Aeroflot's Profits to Fall Despite Revenue Climb

Aeroflot said Thursday that its revenues this year would rise 30 percent, but profits would fall on the back of high jet fuel prices.

The airline plans to increase ticket prices by 8 to 10 percent this year, up from the planned 5 to 6 percent.

"I think we can expect [a fall in profit]. ... This year, fuel prices are having a colossal affect on us," Aeroflot deputy CEO Mikhail Poluboyarinov told reporters.

Rising fuel prices could also influence Aeroflot's hopes to acquire Serbia's state-owned JAT Airways, which will be put up for sale on July 15 with a starting price of 150 million euros ($233.6 million).

Poluboyarinov also said Aeroflot might borrow as much as 300 million euros ($464 million) to help fund a bid for Ceske Aerolinie, which the Czech government might sell.

He said Aeroflot is studying the possibility of buying a stake in Austrian Airlines Group. "It is a very interesting company," Poluboyarinov said. "There are many attractive elements, but the deal is very complicated," he added, without elaborating.

Also Thursday, Aeroflot reported a 21.4 percent rise in full-year 2007 net profit to $313.4 million, buoyed by surging sales and higher ticket prices.

Net income increased to $313.4 million. Revenue rose 27 percent to $3.8 billion.

Aeroflot and its subsidiaries boosted passenger numbers 17 percent to 10.2 million.

"For Aeroflot and the rest of the industry, 2007 was the most profitable year," Poluboyarinov said. "Prospects for the airline industry for the next years will not be as bright."