RIA Novosti reports record profits for Russian air carriers under sanctions. But all these profits are only at the expense of the state

RIA Novosti published an article by Kirill Strelnikov "Russia Organized a 'Hard Landing' for the West". The author cheerfully reports on the success of Russian civil aviation against the backdrop of sanctions:

“A year after the introduction of large-scale sanctions against Russian civil aviation, Western analysts come to the conclusion that instead of an air blitzkrieg, the West itself ended up with huge financial losses, a decrease in market share and a loss in competition, while Russia steadfastly withstood the blow and is now demonstrating high stability of the air transportation system. <…>

All calculations by Western “sanciologists” were based on the fact that three-quarters of the Russian air fleet at the beginning of 2022 were Western-made aircraft, many of which were leased from Western companies. After the start of the NWO, the European Union banned the supply of any civil aircraft and spare parts to Russia, and obliged lessors to terminate contracts with Russian airlines, while aircraft maintenance and insurance services were also banned. At the same time, the EU, the US and a number of other countries closed their airspace to Russian airlines. <…>

However, the West underestimated our determination and margin of safety, and at the same time forgot about history and geography.

The Russian authorities responded instantly, harshly and asymmetrically: in response to the sanctions, Russian airlines were allowed to "kill numbers" on imported aircraft, a large-scale program was initiated to support the aviation industry and import substitution, and international flights were reoriented from west to south and east. Despite a slight drop in the volume of air traffic and the loss of a number of routes, according to the results of 2022, the total profit of the leading Russian airlines reached a record 88 billion rubles, which is 2.8 times more than in 2021.”

The final paragraph is particularly noteworthy:

“Nevertheless, the impossibility of ‘cancelling’ Russia both in the air, in the sea and on land gradually reaches even the most stubborn, and the West gradually moves from the stages of denial and anger to the stage of acceptance and bargaining. According to an expert at the Carnegie Endowment, “Russia cannot be completely excluded from the global transportation system because of its size and geographical location. On the horizon are negotiations to resume cooperation.” Well, good gentlemen, get in line. And we'll see there."

Strelnikov even provided his article with a link to an article by Anastasia Dagaeva “The Year of Martial Law. How Russian Aviation Survived the Loss of Sky, Revenue, and Reputation” (in its abbreviated English version, to be exact) on the Carnegie Endowment website. In the full version of his article, Dagaeva writes about the possibility of Russian air carriers getting out of sanctions:

“However, due to its size and geographical location, it is hardly possible to completely exclude Russia from the global transport system. It is impossible to imagine today when and under what circumstances negotiations on the resumption of cooperation can begin.”

As for the record profits of Russian air carriers, the completely pro-Kremlin publication RBC wrote about this in somewhat more detail. The article, under the no less optimistic headline "Russia's Largest Airlines Earn Record Profits Amid Sanctions," states :

“The total profit of leading airlines reached a record ₽88 billion last year, largely due to subsidies. The industry needs similar support this year, but the Ministry of Finance did not receive motivated justifications for this. <…>

Last year, the passenger traffic of Russian airlines decreased by 14.2%, to 95.2 million people. Transportation within the country fell by 11.2% (the main reason is the closure of 11 southern airports), to 77.7 million people, outside it – by 25.6% (the key factor is the ban on flights to the European Union). International sanctions hit Russian airlines hard. <…>

To neutralize the effect of sanctions, the Russian authorities had to provide additional state support to aviation enterprises, said the head of the Federal Air Transport Agency, Alexander Neradko, last March. In total, according to the Association of Air Transport Operators (AEVT, which unites the largest airlines), civil aviation received a record state support last year – 172.3 billion rubles, including 145 billion rubles. for the first time (of which 100 billion rubles – to support domestic transportation). In addition, due to last year's jump in jet fuel prices, payments to airlines under the damper mechanism amounted to 98.6 billion rubles. In his opinion, first of all, thanks to these factors, it was possible to ensure the “relative financial and economic stability of most airlines.”

RBC specifically notes that Aeroflot was not included in the list of “largest Russian companies”: at the end of 2021, the company reported a net loss of ₽45.6 billion and has not disclosed its financial performance since then. The head of Aeroflot, Sergei Aleksandrovsky, explained it this way:

“We do not want to, for obvious reasons, stress our partners, shareholders, investors due to high volatility.”

Anastasia Dagaeva, in the already mentioned article on the website of the Carnegie Endowment, writes about even more extensive state support for air carriers:

“In 2022, the state spent about 300 billion rubles (about $4.5 billion) to support air travel. The largest items of expenditure were: subsidizing domestic transportation (100 billion rubles), partial compensation for the cost of kerosene that has risen in price (also 100 billion) and the buyout of Aeroflot shares (another 53 billion), after which the state's share increased to 74%.

Also, budget money went to compensate for the cost of tickets returned by passengers due to the cancellation of international flights (20 billion); to support the State Air Traffic Management Corporation, the only provider of air navigation services in Russia, whose revenues have fallen due to the cessation of flights by foreign airlines (15 billion); and support for the south's 11 closed airports (7.5 billion) and cargo carriers (2.9 billion). <…>

Half of the money allocated for subsidizing transportation was received by Aeroflot (49.9 billion). This caused dissatisfaction with other companies and talk that the state saves only Aeroflot, but the head of the Federal Air Transport Agency Alexander Neradko assures that everything was proportional to the passenger turnover.

In 2022, Russian airlines carried 95 million passengers, down 14% from a year earlier and 5 million below the bar set by Putin. Almost 90% of passenger traffic was in the domestic market. The shortage in the industry is explained by the closed airports in the south of Russia.

According to the Russian Association of Air Transport Operators, without budget money, passenger traffic in 2022 would have fallen to the level of a decade ago – 74 million people.

Thus, the success of Russian air carriers lies mainly in the fact that the state had to spend record amounts to save them, and the country's largest airline, despite the huge amount of subsidies, chose to hide its financial performance in order not to stress partners.

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