and law-makers to the issue of children
itable organisations taking part in the programme, including without parents, to provide assistance to such children and to Supporting sports is a priority of Aeroflot Groups corporate larger-capacity planes, including Boeing-777-300ER. From
the Give Life charitable fund, Vladimir Spivakov International organise meetings with prospective adopters. This year the cam- social responsibility policy. The Group runs a large-scale pro- 20 January to 18 March 2014, Aeroflot airline operated 500
Charity Foundation, the Russian Assistance Fund operated by paign also covered Simferopol and Sevastopol. Eight families gramme to support Russian sports and teams, sponsoring both return flights from Moscow to Sochi, providing transportation
Kommersant Publishing House, and the Line of Life fund. The from various corners of Russia planning to adopt or assume major international and national sports events. for 133,887 people. On top of that, the Company operated 20
contributed miles are used to carry children with serious ill- guardianship boarded the Crimea-bound Train of Hope in 2014. return flights from Frankfurt to Sochi, carrying a total of 2,915
nesses to countries and cities where they can get the necessary General Partner for XXII Olympic and XI passengers. During the Games, passengers were offered a spe-
treatment. Assistance to orphanages Paralympic Winter Games in Sochi cial onboard menu.
A Heart Has Two Wings In 2014, Aeroflot airline continued providing assistance to a In its capacity of General Partner for the XXII Olympic and XI Regular and additional Aeroflot airline flights to Sochi trans-
number of orphanages across Russia, including the Reverend Paralympic Winter Games in Sochi, Aeroflot ensured fast and ported over 790 members of the Russian National Team and of
In 2014, Aeroflot airline continued its A Heart Has Two Wings Sergius Residential School in the Sergiev-Posad district and convenient air travel to the Olympic and Paralympic capital. the official delegation of the Russian Federation, 167 members
national charity programme that aims to help children with seri- Pokrov Orphanage in the Vladimir Region. The orphanages of the Paralympic sports delegation, along with their sizeable
ous, rare or hard-to-diagnose illnesses who live in remote areas received edutainment games, stationery supplies and New One of the key tasks was to make the Olympics easily accessi- and fragile special luggage.
of the country. The Company covered all the transport expens- Year presents. The kids also made a site visit to the Companys ble to the Russians. Aeroflot airline also offered a special fare,
es for doctors and children with the accompanying adults. In production facilities and took part in an interactive programme the Olympics for 5,000, to make air tickets to the Olympics Russian medalists were awarded Aeroflot airline Bonus Gold
2014, the programme saw groups of doctors travel to Ulan-Ude, that imitates plane flight. On top of that, Aeroflot airline kept more affordable: an economy class return flight from Moscow Level cards in recognition of their significant achievements.
Arkhangelsk, Severodvinsk, Magadan, Khabarovsk, Simferopol arranging its regular on-site charity campaigns with volunteers to Sochi cost RUB 5,000, all taxes and duties included.
and Barnaul. While in these cities, the Company, together with involved. Aeroflot airline completed a number of projects to get prepared
Scientific Centre of Children Health RAMS, organised on-site During the Olympics, Aeroflot airline set up seamless air travel for the Olympics, including regular connection with Sochi and
open sessions with the doctors. Over 700 children with rare between Sochi, Moscow and Frankfurt. The Company boosted Gelendzhik in almost any weather conditions. During the
illnesses from various Russian regions got treatment thanks air travel to and from Sochi, increasing the number of its own Games, the airline introduced a separate phone number for

to this initiative. flights to 63 a week and operating as many as 12 flights on the Sochi travellers and increased the number of phone lines of
busiest days. In addition, Aeroflot launched direct flights from its call-centre.
Frankfurt to Sochi. The MoscowSochi route was serviced by
88 89
4.3 ENVIRONMENTAL
PROGRAMMES
11,438
A joint campaign of the Russian Olympic Committee, Aeroflot club provides advertising services to the Company and actively Aeroflot airlines environmental policy is aimed at ensuring sustainable devel-
airline and Visa raised RUB 10 million in support of the Rus- promotes its brand both nationally and globally. opment and preserving environmental balance. Being the industry leader,
sian Olympians. The funds were used to establish a scientific the Company observes all the mandatory requirements and strives to comply
and methodological centre for Olympic training that works Official Carrier of CSKA Professional Basketball Club with the strictest international environmental standards. tonnes of fuel saved
on experimental substantiation of innovative technologies in
sports and develops scientific guidelines for sports training of In 2014, Aeroflot airline became the official carrier of the CSKA In 2014, Aeroflot airline successfully implemented its environmental man-
Russian teams. professional basketball club. In this capacity the Company is set agement system and passed a certification audit for compliance of the Com-
to provide professional management and strategic advisory ser- panys quality management and environmental management systems with the
Official Partner and Official Carrier vices for transporting the team and club members. In exchange, international standards ISO 9001:2008 and ISO 14001:2004, respectively.
ofRussian National Football Team the club is providing advertising services to the Company and This made Aeroflot airline the first and only Russian airline with a certified
promoting its brand both nationally and globally. integrated management system. The Company also developed its own envi-
Starting 2012, Aeroflot airline has been an official partner and ronmental responsibility performance indicators.
carrier of the Russian national football team. In 2014, Aeroflot Sponsor of Russian Volleyball Federation
airline organised a MoscowSao Paulo (Brazil) charter flight for The key focus in environmental management is on improving aircraft fuel
the team to the 2014 World Cup on board of the comfortable Since 2012, Aeroflot airline has been supporting volleyball. efficiency achieved through fleet upgrades. Other priorities include:
wide-body Airbus A330 aircraft.
improving energy efficiency of operations by implementing resource-
Official Sponsor and Official Carrier saving policies and technologies;
ofCSKA Professional Football Club streamlining the route network and implementing new piloting tech-
niques to reduce noise and pollution;
Starting 2009, Aeroflot airline has been an official sponsor and recycling-based waste management aimed at reducing the environ-
carrier of the CSKA professional football club. In exchange, the mental footprint;
using environmental performance indicators as a criterion for hiring
vendors and contractors;
incentivising employees to use resources sparingly.
Supporting
cultural projects
In 2014, Aeroflot airline supported the ROSKINO film produc- projects and programmes aimed at preserving Russias cultural
tion company in holding international cultural events to pro- heritage, fostering intercultural dialogue and bolstering the
mote Russian cinema at the top global film festivals. national profile in humanitarian cooperation.
Jointly with the Directorate of International Programmes,

Aeroflot airline also arranged and held over 70 multinational

90 91
Fuel efficiency Environmental fees
Aeroflot airline implements a number of energy efficiency and cutting-edge energy-efficient aircraft. The Company is also As per Federal Law No. 7-FZ On Environmental Protection of Total fees paid by Aeroflot airline for negative impact
on the environment, RUB million
measures to help reduce specific aviation fuel consumption by working on lowering actual hourly in-flight fuel consumption, 10 January 2002, Aeroflot airline pays environmental fees for
43.6% through 2020 (compared to 2007). The amount of fuel reducing fuel usage through improving service at the base air- using natural resources. Fees for the negative impact are cal-
saved during the reporting period was 11.4 kt, which translates port and the cost of fuel. culated based on the Natural Resource User Module 1.7 by the
to USD9.5 million. The main drivers here are fleet upgrades Russian Environmental Watchdog (Rosprirodnadzor). 6.7
In 2014, Aeroflot airlines environmental fees increased 31.1% 5.1
to RUB 6.7 million due to growing traffic and subsequent solid

Initiatives against air pollution waste increase. At the same time, the limits for waste disposal
were not exceeded. 2.8
2.1
1.7
Aeroflot airline has a 2-emissions monitoring and measuring Almost the entire Aeroflot airline fleet complies with ICAO stan-
system in place, which ensures compliance with all the relevant dards for noise levels and emission of atmospheric pollutants.
international requirements. The Company is a part of the Euro- In 2014, the Company won the 7th Quietest Airline Contest at 2010 2011 2012 2013 2014
pean CO2 Emission Allowance Trading System and, as per EU Vaclav Havel Airport Prague.
Directive No. 421/2014 of 16 April 2014, plans to undergo a
verification audit of its emissions report for 20132014. In order to reduce the environmental impact of ground vehicles,
Aeroflot airline carries out regular instrumental controls and
According to Aviasales.ru travel search engine, Aeroflot airline tuning of fuel systems to ensure their compliance with permitted
is the greenest among all Russian airlines. The Companys air- toxicity and smoke levels.
Vendor management system
craft leaves the smallest carbon footprint in the atmosphere development
(66.57 g of 2 per passenger-kilometre) thanks to its higher
fuel efficiency.
Aeroflot airlines vendor management practices are mainly Safety Audit programme for Ground Operations, which speeds
focused on safety. The Company is part of the IATA Fuel Quality up vendor due diligence.
Pool, IATA De-Icing/Anti-Icing Quality Control Pool and IATA
Reducing waste discharge
into water bodies
In 2014, the Companys environment experts and SPU-1 DZM, SanPiN 2.1.5.980-00 Hygienic Requirements for Surface Water
Subsidiary
which services Aeroflot airlines Office Building (Melkisaro- Protection. Currently, the Company exercises monthly control integration
vo), implemented a project to control the quantity and quality over the quality and quarterly control over the quantity of treat-
of waste water discharged by the office buildings treatment ed waste water discharge.
facilities. According to the inspection, the office complies with In 2014, Aeroflot Group continued developing quality manage- IOSA and ISO standards, increasing subsidiary airlines fuel
ment systems at its subsidiary airlines. This process included efficiency and ensuring adherence to Aeroflot airlines stan-
preparation for certification audits for compliance with the dards by all of the Groups carriers.
Solid waste
Aeroflot airline fuel and energy consumption in 2014
disposal
Actual consumption
Item
Volume used Value, thousand roubles (net of VAT)
In 2014, the airlines environment experts kept monitoring solid Aeroflot airline is the only Russian air carrier to collect and
waste storage sites and supervised disposal of these wastes. recycle de-icing fluid. In 2014, the airline allocated about RUB Aviation fuel, tonnes 2,028,842 62,437,990

During the year, 69% of solid wastes were recycled. 5.7 million for this purpose. Heat energy, Gcal 38,561 54,770
Electric power, kWh 25,280,050 82,420
Vehicle fuel, litres 4,511,930 128,388
Aviation lubricants, litres 199,673 95,855
92 93
5 CORPORATE
GOVERNANCE
AND SECURITIES
CALM AND
Russia, St. Petersburg Region

CONFIDENT
A truly reliable company depends only on its own means
5.1 Corporate
Governance
Corporate Governance Corporate governance

System structure
3
In line with top standards and requirements, JSCAeroflots corporate govern-
ance system aims to implement the principles of transparency and acces-
sibility of information about the Company and ensure equitable treatment
of minority and majority shareholders. independent Committee
Committee for finance for innovative
directors
and investments development
JSCAeroflot constantly seeks to improve its corporate governance sys- on the board
tem, including the subsidiary and affiliate practices. In 2014, the Company of JSC Aeroflot
Revision Executive office
assessed compliance of its corporate governance practices with the recom- committee of the Board of Directors
mendations set forth in the Corporate Governance Code as approved by
the Bank of Russias Board of Directors on 21 March 2014. This assess-
ment allowed JSCAeroflots Board of Directors to adopt an Action Plan to
Improve Corporate Governance Practices at JSCAeroflot (Minutes No. 8 of
General Chief Operational,
02 December 2014). After securing an approval of the Russian Government, Board Executive
Meeting of Executive financial Subsidiaries
the final version of the Action Plan was adopted by JSCAeroflots Board of of Directors Board and other
Shareholders Officer
divisions
Directors on 19 March 2015 (Minutes No. 14).
Among other things, the Action Plan aims to:
extend the powers of JSCAeroflots directors in risk management and

steering of the Companys subsidiaries and affiliates;
document procedures to tackle conflicts of interest;
develop a comprehensive risk management system for Aeroflot Group; Personnel Strategy
enhance transparency for JSCAeroflots shareholders and investors. and remuneration committee
committee
The Company is planning to implement most of the initiatives set forth in the
Audit
Plan before June 2016. committee
In addition to the recommendations provided in the Corporate Governance

Code, the Group seeks to implement the following innovative solutions for Corporate governance is exercised by the Companys executive Policy of JSCAeroflot, Dividend Policy of JSCAeroflot and
corporate governance: an IT platform for the Board of Directors; an IT plat- and supervisory bodies, including General Meeting of Share- Corporate Conduct Code of JSCAeroflot.
form to file, archive, classify and control corporate and other documents holders, Board of Directors, Executive Board, CEO and Revision
and subsidiary-related data; regular strategic meetings and workshops to be Committee. Aeroflot developed and adopted a number of documents aiming
attended by members of the Companys Board of Directors, executive bod- to improve corporate governance standards within its aviation
ies and key management, with professional moderators, third party experts, External auditors are signed to provide an independent review subsidiaries and affiliates, including: the Statute on participa-
etc. involved of JSCAeroflots financial and operational activities in accord- tion of JSCAeroflot representatives in the governance bod-
ance with both the Russian Accounting Standards (RAS) and ies of the Groups aviation subsidiaries and affiliates, a list of
JSCAeroflot contributes greatly to the improvement of the corporate gover International Financial Reporting Standards (IFRS). managers charged with approving materials for meetings of the
CORPORATE GOVERNANCE AND SECURITIES

nance regulation framework. Groups governance bodies (Board of Directors / General Meet-
Key documents ensuring the respect of JSCAeroflot share- ing of Shareholders / the sole shareholder draft decisions) and
holder rights include: Articles of Association of JSCAeroflot, a list of transactions made by aviation subsidiaries and affili-
Statute on the General Meeting of Shareholders of JSCAeroflot, ates. On top of that, the Company developed a cross-functional
Statute on the Board of Directors of JSCAeroflot, Statute on the governance system for its aviation subsidiaries and affiliates.
Executive Board of JSCAeroflot, Statute on the Revision Com-
mittee of JSCAeroflot, Statute on the Corporate Information
96 97
Board of Directors
To ensure control over financial and operational activities of dedicated internal documents stipulating the responsibilities of JSCAeroflots Board of Directors has overall authority over improve operating, financial and marketing practices and
the aviation subsidiaries and affiliates the Group enabled each its governance bodies. Among those are Statutes on the Board the Company and is responsible for overall governance of the methods through upgrades, innovation, and implementa-
of them to have a dedicated revision committee made up of of Directors, Executive Board and Development Strategy. The Companys operations, excluding matters of JSCAeroflots Gen- tion of best practices from global peers;
JSCAeroflot representatives. In addition to revision committee Company also adopted, updated and implemented a Regulation eral Meeting of Shareholders. The convocation and holding boost branch and representative office performance both
(internal) inspections, subsidiaries and affiliates are subject to on Purchase of Goods, Works and Services, In-Flight Meals procedures for the Board meetings and other Board activities domestically and internationally;
inspections by an auditor approved pursuant to the relevant Procurement Standards, etc. are stipulated by the Statute on the Companys Board of Direc- enforce higher standards for airport and in-flight passen-
bidding procedures. tors in line with the Federal Law on Joint-Stock Companies. ger services, expand the service mix and improve cus-
The responsibilities of the Companys corporate secretary are Among the Boards key focus areas are the Companys long- tomer experience;
In accordance with the applicable laws and articles of asso- vested with the Corporate Governance Department and Execu- term sustainable development, effective oversight of the Groups promote cooperation with SkyTeam partners, use the
ciation, each subsidiary and affiliate developed and adopted tive Secretary of the Board. executive bodies, uncompromising observance and protection membership to expand the Companys route network and
of shareholder rights and their legitimate interests. Importantly, boost the international flight performance;
JSCAeroflots corporate governance system aims to strike an promote strategic partnerships in crucial destinations;
optimum balance between the executive, non-executive and boost efficiency at JSCAeroflot subsidiaries and affiliates,
independent directors on the Companys Board. streamline the non-core asset structure to cut unnecessary
spending and increase investment returns;
General Meeting The resolutions passed by the Companys Board of Directors develop and improve corporate policies;
of Shareholders sought to accomplish some of the Groups top objectives, develop and upgrade information technologies;
namely: ensure information transparency, including shareholder
and investor relations, procurement.
The General Meeting of Shareholders is the Companys highest For the purposes of the 2013 dividend payout, the Meeting ensure flight safety and frequency;
governing body. The respective scope of competencies and resolved to allocate RUB 2,774.8 million (RUB 2.4984 per define the Groups strategy and rank its lines of business; The Board members performance is assessed based on their
meeting convocation, holding and summarising procedures are share), or 25.0% of the Companys RAS net profit. map out a development strategy for Aeroflot Groups air- attendance of the Board and Committee meetings. In 2015,
set forth in the Companys Articles of Association and Statute craft fleet and route network; we are planning to develop and introduce a new framework to
on the General Meeting of Shareholders. The Annual General The Meeting approved a new composition of the Board of Direc- develop the aircraft fleet by way of new acquisitions and assess the Boards performance.
Meeting of Shareholders is held annually no earlier than three tors and Revision Committee, and the Companys auditor for optimisation;
months and no later than six months after the end of the fiscal 2014 (selected pursuant the relevant bidding requirements). It
year. also adopted the amended versions of JSCAeroflots Articles
of Association, Statutes on the Companys General Meeting of
In 2014, JSCAeroflot convoked the Annual General Meeting Shareholders and Board of Directors, and approved a number
of Shareholders in Moscow on 27 June (Minutes No. 36 of 30 of related-party transactions.
June 2014). The meeting was attended by owners of 73.95%
of JSCAeroflots total voting stock. On 21 January 2014, an Extraordinary General Meeting of
JSCAeroflots Shareholders was held by way of absentee vot-
The Annual Meeting approved the Companys Annual Report, ing (Minutes No. 35 of 24 January 2014) to address associated
2013 Financial Statements (including Profit and Loss State- related-party transactions and acquisition of new aircraft under
ment), distribution of 2013 net profit and remuneration amount a financial lease.
paid to the members of the Board of Directors and Revision

Committee.
98 99
Membership of JSCAeroflots
Board of Directors
as at 31 December 2014
Kirill Mikhail Igor Igor Marlen

Androsov Alexeev Kamenskoy Kogan Manasov
Chairman of the Board of Directors Member of the Board of Directors Independent member of the Board Independent member of the Board Independent member of the Board
at JSCAeroflot at JSCAeroflot, member of the of Directors at JSCAeroflot, Head of Directors at JSCAeroflot, Head of Directors at JSCAeroflot, member
Personnel and Remuneration of the Personnel and Remuneration of the Audit Committee, member of of the Personnel and Remuneration
Born in 1972. Committee and Strategy Committee Committee the Personnel and Remuneration Committee and Strategy Committee
Graduated from the St Petersburg Committee
Maritime Engineering University (School
Born in 1964. Born in 1968. Born in 1965.
of Engineering and Economics) and St.
Graduated from the Moscow Financial Graduated from the Moscow State Born in 1969. Graduated from the Moscow State University
Petersburg State University of Economics
University (Financial Academy under the Pedagogical Institute with a degree in Graduated from Lenin State Pedagogical with a degree in Political Economics.
and Finance.
Government of the Russian Federation) with Russian Language and Literature. Institute with a degree in Mathematics. Economist, political economics lecturer.
MBA from Chicago University Business
a degree in Finance and Credit. From 1992 to 1998, Vice-President at Doctoral Candidate in Economics. Formerly, CEO at UBS Securities, member
School.
Doctor of Economics. Soyuzcontract Limited Liability Partnership. From 1998 to 2009, Deputy Chairman and of the Board of Directors at UBS Bank, UBS
Doctoral Candidate in Economics.
From 1989 to 1991, Senior Expert, Lead, In 1999, Vice-President at Rosbank. Chairman of the Management Board at Securities, Novoship, RTS Stock Exchange,
From 2005 to 2008, Deputy Minister of
Department Head, Deputy Head of the Main From 2000 to 2002, Advisor to the Chairman ORGRESBANK. Svyazinvest and NAUFOR.
Economic Development and Trade of the
Directorate at the USSR Ministry of Finance. of the State Duma. Since 2009, Deputy Chairman of the Board Since 2010, member of the Board of
Russian Federation.
From 1992 to 1995, Head of Securities and From 2002 to 2009, member of the of Directors at Nordea Bank, member of Directors at Sovkomflot.
From 2008 to 2010, Deputy Head of the
Economic Analysis at Mezhkombank. Federation Council, Committee Deputy the Supervisory Council at the Agency for Since 2011, member of the Board of
Executive Office of the Government of the
From 1995 to 1999, Deputy Chairman of the Chairman with the Federation Council of the Housing Mortgage Lending. Directors at the RUSS-INVEST Investment
Russian Federation.
Management Board at Oneximbank. Russian Federation. From 2009, member of the Council, and later Company.
Since 2010, Managing Partner of the
From 1999 to 2006, Senior Vice-President Since 2009, Chairman of the Board of on, since June 2011, member of the Council
Altera Capital.
and Deputy Chairman of the Management Directors at Renaissance Capital. Presidium at the Association of Russian Holds no shares of JSCAeroflot.
Since 2011, member of the Public Council
Board Banks.
under the Federal Tax Service of Russia.
at Rosbank. Holds no shares of JSCAeroflot.
Since 2012, professor at the Higher School
From 2006 to 2008, President and Holds no shares of JSCAeroflot.
of Economics.
Chairman of the Management Board at
Rosprombank.
Holds no shares of JSCAeroflot.
Since 2008, Chairman of the Management
Board at UniCreditBank.


100 101
Roman Dmitry Vitaly Dmitry Vasiliy Sergey

Pakhomov Peskov Saveliev Saprykin Sidorov Chemezov
Member of the Board of Directors at Member of the Board of Directors CEO, Chairman of the Executive Deputy CEO for Sales and Property at Member of the Board of Directors Member of the Board of Directors
JSCAeroflot, Head of the Strategy and Strategy Committee at Board and member of the Board of JSCAeroflot, member of the Board of at JSCAeroflot, member of the and Personnel and Remuneration
Committee, member of the Audit JSCAeroflot Directors at JSCAeroflot Directors and Strategy Committee Audit Committee, Personnel and Committee at JSCAeroflot
Committee and Personnel and Remuneration Committee and
Remuneration Committee Born in 1975. Born in 1954. Born in 1974. Strategy Committee Born in 1952.
Graduated from the Voronezh State Graduated from Kalinin Leningrad Graduated from the Moscow State Law Graduated from the Irkutsk Institute of
Born in 1971. University. Polytechnical Institute and Togliatti Academy with a degree in Law and from Born in 1971. National Ecomomics, completed Advanced
Graduated from Makarov State Marine In 1999, completed a Masters degree in Leningrad Institute of Engineering and Cornell Law School with the Master of Laws Graduated from the Moscow State Institute Courses at the Military Academy of the
Academy. MBA degree from the Graduate Political Studies at Moscow School of Social Economics. (LL.M.) degree and MBA Programme. of International Relations (MGIMO General Staff of the Russian Armed Forces.
School of International Business at the and Economic Sciences and University of Doctoral Candidate in Economics. Doctoral Candidate in Law. University) with a degree in International Doctor of Economics, Professor, full member
Russian Presidential Academy of National Manchester. From 1987, Deputy Head of Construction From 2006 to 2007, CEO at Moscow Cellular Public Law and from Wharton Business of the Academy of Military Science.
Economy and Public Administration From 2000, led the strategy development Engineering at Glavleningradinzhstroy Communications. School of the University of Pennsylvania with From 1996 to 1999, Head of Foreign
(Moscow) and a degree from the Kingston exercise, chaired the Internet Policy Centre (Leningrad). From 2007 to 2009, Director of Transaction a degree in Finance. Economic Relations at the Administrative
University (London). and oversaw the establishment of the From December 1988, Head of the Support, Deputy Head of the Legal Division From 1997 to 2000, Deputy CEO at Office of the Russian President.
From 1996 to 1998, senior expert for Russian International Studies Association Leningrad branch of the US-Soviet Union at Sistema Financial Corporation. Svyazinvest. From 1999 to 2001, CEO at Promexport.
corporate customers at Inkombank. at MGIMO University, finishing his MGIMO joint venture Dialog. From 2009 to 2013, Deputy CEO for Legal From 2000 to 2003, First Vice-President at From 2001, First Deputy CEO at
From 1998 to 1999, Deputy Chairman of the stint as Deputy Vice-Rector for Research and Founder of DialogBank (1989), member of and Property Issues at JSCAeroflot. Sistema Telecom. Rosoboronexport.
Management Board at Maritime Bank. Head of Innovations. the banks Board of Directors. Since 2013, Deputy CEO for Sales and From 2003 to 2006, President at MTS. From 2004 to 2007, CEO at
From 1999 to 2004, CEO at IC Center From 2009, Head of Strategic Initiatives at From 1990 to 1993, CEO at the US-Soviet Property at JSCAeroflot. From 2006 to 2010, co-owner of the Rosoboronexport.
Capital. the All-Russian Exhibition Centre (VVC). Union joint venture DialogInvest. Telecom Express Group. Since 2007, CEO at ROSTEC Corporation
From 2004 to 2008, Deputy CEO and CEO Since 2011, Head of Young Professionals at From 1993 to 1995, Chairman of the Holds no shares of JSCAeroflot. Since 2010, Managing Partner at (a state corporation set up to further the
at VIM-avia. the Agency for Strategic Initiatives. Member Management Board at Rossiya Bank. Euroatlantic Investments Ltd. development, manufacture and export of
From 2008 to 2009, Executive Director at of the Government Expert Council, member From 1995, Chairman of the Management Since 2012, member of the Board of hi-tech industrial products).
Atlant Soyuz Airlines. of the Board of Directors at the United Board at Menatep Saint Petersburg. Directors at Russian Railways, CEO at
From 2009 to 2010, CEO at the Rossiya Aircraft Corporation, Russian Railways, From 2001, Deputy Chairman of the ARIDA. Holds no shares of JSCAeroflot.
State Transport Company, advisor to Deputy All-Russian Exhibition Centre (VVC) and Management Board at Gazprom.
CEO at ROSTEC Corporation. Mashpribor. From 2002 to 2004, Vice-President at GROS Holds no shares of JSCAeroflot.
From 2010 to the present, CEO at United Company, Finance and IT Advisor to
Aviacapital-Service. Holds no shares of JSCAeroflot. CEO at Svyazinvest.
Holds no shares of JSCAeroflot. Economic Development and Trade of the
Russian Federation.
From 2007 to 2009, First Vice-President

and Head of Telecom Asset Development at
Sistema Telecom, First Vice-President and
Head of Telecom Assets at Sistema Financial
Corporation.
Since 2009, CEO, Chairman of the Executive
Board at JSCAeroflot.
Holds 0.121% in Charter Capital of

JSCAeroflot.
102 103
Remuneration
Changes in the membership of for members of the Board
the Board of Directors in 2014 of Directors
16
Members of the Board of Directors elected in 2014: Guidelines for Board remuneration calculation and payouts is equivalent to 0.5% of JSCAeroflots market capitalisation
are set forth in the Statute on Remuneration and Compensa- growth over the lifetime of the plan.
Igor Kamenskoy tion Payments to the Members of the Board of Directors of
member of JSCAeroflots Board of Directors since 27 June 2014; meetings held JSCAeroflot in line with the Federal Law on Joint-Stock Com- The stock option plan draws heavily on two underlying metrics,
Dmitry Peskov by the board panies, other applicable laws of the Russian Federation and the namely: JSCAeroflots market capitalisation growth in the rel-
member of JSCAeroflots Board of Directors since 27 June 2014. of directors Groups internal regulations. The said statute was approved by evant year (maximum weight of 50%), and the Companys rank
of JSCAeroflot JSCAeroflots General Meeting of Shareholders on 24 June in the Top 5 market cap growth peer chart in the relevant year
Members of the Board of Directors removed in 2014: 2013. (maximum weight of 50%). The second metric is accounted
for only when JSCAeroflots market capitalisation growth is
140
Aleksey Germanovich The Board remuneration framework comprises fixed and vari- positive.
member of JSCAeroflots Board of Directors up to 27 June 2014; > able (bonus) components. The key criterion defining the fixed
Igor Lozhevsky remuneration component is the extent to which members On 27 June 2014, the Groups Annual General Meeting
member of JSCAeroflots Board of Directors up to 27 June 2014. items of JSCAeroflots of JSCAeroflots Board of Directors are actually involved in of Shareholders resolved to pay members of the Board of
board of directors the operations of the Board and its Committees. The variable Directors who are not civil servants the total remunera-
In 2014, JSCAeroflots Board of Directors held 16 meetings, including 9 agenda discussed (bonus) remuneration component is directly linked the Com- tion of RUB47,941,053.00 for 2013, and additional RUB
meetings in person and 7 meetings by way of absentee voting. The said panys market capitalisation growth on Moscow Exchange as 35,882,000.00 under the 2013 stock option plan (Minutes
meetings addressed over 140 items and passed over 200 resolutions on benchmarked against the MICEX index performance. No. 36 of 27 June 2014).
matters of the Board.
In 2013, in order to provide for long-term incentives, Aeroflot
approved a stock option plan for Board members valid through
Participation of Board members in 2014 Board meetings
2015. The total pool of the stock option plan for Board members
In person
Number of meetings
Board member In absentia
attended
Attendance in person Written opinion
Remuneration for members of JSCAeroflots Board of Directors in 2013
Kirill Androsov 16 7 - 9
Mikhail Alexeev 16 6 1 9 Board member Remuneration, RUB Remuneration under stock option plan, RUB
Aleksey Germanovich* 8 2 1 5
Sergey Aleksashenko 2,889,798 1,757,836
Igor Kamenskoy** 7 3 - 4
Mikhail Alexeev 3,079,190 2,131,990
Igor Kogan 16 7 - 9
Kirill Androsov 5,000,000 5,926,640
Igor Lozhevsky* 8 2 1 5
Aleksey Germanovich 4,477,976 4,895,356
Marlen Manasov 16 7 - 9
Igor Kogan 4,213,684 4,373,237
Roman Pakhomov 16 7 - 9
Igor Lozhevsky 4,480,000 4,899,355
Dmitry Peskov** 8 4 - 4
Marlen Manasov 3,079,190 2,131,990
Vitaly Saveliev 16 7 - 9

Aleksey Navalny 2,871,822 1,722,324
Dmitry Saprykin 16 7 - 9
Gleb Nikitin - -
Vasiliy Sidorov 16 7 - 9
Roman Pakhomov 3,101,215 2,175,500
Sergey Chemezov 16 5 2 9
Vitaly Saveliev 3,800,000 -
* Member of the Board of Directors up to 27 June 2014. Dmitry Saprykin 3,977,976 -
** Member of the Board of Directors since 27 June 2014.
Vasiliy Sidorov 3,090,202 2,153,745
Alexander Tikhonov - -
Sergey Chemezov 3,880,000 3,714,027
TOTAL 47,941,053 35,882,000
104 105
Committees of the Board

of Directors Executive Board
In accordance with the Statute on Committees adopted by the Membership of the Strategy Committee JSCAeroflots sole executive body, CEO, and collective execu- JSCAeroflots credit lines and documentary credit
Companys Board of Directors, the said Board has set up three as at 31 December 2014 tive body, the Executive Board, are charged with running the facilities;
dedicated Committees, each acting as per the Boards resolu- Roman Pakhomov Member of JSCAeroflots Companys ongoing operations. The executive bodies report shareholder and investor relations;
tions and an action plan based on the Boards Action Plan. Board of Directors, Head of the Committee; directly the Board of Directors and General Meeting of Share- JSCAeroflots Annual Financial Statements for fiscal year
Mikhail Alexeev Member of JSCAeroflots Board of holders. The CEO also acts as the Chairman of the Executive 2013;
In 2014, the Committees held a total of 22 meetings, address- Directors; Board. The Board of Directors is authorised to appoint members approval of JSCAeroflots related-party transactions;
ing specific matters from JSCAeroflots agenda and submitting Marlen Manasov Independent member of JSCAeroflots of the Executive Board, and remove them from office before the JSCAeroflots dividend policy;
recommendations and proposals for the Companys Board of Board of Directors; expiration of their term. JSCAeroflots treasury shares;
Directors and Executive Board to consider. Giorgio Callegari Member of JSCAeroflots Executive relations with large corporate clients;
Board, Deputy CEO for Strategy and Alliances; The Executive Board shall act in compliance with JSCAeroflots feasibility of further block trades in seating capacities
Personnel and Remuneration Committee Shamil Kurmashov Member of JSCAeroflots Executive Articles of Association and Statute on the Executive Board for tourist purposes due to the outdated nature of such
Board, Deputy CEO for Finance and Network and Revenue as approved by the General Meeting of Shareholders of practice;
In 2014, the Committee held a total of six meetings, including Management; JSCAeroflot. securing financing for apron construction at the Sherem-
one meeting by way of absentee voting. Dmitry Peskov Member of JSCAeroflots Board of etyevo Airport;
Directors; In 2014, the Executive Board of JSCAeroflot held a total of 24 JSCAeroflots 2013 procurement;
The said meetings addressed matters of and submitted recom- Vasiliy Sidorov Member of JSCAeroflots Board of meetings, including three meetings by way of opinion surveys. Aeroflot Groups Long-Term Development Programme;
mendations to JSCAeroflots Board of Directors and Executive Directors; JSCAeroflots membership in regional aviation
Board for streamlining the Companys organisational structure, Dmitry Saprykin Member of JSCAeroflots Board of The key matters addressed by JSCAeroflots Executive Board associations;
deciding on the management remuneration amount, param- Directors and Executive Board, Deputy CEO for Sales and in 2014 were as follows: progress in implementation of Aeroflot Groups Strategy;
eters of the Companys target stock option and profit-sharing Property. boosting the Groups ancillary revenue and switching to
plans, developing and implementing employee performance JSCAeroflot flight security; the hybrid business model;
assessment system, defining key performance indicators (KPI) Audit Committee a plan to tackle the Airbus A320 pilot shortages in progress in negotiations to set up strategic alliances with
for the Groups CEO and management, implementing the Cen- 20142016; airlines;
tral Banks Corporate Governance Code, etc. In the reporting year, the Audit Committee held a total of interaction with civil aviation schools; a draft route network based on the distribution of destina-
eleven meetings. These meetings provided recommendations aircraft fleet development for OOO Byudzhetny tions among the Groups airlines;
Membership of the Personnel and Remuneration for JSCAeroflots Board of Directors to ensure effective man- Perevozchik; sponsorship extended to the non-profit organisation of the
Committee as at 31 December 2014 agement and oversight of the Companys business operations, organisational structure of JSCAeroflot and representa- Russian Volleyball Federation, and the CSKA professional
Igor Kamenskoy Independent member of JSCAeroflots and tackle financial, business and other risks associated with tive offices in Russia, the CIS and other countries; football and basketball clubs;
Board of Directors, Head of the Committee; the Groups transactions and operations, along with Aeroflot shutdown of JSCAeroflots representative offices in Lyon, support offered to the Far Eastern Federal University
Mikhail Alexeev Member of JSCAeroflots Board Groups accounting framework, financial planning and budget- Alicante, Krakow, Donetsk and Saratov; through an Endowment Foundation;
ofDirectors; ing. The Committee focused on the development of the Com- establishment of JSCAeroflots line station network in donation of an Il-96-300 to the Moscow State Technical
Igor Kogan Independent member of JSCAeroflots panys internal audit capabilities. On top of that, the Committee Kaliningrad, Sochi, Ufa and Kazan; University of Civil Aviation (MSTUCA);
Board of Directors; addressed matters of shareholder and investor relations. enhancement of service offerings within JSCAeroflot and an agreement with the Russian Orthodox Church;
Marlen Manasov Independent member of JSCAeroflots Aeroflot Group; signing up to the Anti-Corruption Charter of the Russian
Board of Directors; The Audit Committee carried out some random inspections to improvements in quality of the 2015 product offering Business.
Roman Pakhomov Member ofJSCAeroflots Board of check the Companys current operations and application of based on the NPS study;
Directors; internal audit procedures. development of a marketing policy through 2020;
Vasiliy Sidorov Member of JSCAeroflots adoption of a new Statute on the Corporate Information
Board of Directors; Membership of the Audit Committee Policy;
Sergey Chemezov Member of JSCAeroflots as at 31 December 2014 implementation of the Corporate Governance Code;
Board of Directors. updates on the corporate philosophy elements, including
Igor Kogan Independent member of JSCAeroflots Aeroflot Groups mission, vision and values;
Strategy Committee Board of Directors, Head of the Committee; JSCAeroflot motivation system;
Roman Pakhomov Member of JSCAeroflots Board of key performance indicators (KPI) for the CEO and mem-

In 2014, the Strategy Committee held a total of five meetings Directors; bers of the Executive Board, air crew KPI;
in person addressing the implementation progress of Aeroflot Vasiliy Sidorov Member of JSCAeroflots Board of IFRS 2015 budget of JSCAeroflot and consolidated
Groups Development Strategy (including adjustments to the Directors. budget of Aeroflot Group;
Strategy), JSCAeroflots Long-Term Development Programme, the Groups Investment Programme;
Dividend Policy, progress in the strategic airline alliance exer- implementation of the opex cutting programme of
cise and aircraft fleet development. JSCAeroflot, its subsidiaries and affiliates;
establishment of a single treasury covering JSCAeroflot,
its subsidiaries and affiliates;
proposals on how to respond to the crisis in the air trans-
portation market;
financial monitoring of agents;
106 107
Membership
of JSCAeroflots
Executive Board
as at 31 December 2014
Vitaly Vladimir Vasily Kirill Dmitry Vadim

Saveliev Antonov Avilov Bogdanov Galkin Zingman
Chairman First Deputy CEO Deputy CEO for Administrative Deputy CEO for IT Advisor to the Deputy CEO for Deputy CEO for Customer Relations
of the Executive Board, CEO for Aviation Security Management Finance and Network and Revenue
Born in 1963. Management Born in 1970.
Born in 1954. Born in 1953. Born in 1954. Graduated from the Leningrad Polytechnical Graduated from St Petersburg University of
Graduated from Kalinin Leningrad Graduated from the Moscow Railway Graduated from Dzerzhinsky Higher Naval Institute. Born in 1963. Economics and Finance.
Polytechnical Institute and Togliatti Engineering Institute. Engineering College. From 2004 to 2007, Executive Director at Graduated from Ordzhonikidze Moscow Doctoral Candidate in Economics.
Leningrad Institute of Engineering and From 1995 to 2011, Deputy CEO for From 1997 to 2013, Head of Administration RAMAX International. Institute of Management. From 2001 to 2008, Deputy Director of the
Economics. Economic and Aviation Security at at JSCAeroflot, Director of the Department From 2007 to 2009, Director of From 1988 to 2013, Manager, Deputy Head Department for Government Regulation of
Doctoral Candidate in Economics. JSCAeroflot, Deputy CEO for Aviation of General Affairs, Deputy CEO and Development and Control at the and Head of the Internal Audit Service, Foreign Trade at the Ministry of Economic
From 1987, Deputy Head of Construction Security, Deputy CEO for Aviation and Managing Director. Telecommunications Assets of Sistema Director of the Internal Audit Department at Development and Trade of the Russian
Engineering at Glavleningradinzhstroy Operating Security and First Deputy CEO for Since 2013, Deputy CEO for Administrative Financial Corporation. JSCAeroflot. Federation.
(Leningrad). Operations. Management at JSCAeroflot. Has 27 original patents for IT innovations. Since 2013, Advisor to the Deputy CEO From 2008 to 2009, Director of Government
From December 1988, Head of the Since 2011, First Deputy CEO for Aviation Since 2009, Deputy Head of IT at for Finance and Network and Revenue Relations at Sistema Financial Corporation.
Leningrad branch of the US-Soviet Union Security at JSCAeroflot. Holds 0.0000002% in Charter Capital of JSCAeroflot, Advisor to the CEO, Deputy Management at JSCAeroflot. From 2009 to 2012, Advisor to the CEO,
joint venture Dialog. JSCAeroflot. CEO for IT. Deputy CEO for Customer Relations and
Founder of DialogBank (1989), member of Holds 0.000425% in Charter Capital of Holds 0.000003% in Charter Capital of Deputy CEO for Operations and Quality
the banks Board of Directors. JSCAeroflot. Holds no shares of JSCAeroflot. JSCAeroflot. Management at JSCAeroflot.
From 1990 to 1993, CEO at the US-Soviet Since 2012, Deputy CEO for Customer
Union joint venture DialogInvest. Relations at JSCAeroflot.
From 1993 to 1995, Chairman of the
Management Board at Rossiya Bank. Holds no shares of JSCAeroflot.
From 1995, Chairman of the Management
Board at Menatep Saint Petersburg.
From 2001, Deputy Chairman of the
Management Board at Gazprom.
From 2002 to 2004, Vice-President at GROS
United Company, Finance and IT Advisor to
CEO at Svyazinvest.
Economic Development and Trade of the
Russian Federation.
From 2007 to 2009, First Vice-President
and Head of Telecom Asset Development at

Sistema Telecom, First Vice-President and
Head of Telecom Assets at Sistema Financial
Corporation.
Since 2009, CEO, Chairman of the Executive
Board at JSCAeroflot.
Holds 0.121% in Charter Capital of

JSCAeroflot.
108 109
Giorgio Shamil Georgy Igor Dmitry Igor

Callegari Kurmashov Matveyev Parakhin Saprykin Chalik
Deputy CEO Deputy CEO for Finance and Network Director of the Flight Safety Deputy CEO and Technical Director Deputy CEO for Sales and Property Deputy CEO and Flight Director
for Strategy and Alliances and Revenue Management Department
Born in 1961. Born in 1974. Born in 1957.
Born in 1959. Born in 1978. Born in 1953. Graduated from the Moscow Institute of Civil Graduated from the Moscow State Law Graduated from the Aktyubinsk Higher Flying
Graduated from the Polytechnic University Graduated from the Moscow State Institute Graduated from the Academy of Civil Aviation Engineers. Academy with a degree in Law and from School of Civil Aviation.
of Turin (Italy). of International Relations. Aviation. From 2001 to 2011, Head of Programme, Cornell Law School with the Master of Laws From 1994 to 2011, Second Pilot of an Il-86,
From 1990 to 2011, Sales Manager, Doctoral Candidate in Economics. Doctoral Candidate in Technical Science. Deputy Director of the Aviabusiness Higher (LL.M.) degree and MBA Programme. Second Pilot, Commander, Pilot Instructor
Vice-President for Sales, Vice-President From 2004 to 2007, Deputy CEO for Finance From 2001 to 2012, Deputy Head of the Business School. Doctoral Candidate in Law. at 310, Deputy Commander of the 310
for Business Development, Vice-President and Investment at Sistema Telecom. Flight Safety Inspectorate and Deputy Since 2011, Acting Technical Director, From 2006 to 2007, CEO at Moscow Cellular Air Squadron at Aviation Detachment No.
for Alliances, Business Development and From 2007 to 2009, Director of Investments, Director of the Flight Safety Department at Technical Director, Deputy CEO and Communications. 1, Commander of the 320 Air Squadron,
International Relations, Deputy Vice- Deputy Head of the Finance and Investment JSCAeroflot. Technical Director at JSCAeroflot. From 2007 to 2009, Director of Transaction Commander of the 330 Air Squadron of
President for Alliances and Strategy at Division at Sistema Financial Corporation. Since 2012, Director of the Flight Safety Support, Deputy Head of the Legal Division the Flight Operations Department, Deputy
Alitalia. From 2009 to 2013, Advisor to the CEO, Department at JSCAeroflot. Holds 0.000007% in Charter Capital of at Sistema Financial Corporation. CEO and Director of the Flight Operations
Since 2011, Deputy CEO for Strategy and Deputy CEO for Finance and Investment and JSCAeroflot. From 2009 to 2013, Deputy CEO for Legal Department.
Alliances at JSCAeroflot. Deputy CEO for Commerce and Finance at Holds no shares of JSCAeroflot. and Property Issues at JSCAeroflot. Since 2011, Deputy CEO and Flight Director
JSCAeroflot. Since 2013, Deputy CEO for Sales and at JSCAeroflot.
Holds no shares of JSCAeroflot. Since 2013, Deputy CEO for Finance and Property at JSCAeroflot.
Network and Revenue Management at Holds 0.04171% in Charter Capital of
JSCAeroflot. Holds no shares of JSCAeroflot. JSCAeroflot.


Changes in the membership of the Executive Board in 2014
On 30 July 2014, Andrey Kalmykov, First Deputy CEO for Operations, left the Executive Board.
110 111
Remuneration
for members of the
Executive Board
2014 KPI targets for CEO

The remuneration system designed for the Executive Board Pursuant to the directives of the Russian Government,
and the Companys other staff enables Aeroflot to engage and JSCAeroflots KPI System embraces financial, economic and 2013 2014
retain highly qualified professionals. The remuneration amount industry-specific indicators coupled with bonus disqualification KPI
Measurement
unit Performance to Performance to
depends on the Group-wide performance indicators. The incen- indicators, including: Plan Actual
plan
Plan Actual
plan
tives embedded in the senior managers remuneration are cal-

ROIC (Aeroflot Group) % 11.4% 13.3% 116.8% 12.2% 4.6% 37.4%
culated in accordance with the Companys KPI Based Employee mandatory financial and economic KPI of TSR (Total
Bonus System defined by the Statute on Bonus Payments to the Shareholder Return) and ROIC; USD
EBITDAR (Aeroflot Group) 1,228.8 1,602.2 130.4% 1,408.0 1,266.8 90.0%
Managers and Specialists of JSCAeroflot (CEO Order No. 30 of KPI of JSCAeroflots Overall Productivity (included as million
2 February 2011). The Statute stipulates that the incentive com- required by the Russian Governments Directive No. Net income (Aeroflot USD
ponent of the Executive Board members compensation amount 6362p-P13 of 24 October 2013); 31.34 230.30 734.7% 100 (446) 0.0%
Group) million
shall depend on their quarterly and annual performance under Share of Supplies from Small and Medium-Sized Business-
Group-level revenue per
the KPIs approved for the relevant reporting period. es, Efficient Energy Use and Environmental Friendliness cent per
available seat-kilometre 7.71 8.16 105.8% 7.90 7.02 88.9%
(included in Aeroflots general KPI System and KPI lists ASK
(RASK)
In 2013, in order to provide for long-term incentives, the Com- for relevant department heads as required by the Russian
panys Board of Directors approved a Statute on JSCAeroflots Governments Directive No. 6362p-P13 of 24 October Punctuality % 65.0% 59.9% 92.2% 86.0% 89.3% 103.8%
Stock Option Plan. The Statute stipulates a long-term manage- 2013); Flight safety % 99.956% 99.961% 101.1% 99.957% 99.972% 103.5%
ment stock option plan valid through 2015 with approximately Innovative Development Programme Efficiency (since
60 members on board. 2012, included in JSCAeroflots general KPI System and Total shareholder return
% n/a 21.4% (59.20%) 0.0%
(TSR)
KPIs for all of the Companys Deputy CEOs as required by
The stock option plan draws heavily on two underlying metrics, Letter of the Deputy Minister for Economic Development million
namely: JSCAeroflots market capitalisation growth in the rel- No. 3142-OF/D06 of 24 February 2012); Overall productivity TKM per n/a 0.37 0.38 103.7%
person
evant year (maximum weight of 50%), and the Companys rank the bonus disqualification KPI of Flight Safety.
in the Top 5 market cap growth peer chart in the relevant year Reduction of unit cost of
% 10.0% 14.56% 145.6% n/a
(maximum weight of 50%). The second metric is accounted The divergence between the actual and target values of Group- product/works/service
for only when JSCAeroflots market capitalisation growth is level ROIC, EBITDAR, Net Income and RASK in 2014 stems
positive. from the impact the challenging market environment and
exchange rates had on the Groups financials and passenger 2015 KPI targets for CEO*
The total remuneration paid to the members of JSCAeroflots demand.
Executive Board in 2014 stood at RUB 931,358,555.40. KPI (for Aeroflot Group) Weight, % Measurement unit Plan
The total shareholder return underruns result from the drop in
KPI System the share value due to the macroeconomic and market forces Total shareholder return (TSR) 5.0% % 0.0%
affecting the Groups operating and financial results (for exam- Return on invested capital (ROIC) 15.0% % 15.7%
The 2014 KPI System for JSCAeroflots CEO was approved by ple, a slowdown in passenger demand).
the Board of Directors (Minutes No. 11 of 16 December 2013), Long-term debt / EBITDAR 5.0% - 2.3
whereas the KPIs for the Companys management and staff The actual flight safety and punctuality values were above the Investment programmes execution efficiency 5.0% % 80.0%
were approved by CEO Order No. 577 of 31 December 2013. targets.
Investment programme efficiency 5.0% - 3.8

Revenue per available seat-kilometre 5.0% RUB per ASK 3.20
Punctuality 15.0% % 87.0%
Flight safety of Aeroflot airline 20.0% % 99.957%
Passenger load factor 10.0% % 77.1%
Overall productivity 15.0% million ASK per person 4.066
* Approved by JSC Aeroflots Board of Directors, Minutes No. 15 of 23 April 2015.
112 113
In 2014, there were no changes in the KPI System or descrip- From 2015 onward, the scope of the CEO KPI list (with its KPI Membership in the Committee for Finance The Committee is charged with reviewing innovative projects
tions of modifications/adjustments in the KPI targets. weights and targets) will be extended to include all members of and Investments as at 31 December 2014 and providing an assessment of their efficiency, monitoring pro-
the Companys Executive Board. Aeroflot is thereby seeking to gress in the implementation of the ongoing innovative projects,
The 2015 KPI System was modified as compared to 2014 to provide incentives for the management to pursue Group-wide Shamil Kurmashov Deputy CEO for Finance and passing resolutions on project suspension, setting out require-
bring its KPI list in line with the KPI Guidelines (Letter of the Fed- corporate objectives, attain goals at the level of business units Network and Revenue Management, Chairman of the ments for the design and quality of innovative development
eral Agency for State Property Management No. OD-11/22160 and improve the Groups overall performance. Committee; materials submitted to the Executive Board, and recommending
of 26 May 2014). Vadim Zingman Deputy CEO for Customer Relations; projects for implementation.
Dmitry Saprykin Deputy CEO for Sales and Property;
Svetlana Arkhipova Director of the Department for In 2014, the Committee for Innovative Development held a
Financial Planning and Analysis; total of 2 meetings.
Ilya Alexandrovsky Director of the Sales Department;
Committees Alexander Noskov Director of the Economic Security Membership in the Committee for Innovative
Department; Development as at 31 December 2014*
Andrey Chikhanchin Director of the Corporate Finance
In pursuit of recommendations and proposals aiming to boost Company, and the Statute on the Committee for Finance and Department; Vitaly Saveliev CEO and Chairman of the Committee;
the Companys business efficiency, JSCAeroflot set up the Com- Investments. Evgeny Zenchenko Deputy Director of the Corporate Andrey Polozov-Yablonsky Advisor to the CEO;
mittees as follows: Strategy Department; Kirill Bogdanov Deputy CEO for IT;
The Committee is charged, among other things, with monitor- Dmitry Galkin Advisor to the Deputy CEO for Finance Vadim Zingman Deputy CEO for Customer Relations;
Committee for Finance and Investments; ing progress in the implementation of the Companys ongoing and Network and Revenue Management; Shamil Kurmashov Deputy CEO for Finance and Net-
Committee for Innovative Development. investment projects, providing an expert review of any such pro- Andrey Polozov-Yablonsky Advisor to the CEO. work and Revenue Management;
jects, passing resolutions on suspension of investment projects, Dmitry Saprykin Deputy CEO for Sales and Property;
determining their efficiency assessment criteria and drafting Committee for Innovative Development Igor Parakhin Deputy CEO and Technical Director;
Committee for Finance and Investments proposals on the Groups financial, economic and marketing Oleg Volkov Director of the Department for Applied
policies. The Committee for Innovative Development is a permanent Systems;
The Committee for Finance and Investments is a permanent collective advisory body of JSCAeroflot Executive Board. It Aleksey Gromakov Director of the Department for Pro-
collective advisory body of JSCAeroflot. In 2014, the Committee for Finance and Investments held a was set up to provide recommendations and proposals for the curement Management.
total of 18 meetings. Executive Board to boost the Companys business efficiency.
In its operation, the Committee is guided by the applicable laws
of the Russian Federation, resolutions of JSCAeroflots Board In its operation, the Committee is guided by the laws of the Rus-
of Directors, other regulations, rules and procedures of the sian Federation, resolutions of JSCAeroflots Board of Directors
and Executive Board, other regulations, rules and procedures
of the Company, and the Statute on the Committee for Innova-
tive Development.

* On 30 July 2014, Andrey Kalmykov, First Deputy CEO for Operations, left the Executive Board and Committee.
114 115
Internal Control
and Audit
JSCAeroflot has an efficient system in place for financial and The Department regularly reports to the Audit Committee of The General Meeting of Shareholders of 27 June 2014 (Minutes External audit
economic control. It includes the Revision Committee, the Audit JSCAeroflots Board of Directors on progress in implementa- No. 36 of 30 June 2014) elected members of JSCAeroflots
Committee of the Board of Directors, the Companys govern- tion of the annual plan, audits made and application of the Revision Committee as follows: Each year, JSCAeroflot engages an external auditor to check
ance and management bodies, and the Internal Audit Depart- Departments recommendations. the financial (accounting) statements. In 2014, the Companys
ment, Aeroflots service for internal audit and control. 1. Igor Belikov Head of the Russian Institute of Directors; auditors were as follows:
In December 2014, the Board of Directors approved an Action 2. Marina Mikhina Advisor to the Head of the Federal Agen-
The internal control systems are designed to maximise the Com- Plan (Roadmap) for Implementation of the Corporate Govern- cy for State Property Management; CJSC BDO for RAS-based financial statements;
panys transparency, economic efficiency and compliance with ance Code at JSCAeroflot. The Plan sets out initiatives meant 3. Natalia Sligun Deputy Head of Directorate and Head ZAO PricewaterhouseCoopers Audit for IFRS financial
the applicable laws. to improve the systems for risk management, internal control of Department at the Federal Agency for State Property statements.
and audit. Management;
On top of that, the Company regularly engages external auditors 4. Mikhail Sorokin Key Expert at a Directorate of the Federal Based on the 2014 checks, the auditors confirmed accura-
to confirm the accuracy of financial statements made in accord- Revision Committee Agency for State Property Management; cy of the information provided in the financial statements of
ance with the Russian and international reporting standards. 5. Alexei Shchepin Consultant at the Russian Ministry of JSCAeroflot.
The Revision Committee exercises control over JSCAeroflots Transport.
Internal Audit Department financial and economic operations to provide reasonable assur-
ances of the Companys business fully meeting the interests of The General Meeting of Shareholders of 27 June 2014 resolved
The internal control responsibilities are vested with the Internal its shareholders and requirements set forth in the applicable to pay members of JSCAeroflots Revision Committee the total
Audit Department. laws of the Russian Federation. remuneration of RUB 1,152,000.
In its operation, the Department is guided by the International In its operation, the Revision Committee is guided by the Com- Remuneration for members of JSCAeroflots
Standards for the Professional Practice of Internal Auditing panys Articles of Association and Statute on the Revision Com- Revision Committee in 2013
and the underlying principles of independence, objectivity, mittee of JSCAeroflot.
proficiency and professional care. Igor Belikov 432,000 RUB;
As prescribed by the respective Statute, the Revision Com- Sergey Poma 360,000 RUB;
In March 2014, JSCAeroflots Board of Directors adopted a mittee checked for accuracy the information contained in the Vera Mironova 360,000 RUB;
new version of the Statute on the Internal Audit Department RAS-based annual financial statements for 2014, including Marina Mikhina 0 RUB;
produced in collaboration with the Audit Committee of the the Income Statement and other documents submitted to the Aleksander Vasilchenko 0 RUB.
Board of Directors, and experts from the Russian Institute of General Meeting of Shareholders for review. The Committee
Directors and PricewaterhouseCoopers Audit. The new Stat- benchmarked the metrics related to the Companys financial
ute fully meets the requirements set forth in the International and economic activities in 20122014 and their compliance
Standards for the Professional Practice of Internal Auditing with the applicable laws in 2014.
and the Corporate Governance Code of the Bank of Russia.
Based on its audits, the Revision Committee prepared and
The Internal Audit Department is in charge of internal audit of approved a report providing an analysis of the Companys
the Companys units, branches and representative offices, pro- balance sheet and financial results. The Committees report
viding advice on improvements in corporate governance and reflects changes in the balance sheet structure and key change
risk management, coordination of activities with the external drivers, assessing a wide range of the Companys financial and

auditor and overseeing insider information compliance. The economic operations, including compliance and procurement.
Department also assesses efficiency of the systems for internal The conducted audits and inspections enabled the Committee
control, risk management and corporate governance. to provide recommendations meant to improve the Companys
business efficiency and thereby increase earnings and cut costs.
In 2014, the Internal Audit Department conducted a total of
38 audits of the Companys units and subsidiaries to identify In its report, the Revision Committee passed a positive opinion
potential risks and assess efficiency in Aeroflots key business on the accuracy of the Companys financial statements citing
lines and processes. Audit findings enabled the management to no material grounds to disprove the information provided in
come up with proposals on further improvements in the Com- the Balance Sheet and Income Statement of JSCAeroflot as
panys key operations. at 31 December 2014. The report also provides the Commit-
tees recommendations with regards to the Companys business
efficiency and compliance with the applicable laws.
116 117
5.2 Securities
Share Capital
34.8%
JSCAeroflots charter capital as at 31 December 2014 was RUB Information on the key shareholders of JSCAeroflot
1,110,616,299, consisting of 1,110,616,299 ordinary registered uncertifi-
As at 31 December 2013 As at 31 December 2014
cated shares with a par value of RUB 1 each. The Company did not issue Change of stake in
Holder Status
preferred shares. shares held Number of shares
Stake in share
Number of shares
Stake in share share capital, %
capital capital
by legal entities,
State registration numbers of JSCAeroflot ordinary share issues are 73-1 including institutional Legal entities 1,038,497,791 93.51% 1,040,412,580 93.68% 0.17
p-5142 (dated 22 June 1995) and 1-02-00010- (dated 1 February 1999). investors
including:
The issues were merged by Decree No. 04-168/r of the Federal Securities
Commission dated 23 January 2004, following which the issues of JSCAero- Russian Federation (represented by
6.3%
flot ordinary shares were assigned state registration number 1-01-00010-, the Federal Agency for State Property Owner 568,335,339 51.17% 568,335,339 51.17% -
Management)
dated 23 January 2004.
In addition to outstanding shares, the Company has the right to issue a further shares held
CJSC National Settlement Depository Nominee 383,909,712 34.57% 385,852,633 34.74% 0.17
250 million ordinary registered shares (authorised shares). No additional by individals and retail
shares were issued in 2014. investors
LLC Aeroflot-Finance Owner 49,690,915 4.47% 49,918,611 4.49% 0.02

The total number of JSCAeroflots shareholders as at 31 December 2014
was 10,563 (22 legal entities and 10,540 individuals), compared to 10,686
as at 31 December 2013 (26 legal entities and 10,660 individuals). Rostec state corporation for
development, manufacture and export Owner 16,720,724 1.51% 16,720,724 1.51% -
of high-tech industrial products
JSCAeroflots register of shareholders is kept by CJSC Computershare Reg-
istrar (License No. 10-000-1-00252). The register holders details of are
provided in the Contacts section at the end of the Annual Report. LLC Aviacapital-Service Owner 19,488,599 1.75% 19,488,599 1.75% -
Issuer's
JSCAeroflot Russian Airlines 227,696 0.02% - - (0.02)
account
Structure of share capital of JSCAeroflot
Individuals 72,118,508 6.49% 70,174,661 6.32% (0.18)
34.8% 51.2%
Russian Federation
Treasury and quasi-treasury shares Average daily trading volumes of JSCAeroflot shares on the Moscow Exchange
Rostec
265
Individuals
Legal entities (incl.institutional investors)
5,080
129

6.3%
83 69
3.3% 66
4.5%
23
2,211
1,363 1,508
845
626
2009 2010 2011 2012 2013 2014
Average daily volume, thousand shares Average daily volume, RUB million
118 119
Dividend Policy
JSCAeroflot shares, bonds and depositary receipts are trad- Outside Russia, JSCAeroflot shares are traded as global depos- In June 2014, the Annual General Meeting of JSCAeroflots Dividends for 2013 paid to the federal budget amounted to RUB
ed on the stock market. The Companys ordinary shares and itary receipts (GDRs) at the over-the-counter section of the Shareholders approved payment of RUB 2,774.2 million 1,419,929,010.96. The Company has no outstanding dividend
exchange bonds are traded on the Russian market, and global Frankfurt Stock Exchange and as American depositary receipts (25.0% of the Companys RAS net profit in 2013) as dividends payments to the federal budget.
depositary receipts (GDRs) and American depositary receipts (ADRs) on the US over-the-counter market. One GDR/ADR for 2013 in accordance with the guidelines of Federal Agency
(ADRs) are traded on foreign markets. represents 5 ordinary shares. Deutsche Bank Trust Company for State Property Management. The amount of cash dividends
Americas acts as the depository bank, and LLC Deutsche Bank per share was set at RUB 2.4984, and 8 July 2014 was chosen
Shares of JSCAeroflot are traded on the Moscow Exchange, is the custodian. A total of 11,834,855 shares were converted as at the record date. The payments were made between 27
where as at 31 December 2014 they were included in the Level into GDRs as of 31 December 2014, representing 1.07% of June and 12 August 2014.
1 Quotation List (AFLT ticker). Securities transactions are sub- the charter capital.
ject to the T+ trading mode (T+2 settlement cycle). JSCAeroflot Information on payment of the announced (accrued) dividends on JSCAeroflots shares
shares are included in the main Russian stock indexes: MICEX, In order to achieve higher GDR liquidity, the shares-to-GDR
MICEX BMI (broad market), MICEX TRN (transport companies) ratio was changed to 5:1 in January 2014. Also, in January Total accrued dividends, Total amount actually paid, Number of shares Dividends per share,
Dividend period
and RTSI. 2014 the US Securities and Exchange Commission announced ths RUB ths RUB* at record date RUB
the launch of JSCAeroflots programme of issuing Level-1 2009 388,383 388,346 1,110,616,299 0,3497
There was further growth of JSCAeroflot shares trading vol- ADRs aimed at luring prospective investors and simplifying
umes on the Moscow Exchange in 2014, with volumes more investments in Aeroflot for American OTC investors. 2010 1,205,130 1,204,915 1,110,616,299 1,0851
than doubling y-o-y from a daily average of 2,211 thousand to 2011 2,000,018 1,999,927 1,106,143,588** 1,8081
5.080 thousand shares.
2012 1,292,313 1,292,149 1,110,616,299 1,1636
2013 2,774,195 2,773,517 1,110,616,299 2,4984
* The reason for inconsistency between the amounts accrued and the amounts actually paid is that the shareholder register of JSCAeroflot lacked current
Maximum and minimum market price per share
payment details of some shareholders as at the payment date.
2014 2013 2012 2011 2010 ** The reason for inconsistency in the number of shares was buyback of shares by the Company at the request of the shareholders. According to Article 76, Clause
6 of Federal Law No. 208-FZ On Joint-Stock Companies of 26 December 1995, the above-mentioned shares shall not confer any voting rights, shall not be taken
Maximum, RUB 86.46 86.60 55.85 81.80 84.86 into account in calculation of votes, and shall bear no dividends.
Minimum, RUB 29.90 46.14 39.03 44.23 50.96
GDR programme Bonds

Programme type Sponsored Level-1 GDRs under Regulation S and Rule 144A
Ratio (shares:GDR) 5:1 JSCAeroflot BO-03 bonds are traded on Moscow Exchange, In May 2014, Fitch Ratings international agency affirmed for
where they are included in the Level 2 Quotation List, as well a fourth time the ratings it had assigned to JSCAeroflot as
Ticker AERAY
as in the Bank of Russias Lombard List (a list of securities that follows:
ISIN US0077712075, US0077711085 are acceptable as collateral for direct repo transactions).
Long-term foreign currency issuer rating was confirmed at
Coupons on JSCAeroflots bonds in the reporting year were the level of BB-, Stable Outlook.
Level-1 ADR programme paid in full and on schedule: Long-term local currency issuer rating was confirmed at
the level of BB-, Stable Outlook.
Programme type Sponsored Level-1 ADRs 3 April 2014: BO-03 bond payments of RUB The national long-term rating was confirmed at the level of
Ratio (shares:ADR) 5:1 206,950,000.00 (two hundred and six million nine hun- A+ (rus), Stable Outlook.
dred and fifty thousand roubles) for the second coupon
Ticker AERZY period;

ISIN US00777K1060 2 October 2014: BO-03 bond payments of RUB
206,950,000.00 (two hundred and six million nine
hundred and fifty thousand roubles) for the third coupon
period.
Bonds of JSCAeroflot
Number of bonds
Type Issue name Par value, RUB Coupon, % Maturity date Offer Fitch credit rating
issued
Exchange- JSCAeroflot 31 March

5,000,000 1,000 8.30 - BB-
traded bonds BO-03 2016
120 121
6 RISK MANAGEMENT
REACHING
Russia, Magadan Region

NEW HEIGHTS
Means considering even the smallest details
to achieve large-scale results
Risk
description
Aeroflot Group is committed to building a unified risk To minimise its risks, Aeroflot airline has a targeted policy Risk type Description Mitigants
management framework across its subsidiaries based on the that includes insurance, hedging, setting limits, and coverage Credit risks Risks pertaining to the inability of the Aeroflot airline applies a consistent approach to managing and
approaches adopted by JSCAeroflot, its major asset. requirements. Other risk mitigants are personnel development, Companys counterparties to meet their mitigating its credit risks as set out in its internal regulations.
upgrading fleet and using advanced technologies in flight safety, financial obligations.
To reduce risks related to accounts receivable, agents selling air
Aeroflot airline has put in place a comprehensive and effective market risk managements, and pilot training. The Companys
Aeroflot airline has the following credit risk transportation services are required to provide security in the
risk management system, which promptly identifies risks, risk management relies on a holistic approach aimed at scaling sources: form of bank guarantees or deposits. Security amount is subject
assesses their materiality, and promptly responds to them, down adverse risk impact and reducing the probability of risk receivables due from agents selling to monthly review depending on the agents financial standing,
helping to eliminate or minimise these risks. In assessing events and Aeroflot airlines total exposure to all types of risks. passenger and cargo transportation payment discipline, and sales volume. Aeroflot airline assesses
services under agency agreements; counterparty credit risk every ten days. For counterparty banks,
risks, the Company applies a probabilistic approach and uses
transactions with counterparty banks that there is a system of credit risk limits: linked to risk duration, it
mathematical models to measure risk impact on its performance. helps calculate the potential amount to be paid by the bank to the
have an inherent credit risk (deposits,
guarantees, derivative transactions). Company. When setting a credit risk limit, the Company factors
Risk management spans all management levels and functional in the results of financial analysis and expert estimates of credit
institutions. The available and the remaining limits are calculated
and project areas, with the respective functions distributed based on the information from all the companies which are part
among the Board of Directors, Audit Committee, Executive of Aeroflot Group. Financial standing of counterparty banks and
Board, as well as risk management and other divisions of limits are reviewed on a quarterly basis. In addition, the Company
JSCAeroflot. regularly monitors various sources (mass media, official websites
of government authorities, such as the Federal Bailiffs Service and
Federal Tax Service of Russia,
Liquidity risks Risks pertaining to the Companys inability to To mitigate liquidity risk, Aeroflot airlines finance functions are
meet its obligations to counterparties. engaged in careful planning of cash inflows and outflows to
identify and promptly eliminate potential gaps by raising short-
term loans from credit institutions.
Risk type Description Mitigants
Operating risks Risks related to Aeroflot airlines operations, Aeroflot airline has effective measures in place to minimise its
Financial risks Risks triggered by movements in market Aeroflot airline implements a set of initiatives to mitigate the which may be caused by internal process operating risks and prevent potential losses.
indicators, such as FX and interest rates. potential negative effect of financial risks or to eliminate them. errors, employee actions, automated system The Company insures the bulk of its operating risks. Those which
Financial risks may cause a substantial failures or external factors. cannot be insured (other operating risks) are classified by their
reduction in the Companys profit. origin as either internal or external.
Market risks Risks of asset value reductions caused by

Aviation risks Aviation risks include risks of an aircraft going All aviation risks of Aeroflot airline are subject to insurance and
changes in the market environment. missing, loss of or damage to the aircraft and/ account for over two thirds of the Companys total insurance
or its parts and components, civil liability risk expenditure.
Price risk Risk related to changes in aviation fuel prices Aeroflot airline uses financial instruments to hedge its price risks. of the carrier, and military risks. In 2014, aviation risk insurance agreements were extended on a
linked to global oil prices. Aviation fuel As at the beginning of 2015, the Company hedged nearly 70% of scheduled basis. JSCAeroflot included its subsidiaries (Rossiya,
accounts for over 30% of the Company total its planned fuel consumption. The hedging structure employed by Operational risks Risks of an aircraft going missing, loss of or Orenair, Donavia, Aurora and Pobeda airlines) in consolidated
expenses, and any fluctuations in fuel prices Aeroflot airline is in line with its international peers practices. damage to the aircraft and/or its parts and reinsurance coverage, reducing both its own and the Groups
have a material impact on the Companys components. insurance rates. Stabilisation of the global aviation insurance
aggregate expenditure. market was another factor driving the rates down by an average
Carrier civil liability risk Risks related to damages to the lives, health of 14%. Hence, despite the considerably higher aircraft fleet costs
Currency risk Currency risk is associated with FX rate The Company hedged around 23% of its open FX position in euro and property of third parties, lives and health and the growing passenger traffic, the total aviation risk insurance
fluctuations and can significantly affect both targeted in 2015. As at the end of 2014 beginning of 2015, the of passengers, loss, partial loss or damage to premium remained flat against the previous insurance period.
the Companys and the Groups financial performance of FX rates was favourable for the Company. passengers baggage and personal belongings, As during the past two years, the Companys direct insurer for
performance as Aeroflot airline operates damages to cargo owner or shipper. the new insurance period was AlfaStrakhovanie, while SOGAZ
in international markets and carries out became the coinsurer.
Military risks Risks associated with Aeroflot airlines
settlements in various currencies. Aeroflot airline benefited from the combined offering of the two
countries of operation, which primarily cover
major Russian aviation insurers, which provided full coverage
Interest rate risk Risk of interest rate fluctuations, which may Aeroflot airline monitors interest rates on a regular basis and is risks of wars, civil wars, coups dtat, upheavals,
of Aeroflot airlines aviation risks through coinsurance. Among
result in relatively higher borrowing costs ready to start hedging when needed. revolts, revolutions, etc., as well as actions
western reinsurers, the Company selected Willis Ltd, the worlds
due to an increase in the Companys interest that may result in malicious acts, sabotage,
leading aviation broker, and AON as a cobroker, for the second
expenses. The risk is primarily associated nationalisation, appropriation or terrorist acts
year running. With a cobroker engaged to place its risks, the
with Aeroflot airlines lease agreements with against the Companys assets.
Company was able to leverage the intellectual capital of both
a floating LIBOR rate. LIBOR movements in companies, ensure transparent pricing and enjoy additional
the international market may push up interest advice on how to improve and extend the current coverage and
payments under the lease agreements. insurance proposals.
RISK MANAGEMENT
RISK MANAGEMENT
124 125
Risk type Description Mitigants Risk type Description Mitigants
Non-aviation risks Risks which are not related to operating an Non-aviation risks are also subject to insurance. Business risks Risks associated with running and expanding Business risk management is directly linked to the Companys
aircraft but have a material impact on the business and inherent in any company strategy and management efficiency.
Companys day-to-day business. These risks operating in the market.
include medical and workplace accident risks.
Competition risks Risk pertaining to competitor operations. Aeroflot airline flies routes where it competes extensively with
Medical risks Risks related to the health of the Companys Heath insurance makes up nearly 30% of the Companys total domestic and international air carriers. Flexible in responding
employees and their families. insurance expenditure. Aeroflot airline offers comprehensive to market trends, the Company offers strong value for money.
voluntary health insurance to its employees and their families, Its transfer passengers benefit from quick and easy connections
retirees, and employees and their families working at the between domestic and international flights with minimum waiting
Companys foreign representative offices in over 46 countries. time.
SOGAZ is Aeroflot airlines health insurance partner both in Russia Aeroflot airline fosters code-sharing cooperation with Sky Team
and overseas. The insurance is provided to over 30 thousand Alliance members, expanding its flight coverage and travel
persons, including over 19 thousand employees of the Company. offering.
In 2014, more than 1,300 people received health resort treatment By ensuring maximum flight safety, best in class services and a
arranged by Aeroflot Medical Centre. wide range of travel destinations and a loyalty programme, the
Company maintains a great customer experience and strengthens
Workplace accident risks These risks include death, disability (Group As per the Air Code of the Russian Federation, the Company its competitive edge in the long run.
I, II and III) injury resulting from an accident, provides accident insurance to its air and cabin crew members
and temporary or permanent occupational and employees involved in flight services, while at work or going Demand Risks related to the seasonality of air travel The air transportation industry is subject to seasonal demand
disability due to an accident or illness. to/from work. Accident insurance accounts for nearly 2% of fluctuation risks demand. fluctuations. Traditionally, travel activity peaks during holiday and
the Companys total insurance expenditure. It covers more than vacation periods, when domestic and international flights have
11 thousand employees, who are classified into three groups the highest load factor. Aeroflot airline increases passenger load
depending on their position and insurance terms. Each group has by expanding its route network with travel destinations popular
its own insurance coverage based on the age, employment period all year round. To boost its winter passenger traffic, the Company
and risks covered. runs a variety of promotions, discounts and offers. In addition, the
arrival and departure schedule is organised to ensure maximum
Other operating risks The Company is exposed to a wide range Aeroflot airline has launched a number of insurance programmes passenger convenience, so that the traffic remains high even when
subject to insurance of non-aviation risks that may affect its covering a broad range of operating risks, including motor demand is slack.
operations, including risks of hijacking, theft insurance (compulsory motor third-party liability and motor hull
of or damage to vehicles, accidents involving insurance), comprehensive civil liability insurance, hazardous Reputational Risks pertaining to damage to the Companys The Company puts strong emphasis on its reputation of a best in
vehicle drivers or passengers, and risks related industrial facilities insurance, liability insurance for temporary risks reputation. class, safe carrier and a reliable partner, putting every effort into
to operating hazardous industrial facilities, storage owners, liability insurance for the Board of Directors and protecting its good standing and brand.
property loss or damage, management the Executive Board, and property insurance. Its management pays a lot of attention to monitoring and
decisions, etc. improving service quality and implementing cutting-edge service
technologies, also by engaging third-party contractors, which help
Legal risks These risks include regulatory and geopolitical enhance customer loyalty.
risks.
Environmental Risks associated with the Companys Striving to minimise its environmental impact, Aeroflot airline
Regulatory risks Risks related to changes in: Aeroflot airline closely monitors legislative changes and is risks environmental footprint. upgrades its fleet with new generation aircraft that combine higher
currency regulations, actively involved in international organisations to contribute to fuel efficiency with lower air emissions. The carrier has developed
tax laws, the development and improvement of the aviation regulatory and approved the Environmental Management Guidelines in line
customs clearance rules and duties, framework. with the ISO 14000 standards.
legislation on joint-stock companies.
Geopolitical (country and Risks related to geopolitical changes in the The airline is especially focused on analysing country-specific risks
regional) risks regions covered by the carriers route network. and selecting the appropriate response measures (suspending
flights, changing routes, enhancing aviation security and sanitary
and epidemiological control, etc.).
RISK MANAGEMENT
RISK MANAGEMENT
126 127
7 FINANCIAL RESULTS
WE AIM
TO BE FIRST
Italy, Tuscany
Achieving strong results and reaching goals no matter
what the obstacles or conditions
2014. year of flying high
7.1 Overview
of Financial Results
KEY FIGURES OF STATEMENT OF PROFIT OR LOSS*

Traffic and other revenue
RUB million, unless otherwise stated 2014 2013 Change Revenue dynamics
Revenue 319,771 290,956 9.9%
RUB million, unless otherwise stated 2014 2013 Change
Operating costs (308,503) (271,161) 13.8%
Passenger flight revenue, including 268,636 247,768 8.4%
EBITDAR 48,673 51,026 (4.6%)
scheduled passenger flights 253,613 230,594 10.0%
EBITDAR margin 15.2% 17.5% (2.3 p.p.)
charter passenger flights 15,023 17,174 (12.5%)
EBITDA 24,839 31,849 (22.0%)
Cargo flights 8,718 9,778 (10.8%)
EBITDA margin 7.8% 10.9% (3.1 p.p.)
Airline agreements revenue 21,605 16,886 27.9%
Operating profit 11,268 19,795 (43.1%)
Other revenue 20,812 16,524 26.0%
Operating profit margin 3.5% 6.8% (3.3 p.p.)
Total revenue 319,771 290,956 9.9%
(Loss)/profit for the year (17,146) 7,335
Net profit margin 2.5%

Revenue breakdown in 2014 Revenue breakdown in 2013
Adjusted net profit for the year 10,844 15,944 (32.0%)
6.5% 5.7%
79.3% 79.2%
Adjusted net profit margin 3.4% 5.5% (2.1 p.p.) 6.8% 5.8%
3.4%
2.7%
In 2014 Aeroflot Groups total revenue amounted to RUB 319,771 million, up by 9.9% as compared to 2013 on the back of passenger traffic Scheduled passenger flights
4.7%
growth of 10.7% and other revenue increase. 5.9%
Charter passenger flights
Aeroflot Group financial results were significantly influenced by the change in USD/RUB and EUR/RUB exchange rates. The exchange rates Cargo flights
contributed to the revenue dynamics, however, positive effect of Russian currency devaluation was offset by the adjustments in fare policy in order to
maintain passenger traffic. Depreciation of the Rouble also led to an increase in the operating costs and resulted in revaluation of aircraft finance lease Airline agreements revenue
liabilities. As a result of liabilities revaluation and other one-off mainly non-cash effects Aeroflot Groups net loss amounted to RUB17,146million
Other revenue
compared to net profit of RUB 7,335 million in 2013. Net profit adjusted by the aforementioned factors amounted to RUB10,844 million.
Despite external macroeconomic instability and sharp decline in the international tourism segment, Aeroflot Group generated positive operating
profit of RUB 11,268 million compared to RUB 19,795 million in 2013.
In 2014, passenger flight revenue accounted for 84.0% of Groups total revenue, including 79.3% for scheduled passenger flights and 4.7% for
Financial highlights of JSCAeroflot and Groups subsidiaries for 2014** charter passenger flights. The share of cargo revenue stood at 2.7%, while the share of other revenue was 13.3%, including a 6.8% share of airline
agreements revenue.
RUB million, unless otherwise stated JSCAeroflot Total for airline subsidiaries
2014 2013 Change 2014 2013 Change Passenger flights revenue amounted to RUB 268,636 million, up by 8.4% as compared to 2013. The key driver of the passenger flight revenue
Revenue 257,684 221,316 16.4% 75,847 76,467 (0.8%) increase was the revenue from scheduled passenger flights that showed a 10.0% growth and reached RUB 253,613 million on the back of a 10.7%
y-o-y increase in Groups passenger traffic. The revenue from charter passenger flights declined by 12.5% to RUB 15,023 million as a result of the
Operating profit 16,266 17,280 (5.9%) (7,382) 436
overall market developments in the segment.
EBITDA 27,673 26,938 2.7% (5,287) 2,806
Net (loss)/profit (5,784) 8,956 (15,383) (3,352) Cargo revenue stood at RUB 8,718 million, down by 10.8% y-o-y, primarily due to the suspension of Aeroflot airline cargo fleet operations in 2013
and refocus on passenger fleet belly cargo operations.
Airline subsidiaries performance negatively affected bottom line of the Group due to the decline in the operating profitability in the environment
of slowdown of consumer demand as well as due to one-off provisions. Other revenue, including airline agreements revenue, amounted to RUB 42,417 million, up by 27.0% y-o-y, mainly affected by airline agreements,
nominated in foreign currency, Aeroflot Bonus and third-party aircraft fuelling income as the main revenue growth contributors.
Yields
In 2014, scheduled flight yields decreased by 0.7% due to a number of factors, including domestic yields (a 2.8% yield decline) on the back of
tougher market competition, introduction of non-refundable fares and limited air tickets price increase at the end of the year. Rouble yields of
fINANCIAL RESULTS
fINANCIAL RESULTS
international destinations grew by 0.8%, following the positive effect the Rouble weakening had on fares denominated in foreign currency during
Q4 2014. This was partially offset by a reduction in outbound flight fares denominated in foreign currency , which was aimed at maintaining
passenger load factor during the sharp depreciation of the Rouble. In Q4 2014, international scheduled flight yields showed an increase of 12.1%.
The growth in cargo yields was related to the suspension of the dedicated cargo fleet operations in 2013 and switching entirely to passenger
fleet belly cargo operations.
130 131
In 2014, Aeroflot Groups operating costs amounted to RUB 308,503 million, up by 13.8%, with the largest share of aircraft fuel (28.3%), aircraft
servicing and passenger services (19.8%) and staff (16.9%) costs.
Scheduled passenger flights yields, RUB/PKM Cargo yields, RUB/TKM
ircraft fuel costs increased by 10.2% in 2014 compared to 2013 and reached RUB 87,199 million, following the fluctuations of oil and jet fuel
prices and the Rouble weakening as well as the increase in the operations volume , aircraft fleet and network expansion.
0.8%
(2.8%) (0.7%) 21.2% Aircraft servicing and passenger services costs amounted to RUB 61,070 million, up by 15.6% y-o-y, mainly due to effect of the Rouble exchange
rate movements, Groups expansion and changed service tariffs.
3.05 3.07 3.07 2.98 3.06 3.04 2013 12.0 2013
9.9 Staff costs went up by 15.0% y-o-y to RUB 52,148 million on the back of Groups headcount growth, growth in scale and size of operations,
2014 2014 2013year-end salary inflation adjustment as well as other factors, including the review of the incentive system in subsidiaries to bring it up with
Change Change
JSCAeroflot standards.
International Domestic Total Operating lease expenses grew by 24.3% y-o-y up to RUB 23,834 million, which was primarily related to the effect of the Rouble exchange
scheduled scheduled scheduled
flights flights flights movements as well as Groups aircraft fleet expansion throughout the year.
Aircraft maintenance costs decreased by 5.6% to RUB 19,224 million, mainly due to the revision of the repair and maintenance programme after
MD-11 and IL-96 aircraft phase out.
Operating costs
Sales and marketing, administration and general expenses amounted to RUB 22,206 million and were in line with the previous year.
Operating costs dynamics
Depreciation, amortisation and customs duties grew by 12.6% and amounted to RUB 13,571 million as a result of Groups aircraft fleet expansion.
Aircraft servicing and passenger services 61,070 52,830 15.6% Other costs amounted to RUB 29,251 million, up by 40.8% y-o-y, primarily due to accruals of provisions for accounts receivable and bank fees.
% of revenue 19.1% 18.2% 0.9 p.p.
Staff costs 52,148 45,349 15.0%
% of revenue 16.3% 15.6% 0.7 p.p. EBITDA and EBITDAR
Operating lease expenses 23,834 19,177 24.3%
In 2014, Aeroflot Groups EBITDA declined by 22.0% y-o-y to RUB 24,839 million, with its EBITDA margin slipping from 10.9% in 2013 to 7.8%
% of revenue 7.5% 6.6% 0.9 p.p.
in 2014. Groups EBITDAR was also down in 2014 and amounted to RUB 48,673 million, a 4.6% y-o-y decrease. EBITDAR margin decreased
Aircraft maintenance 19,224 20,374 (5.6%) from 17.5% in 2013 to 15.2% in 2014. Margins decline was driven by higher operating costs growth compared to revenue growth as aresult of
% of revenue 6.0% 7.0% (1.0 p.p.) the aforementioned factors.
Sales and marketing, administration and general expenses 22,206 21,471 3.4%
EBITDAR (RUB million) and EBITDAR margin (%) EBITDA (RUB million) and EBITDA margin (%)
% of revenue 6.9% 7.4% (0.5 p.p.)
Depreciation, amortisation and customs duties 13,571 12,054 12.6% 17.5% 15.2%
% of revenue 4.2% 4.1% 0.1 p.p.
10.9%
Other costs 29,251 20,778 40.8% 7.8%
% of revenue 9.1% 7.1% 2.0 p.p.
51,026
48,673
Total operating costs, excluding aircraft fuel 221,304 192,033 15.2%
% of revenue 69.2% 66.0% 3.2 p.p. 31,849

EBITDAR 24,839 EBITDA
Aircraft fuel 87,199 79,128 10.2%
EBITDAR margin, % EBITDA margin, %
% of revenue 27.3% 27.2% 0.1 p.p.
Total operating costs 308,503 271,161 13.8% 2013 2014 2013 2014
% of revenue 96.5% 93.2% 3.3 p.p.
Finance income and costs

Operating costs breakdown in 2014 Operating costs breakdown in 2013
Finance income and expenses dynamics
9.5% 7.7%
4.4% RUB million, unless otherwise stated 2014 2013 Change
4.4% Aircraft fuel
28.3% Finance income
29.2%
7.9%
7.2% Aircraft servicing and passenger services
Realised gain on derivative financial instruments 1,058 1,812 (41.6%)
Staff costs
Interest income on bank deposits and security deposits 958 543 76.4%
7.5% Operating lease expenses
6.2%
Gain on disposal of investments 1 331
Aircraft maintenance
Other financial income 454
Sales and marketing,
fINANCIAL RESULTS
fINANCIAL RESULTS
7.7% administration and general expenses Total finance income 2,471 2,686 (8.0%)
7.1%
Depreciation, amortisation and customs duties Finance costs

19.8% 19.5%
Other costs Foreign exchange loss 9,720 3,348 190.3%
16.9% 16.7%
Realised loss on derivative financial instruments 3,871 1,192 224.7%
132 133
RUB million, unless otherwise stated 2014 2013 Change RUB million, unless otherwise stated 2014 2013 Change
Loss on change in fair value of derivative financial instruments 9,869 939 951.0% Interest paid (3,409) (2,857) 19.3%
Interest expenses 4,934 3,320 48.6% Dividends paid (2,833) (1,289) 119.8%
Other finance costs 5 15 (66.7%) (Payments)/proceeds on settlement of derivative financial instruments, net (1,451) (127) 1042.5%
Total finance costs 28,399 8,814 222.2% Proceeds from sale of treasury shares to non-controlling shareholders 119 12 891.7%
Hedging result Net cash used in financing activities (14,673) (21,782) (32.6%)
Ineffective portion of fuel hedging (1,187) Effect of exchange rate fluctuations on cash and equivalents 5,075 26
Effect of revenue hedging with liabilities in foreign currency (536) Net increase in cash and cash equivalents 7,887 3,590 119.7%
Total hedging result (1,723) Cash and cash equivalents at the beginning of the year 18,660 15,070 23.8%
Cash and cash equivalents at the end of the year 26,547 18,660 42.3%
In 2014, finance income decreased to RUB 2,471 million, down by 8.0% y-o-y, due to reduced realised gain on derivative financial instruments.
Finance costs surged to RUB 28,399 million in 2014, mainly due to foreign exchange loss of RUB 9,720 million, which was primarily driven by Cash flows from operating activities
revaluation of finance lease liabilities, increased interest expenses (up to RUB 4,934 million) as well as losses from derivatives (RUB 13,740 million).
In 2014, net cash flows from operating activities had a gain of RUB 7,032 million (24.3% y-o-y) and reached RUB 35,977 million despite loss
In 2014, hedging result included the effect of hedging of revenue with finance lease liabilities denominated in foreign currency and ineffective portion before income tax of 16,352. Core adjustments to net cash flows from operating activities for 2014 were related to:
of fuel hedging and amounted to RUB1,723 million.
1. foreign exchange loss of RUB 14,795 million related to USD/RUB change from 32.73 as of 1 January 2014 to 56.26 as of 31 December
2014;
Cash flows
2. depreciation and amortisation of RUB 12,136 million, up by RUB 1,478 million (13.9% y-o-y), primarily due to increase in cost of fixed
AGGREGATED CONSOLIDATED STATEMENT OF CASH FLOWS
assets (27.9% y-o-y);
3. loss from change in the fair value of derivative financial instruments, standing at RUB 9,869 million, which is non-cash revaluation of
(Loss)/profit before income tax (16,352) 13,704
hedging instruments due to the Rouble devaluation and decline in jet fuel price in US dollars;
Depreciation and amortisation 12,136 10,658 13.9%
Change in provisions 4,328 998 333.7% 4. income tax paid/refunded and working capital change mainly due to the change in accounts receivable and prepayments as well as
accounts payable and accrued liabilities.
Foreign exchange loss 14,795 3,348 341.9%
Loss from change in the fair value of derivative financial instruments 9,869 939 951.0% Free cash flow
Hedging result 1,723
In 2014, free cash flow totalled RUB 17,485, down by RUB 7,861 million (31.0% y-o-y), which was driven by the increase in net cash flows used
Interest expense 4,934 3,320 48.6%
in investing activities by RUB 14,893 million, and the increase in net cash flows from operating activities by RUB 7,032 million.
Other adjustments 88 (83)
Working capital changes and income tax paid/refunded 4,456 (3,939)

Key drivers of y-o-y change in net cash flows used in investing activities are:
Net cash flows from operating activities 35,977 28,945 24.3%
Purchases of property, plant and equipment and intangible assets (6,160) (4,410) 39.7% 1. aircraft prepayments for Airbus A320, Airbus A321 and Boeing 777, totalling RUB 21,361 million (RUB 7,154 million in 2013);
Purchases of investments and deposits placement (2,552) (361) 606.9% 2. purchases of investments and deposits placement, totalling RUB 2,552 million (RUB 361 million in 2013);
3. purchases of property, plant and equipment and intangible assets, totalling RUB 6,160 million (RUB 4,410 million).
Proceeds from sale of investments and deposits return 1,869 228 719.7%
Prepayments / return of prepayments for aircraft, net (11,741) 629 In 2014, the internal-financing ratio (net cash flows from operating activities to capital expenditure) stood at 413.0% (607.8% in 2013).
Other 92 315 (70.8%)
Net cash flows used in investing activities (18,492) (3,599) 413.8% Cash and cash equivalents grew by RUB 7,887 million (42.3% y-o-y) from RUB 18,660 million to RUB 26,547 million, driven among other factors
Free cash flow 17,485 25,346 (31.0%) by the effect of exchange rate fluctuations on cash and cash equivalents in the amount of RUB 5,075 million (RUB 26 million in 2013). Cash and
cash equivalents and short-term financial investments reached RUB 27,508 million (RUB 18,932 million in 2013).
Proceeds from loans and borrowings 18,398 6,500 183.0%
Repayment of loans and borrowings (9,870) (14,579) (32.3%)
Sale/(purchase) of treasury shares, net 2 353 (99.4%)
Repayment of the principal element of financial lease liabilities (15,629) (9,795) 59.6%
fINANCIAL RESULTS
fINANCIAL RESULTS
134 135
Cash flows from operating activities and free cash Capital expenditure*, cash flows from operating Current assets
flow (RUB million) activities, depreciation and amortisation (RUB million)
In 2014, current assets grew by 13.2% up to RUB 92,213 million on the back of RUB 8,576 million cash and short-term financial investment increase.
35,977 35,977
28,945 28,945 Equity

25,346
In 2014, equity, including non-controlling interests, dropped by RUB 67,985 million to a negative value of RUB 13,505 million. The key driver of this
17,485
decrease was the adoption of specific hedge accounting in regards to foreign currency risks for part of revenue denominated in USD with finance
12,136
10,658
8,712
lease liabilities denominated in the same currency, and foreign currency risks for part of revenue in EUR with derivative financial instruments, as
4,771 well as risks of changes in aircraft fuel prices with derivative financial instruments.
2013 2014 2013 2014

As at 31 December 2014, the hedging reserve, including deferred tax, in the Groups equity stood at RUB 48,657 million. The effect from this
Free cash flow Depreciation and amortisation reclassification of losses recognised in other comprehensive expenses from hedging will affect the results of future periods along with revenue
recognition and aircraft fuel purchases.
Net cash flows from operating activities Net cash flows from operating activities
Capital expenditure
Current liabilities
Consolidated statement of financial position summary

In 2014, current liabilities increased by RUB 67,165 million or by 98.8% y-o-y, which was mainly driven by a surge of RUB 26,099 million in
AGGREGATED consolidated statement of financial position derivative financial instruments value. To a lesser extent the growth was attributed to RUB 12,703 million increase in accounts payable and accrued
liabilities, RUB 8,224 million increase in financial lease liabilities and RUB 6,135 million increase in unearned traffic revenue. Short-term loans
RUB million, unless otherwise stated 31 December 2014 31 December 2013 Change and borrowings and current portion of long-term loans and borrowings rose by RUB 12,314 million, primarily due to the raise of the new debt.
ASSETS
Non-current liabilities
Cash, cash equivalents and short-term financial investments 27,508 18,932 45.3%
Other current assets 64,705 62,533 3.5% In 2014, non-current liabilities increased by 80% or by RUB 69,354 million and reached RUB 156,087 million. The key drivers of the increase
Total current assets 92,213 81,465 13.2% were finance lease liabilities that grew by RUB 69,018 million due to the sharp Rouble depreciation and addition of six Boeing 777 to Aeroflot
Groups fleet in 2014.
Property, plant and equipment 116,044 88,777 30.7%
Other non-current assets 69,461 38,942 78.4%
Total non-current assets 185,505 127,719 45.2% Debt and liquidity

TOTAL ASSETS 277,718 209,184 32.8%
Net debt dynamics
LIABILITIES AND EQUITY
Current liabilities 135,136 67,971 98.8% RUB million, unless otherwise stated 31 December 2014 31 December 2013 Change
Non-current liabilities 156,087 86,733 80.0% Loans and borrowings 24,203 13,406 80.5%
Total equity (13,505) 54,480 Finance lease 149,278 72,036 107.2%
TOTAL LIABILITIES AND EQUITY 277,718 209,184 32.8% Pension liability 659 707 (6.8%)
Customs duties 169 436 (61.2%)

Assets breakdown as at 31 December
Total debt 174,309 86,585 101.3%
18.6% 25.0% Cash, cash equivalents and short-term financial investments 27,508 18,932 45.3%
42.4% Net debt 146,801 67,653 117.0%

41.8%
Net debt / EBITDA 5,9 2,1
Other non-current assets
29.9% Property, plant and equipment Total debt increased to RUB 174,309 million, up by 101.3% as of 31 December 2014. This was primarily driven by the increase in finance
23.3%
Other current assets lease liabilities denominated in foreign currency after the Rouble exchange rate significantly changed against the US dollar and Euro. Although
9.1% 9.9%
Cash, cash equivalents, and short-term
the share of foreign currency liabilities stands at 98.1% of the total volume of financial lease liabilities, 65.8% of payments under financial lease
financial investments agreements are due from 2018 onwards.
2013 2014
Aeroflot Groups loans and borrowings, both fixed-rate and variable-rate, were mainly used to finance the working capital. The shares of foreign
Non-current assets currency and Rouble denominated liabilities in the loan portfolio are 49.3% and 50.7% respectively.
In 2014, non-current assets increased by 45.2% and reached RUB 185,505 million mainly due to the increase in property, plant and equipment by Cash, cash equivalents and short-term financial investments amounted to RUB 27,508 million as at 31 December 2014, which represents an
RUB 27,267 million (30.7% y-o-y). Key contributor to the increase in the property, plant and equipment was the addition of six oeing 777 aircraft increase of 45.3% y-o-y. In 2014, net cash flows from operating activities reached RUB 35,977 million, as compared to RUB 28,945 million in
under financial lease agreements. The growth of non-current assets was also influenced by prepayments for Airbus A320 and Airbus A321 under 2013. The current liquidity ratio as at 31 December 2014 amounted to 0.7x versus 1.2x as at 31 December 2013.
new agreements, totalling RUB 21,361 million.
fINANCIAL RESULTS
fINANCIAL RESULTS
As at 31 December 2014, the Group had RUB 21.6 billion undrawn credit facilities from Russian and international banks.
* Capital expenditure doesnt include prepayments for aircraft.
136 137
Currency breakdown of loans and borrowings Currency breakdown of finance lease liabilities
as at 31 December 2014 as at 31 December 2014
49.3% 50.7% 1.9% 98.1%
US dollar Russian rouble US dollar Russian rouble
Finance lease payment schedule (RUB million) Liabilities breakdown as at 31 December (%)
98,278 56.1% 53.6%
43.9% 46.4%
16,912 17,341 16,746
Current liabilities
2015 2016 2017 2018+ 2013 2014
Loan portfolio breakdown
Bank Interest rate Currency Short-term loans and borrowings Long-term loans and bor-
and short-term portion of long-term rowings
loans and borrowings
OJSC AKB Rosbank Libor+4.5% USD 3,382
OJSC Alfa Bank from 11.9% to 14.8% RUB 2,804
OJSC Nordea Bank Libor+5.0% USD 2,523
OJSC Credit Bank of Moscow 5.75% USD 2,253
PAO VTB 7.5% USD 2,251
Citibank Libor+3.5% USD 1,154
OJSC AB Rossia from 11.3% to 14.0% RUB 1,100
PAO Gazprombank 13.0% RUB 758
OJSC BFA Bank 12.4% and 12.9% RUB 513 1,500
OJSC Sberbank of Russia from 11.0% to 12.5% RUB 503
BO03 series bonds 8.3% RUB 102 5,000
Other - USD 360
Total 17,343 6,860

fINANCIAL RESULTS
138
IFRS Consolidated Financial
Statements for the year
ended 31 December 2014
Statement of
7.2 managements
responsibilities
for the preparation and approval of the Consolidated Financial
Statements as at and for the year ended 31 December 2014
7.3 Independent
Auditors Report
The following statement, which should be read in conjunction with the independent auditors responsibilities stated in the independent auditors To the Shareholders and Board of Directors of Joint Stock Company Aeroflot Russian Airlines
report set out below, is made with aview to distinguishing the respective responsibilities of management and those of the independent auditor in
relation to the consolidated financial statements of Joint Stock Company Aeroflot Russian Airlines and its subsidiaries (the Group). We have audited the accompanying consolidated financial statements of Joint Stock Company Aeroflot Russian Airlines and its subsidiaries
(the Group), which comprise the consolidated statement of financial position as at 31 December 2014 and the consolidated statements of profit
Management is responsible for the preparation of consolidated financial statements that present fairly the consolidated financial position of the or loss, comprehensive income, changes in equity and cash flows for 2014, and notes comprising a summary of significant accounting policies
Group as at 31 December 2014, and the financial results of its operations, cash flows and changes in equity for the year then ended, in compliance and other explanatory information.
with International Financial Reporting Standards (IFRS).
Managements Responsibility for the Consolidated Financial Statements
In preparing the consolidated financial statements, management is responsible for:
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International
selecting suitable accounting principles and applying them consistently; Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
making judgements and estimates that are reasonable and prudent;
Auditors Responsibility
stating whether IFRS have been complied with, subject to any material departures being disclosed and explained in the notes to consolidated
financial statements; and Our responsibility is to express an opinion on the fair presentation of these consolidated financial statements based on our audit. We conducted our
audit in accordance with Russian Federal Auditing Standards and International Standards on Auditing. Those standards require that we comply
preparing the consolidated financial statements on agoing concern basis, unless it is inappropriate to presume that the Group will continue with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
in business for the foreseeable future. are free from material misstatement.
Management is also responsible for: An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated
designing, implementing and maintaining an effective system of internal controls, throughout the Group; financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
maintaining proper accounting records that disclose, with reasonable accuracy at any time, information about financial position of the Group, entitys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the
and the financial results of its operations and cash flows and which enable them to ensure that the consolidated financial statements of the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating
Group comply with IFRS; the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the
maintaining statutory accounting records in compliance with local legislation and accounting standards in the respective jurisdictions in overall presentation of the consolidated financial statements.
which the Group operates;
taking such steps as are reasonably available to them to safeguard the assets of the Group; and We believe that the audit evidence we have obtained is sufficient and appropriate to express an opinion on the fair presentation of these consolidated
preventing and detecting fraud and other irregularities. financial statements.
The consolidated financial statements of the Group for the year ended 31 December 2014 (set out on pages 142189) were approved on 27 Opinion
February 2015 and signed on behalf of management by:
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December
2014, and its financial performance and its cash flows for 2014 in accordance with International Financial Reporting Standards.
27 February 2015
Moscow, Russian Federation
V.G. Saveliev Sh.R. Kurmashov A.N. Korablev
General Director Deputy General Director for Finance Senior Manager (licence no. 01-000389), ZAO PricewaterhouseCoopers Audit
and Network and Revenue Management
Financial results
Financial results
Audited entity: Joint Stock Company Aeroflot Russian Airlines Independent auditor
State registration certificate 032.175, issued by ZAO PricewaterhouseCoopers Audit
the Moscow Registration Chamber on 21 June 1994 State registration certificate 008.890, issued by the Moscow Registration Chamber
Certificate of inclusion in the Unified State Register of Legal Entities on 28 February 1992
issued on 2 August 2002 under registration 1027700092661 Certificate of inclusion in the Unified State Register of Legal Entities
Address of audited entity: issued on 22 August 2002 under registration 1027700148431
10 Arbat street, 119002, Russian Federaion Certificate of membership in self regulated organisation non-profit partnership
Audit Chamber of Russia 870. ORNZ 10201003683 in the register
of auditors and audit organizations
140 141
7.4 IFRS Consolidated

Financial Statements
according to International Financial Reporting Standards (IFRS)
for the year ended 31 December 2014
Consolidated Statement of Profit or Loss Consolidated Statement of Comprehensive

for the year ended 31 December 2014 Income for the year ended 31 December 2014
(All amounts in millions of Russian Roubles, unless otherwise stated) (All amounts in millions of Russian Roubles, unless otherwise stated)
Note 2014 2013 Note 2014 2013
Traffic revenue 5 277,354 257,546 (Loss)/profit for the year (17,146) 7,335
Other revenue 6 42,417 33,410 Other comprehensive (loss)/profit:
Revenue 319,771 290,956 Items that may be reclassified subsequently to profit or loss:
Operating costs, excluding staff costs and depreciation and amortisation 7 (239,327) (212,105) Translation from the functional currency to the presentation currency 33 28
Staff costs 8 (52,148) (45,349) Loss from the change in fair value of hedging derivative financial instruments 22 (60,389) (903)
Depreciation and amortisation 19, 20 (12,136) (10,658) Deferred tax related to the loss on the change in fair value of financial
11 12,115 2
instruments
Other operating expenses and income, net 9 (4,892) (3,049)
Other comprehensive loss for the year (48,241) (873)
Operating costs (308,503) (271,161)
TOTAL COMPREHENSIVE (LOSS)/PROFIT FOR THE YEAR (65,387) 6,462
Operating profit 11,268 19,795
Total comprehensive (loss)/profit attributable to:
Finance income 10 2,471 2,686
Shareholders of the Company (63,712) 7,143
Finance costs 10 (28,399) (8,814)
Non-controlling interest (1,675) (681)
Hedging result 10 (1,723)
TOTAL COMPREHENSIVE (LOSS)/PROFIT FOR THE YEAR (65,387) 6,462
Share of results of associates 31 37
(Loss)/profit before income tax (16,352) 13,704 The consolidated statement of comprehensive income should be read in conjunction with the notes set out on pages 150 to 189 which are forming part of the consolidated financial statements
Income tax 11 (794) (6,369)

(Loss)/profit for the year (17,146) 7,335
Attributable to:
Shareholders of the Company (15,471) 8,016
Non-controlling interest (1,675) (681)
(LOSS)/PROFIT FOR THE YEAR (17,146) 7,335
(Loss)/profit per share basic (in Roubles per share) (14.6) 7.6
(Loss)/profit per share diluted (in Roubles per share) (14.6) 7.6
Weighted average number of shares outstanding (millions) 1,056.9 1,054.1
Weighted average number of diluted shares outstanding (millions) 1,056.9 1,054.1
The consolidated statement of profit or loss should be read in conjunction with the notes set out on pages 150 to 189 which are forming part of the consolidated financial statements
Approved on 27 February 2015 and signed on behalf of management

Financial results
Financial results
V.G. Saveliev Sh.R. Kurmashov
General Director Deputy General Director for Finance

and Network and Revenue Management
142 143
Consolidated Statement of Financial

Position as at 31 December 2014
(All amounts in millions of Russian Roubles, unless otherwise stated)
Note 31 December 2014 31 December 2013 Note 31 December 2014 31 December 2013
ASSETS Total non-current liabilities 156,087 86,733

Current assets TOTAL LIABILITIES 291,223 154,704
Cash and cash equivalents 12 26,547 18,660

Short-term financial investments 961 272 Equity
Accounts receivable and prepayments 14 56,769 55,691 Share capital 30 1,359 1,359
Current income tax prepayment 668 476 Treasury shares reserve (3,571) (3,573)
Aircraft lease security deposits 13 321 405 Accumulated profit on disposal of treasury shares 1,659 1,659
Expendable spare parts and inventories 15 6,516 4,927 Investment revaluation reserve (5) (10)
Derivative financial instruments 22 431 1,034 Translation from the functional currency to the presentation currency (28)
Total current assets 92,213 81,465 Hedging reserve 22 (48,657) (383)
Non-current assets Retained earnings 45,584 61,122
Deferred tax assets 11 18,540 2,174 Equity attributable to shareholders of the Company (3,631) 60,146
Investments in associates 140 123 Non-controlling interest (9,874) (5,666)
Long-term financial investments 16 6,115 6,099 TOTAL EQUITY (13,505) 54,480
Aircraft lease security deposits 13 2,110 1,088 TOTAL LIABILITIES AND EQUITY 277,718 209,184
Other non-current assets 17 3,759 5,955

The consolidated statement of financial position should be read in conjunction with the notes set out on pages 150 to 189 which are forming part of the consolidated financial statements
Prepayments for aircraft 18 29,241 12,318
Property, plant and equipment 19 116,044 88,777
Intangible assets 20 2,762 3,350
Goodwill 21 6,660 6,660
Derivative financial instruments 22 134 1,175
Total non-current assets 185,505 127,719
TOTAL ASSETS 277,718 209,184
LIABILITIES AND EQUITY
Current liabilities
Derivative financial instruments 22 26,312 213
Accounts payable and accrued liabilities 23 48,952 36,249
Unearned traffic revenue 22,469 16,334
Deferred revenue related to frequent flyer programme 24 799 577
Provisions 25 2,349 881
Finance lease liabilities 26 16,912 8,688
Short-term borrowings and current portion of long-term loans and borrowings 27 17,343 5,029
Total current liabilities 135,136 67,971
Long-term loans and borrowings 27 6,860 8,377
Finance lease liabilities 26 132,366 63,348
Provisions 25 4,845 1,655
Financial results
Financial results
Deferred tax liabilities 11 133 1,647
Deferred revenue related to frequent flyer programme 24 2,560 1,862
Derivative financial instruments 22 4,839 4,546
Other non-current liabilities 28 4,484 5,298
144 145
Consolidated Statement of Cash Flows

Note 2014 2013 Note 2014 2013
Cash flows from operating activities: Change in restricted cash 12 (82) (60)
(Loss)/profit before income tax (16,352) 13,704 Income taxes paid (6,863) (4,260)
Adjustments for: Income tax refunded 40 9
Depreciation and amortisation 19, 20 12,136 10,658 Net cash flows from operating activities 35,977 28,945
Charge/(reversal) of impairment provision for accounts receivable

9 3,103 (834)
and prepayments, net
Cash flows from investing activities:
Loss on accounts receivable write-off 9 33 616
Proceeds from sale of investments and deposits return 1,869 228
Change in impairment provision for obsolete expendable spare
242 376 Purchases of investments and deposits placement (2,552) (361)
parts and inventory
Charge of provision for impairment of property, plant Proceeds from sale of property, plant and equipment 126 66
19 34 184
and equipment
Purchases of property, plant and equipment and intangible assets (6,160) (4,410)
Non-cash operations, related to assets classified as held for sale (13)
Dividends received 70 58
(Gain)/loss on disposal of property, plant and equipment (1,907) 193
Prepayments for aircraft (21,361) (7,154)
Gain on accounts payable write-off 9 (384) (119)
Return of prepayments for aircraft 9,620 7,783
Share of financial results of associates (31) (37)
Payments and return of operating lease security deposits, net (104) 191
Gain on sale of investments and accrual of provision for impairment
10 (1) (331) Net cash flows used in investing activities (18,492) (3,599)
of investments
Loss from change in the fair value of derivative financial instruments 10 9,869 939
Cash flows from financing activities:
Hedging result 10 1,723
Proceeds from loans and borrowings 18,398 6,500
Change in provisions 25 1,271 1,639
Repayment of loans and borrowings (9,870) (14,579)
Interest expense 10 4,934 3,320
Repayment of the principal element of finance lease liabilities (15,629) (9,795)
Foreign exchange loss 10 14,795 3,348
Interest paid (3,409) (2,857)
Write-off of VAT 9 20
Proceeds from disposal of treasury shares 2 365
Recovery of VAT 9 (285)
Proceeds from sale of treasury shares to non-controlling shareholders 119 12
Change in the share-based payment provision 36 (34)
Purchase of treasury shares (12)
Change in other provisions and other assets impairments (46) 193
Dividends paid (2,833) (1,289)
Other operating expenses/(income), net 165 (224)
(Payments)/proceeds on settlement of derivative financial instruments, net (1,451) (127)
Other finance (income)/costs, net (449) 15
Net cash used in financing activities (14,673) (21,782)
Loss/(gain) on derivative financial instruments, net 2,813 (620)
Effect of exchange rate fluctuations on cash and cash equivalents 5,075 26
Dividend income (60) (49)
Net increase in cash and cash equivalents 7,887 3,590
Total operating cash flows before working capital changes 31,603 32,944
Cash and cash equivalents at the beginning of the year 18,660 15,070
Change in accounts receivable and prepayments 4,658 (3,014)
Cash and cash equivalents at the end of the year 12 26,547 18,660
Change in expendable spare parts and inventories (1,831) (1,019)
Change in accounts payable and accrued liabilities 8,452 4,345

Financial results
Financial results
Non-cash transactions as part of the investing activities:
Total operating cash flows after working capital changes 42,882 33,256
Property, plant and equipment acquired under finance leases 34,472 18,605
The consolidated statement of cash flows should be read in conjunction with the notes set out on pages 150 to 189 which are forming part of the consolidated financial statements
146 147
Consolidated Statement of Changes in Equity

Equity attributable to shareholders of the Company Equity attributable to shareholders of the Company
Accumulated result
on disposal of treasury Investment revaluation Accumulated currency Share-based
Note Share capital Hedging reserve Retained earnings Total Non-controlling interest Total equity
shares less treasury reserve translation reserve payment reserve
shares reserve
1 January 2013 1,359 (2,440) (12) (54) 517 207 54,339 53,916 (4,522) 49,394
Profit/(loss) for the year 8,016 8,016 (681) 7,335
Translation from the functional

2 26 28 28
currency to the presentation currency
Loss from the change in fair value of

derivative financial instruments net of 11.22 (900) (900) (900)
related deferred tax
Total other
(872) (872)
comprehensive loss
Total comprehensive
7,144 (681) 6,463
profit/(loss)
Disposal of subsidiary (347) (347)
Share-based payments (207) (207) (207)
Additions of treasury shares (12) (12) (12)
Disposal of treasury shares 538 538 538
Sale of shares to non-controlling

12 12
shareholders
Dividends declared (1,233) (1,233) (128) (1,361)
31 December 2013 1,359 (1,914) (10) (28) (383) 61,122 60,146 (5,666) 54,480
1 January 2014 1,359 (1,914) (10) (28) (383) 61,122 60,146 (5,666) 54,480
Loss for the year (15,471) (15,471) (1,675) (17,146)
Translation from the functional

5 28 33 33
currency to the presentation currency
Loss from the change in fair value of

derivative financial instruments net of 11.22 (48,274) (48,274) (48,274)
related deferred tax
Total other
(48,241) (48,241)
comprehensive loss
Total comprehensive loss (63,712) (1,675) (65,387)
Disposal of treasury shares 2 2 2
Sale of treasury shares to non-

2,585 2,585 (2,283) 302
controlling shareholders
Dividends declared (2,652) (2,652) (250) (2,902)
31 December 2014 1,359 (1,912) (5) (48,657) 45,584 (3,631) (9,874) (13,505)
The consolidated statement of changes in equity should be read in conjunction with the notes set out on pages 150 to 189 which are forming part of the consolidated financial statements
Financial results
Financial results
148 149
Notes to the Consolidated Financial Statements The table below provides information on the Groups aircraft fleet as at 31 December 2014 (number of items):
for the year ended 31 December 2014 Type of aircraft Ownership Aeroflot Donavia Vladavia AK Rossiya Orenburgavia AK Aurora Pobeda Group total
(All amounts in millions of Russian Roubles, unless otherwise stated) Il-96-300 Owned 5 5
An-24 Owned 1 1
Mi-8 Owned 3 3
Total owned 5 3 1 9
Airbus A319 Finance lease 4 9 13
Airbus A320 Finance lease 1 1
1. Nature of the business Airbus A321 Finance lease 21 21
Airbus A330 Finance lease 8 8

Joint Stock Company Aeroflot Russian Airlines (the Company or Aeroflot) was formed as an opened joint stock company following the
Boeing B737 Finance lease 2 2
Russian Government decree in 1992 (hereinafter the 1992 decree). The 1992 decree conferred all the rights and obligations of Aeroflot
Soviet Airlines and its structural units upon the Company, including inter-governmental bilateral agreements and agreements signed with foreign Boeing B777 Finance lease 10 10
airlines and enterprises in the field of civil aviation. Following the Decree of the Russian President No. 1009 dated 4 August 2004, the Company An-148 Finance lease 6 6
was included in the List of Strategic Entities and Strategic Joint Stock Companies.
Total finance
44 15 2 61
lease
The principal activities of the Company are the provision of passenger and cargo air transportation services, both domestically and internationally,
SSJ 100 Operating lease 16 16
and other aviation-related services from Moscow Sheremetyevo Airport. The Company and its subsidiaries (the Group) also conduct activities
comprising airline catering and hotel operations. Associated entities mainly comprise aviation security services and other ancillary services. Airbus A319 Operating lease 3 10 7 6 26
Airbus A320 Operating lease 62 1 11 74

As at 31 December 2014 and 2013, the Government of the Russian Federation (the RF) represented by the Federal Agency for Management of Airbus A321 Operating lease 5 5
State Property owned 51.17% of the Company. The Companys headquarters are located in Moscow at 10 Arbat Street, 119002, RF
Airbus A330 Operating lease 14 14
. Boeing B737 Operating lease 6 24 3 8 41
Boeing B767 Operating lease 3 3

The principal subsidiaries are:
Boeing B777 Operating lease 3 3
31 December 31 December DHC 8 S-300 Operating lease 4 4

Company name Registered address Principal activity
2014 2013
DHC 8 S-200 Operating lease 3 3
OJSC Donavia ("Donavia") Rostov-on-Don,RF Airline 100.00% 100.00%
DHC 6 S-400 Operating lease 2 2
OJSC Rossiya airlines ("AK Rossiya") St. Petersburg, RF Airline 75% minus one share 75% minus one share
Total operating
106 10 1 21 27 18 8 191
OJSC Vladivostok Avia ("Vladavia") Primorsk Region, RF Airline 26.60% 52.16% lease
Total fleet 155 10 4 36 27 21 8 261

OJSC Aurora Airlines ("AK Aurora") Yuzhno-Sakhalinsk, RF Airline 51.00% 100.00%
OJSC Orenburg airlines ("Orenburgavia") Orenburg, RF Airline 100.00% 100.00%

As at 31 December 2014: 5 aircraft Il-96-300 and 3 aircraft Mi-8 are not operated, 11 Boeing B737 and 1 aircraft Airbus A320 are under rede-
CJSCAeroflot-Cargo Moscow, RF
Cargo transportation
100.00% 100.00% livery maintenance.
services
LLC Dobrolet ("Dobrolet") Moscow, RF Airline 100.00% 100.00%
LLC Pobeda Airlines ("Pobeda") Moscow, RF Airline 100.00% 2. Basis of preparation and summary
LLC Aeroflot-Finance ("Aeroflot-Finance") Moscow, RF Finance services 100.00% 100.00% of significant accounting policies
CJSC Aeromar Moscow Region, RF Catering 51.00% 51.00%
Basis of presentation
CJSC Sherotel Moscow Region, RF Hotel 100.00% 100.00%
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS)
and in accordance with the Federal Law No. 208 FZ On consolidated financial reporting dated 23 July 2010. The consolidated financial state-
In 2013, following an order of the Russian Prime-Minister, OJSC Aurora Airlines was founded based on two Far East airlines OJSC Sahalinskiye
ments are presented in millions of Russian Roubles (RUB million), except where specifically noted otherwise.
Aviatrassi and OJSC Vladivostok Avia. 49% of OJSC Aurora Airlines was sold for RUB 181 million to the governments of the Russian Far East
regions in January 2014.
These consolidated financial statements have been prepared on the historical cost convention except for financial instruments which are initially
recognised at fair value, financial assets available for sale and financial instruments measured at fair value through profit or loss, as well as deriva-
On 16 September 2014 the Company registered legal entity LLC Low Cost Carrier, which was renamed to LLC Pobeda Airlines on 9 December 2014.
tive financial instruments to which specific hedge accounting rules are applicable. The principal accounting policies applied in the preparation
of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented in these
The Groups major associate is:
consolidated financial statements, unless otherwise stated.
Company name Registered address Principal activity 31 December 31 December

All significant subsidiaries directly or indirectly controlled by the Group are included in these consolidated financial statements. Alist of the Groups
2014 2013
principal subsidiaries is set out in Note 1.
Financial results
Financial results
CJSC AeroMASHAB (AeroMASHAB) Moscow Region,RF Aviation security 45.00% 45.00%
Functional and presentation currency
The functional currency of each of the Groups consolidated entities is the currency of the primary economic environment in which the entity
operates. Since 1 January 2007, the functional currency of the Company and its subsidiaries is the Russian Rouble (RUB or rouble). Since 1
January 2013 the presentation currency of the Groups consolidated financial statements is the Russian Rouble as well.
150 151
Consolidation (i) the Groups share of profits or losses of associates is included in the consolidated statement of profit or loss for the year as ashare of finan-
cial results of equity accounted investments,
Subsidiaries represent investees, including structured entities, which the Group controls, as the Group: (ii) the Groups share in other comprehensive income is recorded as aseparate line item in other comprehensive income,
(iii) all other changes in the Groups share of the carrying value of net assets of the associates are recorded in the consolidated statement of
(i) has the powers to control significant operations which has aconsiderable impact on the investees income, profit or loss within the share of financial results of equity accounted investments.
(ii) runs the risks related to variable income from its involvement with investee or is entitled to such income, and However, when the Groups share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables,
the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
(iii) is able to use its powers with regard to the investee in order to influence the amount of its income.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Groups interest in the associates;
The existence and effect of substantive rights, including substantive potential voting rights, are considered when assessing whether the Group has unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the associates assets.
power over another entity. For aright to be substantive, the holder must have practical ability to exercise that right when decisions about the direc-
tion of the relevant activities of the investee need to be made. The Group may have power over an investee even when it holds less than majority Disposals of subsidiaries or associates
of voting power in an investee. In such acase, the Group assesses the size of its voting rights relative to the size and dispersion of holdings of the
other vote holders to determine if it has de-facto power over the investee. When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in
carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequent accounting for the retained
Protective rights of other investors, such as those that relate to fundamental changes of investees activities or apply only in exceptional circum- interest in an associate or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity,
stances, do not prevent the Group from controlling an investee. are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in
other comprehensive income are recycled to profit or loss.
Subsidiaries are consolidated from the date on which control is transferred to the Group (acquisition date) and are deconsolidated from the date
on which control ceases. If the ownership interest in an associate is reduced but significant influence is retained, only aproportionate share of the amounts previously
recognised in other comprehensive income is reclassified to profit or loss where appropriate.
Subsidiaries are included in the consolidated financial statements at the acquisition method. Identifiable assets acquired and liabilities and
contingent liabilities received in abusiness combination are measured at their fair values at the acquisition date, irrespective of the extent of any Goodwill
non-controlling interest.
Goodwill is carried at cost less accumulated impairment losses, if any. The Group performs goodwill impairment testing on an annual basis and
Goodwill is measured through the deduction of net assets of the acquired entity from the total of the following amounts: consideration transferred whenever there are indications that goodwill may be impaired. The carrying value of goodwill is compared to the recoverable amount, which is the
for the acquired entity, non-controlling share in the acquiree and fair value of the existing equity interest in the acquiree held immediately by the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently
Group before the acquisition date. Any negative amount (negative goodwill, bargain purchase) is recognised in profit or loss, after management reversed. Goodwill is allocated to the cash generating units (namely, the Groups subsidiaries). These units represent the lowest level at which the
reassesses whether it identified all the assets acquired and all liabilities and contingent liabilities assumed and reviews appropriateness of their Group monitors goodwill and are not larger than an operating segment.
measurement.
Gains or losses on disposal of an operation within acash generating unit to which goodwill has been allocated include the carrying amount of
The consideration transferred for the acquiree is measured at the fair value of the assets given up, equity instruments issued and liabilities incurred goodwill associated with the disposed operation, generally measured on the basis of the relative values of the disposed operation and the portion
or assumed, including fair value of assets or liabilities from contingent consideration arrangements but excludes acquisition related costs such as of the cash-generating unit which is retained.
advisory, legal, valuation and similar professional services. Transaction costs related to the acquisition and incurred for issuing equity instruments
are deducted from equity; transaction costs incurred for issuing debt as part of the business combination are deducted from the carrying amount Foreign currency translation
of the debt and all other transaction costs associated with the acquisition are expensed.
Monetary assets and liabilities denominated in foreign currency are translated into each entitys functional currency at the official exchange rate of
The Group measures non-controlling interest that represents the ownership interest and entitles the holder to aproportionate share of net assets the Central Bank of the Russian Federation (CBRF) at the respective end of the reporting period. Transactions in foreign currencies are recorded
in the event of liquidation on atransaction by transaction basis, either at: at the rates of exchange prevailing on the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of transac-
tions in foreign currency and from the translation of monetary assets and liabilities denominated in foreign currency into each entitys functional
) fair value, or currency at year-end official exchange rates of the CBRF are recognised in the consolidated statement of profit or loss for the year within finance
b) in proportion to the non-controlling share in the net assets of the acquiree. income or costs except for foreign exchange differences arising on translation of financial assets and liabilities representing hedge instruments.
Foreign exchange differences on hedge instruments are recognised in the hedging reserve.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also
eliminated unless the cost cannot be recovered. Unrealised losses are also eliminated, unless the cost cannot be recovered. The Company and its Translation at year-end rates does not apply to non-monetary items in the consolidated statement of financial position that are measured at his-
subsidiaries use uniform accounting policies consistent with the Groups policies. torical cost. Non-monetary items measured at fair value in aforeign currency, including equity investments, are translated using the exchange
rates at the date when the fair value was determined. Effects of exchange rate changes on non-monetary items measured at fair value in aforeign
Non-controlling interest is that part of the net results and of the equity of asubsidiary attributable to interests which are not owned, directly or currency are recorded as part of the fair value gain or loss.
indirectly, by the Company. Non-controlling interest forms aseparate component of the Groups equity.
The table below presents official US Dollar and Euro to rouble exchange rates used for the translation:
Purchases of non-controlling interests
Official exchange rates

The Group applies the economic entity model to account for transactions with owners of non-controlling interest. Any difference between the
Roubles for 1 US Dollar Roubles for 1 Euro
purchase consideration and the carrying amount of non-controlling interest acquired is recorded as acapital transaction directly in equity. The
Group recognises the difference between sales consideration and carrying amount of non-controlling interest sold as acapital transaction in the Average rate for 2014 38.42 50.82
consolidated statement of changes in equity. 31 December 2014 56.26 68.34
Average rate for 2013 31.85 42.31

Investments in associates
31 December 2013 32.73 44.97
Financial results
Financial results
Associates are entities over which the Group has significant influence (directly or indirectly), but not control, generally accompanying asharehold-
ing of between 20 and 50 percent of the voting rights. Investments in associates are accounted for using the equity method of accounting and are At 26 February 2015 the official exchange rates of US Dollar and Euro to rouble were 62.59 roubles for 1 US Dollar and 71.17 roubles for
initially recognised at cost. The carrying amount of associates includes goodwill identified on acquisition less accumulated impairment losses, if 1 Euro, respectively.
any. Dividends received from associates reduce the carrying value of the investment in associates. Other post-acquisition changes in the Groups
share of net assets of an associate are recognised as follows:
152 153
Revenue recognition their respective estimated useful lives.

The Groups fleet assets have the following useful lives:
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services Airframes of aircraft 2032 years
provided in the normal course of business, net of sales related taxes. Engines 810 years
Interiors 5 years
Passenger revenue: Ticket sales are reported as traffic revenue when the transportation service has been provided. The value of tickets sold Buildings 1550 years
and still valid but not used by the reporting date is reported in the Groups consolidated statement of financial position in aseparate line item Facilities and transport vehicles 35 years
(unearned traffic revenue) within current liabilities. This item is reduced either when the Group completes the transportation service or when the Other non-current assets 15 years
passenger requests arefund. Sales representing the value of tickets that have been issued, but which will never be used, are recognised as traffic (v) Capitalised leasehold improvements: Capitalised costs that relate to the rented fleet are depreciated over the shorter of: their use-
revenue at the date the tickets are issued based on an analysis of historical patterns of actual sales data. Commissions, which are payable to the ful lives and the lease term.
sales agents are recognised as sales and marketing expenses within operating costs in the consolidated statement of profit or loss in the period
of ticket sale by agents. (b) Land, buildings and other plant and equipment
Passenger revenue includes revenue from code-share agreements with certain other airlines as per which the Group and other airlines sell seats Property, plant and equipment is stated at the historical US Dollar cost recalculated at the exchange rate on 1 January 2007, the date of
for each others flights (code-share agreements). Revenue from the sale of code-share seats on other airlines is recorded at the moment of the the change of the functional currency of the Company and its major subsidiaries from the US Dollar to the Russian Rouble. Depreciation
transportation service provision and is accounted for net in Groups passenger revenue in the consolidated statement of profit or loss. Revenue is accrued based on the straight-line method on all property, plant and equipment based upon their expected useful lives or, in the case of
from the sale of code-share seats on Groups flights by other airlines are recorded at the moment of the transportation service provision and is leasehold properties, over the duration of the leases or useful life if it is shorter. The useful lives of the Groups property, plant and equipment
fully accounted for in the Groups traffic revenue in the consolidated statement of profit or loss. range from 1 to 50 years. Land is not depreciated.
Cargo revenue: The Groups cargo transport services are recognised as revenue when the air transportation is provided. The value of cargo (c) Construction in progress
transport services sold but not yet provided is reported in the Groups consolidated statement of financial position in aseparate line item (unearned
traffic revenue) within current liabilities. Construction in progress represents costs related to construction of property, plant and equipment, including corresponding variable out-
of-pocket expenses directly attributable to the cost of construction, as well the acquisition cost of other assets that require assembly or any
Catering: Revenue is recognised when meal packages are delivered to the aircraft, as this is the date when the risks and rewards of ownership other preparation. The carrying value of construction in progress is regularly analysed for the potential accrual of the impairment provision.
are transferred to customers.
Gain or loss on disposal of non-current asset
Other revenue: Revenue from bilateral airline agreements is recognised when earned with reference to the terms of each agreement. Hotel
accommodation revenue is recognised when the services are provided. Revenues from sales of goods are recognised at the point of transfer of The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying
risks and rewards of ownership of the goods, normally when the goods are shipped to the customer. If the Group agrees to transport goods to amount of the asset and is recognised in the Groups consolidated statement of profit or loss within operating costs.
aspecified location, revenue is recognised when the goods are passed to the customer at the destination point. Revenues from sale of services
are recognised in the period in which the services were rendered. Finance lease
Segment information Where the Group is alessee in alease which transferred substantially all the risks and rewards incidental to ownership to the Group, the assets
leased are capitalised in property, plant and equipment at the commencement of the lease at the lower of: the fair value of the leased assets and
The Group determines and presents operating segments based on the information that internally is provided to the General Director of the Group, the present value of the minimum lease payments.
who is the Groups chief operating decision maker. Segments whose revenue, financial result or assets are not less than ten percent or more of
all the segments are reported separately. Each lease payment is allocated between the liability and finance charges so as to achieve aconstant rate on the finance balance outstanding.
Corresponding lease liabilities net of future interest expenses are recorded as aseparate line item (finance lease liabilities) within current and
Intangible assets non-current liabilities in the Groups consolidated statement of financial position. Interest expenses within lease payments are charged to profit
or loss over the lease terms using the effective interest method. The assets acquired under finance leases are depreciated over their useful life or
The Groups intangible assets other than goodwill have definite useful lives and primarily include capitalised computer software with the useful the shorter lease term, if the Group is not reasonably certain that it will obtain ownership by the end of the lease term.
life of 5 years. Intangible assets are amortised using the straight-line method over their useful lives. Acquired licenses for computer software are
capitalised on the basis of the costs incurred to acquire and bring them to use. If impaired, the carrying amount of intangible assets is written down Customs duties, legal fees and other initial direct costs increase the total amount recorded in assets in the Groups consolidated statement of
to the higher of value in use and fair value less costs to sell. financial position. The interest component of lease payments included in financial costs in the Groups consolidated statement of profit or loss.
Property, plant and equipment Capitalisation of borrowing costs
Property, plant and equipment are reported at cost, less accumulated depreciation and impairment losses (where appropriate). Depreciation is Borrowing costs including interest accrued, foreign exchange difference and other costs directly attributable to the acquisition, construction or
calculated in order to allocate the cost (less estimated residual value where applicable) over the remaining useful lives of the assets.. production of assets that are not carried at fair value and that necessarily take asubstantial time to get ready for intended use or sale (the quali-
fying assets) are capitalised as part of the costs of those assets, if the commencement date for capitalisation is on or after 1 January 2009. The
(a) Fleet Group considers prepayments for aircraft as the qualifying asset with regard to which borrowing costs are capitalised.
(i) Owned aircraft and engines: Owned fleet consists of Russian-made aircraft, while engines are both Russian and foreign-made. The The capitalisation starts when the Group:
full list of aircraft is presented in Note 1. () bears expenses related to the qualifying asset;
(ii) Finance leased aircraft and engines: Where assets are financed through finance leases, under which substantially all the risks and (b) bears borrowing costs; and
rewards of ownership are transferred to the Group, the assets are treated as if they had been purchased outright. (c) takes measures to get the asset ready for intended use or sale.
(iii) Capitalised costs on regular repairs and maintenance works of aircraft operated under finance lease: Expenditure
incurred on modernisation and improvements projects that are significant in size (mainly aircraft modifications involving installation of Capitalisation of borrowing costs continues up to the date when the assets are substantially ready for their use or sale.
replacement parts) are separately capitalised. The carrying amount of those parts that are replaced is derecognised from the consoli-
dated statement of financial position and included in operating costs in the Groups consolidated statement of profit or loss. Capitalised The Group capitalises borrowing costs related to capital expenditure made on qualifying assets. Borrowing costs capitalised are calculated at
Financial results
Financial results
costs of aircraft checks and major modernisation and improvements projects are depreciated on astraight-line basis to the projected the Groups average funding cost (the weighted average interest cost is applied to the expenditures on the qualifying assets), except to the extent
date of the next check or based on estimates of their useful lives. Ordinary repair and maintenance costs are expensed as incurred and that funds are borrowed specifically for the purpose of obtaining aqualifying asset. Where this occurs, actual borrowing costs incurred less any
included in operating costs (aircraft maintenance) in the Groups consolidated statement of profit or loss. investment income on the temporary investment of those borrowings are capitalised.
(iv) Depreciation of fleet: The Group depreciates fleet assets owned or held under finance leases on astraight-line basis to the end of
their estimated useful life or lease term, if it is shorter. The airframe, engines and interior of aircraft are depreciated separately over
154 155
Impairment of property, plant and equipment Fair value of financial instruments traded in an active market is measured as the product of the quoted price for the individual asset or liability
and the quantity held by the entity.
At each reporting date the management reviews its property, plant and equipment to determine whether there is any indication of impairment of
those assets. If any such indication exists, the recoverable amount of the asset is estimated by management as the higher of: an assets fair value Aportfolio of financial derivatives or other financial assets and liabilities that are not traded in an active market is measured at the fair value
less costs to sell and its value in use. The carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recorded within of agroup of financial assets and financial liabilities on the basis of the price that would be received to sell anet long position (i.e. an asset)
operating costs in the Groups consolidated statement of profit or loss. An impairment loss recognised for an asset in prior years is reversed where for aparticular risk exposure or paid to transfer anet short position (i.e. aliability) for aparticular risk exposure in an orderly transaction
appropriate if there has been achange in the estimates used to determine the assets value in use or fair value less costs to sell. between market participants at the measurement date. This is applicable for assets carried at fair value on arecurring basis if: (a) the Group
manages the group of financial assets and financial liabilities on the basis of the Companys net exposure to aparticular market risk (or risks)
Operating leases or to the credit risk of aparticular counterparty in accordance with the Groups documented risk management or investment strategy; (b) the
Group provides information on that basis about the group of assets and liabilities to the entitys key management personnel; and (c) the market
Where the Group is alessee in alease which does not transfer substantially all the risks and rewards incidental to ownership from the lessor to the risks, including duration of the Groups exposure to aparticular market risk (or risks) arising from the financial assets and financial liabilities
Group, the total lease payments are charged to profit or loss for the year on astraight-line basis over the lease term. The lease term is the non-can- is substantially the same.
cellable period for which the lessee has contracted to lease the asset together with any further terms for which the lessee has the option to continue
to lease the asset, with or without further payment, when at the inception of the lease it is reasonably certain that the lessee will exercise the option. Valuation techniques such as discounted cash flow models or models based on recent arms length transactions or consideration of financial
data of the investees are used to measure fair value of certain financial instruments for which external market pricing information is not available.
Related direct expenses including custom duties for imported leased aircraft are recognised within non-current assets at the time of the aircraft
transfer and amortised using astraight-line method over the term of lease agreement. Amortisation charges are recognised within operating costs. Financial instrument measured at fair value are analysed by levels of the fair value hierarchy as follows:
In compliance with the customs legislation of the Russian Federation, the Group pays customs duties in instalments, and therefore customs duties
payment obligations are initially recognised at amortised cost. (i) level 1 are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities,
(ii) level 2 measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices)
The operating lease agreements include requirements to perform regular repairs and maintenance works during the lease term. Accordingly, or indirectly (that is, derived from prices), and
the Group accrues aprovision in the amount of discounted expenses needed to perform regular repairs and maintenance works. The estimated (iii) level 3 measurements are valuations not based on solely observable market data (that is, the measurement requires significant unobserv-
expenses are based on the most reliable data available at the time of such estimation. The provisions of the operating lease agreements, age and able inputs).
condition of the aircraft and engines, market value of fixtures, key parts and components subject to replacement and the cost of required work are
taken into account. The provision is recorded at the discounted value. Transfers between levels of the fair value hierarchy are deemed to have occurred at the end of the reporting period.
The costs of regular repairs and maintenance works performed for aircraft held under finance lease are capitalized and amortized over the shorter Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisi-
of (i) the scheduled usage period to the next major inspection event or (ii) the remaining life of the asset or (iii) remaining lease term. tion and includes transaction costs. Measurement at cost is only applicable to investments in equity instruments that do not have aquoted market
price and whose fair value cannot be reliably measured and derivatives that are linked to, and must be settled by, delivery of such unquoted
Aircraft lease security deposits equity instruments.
Aircraft lease security deposits represent amounts paid to the lessors of aircraft in accordance with the provisions of operating lease agreements. Amortised cost is the amount at which the financial instrument was recognised at initial recognition less any principal repayments, minus or plus
These security deposits are returned to the Group at the end of the lease period. Security deposits related to lease agreements are presented accrued interest, and for financial assets less any write-down (direct or through the valuation provision account) for incurred impairment losses.
separately in the consolidated statement of financial position (aircraft lease security deposits) and recorded at amortised cost. Accrued interest includes amortisation of transaction costs deferred at initial recognition and of any premium or discount to maturity amount using
the effective interest method. Accrued interest income and accrued interest expense, including both accrued coupon and amortised discount or
Classification of financial assets premium (including fees deferred at origination, if any), are not presented separately and are included in the carrying values of related items in
the consolidated statement of financial position.
Financial assets have the following categories: ) loans and receivables, b) financial assets available for sale, and c) financial assets measured at
fair value through profit or loss, which are recognised in this category from the date of the initial recognition. The effective interest method is amethod of allocating interest income or interest expense over the relevant period so as to achieve
aconstant periodic rate of interest (effective interest rate) on the carrying amount. The effective interest rate is the rate that exactly discounts
Loans and receivables are unquoted non-derivative financial assets with fixed or determinable payments other than those that the Group intends estimated future cash payments or receipts (excluding future credit losses) through the expected life of the financial instrument or ashorter
to sell in the near term. Financial assets that would meet the definition of loans and receivables may be reclassified if the Group has the intention period, if appropriate, to the net carrying amount of the financial instrument. The effective interest rate discounts cash flows of variable inter-
and ability to hold these financial assets for the foreseeable future or until maturity. est instruments to the next interest repricing date, except for the premium or discount which reflects the credit spread over the floating rate
specified in the instrument, or other variables that are not reset to market rates. Such premiums or discounts are amortised over the whole
Derivative financial instruments, including currency and interest rate options, fuel options, and currency and interest rate swaps are carried expected life of the instrument. The present value calculation includes all fees paid or received between parties to the contract that are an
at their fair value. All derivative instruments are carried as assets when fair value is positive and as liabilities when fair value is negative. Changes integral part of the effective interest rate.
in the fair value of derivative instruments are included in profit or loss for the year, except for instruments subject to special hedge accounting
rules, whose fair value changes are recorded in other comprehensive income. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of afinancial instrument. An incremental
cost is one that would not have been incurred if the transaction had not taken place. Transaction costs include fees and commissions paid to agents
All other financial assets are included in the available-for-sale category, which includes investment securities which the Group intends to hold and advisors, levies by regulatory agencies and securities exchanges, and transfer taxes and duties imposed on property transfer. Transaction
for an indefinite period of time and which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices. costs do not include debt premiums or discounts, financing costs or internal administrative or holding costs.
Classification of financial liabilities Initial recognition of financial instruments
Financial liabilities have the following measurement categories: a) held for trading, which also includes financial derivatives, and (b) other financial Derivative financial instruments, including financial instruments subject to special hedge accounting rules, are initially recognised at fair value.
liabilities. Liabilities held for trading are carried at fair value with changes in value recognised in profit or loss for the year (as finance income or All other financial instruments are initially recorded at fair value plus transaction costs. Fair value at initial recognition is best evidenced by the
finance costs) in the period in which they arise. Other financial liabilities are carried at amortised cost. transaction price. Again or loss on initial recognition is only recorded if there is adifference between fair value and transaction price which can
be evidenced by other observable current market transactions in the same instrument or by avaluation technique whose inputs include only data
Financial instruments key measurement terms from observable markets.
Financial results
Financial results
Depending on their classification, financial instruments are carried at fair value, cost or amortised cost, as described below. All purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (regular way
purchases and sales) are recorded at trade date, which is the date on which the Group commits to deliver afinancial asset. All other purchases
Fair value is the price that would be received to sell an asset or paid to transfer aliability in an orderly transaction between market participants are recognised when the Company/Group becomes aparty to the contractual provisions of the instrument.
at the measurement date. The best evidence of fair value is price in an active market. An active market is one in which transactions for the asset
or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
156 157
Derecognition of financial assets Impairment losses on equity instruments are not reversed and any subsequent gains are recognised in other comprehensive income. If, in
asubsequent period, the fair value of adebt instrument classified as available for sale increases and the increase can be objectively related to an
The Group derecognises financial assets when: event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through current periods profit or loss.
() the assets are redeemed or the rights to cash flows from the assets expired, or Cash and cash equivalents
(b) the Group has transferred the rights to the cash flows from financial assets or entered into atransfer agreement, while:
(i) also transferring all substantial risks and rewards of ownership of the assets, or Cash and cash equivalents include cash in hand, deposits held at call with banks, and short-term highly liquid investments (including bank deposits)
(ii) neither transferring nor retaining all substantial risks and rewards of ownership but losing control over such assets. with contractual maturities of three months or less. Cash and cash equivalents are carried at amortised cost using the effective interest method.
Control is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated third party without needing Restricted balances are excluded from cash and cash equivalents for the purposes of the consolidated statement of cash flows. Balances restricted
to impose additional restrictions on the sale. from being exchanged or used to settle aliability for at least twelve months after the reporting period are included in other non-current assets in
the Groups consolidated statement of financial position.
Offsetting financial instruments
Loans and receivables
Financial assets and liabilities are offset and the net amount reported in the statement of financial position only when there is alegally enforceable
right to offset the recognised amounts, and there is an intention to either settle on anet basis, or to realise the asset and settle the liability simultane- Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and
ously. Such aright of set off (a) must not be contingent on afuture event and (b) must be legally enforceable in all of the following circumstances: receivables are individually recognised at fair value, and are subsequently measured at amortised cost using the effective interest rate method.
(i) in the normal course of business, (ii) in the event of default and (iii) in the event of insolvency or bankruptcy. Doubtful accounts receivable balances are assessed individually and any impairment losses are included in other operating costs in the Groups
consolidated statement of profit or loss.
Financial instruments and hedge accounting
Impairment of financial assets carried at amortised cost
Derivatives are initially recognised at fair value on the date aderivative contract is entered into and are subsequently re-measured at their fair
value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as ahedging instrument, and if so, Impairment losses are recognised in profit or loss when incurred as aresult of one or more events (loss events) that occurred after the initial
the nature of the item being hedged. The group designates certain derivatives as hedges of aparticular risk associated with arecognised asset or recognition of the financial asset and which have an impact on the amount or timing of the estimated future cash flows of the financial asset or
liability or ahighly probable forecast transaction (cash flow hedge). group of financial assets that can be reliably estimated. The primary factors that the Group considers in determining whether afinancial asset is
impaired are its overdue status and realisability of related collateral, if any.
The group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk man-
agement objectives and strategy for undertaking various hedging transactions. The group also documents its assessment, both at hedge inception Impairment losses are always recognised through an allowance account to write down the assets carrying amount to the present value of expected
and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values cash flows (which exclude future credit losses that have not been incurred) discounted at the original effective interest rate of the asset. The
or cash flows of hedged items. calculation of the present value of the estimated future cash flows of acollateralised financial asset reflects the cash flows that may result from
foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.
The fair values of various derivative instruments used for hedging purposes are disclosed in note 22. The full fair value of ahedging derivative is
classified as anon-current asset or liability when the remaining hedged item is more than 12 months, and as acurrent asset or liability when the If, in asubsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after
remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as acurrent asset or liability. the impairment was recognised (such as an improvement in the debtors credit rating), the previously recognised impairment loss is reversed by
adjusting the allowance account through profit or loss for the year.
Cash flow hedge
Uncollectible assets are written off against the related impairment loss provision after all the necessary procedures to recover the asset have been
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other com- completed and the amount of the loss has been determined. Subsequent recoveries of amounts previously written off are credited to impairment
prehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the income statement as aseparate line below loss account within the profit or loss for the year.
operating result of the Group.
If the terms of an impaired financial asset held at amortised cost are renegotiated or otherwise modified because of financial difficulties of the
Amounts accumulated in equity are reclassified to profit or loss (as profit or loss from financing activities) in the periods when the hedged item counterparty, impairment is measured using the original effective interest rate before the modification of terms. The renegotiated asset is then
affects profit or loss (for example, when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged results derecognised and anew asset is recognised at its fair value only if the risks and rewards of the asset substantially changed. This is normally evi-
in the recognition of anon-financial asset (for example, inventory), the gains and losses previously deferred in equity are transferred from equity denced by asubstantial difference between the present values of the original cash flows and the new expected cash flows.
and included in the initial measurement of the cost of the asset.
Prepayments
When ahedging instrument expires or is sold, or when ahedge no longer meets the criteria for hedge accounting, any cumulative gain or loss
existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. In these consolidated financial statements, prepayments are carried at cost less provision for impairment. Aprepayment is classified as non-current
When aforecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to when the goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset
the income statement within financial gains and losses as aseparate line. which will itself be classified as non-current upon initial recognition. Prepayments to acquire assets are included to the carrying amount of the
asset once the Group has obtained control of the asset and it is probable that future economic benefits associated with the asset will flow to the
Available-for-sale investments Group. Other prepayments are written off to profit or loss when the services relating to the prepayments are received. If there is an indication that
the assets, goods or services relating to aprepayment will not be received, the carrying value of the prepayment is written down accordingly and
Available for sale investments are carried at fair value. Interest income on available-for-sale debt securities is calculated using the effective inter- acorresponding impairment loss is recognised in the Groups consolidated statement of profit or loss for the year.
est method and recognised in profit or loss for the year as finance income. Dividends on available-for-sale equity instruments are recognised in
profit or loss for the year as finance income when the Groups right to receive payment is established and it is probable that the dividends will be Trade and other payables
collected. All other elements of changes in the fair value are recognised in other comprehensive income until the investment is derecognised or
impaired at which time the cumulative gain or loss is reclassified from other comprehensive income to finance income in profit or loss for the year. Trade payables are accrued when the counterparty performs its obligations under the contract and are carried at amortised cost using the effec-
tive interest method.
Impairment losses are recognised in profit or loss for the year when incurred as aresult of one or more events (loss events) that occurred after
Financial results
Financial results
the initial recognition of available-for-sale investments. Asignificant or prolonged decline in the fair value of an equity security below its cost is
an indicator that it is impaired. The cumulative impairment loss measured as the difference between the acquisition cost and the current fair
value, less any impairment loss on that asset previously recognised in profit or loss is reclassified from other comprehensive income to finance
costs in profit or loss for the year.
158 159
Loans and borrowings Deferred income tax is provided using the balance sheet liability method for tax losses carried forward and temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts for consolidated financial reporting purposes. In accordance with the initial recog-
Loans and borrowings are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method. nition exemption, deferred taxes are not recorded for temporary differences arising on initial recognition of an asset or aliability in atransaction
other than abusiness combination if the transaction, when initially recorded, affects neither accounting nor taxable profit. Deferred tax liabilities
Short-term loans and borrowings comprise: are not recorded for temporary differences on initial recognition of goodwill, and subsequently for goodwill which is not deductible for tax purposes.
interest bearing loans and borrowings with aterm shorter than one year; Deferred tax assets and liabilities are measured at tax rates enacted or substantively enacted at the end of the reporting period which are expected
current portion of long-term loans and borrowings. to apply to the period when the temporary differences will reverse or the tax losses carried forward will be utilised.
Long-term loans and borrowings include liabilities with the maturity exceeding one year. Deferred tax assets for deductible temporary differences and tax losses carried forward are recorded only to the extent that it is probable that
future taxable profit will be available against which the deductions can be utilised.
Expendable spare parts and inventories
Deferred income tax assets and liabilities are offset when there is alegally enforceable right to offset current tax assets against current tax liabilities
Inventories, including aircraft expendable spare parts, are valued at cost or net realisable value, whichever is lower. The costs are determined on and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable
the first-in, first- out (FIFO) basis. The Group accrues aprovision for the full amount of obsolete inventories which the Group does not plan to entity or different taxable entities where there is an intention to settle the balances on anet basis. Deferred tax assets and liabilities are netted
continue using in its operations. only within the individual companies of the Group.
Value added taxes The Group controls the reversal of temporary differences relating to taxes chargeable on dividends from subsidiaries or on gains upon their
disposal. The Group does not recognise deferred tax liabilities on such temporary differences except to the extent that Management expects the
Value added tax (VAT) related to sales of goods or provision of services is recorded as aliability to the tax authorities on an accruals basis. temporary differences to reverse in the foreseeable future.
Domestic flights in general are subject to VAT at 18% and international flights are subject to VAT at 0%. Input VAT invoiced by domestic suppliers
as well as VAT paid in respect of imported leased aircraft and spare parts may be recovered, subject to certain restrictions, against output VAT. The Uncertain income tax positions
recovery of input VAT is typically delayed by up to six months and sometimes longer due to compulsory tax audit requirements and other admin-
istrative matters. Input VAT claimed for recovery as at the date of the consolidated statement of financial position is presented net of the output The Groups uncertain tax positions are reassessed by management at the end of each reporting period. Liabilities are recorded for income tax
VAT liability. Recoverable input VAT that is not claimed for recovery in the current period is recorded in the consolidated statement of financial positions that are determined by management as more likely than not to result in additional taxes being levied if the positions were to be chal-
position as VAT receivable. VAT receivable that is not expected to be recovered within the twelve months from the reporting date is classified as lenged by the tax authorities. The assessment is based on the interpretation of tax laws that have been enacted or substantively enacted by the
anon-current asset. Where provision has been made for uncollectible receivables, the bad debt expense is recorded at the gross amount of the end of the reporting period, and any known court or other rulings on such issues. Liabilities for penalties, interest and taxes other than income
account receivable, including VAT. tax are recognised based on managements best estimate of the expenditure required to settle the obligations at the end of the reporting period.
Frequent flyer programme Pensions
Since 1999 the Group operates afrequent flyer programme referred to as Aeroflot Bonus. Subject to the programmes terms and conditions, the The Group makes certain payments to employees on retirement. These obligations represent obligations under adefined benefit pension plan. For
miles earned entitle members to anumber of benefits such as free flights and flight class upgrades. In accordance with IFRIC 13 Customer Loyalty such plans the pension accounting costs are assessed using the projected unit credit method. Under this method the cost of providing pensions
Programmes, accumulated but as yet unused bonus miles are deferred using the deferred revenue method to the extent that they are likely to be is charged to the consolidated statement of profit or loss in order to spread the regular cost over the average service lives of employees. Actuarial
used. The fair value of miles accumulated on the Groups own flights is recognised under current and non-current deferred revenue related to gains and losses are recognised in financial results immediately. The pension liability for non-retired employees is calculated based on aminimum
frequent flyer programme (Note 24) within current and non-current liabilities in the Groups consolidated statement of financial position. The fair annual pension payment and do not include increases, if any, to be made by management in the future. Where such post-employment employee
value of miles accumulated by Aeroflot-Bonus participants for using services provided by the partners of the programme, as well as the fair value benefits fall due more than twelve months after the reporting date they are discounted using adiscount rate determined by reference to the aver-
of promo miles, is recognised as other current and non-current liabilities related to frequent flyer programme (Notes 23 and 28) in accounts pay- age government bond yields at the reporting date.
able and accrued non-current liabilities, respectively, in the Groups consolidated statement of financial position. Revenue is recognised upon the
provision of air transportation services to passengers.. The Group also participates in adefined contribution plan, under which the Group has committed to making additional contributions as aper-
centage (20% in 2014) of the contribution made by employees choosing to participate in the plan. Contributions made by the Group on defined
Employee benefits contribution plans are charged to expenses when incurred. Contributions are also made to the Government Pension fund at the statutory rates in
force during the year. Such contributions are expensed as incurred.
Wages, salaries, contributions to the Russian Federation state pension and social insurance funds, paid annual leave and sick leave, bonuses, and
non-monetary benefits (such as health services and etc.) are accrued in the year in which the associated services are rendered by the employees Share capital
of the Group.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as
Provisions adeduction, net of tax, from the proceeds. Any excess of the fair value of consideration received over the par value of shares issued is recorded
as share premium in equity..
Provisions are recognised if, and only if, the Group has apresent obligation (legal or constructive) as aresult of apast event, and it is probable (i.e.
more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation, and areliable estimate Share-based compensation
can be made of the amount of the obligation. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate
(Note 27). Where the effect of the time value of money is significant, the amount of aprovision is stated at the present value of the expenditures The title to future equity compensations (shares or share options) to employees for the provided services is measured at fair value of these instru-
required to settle the obligation. ments at the date of the transfer and is recognised as an employee expense, with acorresponding increase in equity, over the period that the
employees unconditionally become entitled to these awards.
Income tax
The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting condi-
Income taxes have been provided for in the consolidated financial statements in accordance with legislation using tax rates and legislative regulations are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related
tions enacted or substantively enacted at the end of the reporting period. Income tax expense/benefit comprises current and deferred tax and is service and non-market performance conditions at the vesting date. The effect of revisiting initial estimates, if any, is recognised in profit or loss
recognised in the consolidated statement of profit or loss for the year, unless it should be recorded within other comprehensive income or directly in in alignment with the Groups equity.
equity since it relates to transactions which are also recognised within other comprehensive income or directly in equity in this or any other period.
Financial results
Financial results
For share-based payment awards with non-vesting conditions, the grant-date fair value is measured to reflect such conditions and there is no
Current tax is the amount expected to be paid to or recovered from tax authorities in respect of taxable profits or losses for the current and prior true-up for differences between expected and actual outcomes.
periods. Taxable profits or losses are based on estimates if the consolidated financial statements are authorised prior to filing relevant tax returns.
Other tax expenses, except from the income tax, are recorded within other operating costs in the Groups consolidated statement of profit or loss.
160 161
Treasury shares purchased Compliance with tax legislation
Where the Company or its subsidiaries purchase the Companys equity instruments, the consideration paid, including any directly attributable Compliance with tax legislation, particularly in the Russian Federation, is subject to asignificant degree of interpretation and can be routinely
incremental costs, net of income taxes, is deducted from equity attributable to the Companys owners until the equity instruments are cancelled, challenged by the tax authorities. The management records aprovision in respect of its best estimate of likely additional tax payments and related
reissued or disposed of. The Companys shares, which are held as treasury stock or belong to the Companys subsidiaries, are reflected as penalties which may be payable if the Groups tax compliance is challenged by the relevant tax authorities (Note 39).
areduction of the Groups equity.
Classification of alease agreement as operating and finance lease
The sale or re-issue of such shares does not impact net profit for the current year and is recognised as achange in the shareholders equity of the
Group. Where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable incremental transaction Management applies professional judgement with regard to the classification of aircraft lease agreements as operating and finance lease agreements
costs and the related income tax effects, is included in equity attributable to the Companys shareholders. in order to determine whether all significant risks and rewards related to the ownership of an asset are transferred to the Group in accordance with
the agreement and which risks and rewards are significant. Achange in these estimates may require adifferent approach to aircraft accounting.
Dividend distributions by the Company are recorded net of the dividends related to treasury shares.
Estimated impairment of goodwill
Dividends
The Group tests goodwill for impairment at least annually. The recoverable amount of each cash generating unit was determined based on value-
Dividends are recorded as aliability and deducted from equity in the period in which they are declared and approved by the shareholders in the in-use calculations. These calculations require the use of estimates as further detailed in Note 21.
General Shareholders Meeting.
Deferred tax asset recognition
Earnings/loss per share
The recognised deferred tax asset represents income taxes recoverable through future deductions from taxable profits and is recorded in the
Earnings per share are determined by dividing the profit or loss attributable to the Companys shareholders by the weighted average number of consolidated statement of financial position. Deferred income tax assets are recognised to the extent that realisation of the related tax benefit is
participating shares outstanding during the reporting year. The calculation of diluted earnings per share includes shares planned to be used in probable. The future taxable profits and the amount of tax benefits that are probable in the future are based on the medium term business plan
the option programme when the average market price of ordinary shares for the period exceeds the exercise price of the options. prepared by management and extrapolated results thereafter. The business plan is based on management expectations that are believed to be
reasonable under the circumstances.
Changes in presentation of consolidated financial statements
Where necessary, corresponding figures have been adjusted to conform to the presentation of the current year amounts. 4. Adoption of new or revised standards and interpretations
New standards and interpretations effective from 1 January 2014
3. Critical accounting estimates and judgements
in applying accounting policies The following new standards and interpretations became effective for the Group from 1 January 2014:
The Group makes estimates and assumptions that affect the amounts recognised in the consolidated financial statements and the carrying amounts IFRIC 21 Levies (issued on 20 May 2013, effective for annual periods beginning on or after 1 January 2014);
of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on managements experi- Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities (issued on 31 October 2012, effective for annual periods beginning
ence and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management also on or after 1 January 2014);
makes certain judgements, apart from those involving estimations, in the process of applying the accounting policies. Judgements that have the Offsetting financial assets and financial liabilities Amendments to IAS 32 (issued in December 2011, effective for annual periods
most significant effect on the amounts recognised in the consolidated financial statements and estimates that can cause asignificant adjustment beginning on or after 1 January 2014);
to the carrying amount of assets and liabilities within the next financial year include: Amendments to IAS 36 Recoverable amount disclosures for non-financial assets (issued on 29 May 2013, effective for annual peri-
ods beginning on or after 1 January 2014; earlier application is permitted if IFRS 13 is applied for the same accounting and comparative period);
Useful lives and residual value of property, plant and equipment Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting (issued on 27 June 2013, effective for
annual periods beginning on or after 1 January 2014).
The assessment of the useful lives of property, plant and equipment and their residual value are matters of management judgement based on the
use of similar assets in prior periods. To determine the useful lives and residual value of property, plant and equipment, management considers These Standards, amendments to standards and interpretations did not have material impact on the Groups consolidated financial statements.
the following factors: nature of the expected use, estimated technical obsolescence and physical wear. Achange in each of the above conditions
or estimates may require the adjustment of future depreciation expenses. New Accounting Pronouncements
Value of tickets which were sold, but will not be used The following new standards or amendments effective for the annual periods beginning on or after 1 January 2015 and which the Group has not
early adopted:
Sales representing the value of tickets that have been issued, but which will never be used, are recognised as traffic revenue at the date the tickets
are issued based on an analysis of historical patterns of actual sales data. The assessment of the probability that the tickets will not be used is IFRS 9 Financial Instruments Part 1: Classification and Measurement (issued in June 2014 effective for annual periods beginning on or
amatter of management judgement. Achange in these estimates may require the adjustment to the revenue amount in the consolidated statement after 1 January 2018). The Group is considering the implications of the amendment and its impact on the Groups consolidated financial statements;
of profit or loss (Note 5) and to the unearned traffic revenue in the consolidated statement of financial position. Amendments to IAS 19 Defined benefit plans: Employee contributions (issued in November 2013 and effective on or after 1 July
2014). These amendments were approved for implementation in Russian Federation;
Frequent flyer programme IFRS 14 Regulatory deferral accounts (issued in January 2014, effective for annual periods beginning on or after 1 January 2016). This
standard was approved for implementation in Russian Federation;
At the reporting date, the Group estimates and recognises the liability pertaining to air miles earned by Aeroflot Bonus programme (Note 2) members. IFRS 15 Revenue from contracts with customers (issued on 28 May 2014, effective for annual periods beginning on or after 1 January
The estimate has been made based on the statistical information available to the Group and reflects the expected air mile utilisation pattern after 2017). The Group is considering the implications of the standard and its impact on the Groups consolidated financial statements;
the reporting date multiplied by their assessed fair value. The assessment of the fair value of abonus mile, as well as the managements expecta- Annual Improvements to International Financial Reporting Standards, 2012 (issued in December 2013 and effective for annual periods
tions regarding the amount of miles to be used by Aeroflot Bonus members, are amatter of management judgement. Achange in these estimates beginning on or after 1 July 2014). These improvements were approved for implementation in Russian Federation;
Financial results
Financial results
may require the adjustment of deferred revenue related to frequent flyer programme in the consolidated statement of financial position (Note 24) Annual Improvements to International Financial Reporting Standards, 2013 (issued in December 2013 and effective for annual periods
and adjustment to revenue in the consolidated statement of profit or loss (Note 5). beginning on or after 1 July 2014). These improvements were approved for implementation in Russian Federation;
162 163
Accounting for Acquisitions of Interests in Joint Operations Amendments to IFRS 11 Joint Arrangements (issued on 6 May 2014 2013
2014 and effective for the annual periods beginning on or after 1 January 2016). These amendments were approved for implementation in
Custom duties 1,435 1,396
Russian Federation;
Clarification of Acceptable Methods of Depreciation and Amortisation Amendments to IAS 16 Property, plant and equipment Insurance expenses 1,358 1,242
and IAS 38 Intangible Assets (issued in May 2014 and effective on or after 1 January 2016). These amendments were approved for imple- Cost of duty free goods sold 362 192
mentation in Russian Federation;
Other expenses 8,875 5,468
Equity Method in Separate Financial Statements Amendments to IAS 27 (issued on 12 August 2014 and effective from 1 January 2016);
Annual Improvements to International Financial Reporting Standards, 2014 (issued on 25 September 2014 and effective on or after Operating costs less aircraft fuel, staff costs and depreciation and amortisation 152,128 132,977
1 January 2016); Aircraft fuel 87,199 79,128

Amendments to IFRS 10 and IAS 28 (issued on 11 September 2014 and effective for the periods beginning on or after 1 January 2016); Total operating costs less staff costs and depreciation and amortisation 239,327 212,105
Disclosure Initiative Amendments to IAS 1 (issued in December 2014 and effective for annual periods beginning on or after 1 January
2016);
Applying the Consolidation Exception for Investment entities Amendments to IFRS 10, IFRS 12 and IAS 28 (issued in December
2014 and effective for annual periods beginning on or after 1 January 2016). 8. Staff costs
Unless otherwise described above, the new standards, amendments to standards and interpretations are not expected to affect significantly the 2014. 2013
Groups consolidated financial statements. Wages and salaries 42,379 36,703
Pension costs 7,980 6,930

Standards, amendments to standards and interpretations effective for annual periods on or after 1 January 2015 were not approved for imple-
mentation in Russian Federation, if above not stated otherwise. Social security costs 1,789 1,716
Total staff costs 52,148 45,349
Pension costs include:

5. Traffic revenue compulsory payments to the Pension Fund of the RF,
contributions to anon-government pension fund under adefined contribution pension plan under which the Group makes additional pen-
2014 2013
sion contributions as afixed percentage (20% in 2014, 20% in 2013) of the transfers made personally by the employees participating in the
programme, and
Scheduled passenger flights 253,613 230,594
an increase in the net present value of the future benefits which the Group expects to pay to its employees upon their retirement under adefined
Charter passenger flights 15,023 17,174 benefit pension plan as follows:
Cargo flights 8,718 9,778
2014 2013
Total traffic revenue 277,354 257,546
Payments to the Pension Fund of the RF 7,904 6,866
Defined contribution pension plan 37 45

6. Other revenue Defined benefit pension plan 39 19
Total pension costs 7,980 6,930

2014 2013
Airline agreements revenue 21,605 16,886
Revenue from partners under frequent flyer programme 7,685 5,615 9. Other operating expenses and income, net
Refuelling services 2,815 2,154
2014 2013
Catering services on board 1,118 1,217
Gain/(loss) on fixed assets disposal 1,872 (377)
Ground handling and maintenance 1,000 902
Gain on accounts payable write-off 384 119
Hotel revenue 447 515
Fines and penalties received from suppliers 307 207
Sales of duty free goods 604 420
Recovery of VAT 285
Other revenue 7,143 5,701
Total other revenue 42,417 33,410 Insurance compensation received 61 171
Write-off of VAT (20)
(Increase)/decrease of bad debt provision (3,103) 834

7. Operating costs less staff costs and depreciation and amortisation Increase of accrued reserves (1,271) (1,639)
Loss on accounts receivable write-off (33) (616)

2014 2013
Other expenses and income, net (3,394) (1,728)
Aircraft servicing and ground handling 51,965 46,015
Total other operating expenses and income, net (4,892) (3,049)
Operating lease expenses 23,834 19,177
Aircraft maintenance 19,224 20,374
Sales and marketing expenses 11,415 12,808

Financial results
Financial results
Administration and general expenses 10,791 8,663
Passenger services 9,105 6,815
Communication expenses 7,784 5,903
Food and beverages for catering services 5,980 4,924
164 165
10. Finance income and costs 31 December Movements for 31 December Movements for 31 December
2014 the year 2013 the year 2012
Finance income: 2014 2013 Tax effect of temporary differences:
Realised gain on derivative financial instruments (Note 22) 1,058 1,812 Tax losses carried forward 1,017 560 457 (947) 1,404
Interest income on bank deposits and security deposits 958 543 Long-term financial investments 25 (6) 31 (1) 32
Gain on disposal of investments 1 331 Accounts receivable (133) (177) 44 (54) 98
Other finance income 454 Property, plant and equipment 9,933 8,700 1,233 (78) 1,309
Total finance income 2,471 2,686 Accounts payable 2,209 745 1,464 826 639
Derivative financial instruments 6,117 5,607 510 189 321
Finance costs: 2014 2013 Deferred tax assets before tax set off 19,168 15,429 3,739 (65) 3,803
Foreign exchange loss (9,720) (3,348) Tax set off (628) 936 (1,565) (667) (898)
Realised loss on derivative financial instruments (Note 22) (3,871) (1,192) Deferred tax assets after tax set off 18,540 16,365 2,174 (732) 2,905
Loss on change in fair value of derivative financial instruments (Note 22) (9,869) (939) Property, plant and equipment (92) 2,317 (2,409) (34) (2,104)
Interest expense (4,934) (3,320) Customs duties related to the imported aircraft (461) 140 (601) 166 (767)
under operating leases
Other finance costs (5) (15)
Long-term financial investments (15) (15) 157 (172)
Total finance costs (28,399) (8,814)
Accounts receivable (164) (3) (161) (56) (105)
Accounts payable (29) (3) (26) (311) 14

Hedging result: 2014 2013
Deferred tax liabilities before tax set off (761) 2,451 (3,212) (78) (3,134)
Ineffective portion of fuel hedging (1,187)
Tax set off 628 (936) 1,565 667 898
Effect of revenue hedging with liabilities in foreign currency (536)
Deferred tax liabilities after tax set off (133) 1,515 (1,647) 589 (2,236)
Total hedging result (1,723)
Movements for the year, net 17,880 (143)
Less deferred tax recognised directly in equity (12,115) (2)
11. Income tax Deferred income tax benefit/(expense)

for the year
5,765 (145)
2014 2013 The Group has unrecognised potential deferred tax assets in respect of unused tax losses carried forward. These tax losses carried forward expire
Current income tax charge 6,559 6,224 as follow:
Deferred income tax (benefit)/expense (5,765) 145
31 December 31 December
Total income tax 794 6,369
2014 2013
Tax losses carried forward expiring by the end of:

Reconciliation of the income tax estimated based on the applicable tax rate to the income tax is presented below:
- 31 December 2018 1,989 2,258
2014 2013 - 31 December 2019 3,909 3,909
(Loss)/profit before income tax (16,352) 13,704 - 31 December 2021 915 915
Tax rate applicable in accordance with Russian legislation 20% 20% - 31 December 2022 1,552 1,552
Theoretical income tax expense at tax rate in accordance with Russian legislation 3,270 (2,741) - 31 December 2023 96 96
Tax effect of items which are not deductible or assessable for taxation purposes: - 31 December 2024 160
Non-taxable income 737 105 Total tax losses carried forward 8,621 8,730
Non-deductible expenses (3,811) (2,653)

Deferred tax asset in respect of the change in the fair value of the derivative financial instruments of RUB 12,115 million (2013: deferred tax
Unrecognised current year tax losses (477) (36) liability of RUB 2 million) has been recognised in these consolidated financial statements as apart of comprehensive income.
Recognition of previously unrecognised tax losses 54 149
Write-off of deferred tax assets (201) (993)

Adeferred tax liability in relation to temporary differences of RUB 205 million (2013: RUB 192 million) relating to investments in subsidiaries of
the Group has not been recognised in these consolidated financial statements as the Group is able to control the timing of reversal of the temporary
Prior years income tax adjustments (219) (18)
difference, and reversal is not expected in the foreseeable future.
Deferred income tax, recognized as part of other comprehensive income (147) (182)
Total income tax (794) (6,369) Management believes that the deferred tax assets of RUB 13,814 million as at 31 December 2014 (31 December 2013: RUB 3 million) and
deferred tax liabilities of RUB 351 million as at 31 December 2014 (31 December 2013: RUB 3 million) are recoverable after more than twelve
During the year the Group revised its estimates related to the possibility of usage of deferred tax assets of OJSC Orenburg airlines and made months after the end of the reporting period.
awrite-off in the amount of RUB 201 million (2013: RUB 993 million related to OJSC Vladivostok Avia).
Financial results
Financial results
166 167
12. Cash and cash equivalents 14. Accounts receivable and prepayments
31 December 2014 31 December 2013 31 December 2014 31 December 2013
Cash on hand and bank accounts denominated in roubles 13,211 9,776 Trade accounts receivable 29,683 24,889
Bank accounts denominated in US Dollars 7,626 4,023 Other financial receivables 5,119 1,547
Bank deposits denominated in roubles with maturity of less than 90 days 3,431 1,891 Less: impairment provision (4,532) (2,440)
Bank deposits denominated in US Dollars with maturity of less than 90 days 1,309 Total financial receivables 30,270 23,996
Bank accounts denominated in other currencies 1,350 1,067 Prepayments to suppliers 9,284 10,869
Bank accounts denominated in Euro 778 499 VAT and other taxes recoverable 10,959 10,501
Cash in transit 151 95 Prepayments for aircraft 4,498 8,197
Total cash and cash equivalents 26,547 18,660 Deferred customs duties related to the imported aircraft under operating leases, current portion 842 935
Other receivables 916 1,193

The Groups exposure to interest rate risk and asensitivity analysis for financial assets are disclosed in Note 34. Most of the funds are held with
Accounts receivable and prepayments 56,769 55,691
ahighly reliable state-controlled Russian bank OJSC Sberbank of Russia (Sberbank of RF) with long-term credit rating BBB (Fitch rating
agency) as at 31 December 2014 (31 December 2013: BBB according to Fitch rating agency), and OJSC Bank BFA (Bank BFA) with long-term
Accounts receivable and prepayments include prepayments for acquisition of aircraft to be delivered within 12 months after the reporting date.
credit rating B(S&P rating agency) as at 31 December 2014 (31 December 2013: Baccording to S&P rating agency).
Movements on the Prepayments for aircraft line item are due to the approaching aircraft delivery dates as well as the refund of prepayments related
to the delivery of aircraft in the current period.
As at 31 December 2014 the Group had restricted cash of RUB 186 million (31 December 2013: RUB 104 million) recorded within other non-
current assets in the Groups consolidated statement of financial position.
Deferred customs duties of RUB 842 million as of 31 December 2014 (31 December 2013: RUB 935 million) relate to the current portion of customs
duties related to imported aircraft under operating leases. These customs duties are recognised within operating costs in the Groups consolidated
statement of profit or loss over the term of the operating lease. The non-current portion of the deferred customs duties is disclosed in Note 17.
13. Aircraft lease security deposits
Financial receivables are analysed by currencies in Note 34.
Asecurity deposit is held with the lessor to secure the lessees fulfilment of its obligations in full, on atimely basis and in good faith. The security
deposit is transferred to the lessor by instalments or in asingle instalment. The security deposit is usually equal to three monthly lease payments.
As at 31 December 2014 and 31 December 2013, sufficient impairment provision was made against accounts receivable and prepayments.
The lessee has the right to replace the security deposit, in full or in part, with aletter of credit. The security deposit can be offset against the last
lease payment or any payment if there is any non-fulfilment of obligations by the lessee. The security deposit is returned subsequent to the lease
The movements in the Groups impairment provision for accounts receivable and prepayments are as follows:
agreements termination/cancellation or return of the aircraft immediately after the date of lease termination and fulfilment by the lessee of its
obligations. The security deposits under aircraft lease agreements are recorded at amortised cost using an average market yield from 3.7% to
9.5% p.a. in 2014 (2013: from 5.0% to 9.5% p.a.). Impairment provision
1 January 2013 3,274
Aircraft lease security deposits Increase in impairment provision 1,100

1 January 2013 1,322 Provision use (577)
Payment of security deposits 322 Release of provision (1,357)
Amortisation charge 241 31 December 2013 2,440
Return of security deposits (503) Increase in impairment provision 3,550

Foreign exchange difference 111 Provision use (1,011)
31 December 2013 1,493 Release of provision (447)
Payment of security deposits 304 31 December 2014 4,532
Amortisation charge 127

Financial receivables are analysed by credit quality in Note 34.
Return of security deposits (372)
Foreign exchange difference 935
Deposit write-off (56) 15. Expendable spare parts and inventories

31 December 2014 2,431
31 December 2014 31 December 2013
Expendable spare parts 4,349 3,629

Fuel 714 362
Current portion of security deposits 321 405
Other inventories 2,129 1,370
Non-current portion of security deposits 2,110 1,088
Total expendable spare parts and inventories, gross 7,192 5,361
Total aircraft lease security deposits 2,431 1,493
Less: impairment provision for obsolete expendable spare parts and inventories (676) (434)
Analysis of aircraft lease security deposits by their credit quality is presented below: Total expendable spare parts and inventories 6,516 4,927
Financial results
Financial results
International companies 2,408 1,473
Russian companies 23 20
Total aircraft lease security deposits 2,431 1,493
168 169
16. Long-term financial investments 19. Property, plant and equipment
31 December 2014 31 December 2013 Owned aircraft Leased aircraft Land and Transport, Construction Total
and engines and engines buildings equipment and other in progress
Available-for-sale investments:
Cost
Available-for-sale securities 6,062 6,062
1 January 2013 6,175 75,504 10,948 12,233 721 105,581
Mutual investment funds 15 15
Additions 1,013 18,024 108 2,197 1,293 22,635
SITA Investment Certificates 39 20
Capitalised expenditures 2,101 330 2,431
Total available-for-sale investments (before impairment provision) 6,116 6,097
Disposals (774) (1,032) (34) (748) (2,588)
Other long-term investments:
Transfers 66 416 (482)
Loans issued to related parties and promissory notes of related parties (Note 36) 29
31 December 2013 6,414 94,597 11,088 14,098 1,862 128,059
Total other long-term financial investments (before impairment provision) 29
Additions (i) 1,358 33,672 249 2,624 1,027 38,930
Less: provision for impairment of long-term financial investments (1) (27) Capitalised expenditures 1,473 172 1,645
Total long-term financial investments 6,115 6,099 Disposals (ii) (902) (3,218) (16) (661) (7) (4,804)
Transfers 60 200 397 878 (1,535)

Available-for-sale securities are mainly represented by the initial value of the Groups investment in OJSC MASH, astate-related company engaged
31 December 2014 6,930 126,724 11,718 16,939 1,519 163,830
in servicing of aircraft, passengers and handling cargo of Russian and foreign airlines, and providing non-aviation services to entities operating
in Sheremetyevo airport and adjacent area, and to Sheremetyevo airport passengers.
Owned aircraft Leased aircraft Land and Transport, Construction Total
The RF represented by the Federal Agency for State Property Management owns over 80% of the entitys shares (Note 36). and engines and engines buildings equipment and other in progress
Accumulated depreciation
Management is unable to measure the fair value of the Groups investments in OJSC MASH reliably, as this entity has not published its most recent 1 January 2013 (4,233) (17,246) (3,871) (6,231) (15) (31,596)
financial information, its shares are not quoted and recent trade prices are not publicly accessible. As at 31 December 2014 the investments are
Charge for the year (887) (6,866) (370) (1,711) (9,834)
recognised in the consolidated statement of financial position at their initial cost of RUB 6,013 million (31 December 2013: RUB 6,013 million).
(Accrual)/release of impairment provision (240) 56 1 (183)
Disposals 731 1,032 4 564 2,331

17. Other non-current assets 31 December 2013 (4,629) (23,080) (4,237) (7,322) (14) (39,282)
Charge for the year (382) (8,851) (396) (1,711) (11,340)

(Accrual)/release of impairment provision 17 8 (59) (34)
Deferred customs duties related to the imported aircraft under operating leases, 2,083 2,915
non-current portion Disposals (ii) 884 1,462 6 518 2,870
VAT recoverable on acquisition of aircraft 328 1,886 31 December 2014 (4,110) (30,469) (4,627) (8,507) (73) (47,786)
Other non-current assets 1,348 1,154 Carrying amount
Total other non-current assets 3,759 5,955 31 December 2013 1,785 71,517 6,851 6,776 1,848 88,777
31 December 2014 2,820 96,255 7,091 8,432 1,446 116,044
18. Prepayments for aircraft (i) The 2014 additions mainly relate to the addition of six aircraft Boeing B777, with initial cost of RUB 33,672 million which were received
under finance lease terms (the 2013 additions mainly relate to the addition of four aircraft Boeing B777, with initial cost of RUB 18,024
As at 31 December 2014 and 31 December 2013 non-current portion of prepayments for aircraft were RUB 29,241 million and RUB 12,318 million, million which were received under finance lease terms).
respectively. Movements in the non-current portion of prepayments are due to concluding new agreements for delivery of Airbus A320 and 321. (ii) The 2014 disposals mainly relate to cabins of 6 aircraft Tu-204 of OJSC Vladivostok Avia which were received under finance lease terms
with the book value of RUB 1,723 million.
As at 31 December 2014 and 31 December 2013 non-current prepayments include advance payments for the acquisition of the following aircraft:
In 2014, capitalised borrowing costs amounted to RUB 362 million with capitalisation rate of 2.9% p.a. (2013: 3.7% p.a.).
Expected lease type Aircraft type 31 December 2014 31 December 2013
As at 31 December 2014 property and land (including tenancy) with the total carrying amount of RUB 713 million (31 December 2013: RUB 771
Number of aircraft, Expected delivery date Number of aircraft, Expected delivery date million) were pledged to third and related parties as asecurity for the Groups borrowings (Note 27).
units units
Lease type is not determined Boeing B787 22 20162019 22 20162019 As at 31 December 2014 the cost of fully depreciated property plant and equipment was RUB 7,793 million (31 December 2013: RUB 5,552 million).
Lease type is not determined Airbus 350 22 20182023 22 20182023
Operating lease SSJ 100 12 2015

20. Intangible assets
Finance lease Boeing 777 3 2016 6 20152016
Lease type is not determined Airbus A320 30 20162018 10 20162017

Software Licences Investments in software Trademark and Other Total
Lease type is not determined Airbus A321 19 20162018 4 20162017 and R&D client base
Financial results
Financial results
Cost
Prepayments made to purchase aircraft expected to be delivered within 12 months after the reporting date are recorded within accounts receiv- 1 January 2013 2,144 134 643 1,686 2 4,609
able and prepayments (Note 14).
Additions 466 419 885
Disposals (3) (14) (17)
170 171
Software Licences Investments in software Trademark and Other Total

and currency risk (roubles), the risk of investing in equities, and the risk associated with small-cap shares. The industry average D/E ratio and Beta
and R&D client base coefficient as at 31 December 2014 were taken into account.
31 December 2013 2,607 134 1,048 1,686 2 5,477
The cost of debt was calculated based on the effective rate on Orenburgavias long-term loans in roubles.
Additions 296 157 453
Disposals (637) (21) (658) Pre-tax WACC was 15.6% p.a. (31 December 2013: 16.5% p.a.).
31 December 2014 2,266 134 1,184 1,686 2 5,272
Estimated seat load factor is 71.8%.
Accumulated amortisation
1 January 2013 (914) (71) (321) (1) (1,307) The growth rate for the terminal value calculation was set at the level of Russias GDP long-term growth rate of 2.3% (2013: 3.5%).
Charge for the year (521) (19) (284) (824)
Disposals 4 4
As abasis for Orenburgavias cash flows forecast the Group adopted the approved Orenburgavias budget for 2014.
31 December 2013 (1,431) (90) (605) (1) (2,127)

The Groups management maintained sensitivity analysis of goodwill impairment test results against seat load factor fluctuations as the most
Charge for the year (553) (243) (796) sensitive variable of the model. In case of decrease of this variable by 200 bps the Group should recognise full impairment of goodwill associated
Disposals 412 1 413 with Orenburgavia.
31 December 2014 (1,572) (89) (848) (1) (2,510)
Carrying amount
22. Derivative finacial instruments
31 December 2013 1,176 44 1,048 1,081 1 3,350
31 December 2014 694 45 1,184 838 1 2,762 31 December 2014 31 December 2013
Derivative financial assets
including:
21. Goodwill
Current 431 1,034
The aggregate carrying amount of goodwill, allocated to the Group entities is presented in the table below: Non-current 134 1,175
Total derivative financial assets 565 2,209

CGU name 31 December 2014 31 December 2013
Derivative financial liabilities
AK Rossiya 5,357 5,357
including:
Orenburgavia 1,145 1,145
Current 26,312 213
AK Aurora 158 158
Non-current 4,839 4,546
Total 6,660 6,660
Total derivative financial liabilities 31,151 4,759
For the purposes of impairment testing, goodwill is allocated between the cash generating units (the CGUs), i.e. the Group subsidiaries that
As at 31 December 2014 gross values of derivative financial asset and liabilities amounted to RUB 12,949 million and RUB 43,535 million,
represent the lowest level within the Group at which the goodwill is monitored for internal management purposes and are not larger than an
respectively. Net amounts of derivative financial assets and liabilities after offsetting were RUB 565 million and RUB 31,151 million.
operating segment of the Group.
As at 31 December 2013 gross values of derivatives amounted to RUB 2,209 million as assets and RUB 4,759 million as liabilities. Net amounts
The recoverable amount of CGU was calculated on the basis of value in use, which was determined by discounting the future cash flows to be
of assets and liabilities after offsetting were RUB 794 million and RUB 3,345 million, respectively.
generated as aresult of the entitys operations.
The Group assesses the fair value and performs analysis of derivative financial instruments on aregular basis for the purposes of consolidated financial
Key assumptions against which the recoverable amounts are estimated concerned the discount rate, the terminal growth rate (for the calculation
statements or when so requested by the management. Changes in fair value of derivative financial instruments determined using Levels 2 and 3 inputs:
of the terminal value) and cash flows.
Derivative financialinstruments
AK Rossiya
2014 2013
The discount rate was assumed at 17.5% p.a. for 20152016 and 13.4% p.a. for subsequent periods (31 December 2013: 12.9% p.a. for the whole 1 January (2,551) (1,605)
projection period). This rate was calculated based on the risk-free rate on ten-year U.S. government bonds, adjusted for country risk (for Russia)
Level 3 derivative financial instruments that are not subject
and currency risk (roubles), the risk of investing in equities, and the risk associated with small-cap shares. The industry average D/E ratio and Beta to special hedge accounting rules
coefficient as at 31 December 2014 were taken into account in the calculation.
Change in fair value for the year (6,629) (1,951)
The cost of debt was calculated based on the effective rate on AK Rossiyas long-term loans in roubles and the effective rate of finance lease, Additions (427) 394
adjusted for currency risk, and share of financial leasing in overall AK Rossiyas debt. Settlements during the year (Note 10) (2,779) (35)
Level 3 derivative financial instruments that are subject

Pre-tax WACC was 17.6% p.a. (31 December 2013: 16.1% p.a.). to special hedge accounting rules
Change in fair value for the year (13,939)

The growth rate for the terminal value calculation was set at the level of Russias GDP long-term growth rate of 2.3% p.a. (2013: 3.5% p.a.).
Additions (12)
As abasis for cash flows forecast the Group adopted the approved AK Rossiyas budget for 2014 and managements estimate for subsequent periods. Level 2 derivative financial instruments that are subject
Financial results
Financial results
to special hedge accounting rules
Orenburgavia Change in fair value for the year (4,215) (8)
Settlements during the year (Note 10) (34) 655

The discount rate was assumed at 17.5% p.a. for 20152016 and 13.4% p.a. for subsequent periods (31 December 2013: 13.2% p.a. for the whole
31 December (30,586) (2,550)
projection period). This rate was calculated based on the risk-free rate on ten-year U.S. government bonds, adjusted for country risk (for Russia)
172 173
Derivative financialinstruments 23. Accounts payable and accrued liabilities

2014 2013
of which:
Accounts payable 27,097 18,989
Assets 565 2,209
Dividends payable 36 25
Liabilities (31,151) (4,759)
Other financial payables 5,906 1,643
31 December (30,586) (2,550)
Total financial payables 33,039 20,657
For the purpose of risk management the Group applies the following derivative financial instruments: Staff related liabilities 6,906 7,152
VAT payable on imported leased aircraft 2,005 3,786

() Cross-currency interest rate swaps with afixed interest rate
Advances received (other than unearned traffic revenue) 1,181 1,927
In April and May 2013, the Group entered into two cross-currency interest rate swap agreements with afixed interest rate with aRussian bank Other taxes payable 3,838 981
to hedge some of its Euro-denominated revenues from potential unfavourable RUB/EUR exchange rate fluctuations. As aresult of efficiency test Other current liabilities related to frequent flyer programme(Note 24) 1,489 896
performed for this hedging instrument the loss from the change in fair value of this derivative financial instrument of RUB 4,060 million was
Income tax payable 72 142
recorded within the other comprehensive income together with the corresponding deferred tax of RUB 849 million.
Customs duties payable on imported leased aircraft 115 267
Level 2 market inputs in the fair value hierarchy were used to assess the fair value of the instrument. The fair value was determined based on Other payables 307 441
discounted contractual cash flows using one-month MosPrime discount rate for cash flows in roubles and EURIBOR for Euro-denominated cash
Total accounts payable and accrued liabilities 48,952 36,249
flows. Cash flows under this agreement are expected through to the end of the first quarter of 2016.
As at 31 December 2014, staff related liabilities primarily include salary payable, as well as social contribution liabilities of RUB 4,132 million (31
(b) Interest rate swap with afixed interest rate
December 2013: RUB 4,329 million) and the unused vacation accrual of RUB 2,682 million (31 December 2013: RUB 2,266 million).
During 2014, interest rate swap with afixed interest rate was closed due to the contractual term expiration. The results of closure of the transaction
As at 31 December 2014, accounts payable and accrued liabilities include the current portion of VAT payable of RUB 2,005 million (31 December
were reported within finance expenses in the amount of RUB 34 million. Decrease of hedging reserve and corresponding deferred tax amounted
2013: RUB 3,786 million) and customs duties payable of RUB 115 million (31 December 2013: RUB 267 million) relating to imported leased
to RUB 30 million and RUB 6 million, respectively were recorded within the other comprehensive income.
aircraft, which are payable in equal monthly instalments over athirty-four-month period from the date these assets were cleared through customs.
(c) Fuel options
Financial payables by currency are analysed in Note 34
As of 31 December 2014 the Group was party to anumber of option agreements concluded in 2012, 2013 and 2014 with Russian banks to
hedge aportion of its aircraft fuel costs. Decrease in fair value of these derivative financial instruments amounted to aloss of RUB 9,364 million
for 2014, which is reported in the consolidated statement of profit or loss (2013: aprofit of RUB 79 million). 24. Deferred revenue and other liabilities related to frequent flyer programme
For certain option agreements concluded in 2014 the Group applies cash flow hedge accounting model according to IAS 39 in order to decrease Deferred revenue and other liabilities related to frequent flyer programme (Aeroflot Bonus programme) as at 31 December 2014 and 31 Decem-
exposure to volatility of cash flows from change in fuel prices. ber 2013 represent the number of bonus miles earned when flying on the Group flights, but unused by the Aeroflot Bonus programme members
and the number of promo-miles and bonus miles earned by programme members for using programme partners services, respectively, and are
Loss from change in fair value of option agreements to which hedge accounting is applied for 12 months 2014 amounted to RUB 13,952 million, estimated at fair value. Deferred revenue and other liabilities related to frequent flyer programme also include liabilities under the Companys
effective part of this hedging relationship in the amount of RUB 12,763 million before deferred income tax was recognised within hedging reserve, discount programme as at 31 December 2014 and 31 December 2013, which represent the fair value of coupons for adiscount on the repeated
ineffective part amounting to RUB 1,187 million within hedging result line item of the consolidated statement of profit or loss. purchase of tickets at Aeroflots web-site.
Asimilar transaction entered into in September 2013 was closed in the first half of 2014 due to the contractual term expiration. The gain of 31 December 2014 31 December 2013
RUB26million on the closure of this transaction was recorded in 2014 within the finance income line item of the consolidated statement of profit or loss.
Deferred revenue related to frequent flyer programme, current 799 577
(d) Currency options Deferred revenue related to frequent flyer programme, non-current 2,560 1,862
Other current liabilities related to frequent flyer programme (Note 23) 1,489 896
The Group entered into currency option agreements with anumber of Russian banks to hedge the currency risk. The loss from the change in fair
Other non-current liabilities related to frequent flyer programme (Note 28) 3,279 2,451
value of these derivative financial instruments in 2014 recorded in the consolidated statement of profit or loss amounted to RUB 531 million
Total deferred revenue and other liabilities related to frequent flyer programme 8,127 5,786
(2013: loss in amount of RUB 1,018 million).
For the year ended 31 December 2014, the gain on the currency and fuel options was RUB 1,058 million, the loss was RUB 3,837 million
(2013: RUB 831 million and RUB 866 million, respectively) which were recorded within finance income and finance costs, respectively. 25. Provisions
Assessment principles for currency and fuel options Litigations Tax risks Regular repairs and Total provisions
maintenance works
The derivative financial instruments listed below are carried as assets when their fair value is positive and as liabilities when their fair value is 1 January 2013 102 122 224
negative. Changes in the fair value of derivative financial instruments are included in profit or loss for the reporting period if hedge accounting is
Additional provision for the year 474 14 1,252 1,740
not applied. In case hedge accounting is applied the effective portion is accounted within hedge reserve.
Release of provision for the year (12) (89) (101)
Level 3 market inputs were used to assess the fair value of the instrument and the Monte-Carlo method was applied. The following inputs were Unwinding of the discount 559 559
Financial results
Financial results
used to assess the fair value of the options:
Foreign exchange loss, net 114 114
spot price for Brent crude oil observable in the information systems at the valuation date; 31 December 2013 564 47 1,925 2,536
forecast price for Brent crude oil determined based on the data provided by analysts for the term of the option; Additional provision for the year 1,055 2,224 3,279
volatility calculated based on historical closing prices for underlying asset; and
Release of provision for the year (440) (47) (1,521) (2,008)
respective currency market rate (MosPrime LIBOR, EURIBOR, etc.).
174 175
Litigations Tax risks Regular repairs and Total provisions

ahedging instrument denominated in US dollars of highly probable revenue forecasted or the period 2015 2026. The Group expects that this
maintenance works hedging relationship will be highly effective since the future cash outflows on the lease liabilities match the future cash inflows on the revenue
being hedged. At 31 December 2014, aforeign currency loss of RUB 43,596 million (before deferred income tax) on the finance lease liabilities,
Unwinding of the discount 634 634
representing an effective portion of the hedge, is deferred in the hedging reserve in other comprehensive income. The amount reclassified from
Foreign exchange loss, net 193 2,181 2,374 the hedging reserve to profit or loss from inception of the hedge was RUB 536 million.
Other changes 379 379
31 December 2014 1,372 5,822 7,194 In 2014 interest expense on finance leases was RUB 2,966 million (2013: RUB 1,786 million).
Leased aircraft and engines with the carrying amount disclosed in Note 19 are effectively pledged for finance lease liabilities as the rights to the
31 December 2014 31 December 2013 leased asset revert to the lessor in the event of default.
Current liabilities 2,349 881
Non-current liabilities 4,845 1,655

27. Loans and borrowings
Total provisions 7,194 2,536

Litigations
Short-term bank loans, bonds and other borrowings:
The Group is adefendant in legal claims of adifferent nature. Provisions for liabilities represent managements best estimate of probable losses Short-term loans in US dollars 10,409 -
on existing and potential lawsuits (Note 39).
Short-term loans in Russian Roubles 1,603 1,000
Tax risks Current portion of bonds in Russian Roubles 102 101
Current portion of long-term bank loans in US dollars 1,154 792

The Group makes aprovision for contingent liabilities and accrued fines and penalties based on the best managements estimate of the amount
Current portion of loans and borrowings in Russian Roubles 4,075 3,136
of additional taxes that may be required to be paid (Note 39).
Total short-term loans and borrowings 17,343 5,029
Regular repairs and maintenance works Long-term bank loans, bonds and other borrowings:
Long-term loans in Russian Roubles 5,575 5,636

As at 31 December 2014, the Group made aprovision of RUB 5,822 million (31 December 2013: RUB 1,925 million) for regular repairs and
Long-term bonds in Russian Roubles 5,102 5,101
maintenance works of aircraft used under operating lease terms.
Long-term loans and borrowings in US dollars 1,514 1,669
Less:
26. Finance lease liabilities Current portion of bonds in Russian Roubles (102) (101)
Current portion of long-term bank loans in US dollars (1,154) (792)

The Group leases aircraft from third and related parties under finance lease agreements (Note 36). The aircraft that the Group have operated
under finance lease agreements as at 31 December 2014 are listed in Note 1. Current portion of loans and borrowings in Russian Roubles (4,075) (3,136)
Total long-term loans and borrowings 6,860 8,377

Description of the main changes in loans and borrowings during 2014:
Total outstanding payments on finance lease contracts 170,485 86,514
Future finance lease interest expense (21,207) (14,478) The Group has opened long-term credit lines with OJSC Alfa-Bank in the amount of RUB 3,600 million. As at 31 December 2014 the outstanding
Total finance lease liabilities 149,278 72,036 amount of the credit lines was RUB 2,800 million. Interest rates varies from 11.9% to 14.8% p.a. The loans are unsecured.
including:
The Group has opened long-term credit line with OJSC AKB ROSBANK in the amount of USD 60 million. As at 31 December 2014 the credit
Current finance lease liabilities 16,912 8,688
line was entirely used and the outstanding amount including interest accrued was RUB 3,382 million. Interest rate is LIBOR +4.5% p.a. The
Non-current finance lease liabilities 132,366 63,348 loan is unsecured.
Total finance lease liabilities 149,278 72,036
The Group has opened long-term credit line with OJSC Nordea Bank in the amount of USD 55 million. As at 31 December 2014 the principal
outstanding amount of the credit line was USD 44.85 million, which is equal to RUB 2,523 million. Interest rate is LIBOR +5.0% p.a. The loan
Due for repayment: 31 December 2014 31 December 2013 is unsecured.
Principal Future interest Total payments Principal Future interest Total payments
expense expense The Group has opened long-term credit line with OJSC Moscow Credit Bank in the amount of RUB 4,000 million, which can be obtained in roubles
On demand or within 1 year 16,912 4,191 21,103 8,688 2,652 11,340 or foreign currency. As at 31 December 2014 the principal outstanding amount was USD 40 million, which is equal to RUB 2,523 million (includ-
ing interest). Interest rate is 5.75% p.a. The loan is unsecured.
Later than 1 year and not later than 5 years 65,406 11,832 77,238 29,409 7,802 37,211
Later than 5 years 66,960 5,184 72,144 33,939 4,024 37,963 The Group has opened long-term credit line with PJSC VTB in the amount of RUB 5,000 million which can be obtained either in US Dollars, Euro
Total 149,278 21,207 170,485 72,036 14,478 86,514 or roubles. As at 31 December 2014 the principal outstanding amount of the credit line was USD 40 million, which is equal to RUB 2,251 million
(including interest). Interest rate is 7.5% p.a. The loan is unsecured.
As at 31 December 2014 interest payable amounted to RUB 480 million (31 December 2013: RUB 251 million) and is included in accounts
payable and accrued liabilities. The Group has opened long-term credit line with PJSC Gazprombank in the amount of RUB 1,500 million with interest rate of 13.0% p.a. As at 31
Financial results
Financial results
December 2014 the principal outstanding amount of the credit line was RUB 750 million. The loan is unsecured.
The effective interest rate as at 31 December 2014 was 3.0% p.a. (31 December 2013: 4.1% p.a.).
As at 31 December 2014 and 31 December 2013, the fair value of loans and borrowings, including bonds was not materially different from their
The Group hedges foreign currency risk arising on aportion of the future revenue stream denominated in US dollars with the debt (lease obli- carrying amounts.
gations) denominated in the same currency. The Group applies cash flow hedge accounting model to this hedging transaction, in accordance
with IAS 39. At 31 December 2014, finance lease liabilities in the amount of RUB 144,059 million denominated in US dollars are designated as
176 177
As at 31 December 2014 the Group has bonds issued (BO-03 series) with notional amount of RUB 5,000 million and interest coupon rate of 8.3% 30. Share capital
p.a. As at 31 December 2014 effective yield to maturity for these bonds was 11.3% p.a.
As at 31 December 2014 and 31 December 2013 share capital was equal to RUB 1,359 million.
As at 31 December 2014 the Group was able to attract RUB 21,562 million of cash (31 December 2013: RUB 16,229 million) available under
existing credit lines granted to the Group by various lending institutions.
Number of ordinary shares authorised and Number of treasury shares Number of ordinary shares outstanding
issued (shares) (shares) (shares)
As at 31 December 2014 bank loans in the amount of RUB 2,000 million (31 December 2013: RUB 1,600 million) were secured by property and
31 December 2013 1,110,616,299 (53,757,439) 1,056,858,860
land (Note 19).
31 December 2014 1,110,616,299 (53,716,189) 1,056,900,110
28. Other non-current liabilities All issued shares are fully paid. The total number of unissued ordinary shares is 250,000,000 shares (31 December 2013: 250,000,000 shares)
with apar value of RUB 1 per share (31 December 2013: RUB 1 per share).

Ordinary shareholders are entitled to one vote per share.
Other non-current liabilities related to frequent flyer programme (Note 24) 3,279 2,451
VAT payable on imported leased aircraft 328 1,886 In 2014, the number of the Groups treasury shares decreased by 41,250 shares due to the exercise of rights under the share option programme
(Note 36) (2013: the decrease was 9,057,005 shares).
Defined benefit pension obligation, non-current portion 659 707
Customs duties payable on imported leased aircraft 54 169 As at 31 December 2014, treasury shares were held by wholly-owned subsidiaries of the Group and by the Company:
Other non-current liabilities 164 85
Total other non-current liabilities 4,484 5,298 31 December 2014 31 December 2013
(shares) (shares)
As at 31 December 2014 other non-current liabilities include the non-current portion of VAT payable of RUB 328 million (31 December 2013: Aeroflot - 227,696
RUB 1,886 million) and customs duties of RUB 54 million (31 December 2013: RUB 169 million) relating to imported leased aircraft, which are Aeroflot Finance 53,714,098 53,527,652
payable in equal monthly instalments over athirty-four-month period from the date these assets are cleared through customs.
LLC Partner ("Partner") 2,091 2,091
Non-current customs duties payable on imported leased aircraft have been discounted using adiscount rate of 10.8% to 12.0% p.a. (31 December Total number of treasury shares 53,716,189 53,757,439
2013: 9.8% to 12.0% p.a.).

These ordinary shares carry voting rights in the same proportion as other ordinary shares. Voting rights of ordinary shares of the Company held
by the entity within the Group are effectively controlled by management of the Group.
29. Non-controlling interest
The Companys shares are listed on the Moscow Exchange; as at 31 December 2014 and 31 December 2013, they were traded at RUB 31.8 per
share and RUB 84.1 per share, respectively.
The following table provides information about the subsidiary (AK Rossiya) with non-controlling interest that is material to the Group:
The Company launched Global Depositary Receipts (GDRs) programme in December 2000. For the liquidity increase in January 2014 the Company
2014 2013 adjusted the ratio of ordinary shares to GDR to 5:1, as at 31 December 2014 the GDRs were traded on the Frankfurt stock exchange at RUB 180
Portion of non-controlling interests voting rights held 25% plus 1 share 25% plus 1 share per GDR. As at 31 December 2013 the ratio of ordinary shares to GDR was 100:1 and the GDRs were traded on the Frankfurt stock exchange
Loss attributable to non-controlling interest for the year (1,356) (158)
at RUB 8,005 per GDR.
Accumulated losses attributable to non-controlling interests in subsidiary (3,809) (2,452)
The summarised financial information of AK Rossiya is presented below:

31. Dividends
At the annual shareholders meeting held on 27 June 2014 the shareholders approved dividends in respect of 2013 in the amount of RUB 2.4984
31 December 2014 31 December 2013 per share totalling to RUB 2,774 million for the Companys total declared and placed shares.
Current assets 5,200 4,016
Non-current assets 11,431 10,492

At the annual shareholders meeting held on 24 June 2013 the shareholders approved dividends in respect of 2012 in the amount of RUB 1.1636
per share totalling to RUB 1,292 million for the Companys total declared and placed shares.
Current liabilities 11,974 9,593
Non-current liabilities 19,892 14,723 All dividends are declared and paid in roubles.
2014 2013
32. Operating segments
Revenue 35,655 32,090
Loss for the year (5,449) (657) The Group has anumber of operating segments, but none of them, except for Passenger Traffic, meet the quantitative threshold for determining
Comprehensive loss for the year (5,449) (657)
reportable segment.
The passenger traffic operational performance is measured based on internal management reports which are reviewed by the Groups General
As at 31 December 2014 there are no significant restrictions in getting access to the subsidiarys assets or using them for settling the subsidiarys
Director. Passenger traffic revenue by flight routes is allocated based on the geographic destinations of flights. Passenger traffic revenue by flight
obligations.
routes is used to measure performance as the Group believes that such information is the most material in evaluating the results.
Financial results
Financial results
178 179
Passenger traffic Other Inter-segment sales Total Group Passenger revenue: 2014 2013
elimination
International flights from the RF to:
2014
CIS 8,184 9,457
External sales 317,850 1,921 319,771
Europe 33,691 31,271
Inter-segment sales 2 11,645 (11,647)
Middle East and Africa 7,012 6,996
Total revenue 317,852 13,566 (11,647) 319,771
Asia 17,352 14,512
Operating profit 11,225 344 (301) 11,268
North America 7,934 7,497
Finance income 2,471
Total passenger revenue from flights from the RF 74,173 69,733
Finance costs (28,399)
International flights to the RF from:
Hedging result (1,723)
CIS 7,881 9,487
Share of results of associates 31
Europe 34,292 32,116
Loss before income tax (16,352)
Middle East and Africa 7,148 7,301
Income tax (794)
Asia 18,074 15,414
Loss for the year (17,146)
North America 7,921 7,326
31 December 2014
Total passenger revenue from flights to the RF 75,316 71,644
Segment assets 262,661 8,568 (12,860) 258,369
Domestic flights 104,009 89,215
Investments in associates 142 142
Other international flights 115 2
Unallocated assets 19,207
Total passenger traffic revenue 253,613 230,594
Total assets 277,718
Segment liabilities 291,267 4,165 (4,413) 291,019
Unallocated liabilities 204 33. Presentation of financial instruments by measurement category

Total liabilities 291,223
2014 Financial assets and liabilities are classified by measurement categories as at 31 December 2014 as follows:
Capital expenditures and PP&E additions (Note 19) 39,951 622 40,573
Note Loans and Available-for-sale Financial assets at fair Derivative financial Total
Depreciation (Note 19) 11,118 222 11,340 receivables financial assets value through profit or loss instruments (hedging)
2013 Cash and cash equivalents 12 26,547 26,547
External sales 288,652 2,304 290,956 Short-term financial investments 960 1 961
Inter-segment sales 10 9,204 (9,214) Financial receivables 14 30,270 30,270
Total revenue 288,662 11,508 (9,214) 290,956 Aircraft lease security deposits 13 2,431 2,431
Operating profit 18,597 1,400 (202) 19,795
Derivative financial instruments 22 529 36 565
Finance income 2,686 Long-term financial investments 16 6,115 6,115
Finance costs (8,814) Other non-current assets 186 186
Share of results of associates 37 Total financial assets 60,394 6,116 529 36 67,075
Profit before income tax 13,704
Income tax (6,369) Note Liabilities at fair value through Derivative financial Other financial Total
Profit for the year 7,335 profit or loss instruments (hedging) liabilities
31 December 2013 Derivative financial instruments 22 (12,360) (18,791) (31,151)
Segment assets 210,903 6,971 (11,480) 206,394 Financial payables 23 (33,039) (33,039)
Investments in associates 141 141 Finance lease liabilities 26 (149,278) (149,278)
Unallocated assets 2,649 Loans and borrowings 27 (24,203) (24,203)
Total assets 209,184 Total financial liabilities (12,360) (18,791) (206,520) (237,671)
Segment liabilities 153,415 4,782 (5,282) 152,915

Financial assets and liabilities are classified by measurement categories as at 31 December 2013 as follows:
Unallocated liabilities 1,789
Total liabilities 154,704

Assets Note Loans and Available-for- Assets at fair value Derivative financial Total
2013 receivables sale financial through profit or loss instruments (hedging)
assets
Capital expenditures and PP&E additions (Note 19) 24,614 452 25,066
Cash and cash equivalents 12 18,660 18,660
Depreciation (Notes 19) 9,670 164 9,834
Financial results
Financial results
Short-term financial investments 530 530
Financial receivables 14 23,996 23,996
Aircraft lease security deposits 13 1,493 1,493
Derivative financial instruments 22 2,018 192 2,210
180 181
Assets Note Loans and Available-for- Assets at fair value Derivative financial Total
The treasury function of the Group provides flexibility of financing through available credit lines. As at 31 December 2014, the Group was able to
receivables sale financial through profit or loss instruments (hedging) attract RUB 21,562 million of cash (31 December 2013: RUB 16,229 million) available under credit lines granted by various lending institutions.
assets Additionally for the improvement of liquidity the management is planning to increase operational effectiveness of the Group and further increase
Long-term financial investments 16 29 6,070 6,099 of cash flows from operating activities.
Other non-current assets 104 104
Currency risk
Total financial assets 44,812 6,070 2,018 192 53,092
The Group is exposed to currency risk in relation to revenue as well as purchases and borrowings that are denominated in acurrency other than
rouble. The currencies in which these transactions are primarily denominated are Euro and US Dollar.
Note Liabilities at fair value through Derivative financial Other financial Total
profit or loss instruments (hedging) liabilities
The Groups analyses the exchange rate trends on aregular basis. To hedge the risk of negative changes in the exchange rates the Group entered
Derivative financial instruments 22 (3,981) (779) (4,760)
into financial derivative contracts with anumber of Russian banks.
Financial payables 23 (20,657) (20,657)
Finance lease liabilities 26 (72,036) (72,036) The Group uses long-term lease liabilities nominated in US Dollars as hedging instrument for risk of change in US Dollar exchange rate in rela-
Loans and borrowings 27 (13,490) (13,490)
tion to revenue.
Total financial liabilities (3,981) (779) (106,183) (110,943)

The Groups exposure to foreign currency risk was as follows based on notional amounts of financial instruments:
In millions of Russian Roubles Note 31 December 2014 31 December 2013

34. Risks connected with financial instruments
US Dollar Euro Other Total US Dollar Euro Other Total
currency currency
The Group manages risks related to financial instruments, which include market risk (currency risk, interest rate risk and aircraft fuel price risk),
credit risk, liquidity risk and capital management risk. Cash and cash equivalents 12 7,626 778 1,350 9,754 4,023 499 1067 5,589
Financial receivables 21,820 3,618 3,560 28,998 11,094 2,732 2,595 16,421
Liquidity risk
Aircraft lease security deposits 2,408 2,408 1,473 1,473
Derivative financial instruments 529 36 565 76 192 268

The Group is exposed to liquidity risk, i.e. the risk that the Group will not be able to meet its financial obligations as they fall due. The Groups
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both Other non-current assets 66 52 68 186 28 36 41 105
normal and stressed financial conditions, without incurring unacceptable losses or risking damage to the Groups reputation. The Group utilises Total assets 32,449 4,484 4,978 41,911 16,694 3,459 3,703 23,856
adetailed budgeting and cash forecasting process to ensure its liquidity is maintained at appropriate level.
Financial payables 9,444 4,085 785 14,314 6,480 2,530 480 9,490
The following are the Groups financial liabilities (excluding derivative financial instruments) as at 31 December 2014 and 31 December 2013 Finance lease liabilities 146,436 146,436 69,034 69,034
by contractual maturity (based on the remaining period from the reporting date to the contractual settlement date). The amounts in the table are Short-term loans and borrowings 27 11,563 11,563 792 792
contractual undiscounted cash flows (including future interest payments) as at respective reporting dates:
Long-term loans and borrowings 27 360 360 877 877
Derivative financial instruments 17,325 4,839 22,164 852 750 1,602

31 December 2014 Average interest rate 012 months 12 years 25 years Over 5 years Total
Total liabilities 185,128 8,924 785 194,837 78,035 3,280 480 81,795
Contractual Effective
Total (liabilities)/assets, net (152,679) (4,440) 4,193 (152,926) (61,341) 179 3,223 (57,939)
Loans in foreign currency 5.3% 5.3% 11,798 366 12,164
Loans in roubles 11.8% 11.8% 6,511 194 1,635 8,340 The Group also expects that payments of Euro 2.3 million, Euro 2.3 million and Euro 126.4 million related to the cross-currency interest rate swap
Bonds denominated in roubles 8.3% 8.3% 517 5,102 5,619 with afixed interest rate disclosed in Note 22, will be made in March and September 2015 and March 2016, respectively.
Finance lease liabilities 2.9% 3.0% 21,103 21,045 56,193 72,144 170,485
Strengthening or weakening of listed below currencies against rouble as at 31 December 2014 and 31 December 2013 by 50% and 20%, respec-
Financial payables 33,039 33,039 tively, would have increased/(decreased) profit after tax by the amounts shown below. This analysis assumes that all other variables, in particular
Total future payments, including future 72,968 26,707 57,828 72,144 229,647 interest rates, remain constant.
interest payments

31 December 2013 Average interest rate 012 months 12 years 25 years Over 5 years Total Percent of change in rate Effect on profit after tax Percent of change in rate Effect on profit after tax
of currency versus rouble (increase/ (decrease)) of currency versus rouble (increase/ (decrease))
Contractual Effective
Increase in the rate of currency versus rouble:
Loans in foreign currency 3.5% 3.5% 835 891 1 1,727
US Dollar 50% (57,803) 20% (10,224)
Loans in roubles 11.5% 11.5% 4,693 2,703 7,396
Euro 50% 151 20% 123
Bonds denominated in roubles 8.3% 8.3% 516 415 5,108 6,039
Other currencies 50% 1,747 20% 537
Finance lease liabilities 3.9% 4.1% 11,340 9,860 27,351 37,963 86,514
Decrease in the rate of currency versus rouble:
Financial payables 20,657 20,657
US Dollar 50% 57,803 20% 10,224
Total future payments, including future 38,041 13,869 32,460 37,963 122,333
interest payments Euro 50% (151) 20% (123)
Other currencies 50% (1,747) 20% (537)

Financial results
Financial results
As of 31 December 2014 net short-term liabilities of the Group amounted to RUB 42,923 million (31 December 2013: net short-term assets in
the amount of RUB 13,494 million). Loss for 2014 amounted to RUB 17,146 million (2013: profit in the amount of RUB 7,335 million). Financial
As of 31 December 2014 the effect on the Groups equity would be RUB 63,566 million considering immaterial effect from change in exchange
result for 2014 was materially affected by foreign exchange differences which are related to decrease of exchange rate of Russian rouble to US
rates of other currencies.
Dollar and revaluation of derivative financial instruments. In 2014 cash flows from operating activities were positive and amounted to RUB 35,977
million (2013: RUB 28,945 million).
182 183
Interest rate risk The ratios are as follows:
The Group is exposed to the effects of fluctuations in the prevailing levels of market interest rates on its financial results and cash flows. Changes As at and for the year As at and for the year
in interest rates impact primarily change in cost of borrowings (fixed interest rate borrowings) or future cash flows (variable interest rate bor- ended 31 December 2014 ended 31 December 2013
rowings). At the time of raising new borrowings as well as finance lease management uses judgment to decide whether it believes that afixed or
Total debt 174,309 86,585
variable interest rate would be more favourable to the Group over the expected period until maturity.
Cash and cash equivalents and short-term financial investments (27,508) (18,932)
As at 31 December 2014 and 31 December 2013, the interest rate profiles of the Groups interest-bearing financial instruments were: Net debt 146,801 67,653
Equity attributable to shareholders of the Company (3,631) 60,146

Carrying amount
Total capital 143,170 127,798
EBITDA 24,840 31,849
Fixed rate financial instruments:
Net debt/Total capital 1.0 0.5
Financial assets 3,582 3,295
Total debt/EBITDA 7.0 2.7
Financial liabilities (38,112) (31,435)
Net debt/EBITDA 5.9 2.1
Total fixed rate financial instruments (34,530) (28,140)
Variable rate financial instruments: There were no changes in the Groups approach to capital management in 2014 and 2013.
Variable rate financial liabilities (135,225) (54,006)
Neither the Group nor any of its subsidiaries are subject to externally imposed capital requirements in 2014 and 2013, except for minimal share
During the year some of the Groups loans bore variable interest rates (Note 27). If the variable part of interest rates on loans in 2014 were 20% capital according to the legislation.
higher or lower than the actual variable part of interest rates for the year, with all other variables held constant, interest expense would not have
changed significantly (2013: would not have changed significantly). Credit risk
The interest expense under finance lease agreements primarily accrues at variable interest rates. If in 2014 variable part of those rates were 20% Credit risk is the risk of financial loss to the Group if acustomer or counterparty to afinancial instrument fails to meet its contractual obligations,
higher or lower than what they actually were, with all other variables held constant, interest expense on finance leases for the year would not have and arises principally from the Groups cash and cash equivalents, financial receivables and investments in securities.
been materially different (2013: would not have been materially different).
The Group conducts transactions with the following major types of counterparties:
Aircraft fuel price risk
(i) The Group has credit risk associated with travel agents and industry organisations. Asignificant share of the Groups sales is made via travel
The results of the Groups operations are significantly impacted by changes in the price of aircraft fuel. In 2012, 2013 and 2014 the Group agencies. Due to the fact that receivables from travel agents are diversified the overall credit risk related to travel agencies is assessed by manage-
entered into agreements with anumber of Russian banks to hedge aportion of its fuel costs from potential future price increases. In accordance ment as low.
with the terms of each agreement the Group will be compensated by the bank for the excess between the actual aircraft fuel price and the ceiling (ii) Receivables from other airlines are carried out through the IATA clearing house. Regular settlements ensure that the exposure to credit risk
price specified in the agreement, whilst the Group has agreed to compensate the bank the shortfall between the actual prices and the floor price is mitigated to the greatest extent possible.
specified in the agreement. (iii) Management actively monitors its investing performance and in accordance to current policy investing only in liquid securities with high credit
ratings. Management does not expect any counterparty to fail to meet its obligations.
In case as at 31 December 2014 price for Brent crude oil was 50% higher or lower than its actual price, with all other variables remaining con-
stant (including forecast of crude oil price), the effect of change in crude oil price on the Groups equity and result would not be materially different As at 31 December 2014 the total amount of investments into securities was RUB 6,092 million, major part of financial receivables amounted to
(2013: would not be materially different). RUB 17,314 million relates to receivables regulated by clearing house.
Capital management risk The maximum exposure to the credit risk net of impairment provision is set out in the table below:
The Group manages its capital to ensure its ability to continue as agoing concern while maximizing the return to the Companys shareholders 31 December 2014 31 December 2013
through the optimization of the Groups debt to equity ratio. Cash and cash equivalents (Note 12) 26,547 18,660
The Group manages its capital in comparison with rivals in the airline industry on the basis of the following ratios:
Financial receivables (Note 14) 30,270 23,996
net debt to total capital, Short-term financial investments 961 273

total debt to EBITDA, and Long-term financial investments (Note 16) 6,115 6,099
net debt to EBITDA
Aircraft lease security deposits (Note 13) 2,431 1,493
Total debt consists of short-term and long-term borrowings (including the current portion), finance lease liabilities, custom duties payable on Other non-current assets 186 104
imported leased aircraft and defined benefit pension obligation. Total financial assets exposed to credit risk 66,510 50,625
Net debt is defined as total debt less cash, cash equivalents and short-term financial investments. Analysis by credit quality of financial receivables is as follows:
Total capital consists of equity attributable to the Companys shareholders and net debt.
EBITDA is calculated as operating profit before depreciation, amortization and custom duties expenses. Past due but not impaired
less than 90 days overdue 58 119

Financial results
Financial results
91 days to 2 years overdue 32
Total past due but not impaired receivables 90 119
184 185
Credit risk concentration Government-related entities
As at 31 December 2014 alarge portion of the cash as well as long-term financial investments of the Group was placed in two banks (as at 31 As at 31 December 2014 and 31 December 2013, the Government of the RF represented by the Federal Agency for Management of State Property
December 2013: two banks) and invested in one company (as at 31 December 2013: one company), respectively, which causes the credit risk owned 51.17% of the Company. The Group operates in an economic environment where the entities are directly or indirectly controlled by the
concentration for the Group. Government of the RF through its government authorities, agencies, associations and other organizations, collectively referred to as government-
related entities.
35. Fair value of financial instruments The Group decided to apply the exemption from disclosure of individually insignificant transactions and balances with the state and its related
parties because the Russian government has control, joint control or significant influence over such parties.
Fair value is the amount at which afinancial instrument can be exchanged in acurrent transaction between willing parties, other than in aforced
sale or liquidation. The best evidence of the fair value is an active quoted market price of afinancial instrument. The Group has transactions with government-related entities, including but not limited to the following transactions:
The estimated fair values of financial instruments have been determined by the Group using available market information, where it exists, and banking services,
appropriate valuation methodologies. However, judgement is necessarily required to interpret market data to determine the estimated fair value. transactions with derivative financial instruments,
Management uses all available market information in estimating the fair value of financial instruments. investments in OJSC MASH,
purchase of air navigation and airport services, and
Financial instruments carried at fair value. This category includes only derivative financial instruments disclosed in Note 22. Government subsidies including those provided for compensating the losses from passenger flights under two government programmes, i.e.
flights to and from European Russia for inhabitants of Kaliningrad region and Far East.
Financial assets carried at amortised cost. The fair value of instruments with afloating interest rate is normally equal to their carrying
value. The estimated fair value of fixed interest rate instruments is based on estimated future cash flows expected to be received discounted at Outstanding balances of derivative financial instruments and cash at current rouble and foreign currency accounts in the government-related banks
current interest rates effective on debt capital markets for new instruments with similar credit risk and remaining maturity. Discount rates used
depend on the credit risk of the counterparty. Carrying amounts of financial receivables, lease security deposits and loans issued approximate 31 December 2014 31 December 2013
their fair values, which belong to Level 2 in the fair value hierarchy. Cash and cash equivalents belong to level 1 and are carried at amortised Assets
cost which is approximately equal to their fair value.
Cash and cash equivalents 15,781 11,726
Liabilities carried at amortised cost. The fair value of financial instruments is measured based on the current market quotes, if any. The Derivative financial instruments
estimated fair value of unquoted fixed interest rate instruments with stated maturity was estimated based on expected cash flows discounted at OJSC Sberbank of RF 529 1,253
current interest rates for new instruments with similar credit risk and remaining maturity. As at 31 December 2014 and 31 December 2013, the
PJSC Gazprombank 105
fair values of financial payables (Note 23), finance lease liabilities (Note 26), loans, borrowings and bonds (Note 27) were not materially different
from their carrying amounts. The fair values of financial payables, finance lease liabilities and loans and borrowings are categorised as Levels Liabilities
2, while bonds are categorised as Level 1 in the fair value hierarchy. Derivative financial instruments
OJSC Sberbank of RF (9,887) (2,912)
PJSC VTB (4,613) (29)

36. Related parties transactions
The amounts of the Groups finance and operating lease liabilities are disclosed in Notes 26 and 37. The share of liabilities to the government-
Parties are generally considered to be related if they are under common control or if one party has the ability to control the other party or can
related entities is approximately 12% for finance lease and 7% for operating lease (31 December 2013: 20% and 8%, respectively).
exercise significant influence or joint control over the other party in making financial and operational decisions. In considering each possible
related party relationship attention is directed to the economic substance of the relationship, not merely the legal form.
For the year ended 31 December 2014 the share of the Groups transactions with government-related entities was less than 12% of operating
costs, and less than 3% of revenue (2013: less than 13% and less than 2%, respectively). These expenses primarily include costs of air navigation
As at 31 December 2014 and 31 December 2013, the outstanding balances with related parties and income and expense items with related par-
and aircraft maintenance services in the government-related airports and also supplies of fuel by government-related entities.
ties for the years ended 31 December 2014 and 31 December 2013 were disclosed below:
As at 31 December 2014 the Group issued guarantees for the amount of RUB 398 million to agovernment-related entity to secure obligations
Associates
under tender procedures (31 December 2013: RUB 788 million).
As at 31 December 2014 and 31 December 2013, the outstanding balances with associates and income and expense items with associates for
As at 31 December 2014 the government or government-related entities owned non-controlling interest of particular subsidiaries of the Group
the years ended 31 December 2014 and 31 December 2013 were as follows:
amounted to RUB 3,862 million (31 December 2013: RUB 2,452 million).
31 December 2014 31 December 2013 Transactions with the state also include taxes, levies and customs duties settlements and charges which are disclosed in Notes 7, 8, 9, 11, 14,
Assets 17, 23 and 28.
Accounts receivable 1 38
Compensation of key management personnel
Liabilities
Accounts payable and accrued liabilities 140 75 The remuneration of directors and other members of key management personnel (the members of the Board of Directors and the Management
Committee as well as key managers of flight and ground personnel who have significant power and responsibilities on key control and planning
The amounts outstanding to and from related parties will be settled mainly in cash. decisions of the Group), including salary and bonuses as well as other compensation, amounted to RUB 953 million (2013: RUB 738 million).
2014 2013 These remunerations are mainly represented by short-term payments. Such amounts are stated before personal income tax but exclude mandatory
insurance contributions to non-budgetary funds. According to Russian legislation, the Group makes contributions to the Russian State pension
Transactions
fund as part of compulsory social insurance contributions for all its employees, including key management personnel.
Financial results
Financial results
Sales to associates 19 17
Purchase from associates 1,372 1,306
Purchases from associates consist primarily of aviation security services.
186 187
Bonus programmes based on the Companys capitalisation B787 (31 December 2013: 22), 22 Airbus A350 (31 December 2013: 22) and 62 Airbus A320/321 (31 December 2013: 0) aircraft. The Group plans
to use the mentioned aircraft under operating or finance lease agreements, thus does not expect cash outflow under the corresponding agreements.
In 2013, the Group approved bonus programmes for the Groups key management personnel and members of the Companys Board of Directors.
These programmes run for three years and are exercised in three tranches of cash payments. The amounts of payments depend both on the abso-
lute increase in the Companys capitalisation and the Companys capitalisation growth rates against its peers based on the results of the reporting 39. Contingencies
year. The fair value of the liabilities under the bonus programmes was determined based on consensus forecast for the Companys capitalisation
growth until 2015. Operating Environment of the Group
In 2014, expenses related to the bonus programmes were RUB 566 million and were recorded within staff costs in the Groups consolidated The recent political and economic volatility observable in the region, including developments in Ukraine, have had and may continue to have anega-
statement of profit or loss (2013: RUB 345 million). As at 31 December 2014, outstanding liability under these plans was RUB 247 million (as at tive impact on the Russian economy, including weakening of the Russian Rouble and making it complex to raise international funding. There is
31 December 2013 it was RUB 345 million). amenace of toughening sanctions against Russia and certain individuals and legal entities at the present day. The financial markets continue to
be volatile. These and other events may have an influence on the Groups operations and financial position. Based on the management estimation,
Share option programme effect of the mentioned sanctions on financial results of the Group is not significant. The Group continues to monitor the situation and implement
set of measures to minimize possible risks for the Groups operations and financial position
During 2010 the Group initiated ashare option programme for its key management personnel (the Share option programme). The Share option
programme ran for three years and was exercised in three tranches accrued over the three-year period from 1 January 2011 to 31 December The Groups operations are primarily located in the RF. Consequently, the Group is exposed to the risk of the economic and financial markets of the
2014. The vesting requirement of the Share option programme was the continuous employment of participants in the Company during the vesting RF which display characteristics of an emerging market. The legal and tax frameworks continue development, but are subject to varying interpreta-
period of the Share option programme. tions and frequent changes which together with other legal and fiscal impediments contribute to the challenges faced by entities operating in the
RF. The consolidated financial statements reflect assessment of the Groups management of the impact of the Russian business environment on the
The fair value of services received in return for the share option granted was measured by reference to the fair value of the share option granted. The operations and the financial position of the Group. The future business situation may differ from managements current expectations. .
estimate of the fair value of the services received was determined using the Black-Scholes model. The following variables have been used in the model:
Tax contingencies
Market share price at the grant date, RUB 55,8
Expected volatility, % 40 The taxation system in the RF continues to evolve and is characterised by frequent changes in legislation, official pronouncements and court deci-
sions, which are sometimes fuzzy and contradictory and subject to varying interpretation by different tax authorities. Taxes are subject to audit
Risk free interest rate, % 5
and investigation by anumber of authorities, which have the authority to impose severe fines and penalties charges. Atax year remains open for
review by the tax authorities during the three subsequent calendar years; however, under certain circumstances atax year may remain open longer.
During 2013 the Group recorded release of 1,796,300 unused share options for the amount of RUB 33.9 million within staff costs in the Groups Recent events within the RF suggest that the tax authorities are taking amore tough stance in their interpretation and enforcement of tax legislation.
consolidated statement of profit and loss. As at 31 December 2014, there were no outstanding liabilities under the share option programme
(the outstanding amount as at 31 December 2013: RUB 207.5 million).. These circumstances may create tax risks in the RF that are substantially more significant than in other countries. The Groups management believes
that it has provided adequately for tax liabilities in these consolidated financial statements based on its interpretations of applicable Russian tax
Cross shareholding
legislation, official pronouncements and court decisions. However, the interpretations of these provisions by the relevant authorities could differ
and the effect on these consolidated financial statements, if the authorities were successful in enforcing their interpretations, could be significant.
As at 31 December 2014 Aeroflot-Finance and Partner, 100%-owned subsidiaries of the Group, owned 53,714,098 ordinary shares and 2,091
ordinary shares of the Company, respectively (31 December 2013: 53,527,652 ordinary shares and 2,091 ordinary shares of the Company, Russian revised transfer pricing legislation is effective from 1 January 2012. The new transfer pricing rules appear to be more technically elaborate
respectively) (Note 30). and, to acertain extent, better aligned with the international transfer pricing principles developed by the Organisation for Economic Cooperation and
Development. The Groups management prepared transfer pricing documentation to comply with the new legislation and believes that its pricing policy
and implemented internal procedures are adequate to meet the new transfer pricing legal requirements.
37. Commitments under operating leases
Changes in tax legislation or its enforcement in relation to such issues as transfer pricing may lead to an increase in the Groups effective income tax rate.
Future minimum lease payments under non-cancellable aircraft and other operating lease agreements with third and related parties (Note 36)
are as follows: In addition to the above matters, as at 31 December 2014 management estimates that the Group has no possible obligations from exposure to other
than remote tax risks (31 December 2013: risks in the amount of RUB 7,611 million which were mainly related to VAT accounting treatment for acer-
31 December 2014 31 December 2013 tain type of transactions specific for aGroups subsidiary). The risks represent estimates arising from uncertainties in the interpretation of Russian tax
legislation and related requirements for documentation. Management will vigorously defend the Groups positions and interpretations that were applied
On demand or within 1 year 42,694 20,132
in calculating taxes recognised in these consolidated financial statements, if these are challenged by the tax authorities.
Later than 1 year and not later than 5 years 179,654 95,086
Later than 5 years 209,804 137,073 Insurance
Total operating lease commitments 432,152 252,291

The Group maintains insurance in accordance with the legislation. In addition, the Group insures risks under various voluntary insurance programs,
including managements liability, Groups liability and risks of loss of aircraft under operating and finance lease.
The amounts above represent base rentals payable. Maintenance fees payable to the lessor, based on actual flight hours, and other usage variables
are not included in the amounts.
Litigation
The aircraft that the Group has operated under operating lease agreements as at 31 December 2014 are listed in Note 1. The Group received
During the reporting period the Group was involved (both as aplaintiff and adefendant) in anumber of court proceedings arising in the ordinary
aircraft under operating lease agreements for the term of 2 to 16 years. The agreements are extendable.
course of business. Management believes that there are no current court proceedings or other claims outstanding which could have amaterial
effect on the results of operations and financial position of the Group.
The Group entered into anumber of agreements with Russian banks under which the banks guarantee the payment of the Groups liabilities under
existing aircraft lease agreements.
Financial results
Financial results
40. SUBSEQUENT EVENTS
38. Capital commitments
During the period from January to February 2015, the Group received two Boeing B737, two SSJ100 and one Airbus 319 under operating lease.
During the period two Boeing B737 were disposed of.
As at 31 December 2014, the Group entered into agreements on acquisition of property, plant and equipment with third parties for the total of RUB
776,579 million (31 December 2013: RUB 289,682 million). These commitments mainly relate to 6 Boeing B-777 (31 December 2013: 12), 22 Boeing
188 189
8
APPENDIXES
Russia, The Sea of Okhotsk

8.1 Subsidiaries
and Affiliates
(as of 31 December 2014)
Full and short name Interest, % Objectives Form Size of interest Core business as defined in the Charter Revenue in Profit (loss) in 2014, Dividends in
(as of 31.12.2014), 2014, thousand thousand roubles 2014, roubles
roubles roubles
Open Joint Stock Company Rossiya Airlines 75 (minus Consolidate aviation assets to create an efficient company, Russia's Shares 689,173,000 Domestic and international air transportation of passengers, baggage, cargo and mail and provision of aviation 35,843,845 320,249 0.00
(OJSC Rossiya Airlines) 1 share) national carrier built around JSCAeroflot, by implementing best corporate services, including services for passengers and baggage
governance standards
Joint Stock Company Aurora Airlines 51.0132 Consolidate aviation assets to create an efficient company, Russia's Shares 242,930 Commercial air passenger and cargo services on domestic and international routes and other aviation services 10,266,727 163,032 0.00
(JSC Aurora Airlines) national carrier built around JSCAeroflot, by implementing best corporate
Open Joint Stock Company Vladivostok Air 52.16 Consolidate aviation assets to create an efficient company, Russia's Shares 274,122,792 Air transportation of passengers, baggage, cargo and mail on domestic and international routes 84,961 (1,985,859) 0.00
(JSC Vladivostok Air) national carrier built around JSCAeroflot, by implementing best corporate
Joint Stock Company Orenburg Airlines 100 Consolidate aviation assets to create an efficient company, Russia's Shares 665,503,000 Domestic and international commercial air services 21,772,166 (4,452,468) 0.00
(JSC ORENAIR) national carrier built around JSCAeroflot, by implementing best corporate
Joint Stock Company DONAVIA 100 Consolidate aviation assets to create an efficient company, Russia's Shares 328,863,260 Domestic and international commercial air services 9,964,164 58,352 0.00
(JSC DONAVIA) national carrier built around JSCAeroflot, by implementing best corporate
Limited Liability Company Dobrolet 100 Consolidate aviation assets to create an efficient company, Russia's Stake in 1,414,400,000 Air transportation of passengers, baggage, cargo and mail on international and domestic routes on a commercial 277,233 (321,935) 0.00
(LLC Dobrolet) national carrier built around JSCAeroflot, by implementing best corporate Charter basis in accordance with the requirements of the Air Code and other civil aviation laws and regulations of the
governance standards Capital Russian Federation, Company regulations and duly issued licenses for air routes
Limited Liability Company Budgetniy Perevozchik 100 Consolidate aviation assets to create an efficient company, Russia's national Stake in 1,200,000,000 Air transportation of passengers, baggage, cargo and mail on international and domestic routes on a commercial 112,350 (272,309) 0.00
(LLC Budgetniy Perevozchik) carrier built around JSCAeroflot, by implementing best corporate govern- Charter basis in accordance with the requirements of the Air Code and other civil aviation laws and regulations of the
ance standards Capital Russian Federation, Company regulations and duly issued licenses for air routes
Closed Joint Stock Company Sherotel 100 Provide hotel accommodations at the lowest regulated rates for Shares 882,812,538.63 Building, equipping and renovating hotel facilities, office & hotel complexes, offices and ancillary buildings; 1,405,382 480,080 16,000
(JSC Sherotel) JSCAeroflot crews and passengers in case of service disruptions and for hydrocarbon processing; operation of hotel facilities, office & hotel complexes and offices
crews and passengers of JSCAeroflot subsidiaries and affiliates
Limited Liability Company ALT Reiseburo / 100 Travel and related services (sale of air tickets, visa support) Shares 452,915 Travel arrangements, including arrangements for group travel, on a travel agency basis, and related retail 111,173 (11,408) 0.00
services
Limited Liability Company Aeroflot-Finance 99.9999 Implement investment projects for JSCAeroflot (examples include acquisition Stake in 5,729,228,886.27 Information and advisory services concerning the issuance and circulation of securities; collecting and providing 1,615 (2,636,738) 0.00
(LLC Aeroflot-Finance) of shares in JSCAeroflot from National Reserve Bank and acquisition of Charter information about the state of the securities market and financial market for interested individuals and entities
shares from Rosavia) Capital
Closed Joint Stock Company Aeromar 51 Supply in-flight meals, cleaning services, cabin preparation onboard aircraft Shares 28,050 Production and supply of food and beverages for service on board aircraft; supply of various other services to 11,324,767 742,139 162,386.55
(JSC Aeromar) operated by JSCAeroflot and its subsidiary and affiliate airlines at the low- Russian and foreign airlines, including other catering services, such as preparing and delivering food orders to
est regulated rates businesses and organizations
Limited Liability Company Transnautic Aero 49 Cargo sales agent in Germany Stake in 105,154 Marketing and taking orders for air freight delivery worldwide using the capacities of Aeroflot and other airlines Undergoing bankruptcy
GmbH Charter providing air cargo services, as well as assisting in building structures for air cargo operations in Russia and
Capital other CIS countries and all related operations
Closed Joint Stock Company AeroMASh-Aviation 45 Aviation security at airports, particularly at JSCAeroflots base airport Shares 45,000 Pre-flight screening of passengers, crew members, service personnel, carry-on items, baggage, freight, mail and 2,420,175.00 53,826.00 14,209.65
Security (JSC AeroMASh AB) (Sheremetyevo) catering supplies
Open Joint Stock Company Sheremetyevo 8.96 Base airport for Aeroflot airline Shares 2,259,687,350 Aircraft, passenger and cargo handling 19,150,545.00 (15,918,467.00) 0.00
International Airport (JSC Sheremetyevo
International Airport)
Public Joint Stock Company Transport Clearing 3.85 Provide professional services for settlements between airlines and agents Shares 50,000 Organizing, conducting and improving revenue settlements for the carriage of passengers, baggage, mail and 1,969,123.00 819,387.00 27,530.23
House (JSC TCH) cargo, their insurance and other services between settlement system participants
Non-State Vocational Private Education Institu- Provide training for flight personnel and aviation specialists. Founders 1,339.33 Professional training, advanced training and retraining of civil aviation and travel industry specialists to meet 254,348.00 45.00 0.00
tion Aeroflot Aviation School (Aeroflot Aviation A strategic asset, set up to meet the needs of Aeroflot and other airlines for contribution the specific needs of national and regional bodies and organizations (institutions, businesses), as well as entities
School) qualified specialists with other forms of ownership and individuals
APPENDIXES
APPENDIXES
* JSCAeroflot holds a stake in JSC Vladivostok Air through JSC Aurora Airlines.
192 193
8.2
No. Counterparty Subject matter Price, roubles Period Interested persons Basis of interest Governing body
of transaction that adopted
MATERIAL AND RELATED the resolution
PARTY TRANSACTIONS 6 JSC Aeromar Sale of a laundry as

aproperty complex
8,243,600 31.12.2014 D.P. Saprykin, a member
of the Board of Directors
The Company owns 20 or more
percent of the shares (interests,
Board of Direc-
tors Minutes
and Executive Board of participatory units) in the legal No. 4 dated
JSCAeroflot, is a Board entity which is a party, beneficiary, September 18,
of Directors member at agent or representative in the 2014
JSC Aeromar; transaction.
V.Ya. Zingman, a member The person holds a position in
of the Executive Board governing bodies of the legal
of JSCAeroflot, is a Board entity which is a party, beneficiary,
of Directors member at agent or representative in the
JSC Aeromar transaction.
7 JSC Aeromar Sale of a laundry as 3,424,000 31.12.2014 D. P. Saprykin, a member The Company owns 20 or more Board of Direc-
No. Counterparty Subject matter Price, roubles Period Interested persons Basis of interest Governing body
aproperty complex of the Board of Directors percent of the shares (interests, tors Minutes
of transaction that adopted
the resolution
Q1 2014 of Directors member at agent or representative in the 2014
1 JSC Donavia Services to enable the 717,895 15.02.2014 D.P. Saprykin, a member The Company owns 20 or more Board of Direc- V.Ya. Zingman, a member The person holds a position in
acceptance of cash 15.02.2015 of the Board of Directors percent of the shares (interests, tors Minutes of the Executive Board of governing bodies of the legal entity
payments at Aeroflot and Executive Board of participatory units) in the legal No. 15 dated JSCAeroflot, is a Board which is a party, beneficiary, agent
sales offices for the JSCAeroflot, is a Board entity which is a party, beneficiary, February 27, of Directors member at or representative in the transaction
transportation of of Directors member at agent or representative in the 2014 JSC Aeromar
correspondence on JSC DONAVIA transaction.
Donavias scheduled The person holds a position in 8 OJSC Rossiya Airlines Real property lease 54,161.21 01.04.2014 D.P. Saprykin, a member The Company owns 20 or more Board of Direc-
flights and the issu- governing bodies of the legal 31.03.2017 of the Board of Directors percent of the shares (interests, tors Minutes
ance of related traffic entity which is a party, beneficiary, and Executive Board of participatory units) in the legal No. 20 dated
document agent or representative in the JSCAeroflot, is a Board entity which is a party, beneficiary, June 11, 2014
transaction. of Directors member at agent or representative in the
OJSC Rossiya Airlines; transaction.
Q2 2014 R.V. Pakhomov, a member The person holds a position in
of the Board of Directors governing bodies of the legal
2 JSC Vladivostok Air Lease of non-residen- Monthly rent: 26.02.2013 D.P. Saprykin, a member An affiliate of the Company owns
of JSCAeroflot, is a Board entity which is a party, beneficiary,
tial premises RUB 68,794, 25.01.2018 of the Board of Directors 20 or more percent of the shares
of Directors member at agent or representative in the
but not to and Executive Board of (interests, participatory units) in
JSC Rossiya Airlines transaction.
exceed RUB JSCAeroflot, is a Board the legal entity which is a party,
4,127,640, of Directors member at beneficiary, agent or representative 9 JSC ORENAIR Loan agreement 705,000,000 09.12.2014 D.P. Saprykin, a member The Company owns 20 or more Board of Direc-
including VAT, JSC Vladivostok Air in the transaction. of the Board of Directors percent of the shares (interests, tors Minutes
for the entire and Executive Board of participatory units) in the legal No. 8 dated
transaction JSCAeroflot, is a Board entity which is a party, beneficiary, December 2,
period of Directors member at agent or representative in the 2014
JSC ORENAIR transaction.
Q3 2014
The person holds a position in
3 JSC Aurora Airlines Purchase and sale of 123,970,000 Until the par- D.P. Saprykin, a member The Company owns 20 or more Board of Direc- governing bodies of the legal
ordinary registered ties have fully of the Board of Directors percent of the shares (interests, tors Minutes entity which is a party, beneficiary,
book-entry shares of performed and Executive Board of participatory units) in the legal No. 1 dated agent or representative in the
JSC Aurora Airlines their respec- JSCAeroflot, is a Board of entity which is a party, beneficiary, July 17, 2014 transaction.
placed as part of an tive obliga- Directors member at agent or representative in the
10 JSC ORENAIR Loan agreement 866,246.58 Not to exceed D.P. Saprykin, a member The Company owns 20 or more Board of Direc-
additional issue tions under JSC Aurora Airlines; transaction.
1 year from of the Board of Directors percent of the shares (interests, tors Minutes
the shares V.N. Antonov, a member The person holds a position in
disbursement and Executive Board of participatory units) in the legal No. 5 dated
purchase and of the Executive Board of governing bodies of the legal
sale agree- JSCAeroflot, is a Board of entity which is a party, beneficiary,
ment, but not Directors member at agent or representative in the
exceed 1 year JSC Aurora Airlines. transaction.
from the date
governing bodies of the legal
of signing
entity which is a party, beneficiary,
4 JSC Aeromar In-flight retail services 534,468.84 01.04.2014 D.P. Saprykin, a member The Company owns 20 or more Board of Direc- agent or representative in the
31.03.2017 of the Board of Directors percent of the shares (interests, tors Minutes transaction.
11 JSC ORENAIR Loan agreement 26,664,246.57 Not to exceed D.P. Saprykin, a member The Company owns 20 or more Board of Direc-
JSCAeroflot, is a Board of entity which is a party, beneficiary, July 11, 2014
1 year from of the Board of Directors percent of the shares (interests, tors Minutes
Directors member at agent or representative in the
disbursement and Executive Board of participatory units) in the legal No. 5 dated
V.Ya. Zingman, a member The person holds a position in
of the Executive Board of governing bodies of the legal
JSCAeroflot, is a Board of entity which is a party, beneficiary,
Directors member at agent or representative in the
JSC Aeromar transaction.
Q4 2014 agent or representative in the
transaction.
5 Aeroflot Lease of premises 883,094.38 I.P. Chalik, a member of The person holds a position in
Aviation School the Board of Trustees of governing bodies of the legal 12 JSC ORENAIR Technical support for 229,900 01.04.2014 D.P. Saprykin, a member The Company owns 20 or more Board of Direc-
Aeroflot Aviation School, entity which is a party, beneficiary, aircraft operations in 01.04.2019 of the Board of Directors percent of the shares (interests, tors Minutes
is an Executive Board agent or representative in the Samara, Omsk and and Executive Board of participatory units) in the legal No. 15 dated
member at JSCAeroflot transaction. Yekaterinburg JSCAeroflot, is a Board entity which is a party, beneficiary, February 27,
agent or representative in the
APPENDIXES
APPENDIXES
transaction.
194 195
8.4
No. Counterparty Subject matter
of transaction
Price, roubles Period Interested persons Basis of interest Governing body
that adopted
PRESIDENTIAL AND GOVERNMENTAL
the resolution INSTRUCTIONS AND DIRECTIVES
13 LLC Budgetniy
Perevozchik
Technical support for
aircraft operations of
354,126.11 01.10.2014
31.12.2015
Most of the Executive
Board members of
The Company owns 20 or more
percent of the shares (interests,
Board of Direc-
tors Minutes EXECUTION RESULTS
LLC Low Cost Carrier JSCAeroflot serve on participatory units) in the legal No. 6 dated
the Board of Directors entity which is a party, beneficiary, October 28,
of LLC Low Cost Carrier agent or representative in the 2014
transaction.
agent or representative in the
transaction. No. Document type, date, number Brief description of assignment Execution
14 LLC Budgetniy Provision of AIRCOM 62,765.68 28.10.2014 Most of the Executive The Company owns 20 or more Board of Direc-
1. Ensure the transparency of financial and business activities
Perevozchik air-to-ground 28.10.2019 Board members of percent of the shares (interests, tors Minutes
(Federal Law No. 273-FZ dated December 25, 2008 On Combating Corruption, Russian Presidential Decree No. 309 dated April 2, 2013
telecommunications JSCAeroflot serve on participatory units) in the legal No. 6 dated On measures to implement certain provisions of the Federal Law On Combating Corruption, 2014-2015 National Anticorruption Plan
services to the Board of Directors entity which is a party, beneficiary, October 28, approved by Russian Presidential Decree No. 226 dated April 11, 2014)
LLC Low Cost Carrier of LLC Low Cost Carrier agent or representative in the 2014
transaction.
The person holds a position in 1.1 Instruction of Director of the Public Submit information about own income, expenses, property and Information was submitted within the prescribed
governing bodies of the legal Service and Personnel Department liabilities and those of the spouse and minor children for 2013 to the time limit
entity which is a party, beneficiary, of the Government of the Russian Public Service and Personnel Department of the Government of the
agent or representative in the Federation A.A. Soroko No. P17-5003 Russian Federation by April 30, 2014
transaction. dated February 5, 2014 (Incoming Ref.
No. 921 dated February 10, 2014)
15 LLC Budgetniy Cash contribution to 1,200,000,000 Most of the Executive The Company owns 20 or more Board of
Perevozchik the Charter Capital of Board members of percent of the shares (interests, Directors of
LLC Low Cost Carrier JSCAeroflot serve on participatory units) in the legal JSCAeroflot 1.2 Minutes of a meeting held by Paragraph 3. Recommend to the Companies that have not yet joined A decision to join the Russian Business Anticor-
the Board of Directors entity which is a party, beneficiary, Minutes No. 3 Secretary of State Deputy Minister the Russian Business Anticorruption Charter (the Charter) that they: ruption Charter was adopted by the Executive
of LLC Low Cost Carrier agent or representative in the dated Septem- of Economic Development of the consider joining the Charter to fulfill their obligations to take Board of JSCAeroflot on September 15, 2014
transaction. ber 11, 2014 Russian Federation O.V. Fomichev anticorruption measures stipulated by Article 13.3 of the Federal (minutes No. 14);
The person holds a position in No. 56-OF dated August 12, 2014 Law On Combating Corruption; an application for joining the Russian Business
governing bodies of the legal (Incoming Ref. No. 6473 dated upon deciding to join the Charter, send the necessary documents Anticorruption Charter was sent to the Chamber of
entity which is a party, beneficiary, 25 August 2014) for registration in the Register of Charter Members to one of Commerce and Industry of the Russian Federation
agent or representative in the the business associations initiators of the Charter as soon as (Ref. No. GD-1445 dated October 20, 2014);
transaction. possible A certificate of joining the Russian Business Anti-
corruption Charter, No. 0514 dated November 5,
16 JSC Nordea Bank Addendum to Credit 2,558,000,000 I.V. Kogan, a member of The person holds a position in Board of
2014, has been received
Line Agreement the Board of Directors of governing bodies of the legal Directors of
JSCAeroflot, is a Board entity which is a party, beneficiary, JSC Aeroflot
of Directors member at agent or representative in the Minutes No. 8 1.3 Russian Government Resolution The procedure for notification by certain categories of persons of Is being executed.
JSC Nordea Bank transaction. dated Decem- No. 10 dated January 9, 2014 receipt of a gift related to their official position or official duties, Supplementary agreements imposing an obligation
ber 2, 2014 (Incoming Ref. No. 158 dated valuation, surrender, sale (redemption) of the gift and crediting of to comply with the prohibitions and restrictions
January 13, 2014) proceeds from the sale and perform the duties prescribed by the laws and
regulations of the Russian Federation to combat
corruption have been concluded with JSCAeroflot
1.4 Instruction of the Prime Minister A request to ensure the implementation of the 2014-2015 officials.
of the Russian Federation National Anticorruption Plan approved by Russian Presidential On November 15, 2013, the Executive Board of
No. DM-P17-3229 dated May 5, Decree No. 226 dated April 11, 2014 JSCAeroflot approved the Code of Corporate Con-
2014 (Incoming Ref. No. 3465 duct of JSCAeroflot, which contains provisions on
dated May 8, 2014) combating corruption and preventing and resolving
conflicts of interest in Sections 10 and 11
8.3
Order of the CEO of JSCAeroflot No. 54 dated
1.5 Instruction of the Deputy Prime In pursuance of paragraph 2 item c of the 2014-2015 National February 11, 2015 approved the 2015 Anticor-
Minister of the Russian Federation Anticorruption Plan, by August 1, 2015: ruption Plan of JSCAeroflot, which provides for
No. RD-P17-7398 dated October 1, 2. The organizations set up to accomplish tasks specified by the development and approval of local regulations
TRANSACTIONS BY EXECUTIVE
2014 (Incoming Ref. No. 7589 dated the Russian Government (according to the list) shall ensure that of JSCAeroflot and for certain anticorruption
October 6, 2014) regulations pursuant to section III of the attached list are developed measures
and adopted and shall send information to the Government
BODIES MEMBERS of JSC Aeroflot of the Russian Federation
1.6 Resolution of the Prime Minister of Paragraph 2. information about income, expenses, property Is being executed. Information will be published on
the Russian Federation D.A. Medve- and related liabilities shall be published through the Internet the official website of JSCAeroflot within the time
dev No. 1405 dated December 18, on the official websites of organizations. limits set forth by the laws and regulations of the
2014 On certain anti-corruption is- Russian Federation
sues (Incoming Ref. No. 9775 dated
December 25, 2014)
1.7 Article 92 of Federal Law No. 208-FZ Obligation to disclose information to the extent and in accordance Is being executed.
Name Position Transaction type Date Quantity % of share capital dated December 26, 1995 On with the procedure set forth by the federal executive body for the The regulations on information interaction via
(purchase/sale) Joint-Stock Companies, Chapter securities market. the interdepartmental portal for state property
VIII of Order of the Federal Service Information disclosure requirements for joint-stock companies management have been approved by the Board of
1 V. Saveliev CEO, Board of Directors member, Purchase 09.12.2014 36,400 0.003% for Financial Markets of Russia No. included in the forecast privatization plan. Directors of JSCAeroflot (minutes No. 11 dated
Chairman of Executive Board 11-46/pz-n dated October 4, 2011 April 4, 2012).
2 V. Saveliev CEO, Board of Directors member, Purchase 11.12.2014 893,100 0.083% On approval of disclosure policy by Reports on communications with shareholders
Chairman of Executive Board issuers of equity securities and the investment community are presented
Order of the Russian Ministry of to the Board of Directors of JSCAeroflot on
3 V. Saveliev CEO, Board of Directors member, Purchase 12.12.2014 163,500 0.098% Economic Development No. 208 aquarterly basis.
Chairman of Executive Board dated May 11, 2011 On approval JSCAeroflot fully complies with disclosure require-
of information disclosure by statements set by Russian legislation. In particular, all
4 V. Saveliev CEO, Board of Directors member, Purchase 15.12.2014 258,700 0.121% owned joint-stock companies and information is disclosed on the webpage and in
APPENDIXES
APPENDIXES
Chairman of Executive Board state (municipal) unitary enterprises news bulletins of JSCAeroflot
196 197
No. Document type, date, number Brief description of assignment Execution No. Document type, date, number Brief description of assignment Execution
1.8 Paragraph 2 subparagraph 7 Publish resolution of the board of directors not treated Is being executed in accordance with disclosure 2.2 Directives of the Government of the Ensure the efficiency of the customers interaction with small and
of minutes of a meeting held as a trade secret requirements of legislation in force in the Russian Russian Federation No. 7377p-P13 medium-sized businesses (SMBs), including as regards procure-
by First Deputy Prime Minister Federation dated December 27, 2013 ment of innovative products.
of the Russian Federation (Incoming Ref. No. 486 dated Increase the share of e-procurement and open competitive procure- Being executed taking into account Aeroflots
I.I. Shuvalov No. ISH-P13-98pr January 27, 2014) ment processes in relation to the total annual volume to the extent business specifics
dated October 3, 2013 and by the time provided for in item 7 of the Road Map:
the share of e-procurement and open competitive procurement Established by the KPI achievement target
2 Russian Government Decree No. 867-r dated May 29, 2013 On approval of the action plan (road map) titled Expanding access for processes in 2015 should be at least 45 percent; for 2015
small and medium-sized businesses to procurement conducted by infrastructure monopolies and companies with state participation the share of e-procurement and open competitive procurement Planned to be achieved in 2016
(the Plan), Order of the Russian Ministry of Economic Development No. 3552 dated June 21, 2013 On the organization of work to processes in 2016 should be at least 50 percent;
implement the action plan (road map) titled Expanding access for small and medium-sized businesses to procurement conducted the share of e-procurement and open competitive procurement Planned to be achieved in 2017
by infrastructure monopolies and companies with state participation
processes in 2017 should be at least 60 percent;
the share of e-procurement and open competitive procurement Planned to be achieved in 2018
2.1 Directives of the Government of the Ensure the efficiency of the customers interaction with small and processes in 2018 should be at least 70 percent.
Russian Federation No. 6362p-P13 medium-sized businesses (SMBs), including as regards procure-
dated October 24, 2013 (Incoming ment of innovative products: The customers procurement regulations or other administrative In process. The relevant amendments to the
Ref. No. 9085 dated December 9, create a consultative body responsible for public audit of procure- A consultative body has been set up (Order No. documents shall be amended (when approving specifics of procure- Procurement Regulations will be submitted for
2013) ment effectiveness; 188 dated June 19, 2014), its members have been ment from SMBs) by separate documents stipulating that at least 20 approval to the Board of Directors of JSCAeroflot.
approved by Directive No. 242/U dated December percent of the annual procurement of standard products that can Execution deadline: June 2015.
18, 2014. be replaced with innovative products developed by SMBs should be
allocated annually to innovative products.
develop Regulations on the Consultative Body, ensure the transpar- Regulations on the Consultative Body have been Develop a pilot program of partnership with SMB associations In process. The pilot program of partnership is
ency of its activities; developed (RI-GD-227, annex to Order No. 188 developed taking into account the requirements of
dated June 19, 2014). Russian Government Resolution No. 1352 dated
December 11, 2014 On specifics of participation
ensure control over the efficiency of the customers single window In progress. Planned to be completed in Q2 2015. of small and medium-sized businesses in procure-
system to implement innovative products and results of research, de- ment of goods, works and services by certain
velopment and technological work carried out by SMBs and ensure groups of legal entities and will be submitted for
mutual technology transfer; approval to the Board of Directors of JSCAeroflot
ensure maximum transparency of the activities of the consultative Is being executed. Publications are posted on the following internal approval. Execution deadline:
body responsible for public audit of procurement effectiveness; official website of JSCAeroflot (in the news section June 2015.
at https://www.aeroflot.ru). Prepare proposals for simplifying the procurement procedure Is being executed
for SMBs.
form a special section in the Annual Report of the joint-stock A special section in the Annual Report has been Develop a methodology for determining the life cycle of products, In process. Planned to be approved according
company; formed. works and services to be procured (the Methodology). to the results of the audit by the Higher School
Develop and introduce criteria for evaluating and comparing bids of Economics
develop, with the participation of the consultative bodys repre- Draft regulations on the procedure for implement- based on the life cycle cost of a product or work for innovative, Work will be organized upon approval of the
sentatives, approve and put into effect regulations on procedures ing innovative solutions have been developed high-tech or technically sophisticated products in the procurement Methodology
and rules for implementing innovative solutions in the customers and sent to the members of the consultative body processes.
activities; responsible for public audit of procurement effec- Ensure that annual procurement of innovative, hi-tech or technically Work will be organized upon approval of the
tiveness. Deadline for approval: June 2015. sophisticated products is conducted using the criterion life cycle Methodology based on the 2015 results.
make amendments to the customers procurement regulations or Executed. cost of a product or work Note: JSCAeroflot does not produce products with
other administrative documents with respect to procurement limited a life cycle. The company provides air transporta-
to SMBs, stipulating: tion services as one of its core business areas.
the right of SMBs to select the terms of the bid security; For this reason, JSCAeroflot uses the total cost of
that the bid security provided by SMBs shall be returned to them ownership as a selection criterion in the procure-
within 7 business days; ment process
the customers obligations relating to the time limit for entering
into a contract with SMBs (20 business days maximum);
the customers obligations relating to the time limit for payment 3 Strategy development and updating, efficiency, long-term planning
for work done (10 business days maximum);
that the claims under contracts with SMBs may be assigned to
3.1 List of instructions of the President of Develop and approve an Investment Program and a Long-Term A Long-Term Development Program and an Invest-
financial institutions;
the Russian Federation No. Pr-3086 Development Program ment Program have been developed, heard by the
develop and introduce a KPI for customers management measur- Executed.
dated December 27, 2013 The time for submitting the Programs to the Government Expert Council at the Government of the Russian
ing the share of procurement from SMBs, including innovative
Statement on materials of the meet- of the Russian Federation: within the first six months of 2014 Federation, modified to reflect observations and
products;
ing of the Government of the Russian for the Investment Program and by October 1, 2014 suggestions made, approved by the Board of Direc-
include in the KPI system for management a labour productivity Executed.
Federation dated January 30, 2014, for the Long-Term Development Program tors (minutes No. 8 dated December 2, 2014),
indicator, which should grow by at least 5 percent per annum
minutes No. 3 and approved by the Government Committee for
until the industry average for foreign peers is achieved in 2018;
Transport on December 4, 2014
amend the customers documents relating to the generation of Executed.
relevant statistics and include in the KPI system for management 3.2 Paragraph 2 subparagraph 2 Approve the Strategy by the end of 2014
an energy savings indicator with a target to achieve at least 5 of minutes of a meeting held
percent energy savings annually until the industry average for by First Deputy Prime Minister of the
foreign peers is achieved in 2018; Russian Federation I.I. Shuvalov No.
include in the KPI system for management an indicator of envi- Executed. ISH-P13-98pr dated October 3, 2013
ronmental friendliness of products made and work performed to
be set at a level not lower than that of foreign peers 3.3 Instruction of Deputy Prime Minister A request to submit a timeline for considering investment programs
of the Russian Federation A.V. Deadline: February 25, 2014
Dvorkovich No. AD-P9-882 dated
February 7, 2014 (Incoming Ref. No.
954 dated February 10, 2014)
3.4 Instruction of Deputy Prime Minister A request to ensure, together with the Russian Ministry of Economic
of the Russian Federation Development and the Expert Council at the Government of the
A.V. Dvorkovich No. AD-P9-1810 Russian Federation, that draft investment programs of joint-stock
dated March 17, 2014 (Incoming Ref. companies and federal state unitary enterprises are prepared and
No. 2106 dated March 24, 2014) submitted for consideration, taking into account previous assign-
ments given by the Russian Government, within the time limits
specified in the appendix
APPENDIXES
APPENDIXES
198 199
3.5 Letter from acting Director of the As part of work on implementing Instruction of the Government 3.10 Minutes of the meeting of the Govern- 1. The long-term development program and investment program
Open Government Department of of the Russian Federation No. Ad-P9-1810 dated March 17, 2014, ment Committee for Transport No. 6 of JSC Aeroflot
the Government of the Russian the Expert Council at the Government of the Russian Federation dated December 4, 2014 Paragraph 3. JSCAeroflot (V.G. Saveliev) shall analyze the achieve-
Federation M. German stating that has received for consideration a draft of the investment program (Incoming Ref. No. 9510 dated ment of the parameters of the long-term development program of Work will be organized in the first half of 2015
information on project charters of JSCAeroflot. December 17, 2014) JSCAeroflot in the first half of 2015, based on Aeroflots perfor-
for investment projects included in The following needs to be additionally provided for preparing mance and the situation on the airline market, and, if necessary,
the 2014 investment program and an expert opinion on the above draft investment program: update the program parameters.
an air service investment program project charters for investment projects included in the 2014 The results shall be reported by July 20, 2015.
should be sent by May 16, 2014 in investment program Paragraph 4. The Russian Ministry of Industry and Trade, Minister of
connection with Instruction of the the Russian Federation M.A. Abyzov shall, together with JSCAeroflot Schedules have been prepared
Government of the Russian Federa- and JSC UAC, ensure that a manufacturing schedule for Superjet
tion No. AD-P9-1810 dated March and MC-21 aircraft and a schedule for their delivery to Aeroflot are
17, 2014 (Incoming Ref. No. 3593 prepared and agreed upon.
ofMay 14, 2014) Paragraph 5. The Russian Ministry of Economic Development, the
Russian Ministry of Transport, the Federal Agency for State Property Work has been organized in collaboration with
3.6 Instruction of Deputy Prime Minister M.Yu.Sokolov shall accelerate the execution of the assignment given Management shall, together with JSCAeroflot and SC Rostech, the Russian Ministry of Economic Development,
of the Russian Federation by the Government of the Russian Federation and ensure that draft determine the timing and the terms and conditions of sale of the the Russian Ministry of Transport and the Federal
A.V. Dvorkovich No. AD-P9-6701 investment programs of JSCs (Instruction No. AD-P9-1810 dated minority interest in JSCAeroflot held by the Russian Federation, Agency for State Property Management
dated September 1, 2014 March 17, 2014) are submitted and, together with the Expert Coun- considering the changed socio-economic situation, according to the
(Incoming Ref. No. 6832 dated cil, ensure that draft long-term development programs of joint-stock previously made decisions and submit a draft directive to the Govern-
September 8, 2014) companies are prepared and submitted for consideration to the ment of the Russian Federation in accordance with the established
Russian Federation Government (according to the timeline). procedure
3.7 Instruction of Deputy Prime Minister Finalize and submit the approved draft long-term development pro- 3.11 Instruction of the President of the Ensure the operation of the unified treasury of the company, its The matter was considered at the meeting of the
of the Russian Federation gram and investment program to the Russian Federation Government Russian Federation No. Pr-1032 subsidiaries and affiliates providing the centralized management of Board of Directors of JSCAeroflot (minutes No. 5
A.V. Dvorkovich No. AD-P9-8128 for consideration at the meeting of the Government Committee for dated May 7, 2014 financial flows of the group of companies, minimization of financial dated September 25, 2014, item 8)
dated October 30, 2014 (Incoming Ref. Transport on November 17, 2014 Instruction of the Government risks and operating expenses, and maximization of the return on The Executive Board of JSCAeroflot was tasked with:
No. 8301 dated October 31, 2014) of the Russian Federation investment of available resources. 1. Analyzing the existing system for managing
Instruction of Director of the Industry No. ISH-P13-3464 dated financial flows of the company, its subsidiaries
and Infrastructure Department of the May 13, 2014 The companys board of directors shall ensure that: and affiliates and sending the analysis results
Government of the Russian Federa- to the Russian Ministry of Finance
tion E. Ditrikh No. P9-55899 dated the structure of the unified treasury of the company, its subsidiar- Deadline: October 31, 2014
November 18, 2014 ies and affiliates (the group) providing the centralized manage- An analysis of the existing system for managing
(Incoming Ref. Nos. 8711, 8713, ment of financial flows of the group, minimization of financial financial flows of JSCAeroflot, its subsidiaries
8715 of November 19, 2014) risks and operating expenses, and maximization of the return on and affiliates has been conducted, considered at
investment of available resources; and a meeting of the Executive Board of JSCAeroflot
3.8 Instruction of the President of the Ensure that a long-term development program is approved, develop a
internal documents of the group regulating operation of the (minutes No. 19 dated October 29, 2014) and
Russian Federation No. Pr-3086 program audit procedure:
Treasury and a financial flow management system are developed sent to the Russian Ministry of Finance (Ref. No.
dated December 27, 2013; ensure that a long-term development program be developed and
and approved 403-3298 dated November 5, 2014).
Instruction of the Government approved;
2. Developing and approving the structure of
of the Russian Federation ensure that implementation of the LTDP is audited and a related The Board of Directors of JSCAeroflot (minutes
the unified treasury, taking into account the
No. DM-P13-9589 dated audit standard approved; No. 10 dated January 29, 2015) has approved:
analysis results.
December 30, 2013; ensure that amendments are made to the regulations on the a standard for auditing implementation of the
Deadline: by March 30, 2015
Directives of the Government of the remuneration of the joint-stock companys sole executive body Aeroflot Group LTDP;
3. Developing and approving internal documents
Russian Federation No. 4955p-P13 Statement of Work for audit of implementation of
of Aeroflot Group regulating operation of the
dated July 17, 2014 the Aeroflot Group LTDP
unified treasury.
3.9 Section 2 paragraph 6 subpara- Consideration of an item entitled Labour productivity improvement The item was considered at the meeting of the Deadline: June 30, 2015
graphs 6.2, 6.3, 6.4 of the Action Plan at meetings of the board of directors of joint-stock companies by Board of Directors of JSCAeroflot on December 2, 4. Ensuring the operation of the unified treasury.
for managing performance, creating December 2014 and adopting of decisions intended to ensure that: 2014 (minutes No. 8, item 4) Deadline: June 30, 2015
highly productive workplaces and
3.12 Minutes of a meeting between the Improvement of corporate governance in companies with state The Board of Directors of JSCAeroflot preliminar-
further upgrading them, approved by a set of labour productivity improvement measures (list of activi- A list of labour productivity improvement activities
Prime Minister of the Russian Federa- participation and state property management ily approved the Action Plan for implementing the
the Russian Government Order ties) in the company (the list of activities) is developed and target in JSCAeroflot was prepared and approved on
tion D.A. Medvedev and members of key recommendations of the Code of Corporate
No. 91-r dated January 23, 2003 indicators for these activities are determined; February 19, 2015 (No. 14/Pl)
the Expert Council at the Government Conduct at JSCAeroflot on December 2, 2014.
Directives of the Government of the the list of activities, indicators of their implementation, and values Work will be organized in the first half of 2015
of the Russian Federation No.DM- The Board of Directors suggested that the Execu-
Russian Federation No. 7389p-P13 of the labour productivity indicator (the LPI) calculated under
P36-46pr dated May 28, 2014 tive Board of JSCAeroflot proceed to scheduled
dated October 31, 2014 the methodology provided in the Order of Rosstat No. 576 dated
(Incoming Ref. No. 4370 dated June activities upon preparation of a month-by-month
September 23, 2014 are included in the companys long-term
6, 2014) schedule (the matter was considered by the Execu-
development program, taking into account provisions of the
tive Board JSCAeroflot on January 16, 2015).
Guidelines on development of long-term development programs
The activities are scheduled to be implemented
approved by Instruction of the Government of the Russian Federa-
beginning in February 2015
tion No. ISH-P13-2583 dated April 15, 2014;
the target LPI is included in the list of managements key perfor- 4 Increase procurement of products from Russian manufacturers
mance indicators that have to be considered in making employee
compensation and personnel decisions, and the companys man- The list of managements KPIs includes a labor
4.1 Directives of the Government of the Supplement the regulations on the procurement of goods, works Executed. Amendments were approved by the
agement remuneration is linked to the achievement of the LPI; productivity indicator providing for a 5 percent
Russian Federation No. 4537p-P13 and services to provide that oil, gas and chemical products shall be resolution of the Board of Directors of JSCAeroflot
amendments are made to the employment agreement (contract) growth in labor productivity in the company in
dated July 14, 2014 procured primarily from Russian manufacturers. dated September 25, 2014 (minutes No. 5). In
with the companys sole executive body to include an obligation 2015
2014, the share of procurement of aviation fuel
to achieve the LPI values determined in the companys long-term
from Russian manufacturers in total procurement
development program;
was 69 percent
the annual federal statistical monitoring form Labour productiv-
ity in non-financial corporations with state participation is 4.2 Directives of the Government of the Supplement the regulations on the procurement of goods, works and Executed. Amendments were approved by the
completed via the companys account on the interdepartmental Russian Federation No. 7850p-P13 services to provide that automotive, agricultural, road-building and resolution of the Board of Directors of JSCAeroflot
state property management portal, taking into account provisions dated November 24, 2014 municipal equipment, transport machine building products for the dated January 19, 2015 (minutes No 9)
of the Order of Rosstat No. 576 dated September 23, 2014 food and processing industry, metal products, including large diam-
eter pipes, shall be procured primarily from Russian manufacturers,
unless such goods or equivalent goods are not manufactured in the
Russian Federation.
APPENDIXES
APPENDIXES
200 201
4.3 Instruction of Deputy Prime Minister To the Russian Ministry of Transport (M.Yu. Sokolov) Information concerning reduction of dependence 8 Operation of SSJ-100 aircraft
of the Russian Federation D.O. Ro- the Russian Ministry of Industry and Trade (D.V. Manturov) of Russian air carriers on foreign equipment and
gozin RD-P7-6038 dated August 7, the Russian Ministry of Finance (A.G. Siluanov): services has been sent to the Russian Ministry 8.1 Instruction of First Deputy Prime The Russian Ministry of Transport (M. Yu. Sokolov) and JSCAeroflot A reply on the possibility to expand the Aeroflot
2014 (Incoming Ref. No. 6124 dated Explain how plans for acquisition of Boeing-737-800 aircraft by of Transport (Ref. No. 04-1224 dated August 27, Minister of the Russian Federation (K. G. Androsov) shall consider expanding the Aeroflots fleet through fleet through the transfer of various regional air-
August 13, 2014) Dobrolet will be implemented amid severe sanctions imposed against 2014). I.I. Shuvalov, Deputy Prime Minister the transfer of various regional aircraft into operational management craft into operational management was sent to the
it by several foreign companies. Information on the development of the Dobrolet of the Russian Federation Relevant proposals shall be submitted to the Government of the Rus- Russian Ministry of Transport (Ref. No. 11-1365
Given the imposed sanctions aimed at stopping operation of some of fleet has been sent to the Russian Ministry of A.V.Dvorkovich, No. ISH-P9-7267 sian Federation by September 29, 2014. dated September 29, 2014).
the Boeing aircraft in the Russian Federation, submit, together with Transport (Ref. No. 04-1223 dated August 27, dated September 26, 2014
JSCAeroflot and JSC UAC, agreed proposals on measures to prevent 2014) (Incoming Ref. No. 7389 dated
the position held by of Russian airlines in the airline market from September 29, 2014)
being weakened and to reduce their critical dependence on foreign
equipment and services. 8.2 Instruction of the President of the A request from the President to organize a meeting with his partici- Minutes of the meeting held by aide to the Presi-
Report to the Government of the Russian Federation on the time and
Russian Federation V. V. Putin No. pation and invite the carrier and manufacturers. dent of the Russian Federation A. Belousov on
funds they are ready to allocate to ensure the availability of state-of-
Pr-2316 dated October 1, 2014 in October 4, 2014
the-art products of the Russian aviation industry to Russian airlines.
response to the report by the CEO
of JSCAeroflot on use of domestic
4.4 Executive Office of the Government Consider the questions raised together with interested aviation The questions were considered at the meeting equipment dated September 9, 2014
of the Russian Federation, industry organizations and airlines. Report on the results at the next of the interdepartmental working group at the (Incoming Ref. No. 7492 dated
D.O. Rogozin, No. RD-P7-2037 meeting of the interdepartmental working group Government of the Russian Federation, which is October 2, 2014)
dated March 27, 2014 tasked with developing government measures to
(Incoming Ref. No. 2371 support the manufacture and sales of civil aircraft, 8.3 Minutes of the meeting held by aide to Assignments:
dated April 1, 2014) on October 21, 2014 with the participation of the President of the Russian Federa- Item 1, paragraph 2. Recommend that JSCAeroflot and JSC UAC A memorandum of intent to enter into an agree-
representatives from JSCAeroflot tion A. Belousov on October 4, 2014 arrange for the delivery terms, including financing terms, of twenty ment for delivery of 20 latest Russian aircraft
Sukhoi Superjet 100 aircraft to be agreed upon in accordance with Sukhoi Superjet 100 was signed on January 15,
5 Program for disposal of non-core assets (NCAs) the established procedure. 2015 by the CEO of JSCAeroflot and the Chair-
Item 2. man of the Board of Directors of JSC SCA.
5.1 Paragraph 1 item k of Instruction of The boards of directors need to: The program for disposal of NCAs of JSCAeroflot Paragraph 1. Create a working group consisting of representatives
the President of the Russian Federa- analyze assets of joint-stock companies for separating non-core was approved by the Board of Directors on July 26, from JSC SCA, JSC UAC and JSCAeroflot.
tion No. Pr-3668 dated December assets, where appropriate; 2012 (minutes No. 1). Paragraph 2. The working group shall:
6, 2011. ensure that a program for disposal of NCAs is considered and Information was posted in the companys account conduct a comparative analysis of the time spent on repairs and The working group has been set up; a Joint Action
decided on (approved). on the ID portal (Ref. No. 09-1785 dated July 30, maintenance of Sukhoi Superjet 100 aircraft at JSCAeroflot as com- plan to improve the operational efficiency of
5.2 Paragraph 2 subparagraph c In addition: NCAs have to be not only disposed of, but also removed 2012). pared to foreign operators of this aircraft as well as in comparison Sukhoi Superjet 100 aircraft was developed and
of Russian Presidential Decree from the sphere of influence of joint-stock companies. Progress report on disposal of non-core assets is with other aircraft types operated by JSCAeroflot; approved on October 17, 2014.
No. 596 dated May 7, 2012 On long- NCAs can also include interests in subsidiaries and affiliates not provided within the time limits set by the Govern- analyze the factors affecting the time spent on repairs and main-
term government economic policy. used in core business ment of the Russian Federation tenance of Sukhoi Superjet 100 aircraft during their operation by
JSCAeroflot and agree on measures to eliminate them;
6 Ensure energy efficiency of companies analyze the reasons for the low number of hours flown by Sukhoi
Superjet 100 aircraft and agree on measures to increase flying time.
6.1 Instruction of the Government The energy saving and efficiency improvement The agreed results shall be submitted to the Administration of the
of the Russian Federation dated program of JSCAeroflot until 2020 was approved President of the Russian Federation.
June 19, 2008 by the Board of Directors of JSCAeroflot on
August 18, 2008 (minutes No. 2). 9 Transport accessibility of the Republic of Crimea and Sevastopol
6.2 Federal Law No. 261-FZ dated No- Prepare the organizations energy performance certificate; The implementation results are reported to the
vember 23, 2009 On Energy Saving Approve an energy saving and efficiency improvement program Board of Directors on a regular basis during 9.1 Minutes of a meeting held by the Paragraph. 28. The Russian Ministry of Transport (M. Yu. Sokolov), Proposals for ensuring transport accessibility of
and Efficiency Improvement : consideration of the Aeroflot Strategy implementa- Prime Minister of the Russian Federa- the Russian Ministry of Economic Development (A. V. Uliukaev), the the Republic of Crimea were sent to M. Yu. Sokolov
Chapter 4, Article 15, part 2; tion matters. tion D. A. Medvedev No. DM-P16-19pr Russian Ministry of Finance (A. G. Siluanov) and the FAS of Russia at the Russian Ministry of Transport.
Chapter 7, Article 25 Program implementation progress report was sent dated March 24, 2014 (I.Yu. Artemiev), with the participation of JSC RZD and JSCAeroflot,
Order of the Russian Ministry of to the Russian Ministry of Economic Development (Incoming Ref. No. 2259 dated March shall submit proposals for providing reliable operation of the infra-
Energy No. 182 dated April 19, 2010 on August 5, 2014 (Ref. No. 150-611) 27, 2014) structure ensuring transport accessibility of the Republic of Crimea
and the federal city of Sevastopol to the Government of the Russian
7 Interaction with JSC MASH and prospects for development of Sheremetyevo Airport
Federation within one week in accordance with the established
procedure, including the following:
7.1 Instruction of First Deputy Prime A request to consider the inquiry, taking into account the concept The matter of building an apron in Sheremetyevo increasing the number of flights to the Republic of Crimea and the
Minister of the Russian Federation of development of the Moscow Air Hub airports, and report back. Airport based on the public private partnership federal city of Sevastopol, in particular, by using a low cost carrier
I.I. Shuvalov ISH-P9-2003 issued in principles has been considered by the Russian and subsidizing these flights from the federal budget, as well as
response to inquiry from JSCAeroflot Ministry of Transport (minutes No. VO-34 dated ensuring aviation fuel supply in the required quantities;
No. GD-378 dated March 13, 2014 April 16, 2014). developing ground infrastructure at the airports located in the
with a request to consider amending JSCAeroflot was tasked with submitting at its own Crimean Federal District and their certification, including certifica-
the Federal Target Program Russian cost proposals on project implementation options tion to ICAO standards.
Transport System Development agreed upon with JSC MASH to the Federal Air
(2010-2015) and allocating neces- Transport Agency, including: 9.2 Instruction of Director of the Industry Ensure that proposals for providing reliable operation of the infra-
sary funds for designing and building technical, economic, financial calculations for the and Infrastructure Department of the structure ensuring transport accessibility of the Republic of Crimea
an apron in the southern terminal project; Government of the Russian Federa- and the federal city of Sevastopol are submitted to the Government
complex of Sheremetyevo Airport a mechanism for compensation by JSC MASH of tion A.K. Uvarov of the Russian Federation by March 28, 2014.
(Incoming Ref. No. 2337 dated all or part of expenses incurred by JSCAeroflot; (Incoming Ref. No. 2258 dated March
March 31, 2014) legal scheme of the project 27, 2014)
7.2 Minutes of a meeting held by Deputy Paragraph 3. Recommend that JSC MASH and JSCAeroflot take The long-term programs of JSC MASH and
Prime Minister of the Russian Federa- steps to harmonize their long-term development programs. JSCAeroflot have been considered at a meeting 9.3 Instruction of the President of the Paragraph 2. The Russian Ministry of Transport shall, together with A single level of economy class fares on the
tion A.V. Dvorkovich No. AD-P9-192pr of the Interdepartmental Committee for Transport Russian Federation V.V. Putin follow- the Russian Ministry of Economic Development, make sure that route between Moscow and Simferopol has been
dated November 27, 2014 (Incoming (minutes No. 6 dated December 4, 2014); ing a meeting dedicated to transport JSCAeroflot sets a special fare for the 2014 summer tourist season established (4,000 roubles for one-way ticket;
Ref. No. 9192 dated December 5, specific assignments have been given (Incoming development No. Pr-866 dated April per passenger and baggage on the route between Moscow and 7,500 roubles for round tip ticket) (Ref. Nos.
2014) Ref.No.9510 dated December 17, 2014). 10, 2014 Simferopol for all economy class seats. 407.05-153 dated April 28, 2014, 407-165 dated
(Incoming Ref. No. 2996 dated April The total fare on this route should not exceed 7,500 roubles, includ- May 5, 2014).
7.3 Minutes of a meeting of the Govern- Key parameters of the long-term development program and invest- Work has been organized within the joint working 21, 2014) ing all taxes and charges.
ment Committee for Transport No. 6 ment program of JSC MASH group. A work plan encompassing all design
dated December 4, 2014 (Incoming Paragraph 3. The Russian Ministry of Transport (M.Yu. Sokolov) stages has been prepared and approved. A con- 9.4 Minutes of a meeting held by Deputy Section 1 paragraph 6 On the operation of childrens health facili-
Ref. No. 9510 dated December 17, shall, together with JSCAeroflot and JSC MASH, prepare and agree tractor has been selected and an agreement with Prime Minister of the Russian Federa- ties located in the Republic of Crimea and Sevastopol during the
2014) a construction and reconstruction schedule for terminal facilities the contractor has been signed. Work is scheduled tion O.Yu. Golodets No. OG-P12-98pr 2014 health promotion campaign:
at Sheremetyevo Airport, taking into account the passenger traffic to be completed in May 2015. dated April 18, 2014 The Russian Ministry of Transport shall, along with JSCAeroflot
forecast and modelling results. Information has been sent to the Russian Ministry and other airlines, ensure that the above-mentioned air services are
of Transport (Ref. No. 01-106 dated January 29, offered at discount fares (7.5 thousand roubles).
APPENDIXES
APPENDIXES
2015)
202 203
9.5 Inquiry from the Russian Ministry Submission by JSCAeroflot of its position on setting a special fare 11.3 Minutes of a meeting held by Paragraph 3. The Russian Ministry of Transport, the FAS of Russia Several meetings have been held at the Russian
of Transport regarding execution for the 2014 summer season per passenger and baggage on the First Deputy Prime Minister of and the Federal Tariff Service of Russia shall, together with inter- Ministry of Finance with the participation of
of paragraph 2 of the instructions route between Moscow and Simferopol for all economy class seats. the Russian Federation I.I. Shuvalov ested federal executive authorities and leading Russian airlines, representatives from airlines, the FAS, Agency for
given by the President of the Russian No. ISH-P9-54pr dated May 27, 2014 analyze the actual expenses of airlines associated with flight opera- Strategic Initiatives to Promote New Projects, the
Federation following the meeting Regarding fare pricing system tions (aviation fuel, airport services, air navigation and other charges, RUIE, the Public Council at the Ministry of Finance
dedicated to transport development (Incoming Ref. No. 4393 dated services of credit institutions, taxes, cost of aviation equipment, and Pulkovo Airport. An analysis of the actual ex-
No. 01-01-02/1487 dated April 23, June 9, 2014) and other costs), the cost of flight operations, pricing, government penses for flight operations, their cost and pricing
2014 (Incoming Ref. No. 3141 dated support measures, as compared to US and EU airlines, and consider was sent to the Department of State Civil Aviation
April 23, 2014) economic consequences for airlines due to changes in passenger air Policy (No. 401-28 dated July 18, 2014).
transport pricing. Results shall be reported to the Government of the
9.6 Administration of the President of the Submit: Information that JSCAeroflot is ready to partici- Russian Federation by July 25, 2014.
Russian Federation, V. Letunovsky, information on concluded agreements and granted subsidies; pate in the program of subsidized flights on the
No. A8VP-185-5 dated June 3, 2015 an analysis of air route load factors: Moscow Simferopol and Saint Petersburg 11.5 Instruction of Deputy Prime Minister Paragraph 2. The Government of the Russian Federation shall, with Information about participation of JSCAeroflot
Minutes of the working meeting in the number of flights, technical capabilities, use of additional aircraft, maxi- Simferopol routes in the 2014 holiday season, of the Russian Federation the participation of executive authorities of constituent entities of the in a targeted selection of candidates for training
Control Directorate of the President mum available passenger capacity and proposals on how to reach it. provided that the Government of the Russian O. Yu. Golodets No. OG-P8-5496 Russian Federation, Russian associations of employers, state corpo- under the program Summer operation of aircraft
of the Russian Federation dedicated Calculations, analysis, economic justification of ticket price (seat/pas- Federation issues a relevant resolution, has dated July 22, 2014 rations and joint-stock companies in which the Russian Federation was sent to the Russian Ministry of Science and
to execution of Instructions of the senger), cost, profitability; proposals on reducing airline ticket prices been sent to the Federal Air Transport Agency In pursuance of the instructions is- holds a majority stake, develop and duly submit proposals on: Education (Ref. No. 12-1342 dated September
President of the Russian Federation towards the maximum fare for flights to and from Simferopol set by (Ref. No. 407.05-261 dated July 4, 2014) sued by the President of the Russian promoting targeted training at educational institutions under higher 23, 2014).
No. Pr-866 dated April 18, 2014 and the President of the Russian Federation; Federation following a meeting of the education programs in engineering, technology and technical
No. Pr-1145 dated May 21, 2014 official forecast for passenger traffic for the period from June to Council for Science and Education sciences;
dated June 3, 2014 as regards ensur- October of this year; under the President of the Russian developing a methodology for calculating medium and long-term
ing affordability of flights to and from consider the possibility of making arrangements with transfer Federation, No. Pr-1627 dated June requirements of constituent entities of the Russian Federation ter-
the Crimean Federal District companies and travel operators to provide passenger transportation 23, 2014 (Incoming Ref. No. 5667 ritories, economy sectors and largest employers for engineering
(Incoming Ref. No. 4444 dated June services within the Crimean Federal District timed to flights. dated July 28, 2014) and technical staff.
10, 2014). Information shall be provided within three days.
11.6 Instruction of Deputy Prime Minister For the Russian Ministry of Transport (M. Yu. Sokolov): The matter is under discussion. The Russian
10 Federal program Training and retraining of the management succession pool (2010-2015) of the Russian Federation A.V. Consider the inquiry with the participation of interested federal Ministry of Transport conducts meetings attended
Dvorkovich No. AD-P9-6062 dated executive authorities and report on proposals as soon as possible. by representatives from airlines.
10.1 Instruction of Deputy Chief of Staff of Submit information about graduates of the federal program Training Information has been sent (Ref. No. 12-150 dated August 11, 2014 issued in response
the Government of the Russian Fed- and retraining of the management succession pool (2010-2015) January 31, 2014) to the letter from JSCAeroflot about
eration I.V. Lobanov No. 159p-P17 to the Public Service and Personnel Department of the Government measures for protection from penalty
dated January 18, 2014 of the Russian Federation to evaluate program implementation sanctions imposed by the State Air
(Incoming Ref. No. 302 dated Janu- efficiency. Service of Ukraine in connection with
ary 20, 2014) operation of flights to Simferopol (In-
coming Ref. No. 6162 dated August
10.2 Letter from Deputy Chief of Staff By April 1, 2014, submit proposals on candidates from among the Information has been sent. 13, 2014).
of the Government of the Russian persons included in the basic and prospective tiers of the federal
Federation I.V. Lobanov (Incoming management succession pool (Instruction of the Government of the 11.7 Instruction of the President of the Paragraph 2. Assist the Far-Eastern and North-Eastern Federal A decision to allocate RUB 50 million to form an
Ref. No. 1871 dated March 13, 2014) Russian Federation No. M Ad-P17-4145 dated July 20, 2012) for Russian Federation V.V. Putin No. Universities in forming and replenishing earmarked capital funds, earmarked capital fund of the Far-Eastern Federal
training under the federal program Training and retraining of the PR-2169 dated September 10, 2014 organize interaction in personnel training and putting viable R&D University was passed at the meeting of the Execu-
management succession pool (2010-2015). (Incoming Ref. No. 9549 dated results to use. tive Board of JSCAeroflot on December 19, 2014
December 18, 2014) (minutes No. 23).
10.3 Telegram from the Executive Office of Provide information on graduates of the federal program Training JSCAeroflot employees have taken part in the An agreement has been duly approved and signed.
the Government of the Russian Fed- and retraining of the management succession pool (2010-2015) activities (No. 12-585 dated April 21, 2014, Under the agreement, funds are scheduled to be
eration, I. Lobanov, No. 2141P-P17 (the Federal Program) and, in this connection, arrange for partici- Ref. No. 12-1267 dated September 8, 2014) transferred in April 2015.
dated April 11, 2014 (Incoming pation of the succession pool members:
Ref. No. 2749 dated April 14, 2014) in activities to create individual professional development plans 11.8 Minutes of a meeting held by Deputy Paragraph 7. By December 26, 2014, the Russian Olympic Commit- Addenda to the partnership agreement have been
remotely using the Federal Programs resource centre from Prime Minister of the Russian Federa- tee (A.D. Zhukov), JSCAeroflot (V.G. Saveliev) shall, together with executed.
April 23, 2014. tion D.N. Kozak No. DK-P12-239-pr the Russian Ministry of Transport, decide on arranging flights for Information about the issuance of Moscow
dated December 15, 2014 (Incoming participants between Moscow and Sochi within the quotas under Sochi Moscow tickets was sent to the Social
10.4 Telegram from Deputy Chief A request to arrange for participation of the succession pool members Ref. No. 9542 dated December 18, the partnership agreement between the Sochi 2014 Organizing Development Department of the Government of
of Staff of the Government of the of the basic and prospective tiers in the specified activities under the 2014) Committee and JSCAeroflot. the Russian Federation (Ref. No. 506-12 dated
Russian Federation I. Lobanov federal program Training and retraining of the management succes- January 26, 2015).
No. NR 5488P-P17 dated August 28, sion pool (2010-2015) at the Lomonosov Moscow State University
2014 (Incoming Ref. No. 6601 dated during the period from September 15, 2014 to October 11, 2014.
August 29, 2014)
11 Certain assignments given by the Government of the Russian Federation
11.1 Instruction of Deputy Prime Minister Paragraph 5. Ensure that the necessary resources and funds are JSCAeroflot participated in the interdepartmental
of the Russian Federation D. N. Kozak allocated to cater to 2,500 players participating in the exercises exercises conducted to test the response to an
No. DK-P12-9506 dated December at Sochi Airport on January 10, 2014 to simulate an emergency emergency closure of Sochi International Airport
30, 2013 situation during the 22nd Winter Olympics and the 11th Winter during the 2014 Sochi Winter Olympics under the
(Incoming Ref. No. 1 dated January Paralympics in 2014. direction of Deputy Prime Minister of the Russian
9, 2014) Federation D. N. Kozak.
Following the exercises, actions by crisis centres
Instruction of Deputy Prime Minister Paragraph 4. Ensure that resources and funds are allocated ac- at Sochi Airport and air carriers in an irregularity
of the Russian Federation D. N. Kozak cording to the exercise operational plan and the scheduled arrival situation received a positive assessment.
No. DK-P12-189 dated January 16, and departure times of the flights involved in the interdepartmental
2014 (Incoming Ref. No. 258 dated exercises to be conducted at Sochi International Airport to test the
January 16, 2014) response to an emergency closure of Sochi International Airport
during the 22nd Winter Olympics and the 11th Winter Paralympics
inSochi in 2014
11.2 Minutes of the meeting held by Deputy Paragraph 6. By April 15, 2014, the Russian Ministry of Transport During the 2014 summer schedule period,
Prime Minister of the Russian Federa- (M. Yu. Sokolov), the Russian Ministry of Finance (A. G. Siluanov) and JSCAeroflot operated 7 daily flights between
tion D. N. Kozak on March 25, 2014 JSCAeroflot shall agree and make decisions for improving the avail- Moscow and Sochi on the high capacity B737,
(Incoming Ref. No. 2335 dated March ability of flights to/from Sochi as part of implementing Instruction of A321 and A330 aircraft. Other air carriers of the
31, 2014) the Government of the Russian Federation No. DM-P16-19pr dated Aeroflot Group operated direct flights between
March 24, 2014 (paragraph 28). Sochi and Saint Petersburg, Yekaterinburg, Omsk
and Krasnodar.
APPENDIXES
APPENDIXES
204 205
8.5
No. Principle(s) of corporate governance or key criterion (recommendation) Brief description Explanation of the key reasons, factors and circum-
of the extent stances due to which the principle or key criterion
OBSERVANCE OF THE RUSSIAN to which the
principle or key
is not observed or partially observed, description
of alternative corporate governance mechanisms
CORPORATE GOVERNANCE CODE criterion is not
observed
and tools used
2.1.1. The company should have a board of directors, which: Observed

establishes basic long-term targets of the companys activity and its key performance
indicators;
monitors the activity of the companys executive bodies;
determines major principles of and approaches to creation of a risk management
and internal control system within the company,
establishes the companys remuneration policy for members of the board of direc-
tors, executive bodies and other key managers of the company.
No. Principle(s) of corporate governance or key criterion (recommendation) Brief description Explanation of the key reasons, factors and circum- 2.1.2. Other criteria (recommendations) relating to the said principle(s) of corporate
of the extent stances due to which the principle or key criterion governance, as set forth in Code of Corporate Governance, which the company
to which the is not observed or partially observed, description considers to be key.
principle or key of alternative corporate governance mechanisms
criterion is not and tools used 2.2. The board of directors should be an efficient and professional governing body of the company which is able to make objective and independent judgments and
observed pass resolutions in the best interests of the company and its shareholders. The chairman of the board of directors should help it to carry out the functions assigned
thereto in a most efficient manner. Meetings of the board of directors, preparation for them, and participation of board members therein should ensure efficient
I. Shareholder rights and equality of conditions for shareholders exercising their rights
work of the board.
1.1. The company should ensure equal and fair treatment of all its shareholders in the course of exercise by them of their right to participate in the management of the 2.2.1. The chairman of the board of directors should be an independent director, or the Not observed Given a balanced composition of the board of
company. The corporate governance system and practices should ensure equal terms and conditions for all shareholders owning shares of the same class (category), senior independent director among the companys independent directors should be directors, the quality of preliminary consideration of
including minority and foreign shareholders, as well as their equal treatment by the company. identified who would coordinate work of the independent directors and liaise with the matters submitted to the board of directors (includ-
1.1.1. The company should approve an internal document setting forth the main procedures Observed chairman of the board of directors. ing at the level of committees with the participation
for preparing for, calling and holding general meetings of shareholders in conformity of independent directors) and high activity of inde-
with the recommendations of the Code of Corporate Governance and including the pendent directors, it appears that this recommenda-
companys obligation to: tion does not need to be implemented.
notify shareholders of a general meeting and provide access to materials, including
posting a notice and materials on the companys website, at least 30 days before 2.2.2. Internal documents of the company should set forth a procedure for preparing for and Observed
the meeting (unless the legislation of the Russian Federation provides for a longer holding meetings of the board of directors, which enables its members to get prepared
period); properly for such meetings and stipulates, in particular:
disclose information about the record date for the general meeting of shareholders the time limits for notifying the board members of a forthcoming meeting;
at least 7 days before the meeting; the time limits for sending documents (ballots) for voting and receiving completed
provide additional information and materials related to agenda items before the documents (ballots) for meetings held in absentia;
general meeting of shareholders as recommended by the Code of Corporate a possibility for the board of directors members not present at a meeting held in
Governance. presentia to send their respective written opinions, and for such opinions to be
taken into account;
1.1.2. The company should assume an obligation to provide its shareholders with the op- Not observed Is fully realized in practice. a possibility of discussing and voting via conference and video conference calls.
portunity to put questions about the companys activities to members of the governing The relevant right is fixed during a general meeting
and supervisory bodies, members of the audit committee, the chief accountant, the of shareholders held in the form of joint presence 2.2.3. The most important issues should be decided at the meetings of the board of directors Observed
companys auditors, and candidates to governing and supervisory bodies in the course through approval of the meetings agenda by held in presentia. The list of such issues should meet recommendations of the Code of
of preparing for and holding general meetings of shareholders. This obligation should shareholders. Corporate Governance*
be laid down in the companys charter or internal documents.
2.2.4. Other criteria (recommendations) relating to the said principle(s) of corporate
1.1.3. The company should assume an obligation to adhere to the principle of inadmissibility Not observed The relevant provision is not laid down in internal
governance, as set forth in Code of Corporate Governance, which the company
of actions resulting in artificial redistribution of corporate control (for example, voting documents of JSCAeroflot.
considers to be key.
with quasi-treasury shares, deciding to pay dividends on preferred shares where the
companys financial means are limited, deciding not to pay dividends on preferred
shares, as set out in the charter, where there exist sufficient sources for their payment). 2.3. The board of directors should include a sufficient number of independent directors.
This obligation should be laid down in the companys charter or internal documents.
2.3.1. Independent directors should account for at least one-third of all directors elected to Observed
1.1.4. Other criteria (recommendations) relating to the said principle(s) of corporate the board of directors.
considers to be key. 2.3.2. Independent directors should fully meet the independence criteria recommended by Observed
the Code of Corporate Governance.
1.2 Shareholders should have equal and fair opportunities to participate in the profits of the company through dividends
1.2.1. The company should approve an internal document defining the companys dividend Observed 2.3.3. The board of directors (nominating (personnel, appointments) committee) should evalu- Observed
policy as recommended by the Code of Corporate Governance and setting forth, in ate whether candidates nominated to the board of directors meet independence criteria.
particular:
the procedure for determining a portion of the companys net profit (for companies 2.3.4. Other criteria (recommendations) relating to the said principle(s) of corporate
preparing consolidated financial statements, minimum percentage (portion) of governance, as set forth in Code of Corporate Governance, which the company
consolidated net profit) that will be allocated to pay dividends and the conditions considers to be key.
under which dividends are declared;
minimum amount of dividends on different classes ( categories) of the companys 2.4. The board of directors should set up committees for preliminary consideration of most important issues of the companys business
shares;
an obligation to disclose the companys dividend policy document on the companys 2.4.1. The companys board of directors should set up an audit committee consisting of inde- Partially observed The Audit Committee is headed by an independ-
website. pendent directors, whose functions are set forth in internal documents and conform to ent director. Most members of the Committee are
the recommendations of the Code of Corporate Governance** independent directors.
1.2.2. Other criteria (recommendations) relating to the said principle(s) of corporate Given the balanced composition of the Committee,
governance, as set forth in Code of Corporate Governance, which the company the quality of preliminary consideration of matters
considers to be key. and high activity of independent directors, it ap-
pears that this recommendation does not need to
2. Board of Directors
be implemented.
2.1 The board of directors should establish basic long-term targets of the companys activity, its key performance indicators, be in charge of strategic management of
the company, determine major principles of and approaches to creation of a risk management and internal control system within the company, monitor the activity
of the companys executive bodies, establish the companys remuneration policy for members of the board of directors and executive bodies, and carry out other key
functions.
APPENDIXES
APPENDIXES
* Specified in Section B Clause 168 of the Code of Corporate Governance.
** Specified in Section B Clause 172 of the Code of Corporate Governance.
206 207
No. Principle(s) of corporate governance or key criterion (recommendation) Brief description Explanation of the key reasons, factors and circum- No. Principle(s) of corporate governance or key criterion (recommendation) Brief description Explanation of the key reasons, factors and circum-
of the extent stances due to which the principle or key criterion of the extent stances due to which the principle or key criterion
to which the is not observed or partially observed, description to which the is not observed or partially observed, description
principle or key of alternative corporate governance mechanisms principle or key of alternative corporate governance mechanisms
criterion is not and tools used criterion is not and tools used
observed observed
2.4.2. The companys board of directors should set up a remuneration committee (which may Partially observed JSCAeroflot has set up a Personnel and Remunera- 4.2.1. The company should not use any forms of monetary remuneration for members of the Not observed Remuneration for members of the Board of Direc-
be combined with the nominating (personnel, appointments) committee) consisting of tion Committee headed by an independent director. board of directors other than a fixed annual fee. tors of JSCAeroflot consists of fixed and variable
independent directors, whose functions conform to the recommendations of the Code Most members of the Committee are independent components.
of Corporate Governance* directors. The variable (bonus) component depends on
Given the balanced composition of the Committee, whether a change in the Companys capitalization
2.4.3. The companys board of directors should set up a nominating (personnel, appoint- Partially observed the quality of preliminary consideration of matters level comparable to the change in the MICEX index
ments) committee (which may be combined with the remuneration committee) with and high activity of independent directors, it ap- has been achieved. Calculation and comparison
most members being independent directors, whose functions conform to the recom- pears that this recommendation does not need to be of the changes in the Companys capitalization
mendations of the Code of Corporate Governance** implemented. and the MICEX index for the 52 weeks preceding
The Committees functions are also balanced the comparison date are performed once a year.
Thegeneral meeting of shareholders has decided to
approve the current remuneration policy for mem-
2.4.4. Other criteria (recommendations) relating to the said principle(s) of corporate bers of the Board of Directors of JSCAeroflot.
4.2.2. Members of the companys board of directors should not take part in its option plans, Observed
considers to be key
and their right to dispose of the companys shares held by them should not be made
dependent on the achievement of certain performance indicators.
2.5. The board of directors should ensure that the performance of the board of directors, its committees and members is evaluated
2.5.1. The performance of the board of directors should be evaluated on a regular basis, at Not observed The introduction of such practice is under governance, as set forth in Code of Corporate Governance, which the company
least once a year. At least once every three years such evaluation should be carried out consideration. considers to be key.
by a third party entity (consultant)
4.3. The system of remuneration for the executive bodies and other key managers of the company should provide that their remuneration is dependent on the companys
2.5.2. Other criteria (recommendations) relating to the said principle(s) of corporate performance results and their personal contributions to the achievement thereof
considers to be key. 4.3.1. The company should have in place a long-term incentive program for members Observed
of the executive bodies and other key managers of the company
3. Corporate Secretary of the Company
3.1 The corporate secretary (a special structural division headed by the corporate secretary) shall be responsible for efficient interaction with shareholders, coordination governance, as set forth in Code of Corporate Governance, which the company
of the companys actions designed to protect the rights and interests of its shareholders, and support efficient work of its board of directors. considers to be key.
5. Risk management and internal control system

3.1.1. The corporate secretary shall report to the board of directors and may be removed by Observed
resolution or with the consent of the board of directors.
5.1. The company should have in place an efficient risk management and internal control system designed to provide reasonable assurance that the companys objec-
3.1.2. The company should approve an internal document determining the rights and duties Observed The functions of the companys corporate secretary tives will be achieved.
of the corporate secretary (Regulations on the Corporate Secretary) with contents are performed by the Corporate Governance
conforming to the recommendations of the Code of Corporate Governance*** Department and Executive Secretary of the Board 5.1.1. The board of directors should determine the principles of and approaches to creation Observed Improvement work is underway
of Directors. of a risk management and internal control system in the company
The office of the Executive Secretary of the Board of
Directors of JSCAeroflot operates according to the 5.1.2. The company should create a separate structural division responsible for risk manage- Partially observed Improvement work is underway
Regulations on the Board of Directors of JSCAero- ment and internal control.
flot approved by the annual general meeting of its
shareholders on June 27, 2014, minutes No. 36 5.1.3. The company should have developed and implemented the companys anticorruption Partially observed Improvement work is underway
dated June 30, 2014. policy defining measures to create an anti-corruption corporate culture, organizational
The activities of the Corporate Governance Depart- structure, rules and procedures.
ment are governed by the Regulations on the
Corporate Governance Department of JSCAeroflot 5.1.4. Other criteria (recommendations) relating to the said principle(s) of corporate
approved by Order No. 7 dated November 20, 2013 governance, as set forth in Code of Corporate Governance, which the company
considers to be key.
The position of corporate secretary should not be combined with other functions in Observed
3.1.3. the company. The corporate secretary should perform the functions recommended by 5.2. To independently evaluate, on a regular basis, reliability and efficiency of the risk management and internal control system and corporate governance practices,
the Code of Corporate Governance****. The corporate secretary should be vested with the company should arrange for internal audits
sufficient resources to perform his/her functions
5.2.1. The company should create a separate structural division performing internal audit Observed
3.1.4. Other criteria (recommendations) relating to the said principle(s) of corporate functions and functionally reporting to the companys board of directors. The functions
governance, as set forth in Code of Corporate Governance, which the company of such subdivision should conform to the recommendations of the Code of Corporate
considers to be key Governance and include, in particular:
evaluating the efficiency of the internal control system;
4. System of remuneration for members of the board of directors, the executive bodies, and other key managers of the company evaluating the efficiency of the risk management system;
evaluating corporate governance (if the company does not have a corporate govern-
4.1. The level of remuneration paid by the company should be sufficient to enable it to attract, motivate, and retain persons having the skills and qualifications needed by ance committee).
the company. Remuneration for members of the board of directors, the executive bodies, and other key managers of the company should be paid in accordance with
a remuneration policy approved by the company 5.2.2. The head of the internal audit division shall report to the companys board of directors Observed
and shall be appointed and removed by resolution of the companys board of directors.
4.1.1. The company should regulate all payments, benefits and privileges provided to Observed
members of the board of directors, the executive bodies, and other key managers 5.2.3. The company should approve an internal audit policy (Internal Audit Regulations) Observed
ofthe company determining the internal audit objectives, tasks, and functions.
4.1.2. Other criteria (recommendations) relating to the said principle(s) of corporate 5.2.4. Other criteria (recommendations) relating to the said principle(s) of corporate
governance, as set forth in Code of Corporate Governance, which the company governance, as set forth in Code of Corporate Governance, which the company
considers to be key. considers to be key.
4.2. The system of remuneration for members of the board of directors should ensure harmonization of interests of directors with long-term financial interests of the
shareholders.
APPENDIXES
APPENDIXES
** Specified in Section B Clause 186 of the Code of Corporate Governance.
*** Specified in Section B Clause 217 of the Code of Corporate Governance.
**** Specified in Section B Clause 218 of the Code of Corporate Governance.
208 209
No. Principle(s) of corporate governance or key criterion (recommendation) Brief description Explanation of the key reasons, factors and circum- No. Principle(s) of corporate governance or key criterion (recommendation) Brief description Explanation of the key reasons, factors and circum-
of the extent stances due to which the principle or key criterion of the extent stances due to which the principle or key criterion
to which the is not observed or partially observed, description to which the is not observed or partially observed, description
principle or key of alternative corporate governance mechanisms principle or key of alternative corporate governance mechanisms
criterion is not and tools used criterion is not and tools used
observed observed
6. Disclosure of information about the company, companys information policy 6.2.7. The companys annual report should contain additional information recommended by Observed
the Code of Corporate Governance:
a summary of most significant transactions, including related transactions, entered
6.1. The company and its activities should be transparent for its shareholders, investors, and other stakeholders. into by the company and legal entities controlled thereby during the past year;
report on the activities of the board of directors (including its committees) for the
year, containing, in particular, information about the number of meetings held
6.1.1. The company should approve an internal document defining the companys informa- Observed Improvement work is done in presentia (absentia), the presence of each board member at such meetings, a
tion policy as recommended by the Code of Corporate Governance. The companys description of the most important issues and most difficult problems considered at
information policy should include the following methods of interaction with investors meetings of the board of directors and its committees, main recommendations given
and other stakeholders: by committees to the board of directors;
setting up the companys website where it would post answers to frequently asked information about any shares in the company which are owned, directly or indi-
questions from shareholders and investors, a regularly updated calendar of its rectly, by members of the board of directors and executive bodies of the company;
corporate events, and other information that may be useful for its shareholders and information on whether members of the board of directors and executive bodies
investors; have conflicts of interest (including those associated with their participation in the
regular meetings between members of the companys executive bodies and other governing bodies of any competitors of the company);
key managers, on the one hand, and analysts, on the other hand; a description of the system of remuneration for members of the board of directors,
regular presentations (including teleconferences, webcasts) and meetings with including the amount of individual remuneration payable upon the results of the
members of the companys governing bodies and other key managers, in particular, year to each board member (with a breakdown between the basic fee and additional
in connection with publication of the companys accounting (financial) statements remuneration for the chairmanship in the board of directors, for the chairmanship
or in relation to major investment projects or strategic development plans of the (membership) in committees of the board of directors, the amount of participation in
company the long-term incentive program, the amount of participation of each board member
in an option plan, if any), reimbursement of expenses associated with their participa-
tion in the board of directors, and costs incurred by the company in connection with
6.1.2. The companys information policy shall be implemented by its executive bodies. The Observed
liability insurance for its directors in their capacities of members of the governing
companys board of directors shall exercise control over proper disclosure of informa-
bodies;
tion and compliance with the information policy
information on the total remuneration for the year:
a) in respect of a group of at least five members of the executive bodies and other
6.1.3. The company should establish procedures ensuring coordination of work of all its Observed key managers of the company who receive the largest amounts of remuneration,
structural units and departments which are involved in disclosure of information or broken down by type of remuneration;
whose activities may lead to the need to disclose information b) in respect of all members of the executive bodies and other key managers of the
company who are subject to the companys remuneration policy, broken down by
type of remuneration;
6.1.4. Other criteria (recommendations) relating to the said principle(s) of corporate information on the remuneration of the sole executive body for the year, received or
governance, as set forth in Code of Corporate Governance, which the company to be received from the company (or a legal entity forming part of a group of entities
considers to be key which includes the company), with a breakdown by type of remuneration, both for car-
rying out his/her duties as the sole executive body and otherwise
6.2. The company should disclose, on a timely basis, full, updated, and accurate information about the company so as to enable its shareholders and investors to make 6.2.8. Other criteria (recommendations) relating to the said principle(s) of corporate
informed decisions governance, as set forth in Code of Corporate Governance, which the company
considers to be key
6.2.1. If a material stake in the company is held by foreign investors, along with disclosure of Observed 6.3. The company should provide information and documents requested by shareholders according to the principle of equal access and in a straightforward manner
information in Russian, the most significant information about the company (including
6.3.1. According to the companys information policy, its shareholders holding an equal Observed
notices of general meetings of shareholders, companys annual report) should be
number of voting shares in the company should have equal access to the companys
provided in a foreign language that is commonly used in the financial market
information and documents

6.2.2. The company should disclose information not only about itself but also about any legal Observed governance, as set forth in Code of Corporate Governance, which the company
entities which are controlled by and are material to the company considers to be key
7. Material corporate actions

6.2.3. The company should disclose its annual and interim (semi-annual) consolidated or Observed
standalone financial statements prepared under International Financial Reporting
7.1. Actions which will or may materially affect the companys share capital structure and its financial position and, accordingly, the position of its shareholders (material
Standards (IFRS). Its annual consolidated or standalone financial statements should
corporate actions) should be taken on fair terms and conditions ensuring that the rights and interests of the shareholders and other stakeholders are observed
be disclosed together with an auditors report thereon, while its interim (semi-annual)
consolidated or standalone financial statements should be disclosed together with a 7.1.1. The companys charter should determine a list (criteria) of transactions and other Observed
report on the results of an auditor's review or an auditors report actions that are material corporate actions and are subject to consideration by the
companys board of directors, including:
reorganization of the company, acquisition of 30 and more percent of its voting shares
6.2.4. The company should disclose a special memorandum containing plans of the person Not observed This provision is not applicable to the Company (takeover), increasing or decreasing its authorized capital, listing and delisting of its
that controls the company in respect of the company. The memorandum should be shares;
prepared according to the recommendations of the Code of Corporate Governance* any sale of shares (interests) in any legal entity controlled by and material to the
company, where as a result of such transaction the company would lose control
over such legal entity;
6.2.5. The company should disclose biographical details of the members of its board of direc- Observed
transactions, including related transactions, involving property of the company or
tors, including information about whether they are independent directors, and should
legal entities controlled thereby, whose value exceeds a threshold amount specified
promptly disclose information about a board members loss of his/her status of an
in the companys charter or which is material to the companys business operations;
independent director
establishment of a legal entity controlled by the company and having material
significance for its business;
6.2.6. The company should disclose information about its capital structure as recommended Observed disposal of treasury and quasi-treasury shares by the company
by the Code of Corporate Governance
considers to be key
APPENDIXES
APPENDIXES
210 211
8.6
No. Principle(s) of corporate governance or key criterion (recommendation) Brief description Explanation of the key reasons, factors and circum-
of the extent stances due to which the principle or key criterion
to which the
principle or key
is not observed or partially observed, description
of alternative corporate governance mechanisms
DISPOSAL OF NON-CORE ASSETS
criterion is not
observed
and tools used
DURING THE YEAR
7.2. The company should have in place such a procedure for taking any material corporate actions that would enable its shareholders to receive full information
about such actions in due time and influence them, and that would also guarantee that the shareholder rights are observed and duly protected in the course
of taking such actions
7.2.1. The companys internal documents should set forth the principle of ensuring equal Observed
terms and conditions for all its shareholders when taking any material corporate
actions which would affect rights and legitimate interests of its shareholders, as well
as additional measures to protect the rights and legitimate interests of the companys
shareholders as stipulated by the Code of Corporate Governance, including:
retaining an independent appraiser with an established impeccable reputation in No. Asset Asset Line on the Bookkeeping Asset's book Actual Difference Reason for difference
the market and appraisal experience in the respective area (or providing a reason number balance sheet accounts (taking value, RUB000 sale value, between the ac- between the actual
for not doing so) to determine the value of property to be acquired or disposed of which included into account RUB000 tual sale value sale value of the asset
pursuant to a major transaction or an interested party transaction; the asset as of analytics) show- of the asset and and its book value
determining the price of the companys shares to be purchased or redeemed by an the reporting ing income and its book value,
independent appraiser with an established impeccable reputation in the market date preceding expenses from RUB000
and appraisal experience in the respective area, with the account of the weighted the sale the sale
average price of the shares over a reasonable period of time, without accounting for
the effect of a respective transaction to be entered into by the company (including
without accounting for changes in the price of the shares due to distribution of in- 1 LLC AM-Terminal Not 1150 9121400030 24.2 0.0 (24.2) Withdrawal from mem-
formation on the companys entering into the transaction) and for a non-controlling applicable (expense) bership upon request,
interest discount; market value of the
expanding a list of grounds on which members of the companys board of directors interest is equal to
and other persons defined by law are deemed to be interested in the companys RUB0.0, the company
transactions in order to evaluate actual affiliation relations between respective did not conduct any
persons. business operations

governance, as set forth in Code of Corporate Governance, which the company 2 LLC Aeroflot Riga Not 1150 9121300040 17.1 0.0 (17.1) Company liquidation by
considers to be key. applicable (expense) decision of JSCAeroflot
3 Real property 13740 1130 9111200010 392.5 8,315.6 7,923.1 The property's market
located at 112 (income); value (sale value) is
Saksaganskogo 9121200011 higher than its book
Str., apt. 1, Kiev, (expense) value
Ukraine
TOTAL 433.8 8,315.6 7,881.8

APPENDIXES
APPENDIXES
212 213
8.7
Rossiya airline
Aeroflot Group Indicator Unit 2011 2012 2013 2014
Operating Data Passenger Traffic th PAX 3,537.5 4,208.9 4,590.1 5,191.8
International routes th PAX 1,790.8 2,130.2 2,113.5 1,914.7
Domestic Routes th PAX 1,746.7 2,078.7 2,476.6 3,277.1
Passenger Turnover m pkm 7,190.9 8,760.9 9,186.3 10,147.4
International routes m pkm 4,673.4 5,738.4 5,579.4 4,867.2
Aeroflot airline Domestic Routes m pkm 2,517.5 3,022.5 3,606.9 5,280.2
Passenger Capacity m ASK 9,551.2 11,304.7 12,031.9 13,414.3

Indicator Unit 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
International routes m ASK 5,960.6 7,123.9 7,164.3 6,652.1
Passenger Traffic th PAX 6,666.5 7,290.4 8,166.2 9,271.4 8,755.5 11,285.8 14,173.8 17,656.1 20,902.4 23,610.0
Domestic Routes m ASK 3,590.6 4,180.8 4,867.6 6,762.2
International routes th PAX 4,649.7 4,939.5 5,356.3 5,696.3 5,412.6 7,122.0 8,679.1 10,707.2 12,294.5 12,468.2
Seat Load Factor % 75.3% 77.5% 76.3% 75.6%
Domestic Routes th PAX 2,016.8 2,350.9 2,809.9 3,575.1 3,342.9 4,163.8 5,494.7 6,948.9 8,607.9 11,141.8
International routes % 78.4% 80.6% 77.9% 73.2%
Passenger Turnover m pkm 20,694.8 22,406.5 24,675.3 27,247.5 25,986.2 34,777.1 42,020.9 50,532.5 60,226.3 67,121.7
Domestic Routes % 70.1% 72.3% 74.1% 78.1%
International routes m pkm 15,897.7 16,753.7 18,003.0 18,745.5 17,345.9 23,632.3 28,645.9 34,953.9 40,614.4 42,676.5
Cargo and mail Carried th tonnes 8.8 9.9 10.2 9.6
Domestic Routes m pkm 4,797.1 5,652.8 6,672.3 8,502.0 8,640.3 11,144.8 13,375.0 15,578.6 19,611.9 24,445.2
International routes th tonnes 2.2 2.1 2.2 1.5
Passenger Capacity m ASK 29,977.3 31,945.8 35,119.4 38,412.0 37,399.7 45,020.9 54,195.3 64,880.0 76,444.8 85,822.1
Domestic Routes th tonnes 6.6 7.8 8.0 8.1
International routes m ASK 23,255.7 24,257.6 26,041.8 26,889.3 25,770.2 31,060.8 37,510.1 45,585.5 52,392.4 56,206.9
Tonne-Kilometres m tkm 666.0 810.3 848.0 934.1
Domestic Routes m ASK 6,721.6 7,688.2 9,077.6 11,522.7 11,629.5 13,960.1 16,685.2 19,294.5 24,052.4 29,615.2
International routes m tkm 426.3 522.2 508.5 442.2
Seat Load Factor % 69.0% 70.1% 70.3% 70.9% 69.5% 77.2% 77.5% 77.9% 78.8% 78.2%
Domestic Routes m tkm 239.7 288.1 339.5 491.9
International routes % 68.4% 69.1% 69.1% 69.7% 67.3% 76.1% 76.4% 76.7% 77.5% 75.9%
Available Tonne-Kilometres m tkm 1,045.8 1,239.0 1,325.3 1,478.8
Domestic Routes % 71.4% 73.5% 73.5% 73.8% 74.3% 79.8% 80.2% 80.7% 81.5% 82.5%
Cargo and mail
th tonnes 145.4 145.3 95.9 87.9 86.8 163.4 160.6 193.9 176.5 145.3
Carried Domestic Routes m tkm 390.4 452.9 537.2 752.2
International routes th tonnes 121.8 118.8 67.4 57.5 51.3 121.1 120.3 147.7 118.0 81.5 Revenue Load Factor % 63.7% 65.4% 64.0% 63.2%
Domestic Routes th tonnes 23.6 26.5 28.5 30.4 35.5 42.3 40.3 46.2 58.5 63.8 International routes % 65.1% 66.4% 64.5% 60.9%
Tonne-Kilometres m tkm 2,731.1 2,884.7 2,690.9 2,843.3 2,738.6 4,082.1 4,690.5 5,669.2 6,339.9 6,722.7 Domestic Routes % 61.4% 63.6% 63.2% 65.4%
International routes m tkm 2,192.1 2,253.8 1,959.6 1,949.2 1,793.2 2,864.8 3,295.4 4,054.4 4,306.9 4,236.8 Flight Hours hours 94,207 107,698 112,277 124,927
Domestic Routes m tkm 539.0 630.9 731.3 894.1 945.4 1,217.3 1,395.1 1,614.8 2,033.0 2,485.9
Available
m tkm 4,709.3 5,000.8 4,828.2 5,058.9 4,900.0 6,458.9 7,536.8 8,881.1 9,848.7 10,660.0
Tonne-Kilometres
International routes m tkm 3,849.4 3,988.4 3,661.1 3,599.0 3,383.3 4,622.8 5,408.2 6,455.5 6,821.1 6,983.1
Domestic Routes m tkm 859.9 1,012.4 1,167.1 1,459.9 1,516.7 1,836.1 2,128.6 2,425.6 3,027.6 3,676.9
Revenue Load Factor % 58.0% 57.7% 55.7% 56.2% 55.9% 63.2% 62.2% 63.8% 64.4% 63.1%
Domestic Routes % 62.7% 62.3% 62.7% 61.2% 62.3% 66.3% 65.5% 66.6% 67.1% 67.6%
Flight Hours hours 248,351 271,905 285,915 306,746 286,278 327,054 394,341 460,734 509,058 554,659
APPENDIXES
APPENDIXES
214 215
Orenair airline Donavia airline
Indicator Unit 2011 2012 2013 2014 Indicator Unit 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Passenger Traffic th PAX 2,507.2 3,193.5 3,140.9 3,034.7 Passenger Traffic th PAX 599.6 588.2 956.8 1,314.4 1,210.3 1,385.9 863.9 985.7 1,353.6 1,736.1
International routes th PAX 2,109.1 2,562.5 2,375.5 2,101.6 International routes th PAX 180.1 170.2 524.8 758.8 698.6 655.8 328.7 242.0 303.9 398.2
Domestic Routes th PAX 398.1 631.0 765.4 933.1 Domestic Routes th PAX 419.5 418.0 432.0 555.6 511.7 730.1 535.2 743.7 1,049.7 1,337.9
Passenger Turnover m pkm 912.2 874.5 1,665.0 2,539.7 2,391.8 2,423.0 1,271.1 1,433.7 2,001.1 2,448.0
International routes m pkm 305.7 287.5 1,044.7 1,608.3 1,625.3 1,354.4 587.4 404.3 472.1 514.6
International routes m pkm 6,840.8 8,572.6 8,895.6 6,715.2
Domestic Routes m pkm 606.5 587.0 620.3 931.4 766.5 1,068.6 683.7 1,029.4 1,529.0 1,933.4
Domestic Routes m pkm 659.5 1,932.6 2,088.2 1,755.8
Passenger Capacity m ASK 1,590.3 1,368.5 2,274.4 3,455.7 3,004.1 3,064.3 1,849.3 2,077.6 3,019.6 3,312.6
International routes m ASK 492.1 410.9 1,322.1 1,997.4 1,861.3 1,578.0 806.4 590.8 680.5 742.4
International routes m ASK 7,980.7 9,551.2 10,344.3 8,131.9
Domestic Routes m ASK 1,098.2 957.6 952.3 1,458.3 1,142.8 1,486.4 1,042.9 1,486.8 2,339.1 2,570.2
Seat Load Factor % 57.4% 63.9% 73.2% 73.5% 79.6% 79.1% 68.7% 69.0% 66.3% 73.9%
Seat Load Factor % 83.4% 85.7% 82.0% 78.6%
Domestic Routes % 55.2% 61.3% 65.1% 63.9% 67.1% 71.9% 65.6% 69.2% 65.4% 75.2%
Domestic Routes % 64.9% 71.3% 68.5% 66.4%
Cargo and mail
th tonnes 2.6 2.3 2.0 2.4 1.8 2.2 1.6 1.5 2.3 2.4
Carried
International routes th tonnes 0.5 0.5 0.3 0.4 0.2 0.4 0.4 0.4 0.5 0.5
International routes th tonnes 0.1 0.1 0.1 0.2
Domestic Routes th tonnes 2.1 1.8 1.7 2.0 1.6 1.8 1.2 1.1 1.8 1.9
Domestic Routes th tonnes 1.7 6.0 5.1 2.1
Tonne-Kilometres m tkm 87.0 82.9 153.1 232.8 217.8 221.4 116.6 131.0 183.1 223.6
Tonne-Kilometres m tkm 677.7 975.4 1,012.1 767.5
International routes m tkm 28.5 26.7 94.6 145.3 146.6 122.5 53.4 36.8 43.0 47.0
Domestic Routes m tkm 58.5 56.2 58.5 87.4 71.2 98.9 63.2 94.2 140.1 176.6
Available
m tkm 155.8 137.7 230.4 355.1 302.5 307.8 170.5 197.5 304.1 354.3
Tonne-Kilometres
Available Tonne-Kilometres m tkm 872.4 1,278.1 1445.4 1,086.5
International routes m tkm 50.0 43.1 137.2 210.4 191.1 163.9 74.3 53.3 65.4 74.9
International routes m tkm 771.8 948.8 1,094.4 823.6
Domestic Routes m tkm 105.8 94.6 93.2 144.6 111.4 143.9 96.2 144.2 238.7 279.4
Revenue Load Factor % 55.8% 60.2% 66.4% 65.6% 72.0% 71.9% 68.4% 66.3% 60.2% 63.1%
Revenue Load Factor % 77.7% 76.3% 70.0% 70.6%
Domestic Routes % 55.3% 59.4% 62.8% 60.4% 63.9% 68.7% 65.7% 65.3% 58.7% 63.2%
Domestic Routes % 61.4% 61.8% 60.2% 61.6%
Flight Hours hours 15,153 15,182 21,832 30,357 28,627 29,623 22,720 23,582 30,264 33,748
Flight Hours hours 68,652 80,954 81,784 71,872
APPENDIXES
APPENDIXES
216 217
8.8
Aurora airline
Terms and Abbreviations

Indicator Unit 2011 2012 2013 2014
Passenger Traffic th PAX 1,512.3 1,427.5 1,403.6 1,055.2
International routes th PAX 384.5 321.4 303.9 213.0
Domestic Routes th PAX 1,127.9 1,106.1 1,099.7 842.2
International routes m pkm 779.3 610.9 551.2 333.4
Domestic Routes m pkm 4,051.3 2,774.0 2,324.6 1,419.7

Aviation security aviation protection against unlawful interference Seat kilometre (SKM) measure of an airlines passenger carrying
International routes m ASK 1,224.7 1,000.0 948.3 485.6
and the measures and resources needed to achieve such protection. capacity one seat flown one kilometre
Seat Load Factor % 70.3% 66.7% 68.9% 75.0%

SkyTeam (SkyTeam Alliance) global airline alliance founded on Marketing partner a party and/or airline that has the right to use
June 22, 2000. its code on the flight of a partner operator and to show its code under
International routes % 63.6% 61.1% 58.1% 68.7% the carrier heading on tickets for a code-sharing flight, but which does
Domestic Routes % 71.7% 68.1% 72.1% 76.6%
Flight safety capacity to provide air transportation services without not carry out technical and ground handling or operating control of the
risk to peoples life or health. aircraft that makes the code-sharing flight.
International routes th tonnes 3.1 2.8 1.1 0.5 DAR domestic air routes. IAR international air routes.
Domestic Routes th tonnes 15.1 9.6 9.3 5.7 Passenger turnover measures the volume of air transportation JSCAeroflot Open Joint Stock Company Aeroflot Russian Airlines,
Tonne-Kilometres m tkm 510.1 339.7 283.0 170.0 operations calculated by multiplying the number of paying passengers created by Russian Government Orders No. 267 (01.04.1993) and
carried on each flight stage by the stage distance, expressed in No. 314 (12.04.1994), carrying out air transportation of passengers,
International routes m tkm 75.8 60.3 51.6 30.8 passenger kilometres baggage, mail and cargo, and also providing services based on an
Domestic Routes m tkm 434.3 279.4 231.4 139.2 operators certificate and the appropriate licenses.
Aeroflot Group all the companies (having a separate legal
Available Tonne-Kilometres m tkm 724.7 557.3 465.0 252.9 personality), linked with financial and economic ties, which carry Passenger kilometre (PKM) transportation of one passenger over
International routes m tkm 130.6 108.1 103.6 53.5 out coordinated business on the air transportation market, of which one kilometre.
JSCAeroflot is the head (parent) company and corporate centre, based
Domestic Routes m tkm 594.1 449.2 361.4 199.4 on its significant or dominant stakes in the other companies. Market capitalization total market value of the shares of a company.
Revenue Load Factor % 70.4% 61.0% 60.9% 67.2%
Class of service services and level of comfort offered to passengers TCH Transport Clearing House.
according to a contract of carriage by air.
Domestic Routes % 73.1% 62.2% 64.0% 69.8% Tonne kilometre (TKM) one tonne of paying load (passengers at
Code sharing agreement on the joint use of route codes, enabling 90 kg per passenger, cargo and mail) being moved over one kilometre.
Flight Hours hours 57,014 47,631 42,875 28,695
one and the same route to be sold by two companies under their own
brands and with a distinct route number for each company. Either of the Hub term used to describe an airport where there is a large share of
Note. Consolidated data on OJSC Vladivostok Air and OJSC SAT airlines.
airlines in the agreement can be the actual provider of transportation transit passengers, including airports where the timetable of incoming
service on the route. and outgoing flights is organized in such a way as to minimize transit
time between any one flight and the maximum number of other flights.
Passenger load factor ratio of the number of revenue passenger
kilometres flown to total available seat kilometres, expressed as a E-ticket a way of documenting sale and control of air transport
percentage. without record of a special accounting form. All information relating
to transportation of a specific passenger (routes, fare, class of service,
Cargo load factor ratio of the number of performed tonne-kilometres sum paid, duties, etc.) is contained in an electronic ticket file, located in a
to available ton-kilometres, expressed as a percentage. database of the relevant carrier. E-tickets are not necessarily associated
with sale of transportation services via the internet, although it is easier
to sell electronic tickets than ordinary tickets via the Internet.
APPENDIXES
APPENDIXES
218 219
8.9 Aeroflot Offices

in Russia and Abroad
Sales offices in Moscow

BSP/ARC (Billing and Settlement Plan/Airline Reporting Address Telephone E-mail Opening hours
Corporation) systems for settlement between agents and airlines.
10 Arbat Street +7 (495) 223-55-55 arb@aeroflot.ru Mon.Sat.: 9:0020:30
BSP is an international settlement system between agents and airlines
Sun.: 9:0016:30
organised by IATA, which enables sales of air transportation services
on neutral forms (not assigned to any specific airline), helps airlines 19 Yeniseyskaya Street +7 (495) 223-55-55 ens@aeroflot.ru Mon.Sat.: 9:0020:30
+7 (499) 186-20-92 group@aeroflot.ru Sun.: 9:0016:30
to expand their presence on the air transportation market, minimizes
financial risks, lowers expenses on maintenance of the sales system, 7 Korovy Val Street (Building 1) +7 (495) 223-55-55 krv@aeroflot.ru Mon.Sat.: 9:0020:30
Sun.: 9:0016:30
and speeds up the accounting system by use of electronic technologies.
The purpose of BSP is to raise the efficiency of interactions between 3 Kuznetsky Most Street +7 (495) 223-55-55 kzm@aeroflot.ru Mon.Sat.: 9:0020:30
Sun.: 9:0016:30
airlines and agent networks. ARC is a system used in the USA, which
is analogous to BSP. 20/1 Petrovka Street +7 (495) 223-55-55 ptr@aeroflot.ru Mon.Sat.: 9:0020:30
Sun.: 9:0016:30
IATA (International Air Transportation Association) 32 First Tverskaya-Yamskaya Street +7 (495) 223-55-55 tvr@aeroflot.ru Mon.Sat.: 9:0020:30
Sun.: 9:0016:30
an international association created in 1945 to foster cooperation
between airlines to ensure the safety, reliability, and cost efficiency of 4 Frunzenskaya Embankment +7 (495) 223-55-55 fru@aeroflot.ru Mon.Sat.: 9:0020:30
flights in consumers interests. IATA website www.iata.org. Sun.: 9:0016:30
Terminal D, Sheremetyevo Airport* +7 (495) 223-55-55 24 hours

ICAO (International Civil Aviation Organization) created as a (two 15 minute breaks:
8:459:00; 19:4520:00)
result of the Chicago Convention on International Civil Aviation, signed
in 1944. The ICAO is a specialized institution within the UN, responsible Terminal E, Sheremetyevo Airport +7 (495) 223-55-55 24 hours
(two 15 minute breaks:
for the development of international standards, recommended practice 8:459:00;
and rules in the technical, economic and legal realms of international 19:4520:00)
civil aviation. ICAO website www.icao.int. Terminal F, Sheremetyevo Airport +7 (495) 223-55-55 24 hours
(two 15 minute breaks:
IOSA (International Operational Safety Audit) an international 8:459:00; 19:4520:00)
audit of operational safety, which includes the following aspects of * Aeroflot service desks are located in the left wing of terminal D on the 3rd floor in the domestic departures area in front of check-in counters 21-28
airline operations organization and management system; flight
operations; aircraft engineering and maintenance; ground handling;
operational control and flight dispatch; cabin crew; aviation security; Sales offices, representative offices and branches in the Russian Federation
cargo operations and transportation of hazardous cargo.
City Code Telephone Fax Address

ISO International Organization for Standardisation.
Abakan 3902 296-500 59A Druzhby Narodov Street
ISO 9000 a series of international standards for creation of a Anapa 86133 322-55 315-66 170 Krymskaya Street
quality control system at an enterprise, consisting of a number of
Arkhangelsk 8182 494-058 494-059 Office 303, 30 Naberezhnaya Severnoy Dviny
recommendations for raising business process efficiency.
Astrakhan 8512 511-112 511-111 3 Gubernator A. Guzhvin Prospect
Barnaul 3852 369-902 369-902 85 Dmitrov Street
Blagoveshchensk 4162 318-771 318-771 Office 233, 1 Lenin Street,
Volgograd 8442 385-479 388-555 15 Lenin Prospect
Gelendzhik +7(918) 055-69-55 As Aeroflot does not have representative office in Gelendzhik,
flights from Gelendzhik are handled by staff of the Anapa
representative office.
Yekaterinburg 343 356-5570 356-5571 41 Belinsky Street
Irkutsk 3952 255-780 211-326 Office 107, 27 Stepan Razin Street
Kazan 843 200-95-85 200-95-85 35/15 Butlerova Street
Kemerovo 3842 349-409 349-451 1 Kolomeitsev Street

APPENDIXES
APPENDIXES
Krasnodar 861 225-04-14 225-04-14 167 Krasnaya Street
Krasnoyarsk 391 274-37-20 274-37-23 73A Karl Marx Street
Magnitogorsk 3519 395-490 162 Sovetskaya Street
220 221
City Code Telephone Fax Address

Country/City Code Telephone Fax Address
Mineralnye Vody 87922 6-6612 6-6612 Mineralnye Vody Airport
Great Britain
Murmansk 8152 289-551 289-889 Polyarnye Zori Hotel, Room 222, 17 Knipovich Street,
London 44 (0) 207-355-22-33 208-976-52-41 Room 6112, North East Pod, Heathrow Airport, Terminal 4,
Nakhodka 4236 656-233 656-944 11 Leninskaya Street Hounslow TW6 3FB
Nizhnevartovsk 3466 245-555 245-555 11 Omskaya Street (City Centre) Hungary
Nizhny Novgorod 831 434-4188 434-4188 6 Gorky Square Budapest 361 318-59-55 317-17-34 Jozsef Attila Utca 18, 1050
Novokuznetsk 3843 538-347 51 Prospect Metallurgov Vietnam
Novosibirsk 383 217-69-49 217-96-93 28 Krasny Prospect Hanoi 84-4 377-187-42 377-187-18 Office 209-210, building D1, Van Phuc Diplomatic Compound,
298 Rim Ma street, Ba Dinh district
Novy Urengoy 3494 +7 (964) 205-23-30 936-242 Novy Urengoy Airport
Ho Chi Minh 84-8 354-725-88 - Hai Au Building, 39B Truong Son Street, Ward 4,
Omsk 3812 955-412 955-412 Office 4.2, 14 Gagarin Street Tan Binh district
Orenburg 3532 660-555 9 Turkestanskaya Street Germany
Perm 342 290-1303 290-1302 10 Lenin Street Berlin 49 (0) 306-091-53-72 306-091-53-71 Justus-von-Liebig-Strasse 7
Petropavlovsk Kamchatsky 4152 424-244 424-244 37 Tushkanov Street Hamburg 49 (40) 507-527-46 502-837 Flughafen Hamburg Terminal 1, Flughafenstrasse 1-3, 22335
Rostov-on-Don 863 218-66-18 286-95-42 24 Sholokhov Street Hannover 49 (0) 511-977-20-65 511-977-20-64 Flughafen Hannover Terminal B
Flughafenstrasse 6, 30855 Langenhagen
Samara 846 276-02-77 276-02-80 141 Leninskaya Street
Dusseldorf 49-211 421-65-56 528-76-99 Flughafen Dusseldorf
Simferopol 810-38-0652-595-606 810-38-0652-595-606 6 Airport Square TS 1.642-643 Terminal-Ring 1
40474
Sochi 8622 644-511 644-511 61 Roz Street
Munich 49-89 975-910-93 975-910-90 Flughafen Muenchen terminal 1 C, Raum C4365 85356
Surgut 3462 234-243 41 Lenin Street, Mir TC
Frankfurt 49-69 273-006-11 273-006-19 Hansaallee 154, Haus Hamburg, 60320 Frankfurt am Main
Tomsk 3822 901-129 901-129 51A Kirov Street, bldg. 115
Hahn (regional representative 49-6543 508-600 508-606 55483 Hahn Airport, Building 860
Tyumen 3452 383-871 383-871 84 Malygin Street, bldg. 1
office for cargo transportation in
Ulan-Ude 3012 210-347 210-347 Buryatia Hotel, office 7, 47A Kommunisticheskaya Street Europe)
Ufa 347 216-42-97 71/1 Chernyshevsky Street Stuttgart 49-711 948-49-14 948-49-13 Raum 3301, Ebene 3, Terminal 3, Flughafen Stuttgart, 70629
Greece
Khabarovsk 4212 327-592 306-337 50 Pushkin Street
Chelyabinsk 351 237-04-96 237-09-17 90 Svobody Street Athens 30-210 353-06-11 353-21-48 Athens international airport Eleftherios Venizelos
Ving H, P.O. box 80084, T.K. 19019 Attiki
Chita 3022 321-808 321-808 130/3 Chkalov Street
Denmark
Yuzhno-Sakhalinsk 4242 784-555 788-555 172 Prospect Mira
Copenhagen 45 323-147-00 325-114-62 Denmark Koebenhavns Lufthavn, Terminal 2, 2 Sal 2770
Yakutsk 4112 402-606 402-607 8 Oyunsky Street Kastrup
Egypt
Cairo 202 273-698-57 273-501-11 27, Ahmed Heshmat street, Zamalek

Branches in Russia India
Delhi 91-11 233-104-26 237-232-45 Room 510, Ansal Bhawan, 16, Kasturba Gandhi Marg,
City Code Telephone Fax Address New Delhi 110001
Vladivostok 423 262-10-05 262-10-05 143 Svetlanskaya Street Israel
Kaliningrad 4012 954-805 954-805 4 Pobedy Square Tel Aviv 972-3 7951-578 975-72-43 23 Ben Yehuda street
St. Petersburg 812 438-55-81 438-55-29 1/43 Rubinstein Street (closed for reconstruction) Iran
61 Nevsky Prospect
Tehran 98-21 888-074-94 889-10-889 62 Sadr Street, Vali Asr Ave.
Spain
Offices abroad Barcelona 34-93 430-58-80 419-95-51 Oficina 431, Aeropuerto de Barcelona, Terminal 1, Dique
Norte, planta 0
Madrid 34-91 431-41-07 431-80-98 Oficina 42739, Aeropuerto Barajas, Terminal 1, 28042
Country/City Code Telephone Fax Address
Malaga 34-95 297-45-34 297-45-33 Aeropuerto de Malaga, Avenida Comandante Garcia Morato,
Austria
29004
Vienna 43-1 512-15-01 512-15-01-78 Opernring 1/R/417-419, 1010 Vienna
Italy
Azerbaijan
Bologna 39 051 647-22-95 647-22-07 Bologna Guglielmo Marconi Airport
Baku 99412 498-11-67 498-11-66 123 Khagani Street Via del Triumvirato, 84, 40132
Armenia Venice 39-041 269-84-84 269-84-47 Aeropuerto de Venecia Marco Polo, Luigi Broglio street 8,
30030
Yerevan 37410 532-131 522-435 12 Amiryana Street
Milan 3902 585-810-14 585-810-15 Aeroporto Interc. Malpensa, Terminal 1
Belarus 21010
Minsk 375-17 328-69-79 328-68-95 Office 101, 25 Ya. Kupaly Street Rome 3906 454-259-64 439-570-7 Via Leonida Bissolati, 76
00187
Belgium
Kazakhstan
Brussels 32-02 513-60-66 512-29-61 Bosstraat 13, 1930 Zaventem
APPENDIXES
APPENDIXES
Alma Ata 727 291-54-16 291-54-16 42 Begalina Street
Bulgaria
Karaganda 7212 305-353 68 Buhar Zhyrau Avenue
Sophia 359-2 962-55-66 962-10-01 Office 2B, 1407 Zlaten Rog street
305-387
222 223
Country/City Code Telephone Fax Address Country/City Code Telephone Fax Address
Cyprus Tashkent 998-71 120-05-55 120-05-57 73 Bobur Street, 100029
Larnaca 357 24008455 24008458 P.O. 43062, P.C. 6650 Ukraine

New International Airport Larnaca
Dnepropetrovsk 38-056 239-57-74 239-57-85 Civil Aviation Airport, 49042
Kirgizia
Kiev 38-044 369-55-55 245-48-81 112-A Saksaganskogo Street, 01032
Bishkek 996-312 620-071 620-075 64/1 Erkindik Boulevard
Odessa 38-0482 39-33-03 39-33-04 Odessa International Airport
China
Kharkov 38-057 766-36-17 - 1 Romashkina Street, Airport, Kharkov, 61031
Hong Kong 852 253-726-11 253-726-14 Jubilee Centre, Room 1005,
18 Fenwick Street, Wanchai Finland
Guangzhou 020 360-504-10 360-664-82 Guangzhou Baiyun International Airport, Helsinki 358-9 753-0273 753-0273 Terminaali 2, Helsinki Vantaan,
Hotel Pullman Guangzhou Baiyun Airport, room W202, Lentoasemantie, 01530
510470 France
Beijing 86-10 650-024-12 650-125-63 N2 Chao Yang Men Bei da Jie, 100027 Nice 33-4 932-14-482 932-14-544 Aeroport Nice Cote dAzur,
Rue Costes et Bellonte, Terminal 2
Shanghai 86-21 683-555-10 627-980-35 Suite 664, Shanghai Centre, 1376 Nan Jing Xi Road, 200040
06281, Cedex 3
Cuba
Paris 33 (0) 148-16-90-87 149-47-05-16 Le Dome Batiment 4-4, rue de la Haye 95731
Havana 537 204-32-00 204-55-93 Barcelo Habana Ciudad, 5ta Avenida, Roissy CDG Cedex
Entre 76 y 80, Barrio de Miramar,
Croatia
Oficina 208
Latvia
Zagreb 385-1 487-20-55 487-20-51 4 Hebranga Andrije, Stan 2, 10000
Czech Republic
Riga 371-6 778-07-70 778-07-71 57A Dzirnavu street, LV-1010
Prague 420 227-020-020 227-020-111 Truhlarska 1109/5, 110 00 Praha 1 -Nove Mesto
Lebanon
Montenegro
Beirut 9611 739-597 739-596 Office 1002, Gefinor Center, Block B, Clemanceau Street,
Ras-Beirut/3234 Tivat 382 326-833-83 326-833-83 Tivat Airport
Mongolia Switzerland
Ulan Bator 976-11 319-286 323-321 15 Seoul Street, 210644 Geneve 41-22 798-24-30 738-83-12 15 Route de lAeroport-CP-7, CH-1215 Geneve 15, Suisse
Maldives Zurich 41-43 816-40-48 816-40-88 Terminal 2 CH-8060 Zurich Flughafen
Male 960 333-00-82 333-00-79 Boduthakurufaanu Magu, Aagadhage Building, 20026 Sweden
Moldova Stockholm 46-8 593-618-00 593-618-00 Box 19, 19045, Stockholm Arlanda Airport
Kishinev +373 69516780 Kishinev airport Japan
The Netherlands Tokyo 81-3 553-287-81 553-288-21 Toranomon Kotohira Tower 16F, 1-2-8 Toranomon, Minato-ku,
105-0001
Amsterdam 31-20 625-40-49 625-91-61 1118BG Schiphol , Schiphol Boulevard 159
Norway
Oslo 47 648-104-10 648-184-12 Oslo Airport, Edvard Griegs veg 1, 2060 Gardermoen
United Arab Emirates
Dubai 971-4 222-22-45 222-77-71 PO box 1020,

Al Maktoum Street, Al Mazroei Building, Office 101, Deira
Poland
Warsaw 48-22 628-17-10 628-25-57 Aleje Jerozolimskie 65/79, 00-697

Republic of Korea
Seoul 82-2 569-32-71 569-32-76 Room 207, Shin-a Building 50, 11gil, Seosomun-ro, Jung-gu
Romania
Bucharest 4-021 315-03-14 312-51-52 2-4, Gheorghe Manu Street, 010445 District 1
Serbia
Belgrade 381-11 328-60-71 328-60-83 30 Kneza Mihajlova, 11000

USA
Washington 202 499-59-29 1-866-535 5915 1101 17th St NW, Washington, DC 20036
Los Angeles 323 272-48-61 413-21-59 9100 Wilshire Blvd, 175, Beverly Hills, CA 90212
Miami 305 869-19-46 869-19-43 6450 NW 25th St, Miami, FL 33122
New York 212 944-52-00 944-23-00 358 5th Ave, 1103 New York, NY 10001
Thailand
Bangkok 662 134-2178 134-2179 Suvarnabhimi Airport, Concourse G, Room G2-085, 999 Moo
1 Nong Prue, BangPhli Samut Prakan, 10540
Turkey
APPENDIXES
APPENDIXES
Antalya 902-42 330-31-06 330-34-77 Antalya International Airport, Terminal-2, Z-196
Istanbul 90-212 296-67-25 296-67-37 Harbiye Mah., Cumhuriyet Cad N48 B, Sisli
Uzbekistan
224 225
8.10 Contact
Information
Full name Joint Stock Company Aeroflot Russian Airlines Sheremetyevo Branch of the Registrar: NOTICE CONCERNING FORWARD-LOOKING STATEMENTS
Short name JSCAeroflot Location: Aeroflot Aviation Personnel Training Department, Building 6,
Certificate of inclusion in the Unified State Register of Legal Terminal B, Sheremetyevo Airport, Khimki, Moscow Region In addition to factual data, this Annual Report also contains opinions,
Entities Issued by the Moscow Department of the Russian Tel.: +7 (495) 578-36-80 assumptions and forecasts by Company management based on cur-
Tax Ministry (No. 1027700092661 issued on 02 August 2002) Fax: +7 (495) 578-36-80 rently available information. Changes in external factors, such as
Taxpayer identification number 7712040126 Opening hours for share operations: fluctuating demand for air transportation, price changes, implemen-
Location 10 Arbat Str., Moscow, Russian Federation Monday-Thursday: 9:30 to 16:00, break from 13:00 to 13:30; tation of new technologies, changes in legal environment, fluctua-
Postal address 10 Arbat Str., Moscow, 119002, Friday: 9:30 to 14:30, without break tions in exchange rates, etc., may cause actual performance by the
Russian Federation Company in the future to differ from forecasts in this Annual Report.
Aeroflot Bonus Program
INVESTOR RELATIONS
Tel.: +7(495) 223-55-55
For institutional investors 8-800-444-55-55 from Russian regions
Tel./fax: +7 (495) 258-06-86 Fax: +7 (495) 725-43-56
E-mail: ir@aeroflot.ru Opening hours: 24 hours
www.aeroflotbonus.ru
For retail investors E-mail: bonus@aeroflot.ru
Tel./fax: +7 (495) 258-06-84
E-mail: emitent@aeroflot.ru Call centre
Press service For air ticket booking and information:

+7 (495) 223-55-55, 8-800-444-55-55
Tel.: +7 (499) 500-73-87, (495) 752-90-71
Fax: +7 (495) 753-86-39 Inquiries regarding tickets purchased over the Internet can be sent
E-mail: presscentr@aeroflot.ru by e-mail to: callcenter@aeroflot.ru
Registrar
CJSC Computershare Registrator

License number: 10-000-1-00252
Location: Kutuzoff Tower Business Centre,
8 Ivan Franko Street, Moscow
Tel.: +7 (495) 926-81-60
Fax: +7 (495) 926-81-78
E-mail: info@nrcreg.ru
APPENDIXES
APPENDIXES
226 227
APPENDIXES
229

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Annual Report

1. About Aeroflot Group . . . . . . . . . . . . . . . . . . . . . . . 8

2. Air Transportation Market and Aeroflot Group Market Position

4. Corporate Social Responsibility

5. Corporate Governance and Securities

6. Risk Management . . . . . . . . . . . . . . . . . . . . . . . . 122

7. Financial Results . . . . . . . . . . . . . . . . . . . . . . . . . 128

About Aeroflot Group

Market share of Aeroflot

37.3% 34.7 Top 5 90.1 4.1 319.8

Aeroflot Group's Aircraft in Aeroflot Group Aeroflot is the world's most

Total number Aeroflot was named Best East Passengers carried

Letter from the

1.1 Aeroflot today

The Groups parent company is JSCAeroflot. Other companies in the Group

high rates of business growth;

About Aeroflot Group

1.2 Key events

About Aeroflot Group

1.3 AWARDS AND INDUSTRY

About Aeroflot Group

Russia, Tatarstan Republic

2.1 International air

AIR TRANSPORTATION MARKET AND AEROFLOT GROUP MARKET POSITION

With capacity growth constrained to 4.6%, passenger turnover in Europe 103.7

Russian market passenger Russian market passenger

AIR TRANSPORTATION MARKET AND AEROFLOT GROUP MARKET POSITION

2014 Monthly passenger traffic dynamics:

Air cargo market

Transaero Transaero 16.4%

AIR TRANSPORTATION MARKET AND AEROFLOT GROUP MARKET POSITION

Russia, Irkutsk Region

percentage points (p.p.) to 77.8%. 16.4 50.3

Operating results in cargo

78.8% 65.2% 64.7%

Passengers carried Passenger turnover Available seat-kilometres

3.4 Subsidiaries and

Aeroflot Group AIRLINEs 28.3% 22.3% 9.7% 7.6 p.p.

performance indicators 28.3% 22.3% 9.7% 7.6 p.p.

13.0% 11.4% 12.3% (0.6 p.p.)

13.1% 10.5% 11.5% (0.7 p.p.) 0.1 0.1 0.2 78.0%

5.2 10.1 13.4 76.3% 75.6%

5.2 10.1 13.4 76.3% 75.6%

Rossiya Passengers carried Passenger turnover Available Passenger

3.1 11.0 13.4 82.0%

3.1 11.0 13.4 82.0%

Rossiya airline ORENAIR AIRLINE

5.2 10.1 3.2 10.5 11.0

it was expanded to add another two Airbus A320. Aircraft fleet

Donavia airline AURora airline

1.6 5.0 4.8

74.4% 75.0% 6.8 6.9

As at 31 December 2014, Donavia fleet comprised 10 Airbus

Aircraft fleet Airbus A320 1 6 (5)

as well as three Mi-8 helicopters and one An-24 airliner.

In 2014, Aurora airline continued to invest much effort into

Pobeda airline Non-core assets

Operating results Aircraft fleet of Pobeda airlinE

Indicator 2014 Aircraft type 2014 2013 Change

Passengers carried (thousand PAX) 107.4 Boeing 737 8 - 8

Passenger turnover (million PKM) 134.0 TOTAL 8 - 8

Available seat-kilometres (million ASK) 171.8

Passenger load factor (%) 78.0%