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. Last Updated: 07/27/2016

Aeroflot Quadruples Profit to $89M in 2002

Flagship carrier Aeroflot's net profit under international accounting standards soared more than fourfold last year on better route planning and aggressive cost cutting.

Aeroflot netted $89.3 million in 2002, up from $20.1 million in 2001, the state-owned carrier will report Thursday, a company source said.

The airline, which has bucked a global slump that has engulfed the industry, posted revenues of $1.56 billion, just $5 million more than 2001, but cut spending to $1.4 billion from $1.52 billion.

Under Russian accounting standards, which differ greatly, Aeroflot last year posted a profit of just over $100 million.

Aeroflot officials last year said they expected to quadruple profits on the year, a target met with skepticism by analysts.

Vladimir Savov, who tracks Aeroflot for Brunswick UBS, said Tuesday that he had forecast a net profit under IAS of just $53 million.

Yelena Sakhnova of United Financial Group predicted a net profit of just $15 million and an operational profit of $103 million.

Sakhnova said the company's improved figures may be attributable to non-cash adjustments and will require a more detailed analysis. "They look better than our forecast, but we have to clearly see what they are based on," she said.

Non-cash adjustments such as a deferred income tax benefit would have put Aeroflot $36 million in the red rather than $20 million in the black in 2001, Sakhnova said.

The company also continues to enjoy the benefit of receiving overflight fees from foreign carriers, which amount to at least $200 million per year.

Before the U.S. war in Iraq and the global SARS scare in the spring, Aeroflot had predicted a net profit for 2003 of $114 million.

However, the company now says it may not meet that target.

Late last month the company said it expects first-half revenues to grow by just $7 million to $682 million.

The airline flew 5.5 million passengers last year, 300,000 less than it did in 2001, but expects traffic to increase this year.

Meanwhile, No. 2 carrier Sibir, which enjoyed 40 percent traffic growth last year, said Tuesday it carried 1.3 million passengers in the first half of this year, up 18.4 percent year on year.