A E R O F L O T G R O U P · update any forward-looking statements to reflect events that occur or...

A E R O F L O T G R O U P C A P I T A L M A R K E T S D AY 2 0 1 6

Moscow, 18 October 2016

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This document has been prepared by PJSC “Aeroflot” (the “Company”). By attending the meeting where the presentation is made, or by reading the

presentation slides, you agree to the following.

This document does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to

purchase or subscribe for, any securities of the Company in any jurisdiction, nor shall it or any part of it nor the fact of its presentation or distribution form

the basis of, or be relied on in connection with, any contract or investment decision.

No reliance may be placed for any purpose whatsoever on the information contained in this document or on assumptions made as to its completeness.

No representation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or

agents, as to the accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its

contents.

This document may include forward-looking statements. These forward-looking statements include matters that are not historical facts or statements

regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial

condition, liquidity, prospects, growth, strategies, and the market in which the Company operates. By their nature, forwarding-looking statements involve

risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you

that forward-looking statements are not guarantees of future performance and that the Company’s actual results of operations, financial condition and

liquidity and the development of the market in which the Company operates may differ materially from those made in or suggested by the forward-

looking statements contained in this document. The Company does not undertake any obligation to review or confirm expectations or estimates or to

update any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation.

Disclaimer

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Agenda

Time Content Speakers

9.00 – 10.00 Registration and Coffee

Part I – Management Presentations

10.00 – 10.15 Aeroflot Today and Tomorrow Vitaly Saveliev (CEO)

10.15 – 10.50 Market Update and Strategy Overview Giorgio Callegari (Deputy CEO for Strategy and Alliances)

10.50 – 11.30 Network, Fleet and Financial Overview Shamil Kurmashov (Deputy CEO for Commerce and Finance)

11.30 – 11.50 Marketing Strategy and Customer Service Mikhail Fandeyev (Marketing Director)

11.50 – 12.40 Q&A Session

12.40 – 13.00 Lunch Break

Part II – Site Visits

13.00 – 15.00 Flight Crew Training Center IR, Heads of Divisions

15.30 – 16.30 Hangar IR, Heads of Divisions

17.00 – 17.30 Hub Control Center IR, Heads of Divisions

17.50 – 18.20 Operational Control Center IR, Heads of Divisions

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AEROFLOT TODAY AND TOMORROW

VITALY SAVELIEV

CHIEF EXECUTIVE OFFICER

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#1 airline in one of the world’s largest markets with leading positions on both domestic and international routes

Global network with 153 unique destinations (300+ routes) in 51 countries serviced by one of the youngest fleet globally1

Multi-brand offering to appeal to a broad customer spectrum across geographies

Superior product and customer experience (Aeroflot awarded Four Star Airline status by Skytrax)

Efficient operating model underpinned by effective yield and cost management

Experienced management team and international standards of corporate governance

1

2

3

4

5

6

Aeroflot – #1 Russian Carrier with a Global Network

Note: Network statistics are based on summer 2016 schedule. Youngest average fleet among airlines with fleet over 100 aircraft as of October 2016.

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415.2

bn RUB

106.1

bn RUB

Transformation of Aeroflot Group: Operational Improvements

• Over the course of the last 7 years the Group has shown an extraordinary operational and financial transformation.

11.1

mn

39.4

mn

PAX

3.5X x

REVENUE

3.9X x

PASSENGER LOAD

FACTOR

78%

8.1 p.p. +

FUEL

COMSUMPTION

>30.0

(20.0%) > (8.6 yrs) >15 yrs

6.4 yrs

FLEET

AGE

2009 2015

gr / ASK

23.1

gr / ASK

Note: fleet age for 2009 as of the beginning of the year. Average age of 6.4 in 2015 is for Aeroflot Group (for comparability purposes). For Aeroflot airline average age is 4.3 years.

78%

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Transformation of Aeroflot Group: Optimization of Structure

• Aeroflot Group completed reorganization and established airline holding with presence in all market segments.

From Non-integrated Subsidiaries to Product-

focused Model

Premium Mid-priced Low-cost Far East

Not-integrated subsidiaries:

Multi-brand product offering:

Development of LCC

• Established in 2014 Pobeda has quickly become one of the largest airlines in the Russian market

• Leading (and only) true low-cost carrier in Russia (with 3.1 mn PAX transported in 2015)

• One of the fastest developing LCCs globally (according to Airline Business magazine)

• Developed domestic route network with 35 unique routes

• Focus on domestic market (10-15% capacity abroad on highly-demanded routes)

• High share of promo to attract public attention: 10% of tickets sold for 999 RUB

• Financial performance ahead of the initial expectations

1

2

3

4

5

6

7

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Recognized Level of Excellence

Best European Airline, Best Airline in

Russia and CIS, Best Business-class

in Mid-haul Segment

Best Russian

Airline (2016, 2015,

2014, 2013)

Readers’ Choice

Prize

Skytrax

Best Airline in Eastern

Europe (2016, 2015, 2014,

2013, 2011)

Skytrax

4-star Airline Rating

(2016)

• Aeroflot service quality is recognized by a number of prestigious industrial awards and prizes.

7-star Safety Rating

Best Russian Airline (2015, 2014, 2013)

Best Airline Cuisine Top-10

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B2P

• Aeroflot’s current strategic focus is to further develop IT systems and introduce new digital technologies to promote operational efficiencies and customer experience.

Other

Flight management

system (ASOU PD)

Support systems

35% 100%

2010 – 2015 Before 2009 2016 – 2020

Initial Digitalization IT Systems Consolidation Cutting-Edge Technology Deployment

Fragmented IT-systems impeding operational gains

Core IT-systems for aviation operations support developed

Implementation of the three core platforms (Sabre, SAP and Lufthansa) to optimize IT infrastructure and reduced operating expenses

Over 50% of passengers use Aeroflot digital services (e.g. tickets sales, online check-in etc)

Broad use of Big Data analytics

Personalized targeting of customer communication

Successful implementation could create incremental revenue for the Group

XX% - share of automated business processes

Aeroflot – Digital Take-off

100%

Unstructured data

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Key Strategic Priorities of Aeroflot Group

2025 Strategic Target Ranking in

2009

Ranking in

2015 2025 (Achievement Estimate)

TOP-20 airlines by PAX globally

TOP-5 airlines by PAX in Europe

Over 70 million passengers 11.1 mn 39.4 mn

Over 30 million domestic passengers 4.9 mn 23.4 mn

Note: 2009 traffic number for Aeroflot and subsidiaries (Nordavia and Donavia). Aeroflot standalone – 8.6 mn PAX.

Source: Flightglobal, Company estimates.

68 24

10

7 15

• Aeroflot has made significant progress towards achieving its long-term goals.

• To achieve its long-term goals, Aeroflot plans to continue development of IT and introduce digital solutions, further consolidate its position in Skytrax rankings and continue active development of low-cost operations.

MARKET UPDATE

GIORGIO CALLEGARI

DEPUTY CEO FOR STRATEGY

AND ALLIANCES

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Global Industry Trends

Global Airline Industry Continues to Show Resilience…

Sources: IATA, EIU, AirlineMonitor, US Energy Information Administration. 1 Expenditures by international inbound visitors in 51 largest countries. 2 Aviation Turbine Kerosene.

Passenger Traffic Revenue Operating Profit ROIC

… on the Back of Operational Improvements in the Time of a Variety of External Challenges

2005-2015 Average: 594

2005-2015 Average: 20.5 3.3%

6.2% 5.9%

9.3%

2005 2010 2014 2015E

2005-2015 Average: 2.8

Tourism Spending1 Fuel Unit Cost

bn PAX $ bn $ bn %

Air Connectivity

# of unique city pairs, thousand

455 510

641

844

2005 2010 2014 2015E

4.4

27.6 35.1

59.5

2005 2010 2014 2015E

1.71

2.15

2.70

1.52

2005 2010 2014 2015

413

564

751 718

2005 2010 2014 2015E

11.9

14.1

16.3 16.6

2005 2010 2014 2015

$ bn

2.1

2.7

3.3 3.6

2005 2010 2014 2015E

• Global airline industry shows strong growth in traffic and profitability and improved efficiency backed by growing demand, connectivity and other factors despite external challenges.

2005-2015 Average: 4.8%

75.0%

78.7%

79.9% 80.4%

2005 2010 2014 2015E

Passenger Load Factor

$/gal of ATK2 %

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201

179

140

118

109

108

101

94

90

88

79

70

68

61

56

52

49

49

47

45

43

41

40

39

35

American Airlines

Delta Airlines

United Airlines

Southwest Airlines

China Southern Airlines

Lufthansa Group

Ryanair

China Eastern Airlines

Air China

IAG

Air France-KLM

EasyJet

LATAM Airlines Group

Turkish Airlines

SkyWest Inc

Emirates Group

Qantas

AirAsia Group

ANA Holdings

Lion Group

Etihad Group

Air Canada

Avianca

Aeroflot

Air Berlin

Aeroflot Group in the Global Context

Top-25 Airline Groups Globally and #7 in Europe One of the Youngest Fleets Globally

153 Unique Destinations Including 98 International

Source: Company data, ACAS. 1 Fiscal year ends in June.

Partnership with Leading Global Companies

4.3

4.8

4.9

5.2

6.0

6.2

6.3

6.4

9.2

10.8

10.9

11.8

12.6

13.7

17.0

Hainan

Garuda

China Eastern Airlines

Emirates

Turkish Airlines

Air China

Ryanair

Qantas

Lufthansa Group

American Airlines

Air France

British Airways

United Airlines

Delta Airlines

mn PAX, 2015

- European airlines

Within SkyTeam… … and other partners

• Operational strength and global partnerships put Aeroflot among the leading global players in the airline industry.

#1

#2

#3

#4

#5

#6

#7

#8

#9

#10

#11

#12

#13

#14

#15

#16

#17

#18

#19

#20

#1

#2

#3

#4

#5

#7

#X - position in the world

#X - position in Europe

Average fleets’ age of largest airlines (selected), years

1

#6

for Aeroflot airline (and 6.4 for Aeroflot Group)

#21

#22

#23

#24

#25

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Russian Market

… Lead to Changing Passenger Transportation Mix…

…and Improved Affordability of Flights…

… Has Lead to Restoration of International Flights and

Further Growth of Domestic Air Transportation

244%

79% 41% 28% 29%

2000 2005 2010 2014 2015

0.2 0.3

0.5

0.8 0.7

2000 2005 2010 2014 2015

Aeroflot average fare1 as % of average monthly income

Air passengers per capita

51 47 40 35 37 38 28

131 125 108

96 88 87 75

13 19 29 46 53 52

68

19 25 14 9 7 7 5

12 23 40 62 51 44 67

226 239 231

249 236 228

243

2000 2005 2010 2014 2015 2016 2017 2020 2025

Auto traffic on domestic routes Rail traffic on domestic routesAir traffic on domestic routes Rail traffic on international routesAir traffic on international routes

Int.

D

om

esti

c

+0.7% +0.7% -4.4%

Sources: Rosaviatsia, World Bank, UK Civil Aviation Authority, USA Bureau of Transportation Statistics, General Directorate Of State Airports Authority of Turkey, Eurostat, World. Development Indicators, Rosstat, Company estimates based on data from Transport Clearing House, Сenter for Strategic Development in Civil Aviation, Russian Railways. 1 Calculated as passenger revenue divided by PAX.

• There is great potential for growth of the Russian air traffic market, which is demonstrated by recent structural changes.

13 19 29 46 53 52

68 12

23

40

62 51 44

67

26 42

69

109 103 96

135

2000 2005 2010 2014 2015 2016 2017 2020 2025Domestic International

Inte

rnat

iona

l D

om

esti

c

+10.9%

-10.8% +3.8%

Passenger transportation structure evolution by type, mn PAX

Air transportation market, mn PAX

Low Air Traffic Penetration…

0

1

2

3

10

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000

Air p

assengers

per

capita

3.5

2.8

1.7

1.5

0.7

Passengers per capita

Air passengers per capita vs. GDP per capita ($), 2015

GDP per capita ($)

Russia

Austria

Brazil

Bulgaria

China Croatia

Finland

France

Germany

Greece

Italy

Malaysia

Netherlands

Portugal

Romania

Spain

Switzerland

Thailand

UAE

UK

US

EU-27

Turkey

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44.6%

13.1%

6.4%

6.0%

13.8%

16.1%

Aeroflot as the Market Leader

Leader on the Russian Market…

…which Continues to See Consolidation by Key Players

Top-20 Russian Airlines

Group

• Aeroflot keeps a leading position on the Russian market due to its efficient business model and unique capabilities.

19.7

5.8

2.8 2.7

6.1 7.1

AeroflotGroup

ForeignCarriers

Others

+1.8

+1.1 +0.4 (0.6)

(0.9) (0.1)

mn PAX, 6M 2016 Increase/decrease in mn PAX

Airline PAX,

6M 2016 Business model

Aeroflot 13,438,100 Premium segment with wide regional and international network

S7 4,327,139 Middle segment with wide regional and international network

Rossiya 3,658,422 Regional charter operating in the middle price segment

UTair 2,823,985 Big player in regional flights

Ural Airlines 2,659,801 Regional and international airline with both scheduled and

charter flights

Pobeda 1,990,762 Low-cost regional and international airline

Globus 1,458,741 Operates under S7 brand targeting regional destinations

AZUR Air 855,219 Charter airline targeting main holiday destinations

VIM-avia 753,630 Operating scheduled international flights

Aurora 607,040 Connecting Far East and Siberia regions

Nordwind 585,722 Primarily links airports in Russia with holiday destinations

around the Mediterranean Sea and the Indian Ocean

NordStar Airlines 541,463 Regional airline targeting Krasnoyarsk region

Yamal 534,357 Regional airline targeting Tyumen region

Orenburg airlines 375,253 Charter flights to Russian regions and main holiday destinations

Red Wings 360,840 Scheduled and charter flights for Pegas Touristik

Pegas fly 330,093 Charter flights for Coral Travel and Sunmar travel agencies

Royal Flight 324,708 Regional airline targeting Arkhangelsk region

Nordavia 265,044 Regional airline targeting Yakutia region

Yakutia 249,674 Charter and VIP flights

RusLine 189,866 Operate regional and international flights from Saratov

Foreign Airlines

Other Russian Airlines

37.0%

12.0%

9.7%

7.2%

4.7%

14.6%

14.9%

PAX, 6M 2015 PAX, 6M 2016

Aeroflot Group

Source: TCH, Rosaviatsia, Company estimates.

Group

STRATEGY UPDATE

GIORGIO CALLEGARI

DEPUTY CEO FOR STRATEGY

AND ALLIANCES

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2025 Strategic Goals

Top-5 European airline by revenue and passenger traffic

Top-20 global airline by revenue and passenger traffic

Total annual passenger traffic of more than 70 mn passengers, including 30 mn on the Russian market

Share of transit passengers through Aeroflot’s hub in Moscow at least 32%

Market expansion based on implementation of multi-brand strategy

Multi-brand Strategy

1

Global Network

2

Strategic Partnerships

3

Infrastructure

Expansion

4

Key Pillars of Aeroflot’s Corporate Strategy

Strategy 1 Strategy 2 Strategy 3 External (infrastructure) 4

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16.4 27.5 31.4 34.7 39.4

2011 2012 2013 2014 2015

CAGR: 24.5%

158.0 253.0 291.0 319.8

415.2

2011 2012 2013 2014 2015

CAGR: 27.3%

20.5% 30.0% 30.3% 31.1% 36.7%

2011 2012 2013 2014 2015

+16.2 p.p.

30.1% 32.7% 35.5% 39.2% 44.2%

2011 2012 2013 2014 2015

+ 14.1 p.p.

Leading positions in European and global

rankings by passenger traffic

Leading positions in European and global rankings by revenue

Development of hub-and-spoke model

Increasing presence in various geographical and

price segments

• Aeroflot Group has achieved substantial progress on its way to meeting its long-term strategic goals.

PAX, mn

Revenue, RUB bn

Russian market share, %

1

2

3

4

2025 Strategy Progress

Strategic Goal

Share of transit PAX, %

2011 – 2015 Progress 2025 Goal Status

5

7

– position among European airlines – position among airlines globally

5

TOP-5 European TOP-20 Global PAX >70 mn Domestic PAX > 30 mn

Share of transit passengers: 32%

TOP-5 European TOP-20 Global

Broad presence on the market

7

23

24

# #

Multi-Brand Strategy 1 Global Network 2 Strategic Partnership 3 Infrastructure Expansion 4

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39.4

61.5

2015 2016 2017 2018 2019 2020 2021

Russian market International transit traffic

Aeroflot Pobeda

Rossiya Aurora

~22 mn

incremental

PAX

+56%

Ke

y g

row

th

drive

rs:

Aeroflot Group Traffic Growth Projected Sources of Growth

CAGR: 7.6%

Identifying Sources of Future Aeroflot Group’s Growth

Creation of united airline company Rossiya

Capturing new market opportunities

Expansion

New Rossiya reaches full potential

Realization of Potential

Sustainability of profit margins

Strategic use of the multi-brand product strategy

Sustainable Growth

• Aeroflot and Pobeda are expected to be the main contributors to the growth of the Group in 2016–2021.

PAX, mn


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POSITIONING

2015 OFFERING:

2016 OFFERING:

Scheduled flights

Hub and spoke model, international and domestic flights

High frequency Economy and

business class

Short- to long-haul

Narrow-body aircraft Wide-body aircraft

Business tourism Visiting friends and

relatives Tourism

Moscow: Sheremetyevo

PREMIUM PRODUCT MID-PRICE REGIONAL / CHARTER PRODUCT

Business model

Flight range

Aircraft fleet

Target group

Share of int.

routes in PAX1

Scheduled and charter flights

Point-to-point (P2P) flights within Russia Limited connectivity Popular international destinations Charter flights to the most popular tourist destinations

(international and domestic) Economy and business class Short- to long-haul

Narrow-body aircraft Wide-body aircraft

Visiting friends and relatives Tourism Business tourism

Moscow: Vnukovo Saint-Petersburg: Pulkovo Regions: Orenburg, Rostov-on-Don

Scheduled flights

P2P flights via Moscow P2P flights within regions High passenger load factor

and fleet utilization Economy class

Up to 3-4 hours

Narrow-body aircraft

Tourism Visiting friends and relatives

Moscow: Vnukovo

Scheduled flights

Passenger flights in the Far East

Local flights to remote destinations within the region

Economy and business class

Short- and medium-haul

Narrow-body aircraft

Visiting friends and relatives Tourism Business tourism

Vladivoskok Khabarovsk Yuzhno-Sakhalinsk

~50% (extensive

geography)

~20-30% (mainly within the CIS)

and including charter

~9% (international

flights launched

in late 2015)

~20%

(Asian

countries)

LOW-COST PRODUCT PRODUCT FOR FAR EAST

Focus airport

Multi-Brand Strategy: New Vision 1

Regional product for Far East

• Simplified multi-brand product offering to capture customers in every market segment: from premium to low-cost.

POSITIONING PREMIUM PRODUCT LOW-COST PRODUCT PRODUCT FOR FAR EAST MID-PRICE REGIONAL PRODUCT CHARTER PRODUCT

1 Data as of H1 2016.


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Aeroflot’s Strategic Priorities Key Operating Results

62% 9%

4%

25%

60% 9%

4%

27%

O&D passenger traffic1

Passenger traffic on highly competitive markets1

Competitive pressure1

Transit market1

Transit structure, 2015 Structure development by 2021

26.1

38.8

2015 2021

Focus on Servicing Transit Passenger Flows 2021 Strategy Highlights

CAGR: 7%

170

225

2015 2021

CAGR: 5%

1 O&D passenger traffic (direct traffic) – both Aeroflot and competitor conduct direct flights, Passenger traffic on highly competitive markets – Aeroflot offers flights with stopover in the hub while competitor conducts direct flights, Competitive pressure – Aeroflot performs direct flights while competitor offers connecting flights, Transit market – both Aeroflot and competitor offer flight only via respective hub. 2 average aircraft in the fleet during the year (may not coincide with the aircraft in the fleet as of the end of the period).

Positioning • Premium airline with young fleet and high service standards

• Based in SVO in Moscow

• Hub and spoke model

Network

• Focus on the long-haul network development (6-7 destinations

points to be added annually over the next 5 years)

• Further transformation of SVO to the rolling hub model

• Frequency and capacity reduction on a number of domestic routes

• Use of JVs / code sharing agreements to grow market presence

Fleet

• Fleet renewal to maintain modern and efficient fleet

• Increasing share of Russian aircraft in the fleet (50 MC-21 planned

for 2018-2024 deliveries)

• 2021 target fleet size – 225 aircraft

Transit

• Growing share of one connection transit traffic due to network

expansion, hub development and general transit market growth

• Retaining transit market share due to closed nature of Russian

market and high competition

1 Aeroflot Airline: the Group’s Flagship Carrier

FY 2014 FY 2015 Change H1 2015 H1 2016 Change

PAX (mn) 23.6 26.1 10.6% 12.0 13.4 12.2%

International 12.5 13.4 7.8% 6.4 6.8 6.7%

Domestic 11.1 12.7 13.7% 5.6 6.7 18.3%

RPK (bn pkm) 67.1 74.1 10.4% 34.2 38.3 12.2%

International 42.7 46.8 9.6% 22.2 24.5 10.4%

Domestic 24.4 27.3 11.8% 11.9 13.8 15.5%

PLF 78.2% 79.3% 1.1 p.p. 76.9% 78.9% 2.0 p.p.

International 75.9% 77.7% 1.8 p.p. 76.4% 76.5% 0.1 p.p.

Domestic 82.5% 82.2% (0.3 p.p). 77.9% 83.4% 5.5 p.p.

PAX, mn Fleet size 2

• Aeroflot is and will continue to be the engine of the Group’s growth.


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59

78

2015 2021

9.1

13.0

2015 2021

Rossiya’s Strategic Priorities

• New Rossiya airline is expected to crystalize the Group’s proposition in the mid-price market segment.

Key Operating Results

Consolidated Share of Rossiya, Orenair and Donavia 2021 Strategy Highlights

PAX, mn

CAGR: 7%

1 Rossiya Airline: the New Vision

Positioning

• Focus on regional operations in the mid price segment with

selective exposure to international routes

• Unite Rossiya, Donavia and Orenair under one brand to better

cope with the current macro conditions and improve efficiency

Network

• Based in LED, VKO, ROV, subsidiary in Orenburg, take-off from

Simferopol

• Focus on regional operations, limited charter programme

• Not targeted transit of c. 20% of airline’s PAX

Fleet • Increasing share of Russian aircraft in the fleet – 20 SSJ to be

added over 2016 – 2021 and simultaneous phasing out of 15 A319


PAX • Target PAX to grow to 13 mn due to capturing market opportunities

in the Moscow market as well as in leisure and charter segment

Fleet size 1

CAGR: 5%

19%

% of Aeroflot Group’s PAX, as of H1 2016

FY 2014 FY 2015 Change H1 2015 H1 2016 Change

PAX (mn) 10.0 9.1 (9.0%) 4.3 3.7 (14.2%)

International 4.4 2.3 (46.9%) 1.1 1.0 (8.6%)

Domestic 5.5 6.7 21.2% 3.2 2.7 (16.2%)

RPK (bn pkm) 21.1 17.0 (19.4%) 7.8 7.6 (2.0%)

International 12.1 5.8 (52.1%) 2.6 3.1 20.2%

Domestic 9.0 11.2 24.7% 5.2 4.5 (13.1%)

PLF 76.6% 74.1% (2.5 p.p.) 70.6% 77.0% 6.3 p.p.

International 77.9% 76.1% (1.8 p.p.) 72.5% 81.1% 8.6 p.p.

Domestic 74.9% 73.1% (1.8 p.p.) 69.7% 74.3% 4.6 p.p.

1 Average aircraft in the fleet during the year (may not coincide with the aircraft in the fleet as of the end of the period).


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25%

17%

15%

11%

32%

Russian Leisure Market Evolution Group’s Proposition for Leisure and Charter Segment

Key Players by PAX(1)

as of H1 2016

1.9

mn

PAX

• Charter airline business model

• 60% charter / 40% regular routes

• Plans to consolidate Aeroflot Group’s charter

operations

Before

2015

0.2

0.6 0.8

0.5

1.9 2.2

PAX (mn) RPK (bn pkm) ASK (bn)

2.1

7.0

Revenue (RUB, bn)

• In 2014 Aeroflot Group decided to reduce its exposure to the leisure segment due to a negative market outlook; however Group has revisited its approach after changes in competitive landscape in the segment.

H1 2015 H1 2016

1 Leisure Market & Charter Programme

After

2015

• Charter flights were transferred under united

regional brand

• Limited charter programme due to general market

decline and Group’s decision to reduce its presence

in the segment

• Cooperation with Biblio Globus

Aeroflot Group Charter Flights

Others

19.5 18.8

2013 2015 2016E 2017F 2018F 2019F 2020F

PAX, mn

1.1% 2.6% 1.4% 3.8% 1.3% 3.4% 1.4% 3.7%

Share of the Group’s total (for revenue –

share in PAX revenue)

Source: Company data, Euromonitor, EIU, IMF, Development center, Gfk, Federal Agency for Tourism (Russia Federation), TUI, Bain. 1 Includes companies that approved publication. Multi-Brand Strategy 1 Global Network 2 Strategic Partnership 3 Infrastructure Expansion 4

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12

26

2015 2021

2021 Strategy Highlights

Pobeda’s Strategic Priorities Key Operating Results

• Pobeda is expected to be one of the main contributors to the growth of the Group in 2016–2021.

Pobeda’s Network – Summer 2016

Routes from Moscow Routes from Sochi Routes From Anapa

3.1

8.1

2015 2021

CAGR: 17% CAGR: 14%

1 Pobeda Airline: Group’s Low Cost Carrier

Positioning • The only Russian LCC, a timely value proposition to cost

conscious passengers

Network

• Based in VKO

• P2P low frequency flights

• Increased focus on regional network development (intra-

regional flights)

• Limited focus on international flights (less than 15% of PAX)

Fleet • B737-800 as the major aircraft

• Up to 5 aircraft to be added in 2017


PAX • 2021 target PAX of 8.1 mn

Moscow

Belgorod

Gelenzhik

Rostov

Anapa Krasnodar

Nazran

Vladikavkaz Makhachkala Sochi

Astrakhan

Volgograd

Ulyanovsk

Kazan

Kirov Perm

Ufa Magnitogorsk

Chelyabinsk

Ekaterinburg

Tyumen

Surgut

Novosibirsk

Bergamo

Bratislava

Cologne

Memmingen

Girona

Samara

Cheboksary

Larnaca

Nalchik

Paphos

Tivat

N. Novgorod

Yaroslavl

Nizhnekamsk

Voronezh

Saint Petersburg

FY 2014 FY 2015 Change 1H 2015 1H 2016 Change

PAX (mn) 0.1 3.1 – 1.1 2.0 80.7%

International – 0.0 – – 0.2 –

Domestic 0.1 3.1 – 1.1 1.8 65.1%

RPK (bn pkm) 0.1 4.7 – 1.7 3.1 82.1%

International – 0.0 – – 0.4 –

Domestic 0.1 4.7 – 1.7 2.7 59.8%

PLF 78.0% 81.2% 3.2 p.p. 81.0% 84.0% 3.0 p.p.

International – 68.8% – - 68.4% –

Domestic 78.0% 81.3% 3.3 p.p. 81.0% 86.8% 5.8 p.p.

Routes from Saint Petersburg




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59% 60% 88%

102% 112%

62%

162%

90%

155%

204% 201%

St. Petersburg Volgograd Ekaterinburg Sochi Tyumen Novosibirsk Vladivostok

2-class compartment ticket price as % of Aeroflot ticket price² 2-class compartment ticket price as % of Pobeda ticket price²

628.0

523.8

n/a

624.2 595.4

474.6

Aeroflot Rossiya Pobeda

2014 2015

548.4

n/a

578.1

353.2

Aeroflot Pobeda

Pobeda Competitive Strength: Air and Rail Ticket Pricing

Air Ticket Prices Have Been

Decreasing Relative to Rail Ones…

Source: Company estimates, Federal Passenger Company, Russian Railways, Rosstat. 1 Calculated as passenger revenue divided by PAX. 2 Calculated on the basis of the lowest available price for air tickets with departure in mid-November 2016 as of September 27, 2016.

3,640

2,439

1,513

Pobeda Rail deregulated(1st and 2nd

class sleepingcompartment,

int. routes)

Rail regulated(3rd class open

sleeping andsitting)

Regulated segment (open

sleeping and sitting cars)

Deregulated segment

(compartments and premium

compartments)

Total: 91.2

Aeroflot Ticket Prices are Very Close to Russian Railways 2-class Compartment

• Air ticket prices have become competitive vs. rail ticket prices.

• Travel time by air has an outstanding advantage over other transport means on the Russian market.

… Competing with the Deregulated

Rail Segment…

60.9

(67%)

30.3

(33%)

8.0%

(7.9%) (7.5%)

5.5% 6.8%

13.4%

3.8% 6.0%

2012 2013 2014 2015

Aeroflot Group domestic routes

Russian Railways

Average fare1, RUB Average fare1 growth Russian Railways passengers 2015, mn

…which Represents c. 30 mn Rail

Passengers

1

Effective Market Segmentation

Sochi destination

PAX (thd) and PLF

Moscow - Ekaterinburg

PAX (thd) and PLF

79.8%

80.3%

78.8%

81.7% 82.3% 82.6%

78.7% 83.6%

(0.6)% 13.7% 5.4%

High base effect of 2014 on SVO-AER route due to Winter Olympic Games (incremental PAX of 68 thd for Aeroflot airline in Feb and March 2014 Y-o-Y)

Distance from Moscow 651 km 1,073 km 1,667 km 1,622 km 2,144 km 3,191 km 9,302 km

Av. travel time by rail 6h 20min 22h 28h 50min 30h 50min 34h 49h 50min 156h

Travel time by air 1h 10min 1h 50min 2h 20min 2h 30 min 2h 40min 4h 8h 30min


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21 17

2015 2021

Aurora’s Strategic Priorities Key Operating Results

1.1

1.4

2015 2021

Aurora’s Network – Summer 2016 2021 Strategy Highlights

CAGR: 4.1% CAGR: (3.5%)

Positioning • The Group’s carrier in the Russian Far East, operating scheduled

commercial and subsidized local flights between distantly located

cities in the Far East

Network

• Based in Vladivostok, Yuzhno-Sakhalinsk and Khabarovsk airports

• Scheduled flights to 23 destinations:

- 11 domestic regional

- 12 international routes

• 13 domestic local flights (10.1% of carrier’s PAX in 6M 2016)

Fleet • Focus on fleet optimization and unification

• Target fleet size – 17 aircraft

PAX • 2021 target PAX of 1.4 mn

1 Aurora Airline: Single Far Eastern Regional Carrier

• Streamlining of Aurora development plans to better serve market demand.

FY 2014 FY 2015 Change 1H 2015 1H 2016 Change

PAX (mn) 1.1 1.1 7.1% 0.5 0.6 19.9%

International 0.2 0.2 10.3% 0.1 0.1 28.5%

Domestic 0.8 0.9 6.2% 0.4 0.5 17.6%

RPK (bn pkm) 1.7 1.9 7.1% 0.8 1.0 16.8%

International 0.3 0.4 11.5% 0.2 0.2 27.8%

Domestic 1.4 1.5 6.1% 0.7 0.8 13.9%

PLF 75.1% 71.6% (3.5 p.p.) 66.5% 68.0% 1.5 p.p.

International 68.8% 57.2% (11.6 p.p.) 58.5% 66.4% 7.9 p.p.

Domestic 76.8% 76.4% (0.4 p.p.) 69.1% 68.5% (0.6 p.p.)

Novosibirsk

Khabarovsk

Krasnoyarsk

Irkutsk

Seoul

Harbin

Magadan

Beijing

Petropavlovsk-Kamchatsky

Yuzhno-Sakhalinsk

Vladivostok

Dalian

Busan

Yakutsk

Hong Kong

Routes from Khabarovsk

Routes from Vladivostok

Routes from Y.-Sakhalinsk


Yuzhno-Sakhalinsk

Shahtersk

Okha

Kurilsk

Khabarovsk

Vladivostok

Kavalerovo

Plastun Terney Dalnerechensk

Dalnegorsk

Amgu Svetlaya

Edinka

Yuzhno-Kurilsk



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0.6 1.2 1.5

1.9 2.4

2.7

3.6

6.1

2009 2010 2011 2012 2013 2010 2015 2021

Key International Transit Markets

№ Market Current

Position

2021 Target

Position

Action

Strategy

1 Northeast Asia– Western Europe Top-10 Top-10 Defend

2 Southeast Asia – Western Europe Top-20 Top-10 Expand

3 Middle East – Western Europe Top-20 Top-10 Expand

4 Southwest Asia– Western Europe Top-20 Top-10 Expand

5 Middle East – Northern America Top-20 Top-10 Expand

6 CIS – Western Europe Top-5 Top-5 Defend

7 Eastern Europe – Northeast Asia Top-5 Top-5 Defend

8 CIS – Northern America Top-5 Top-5 Defend

9 Eastern Europe – Southeast Asia Top-5 Top-5 Defend

10 CIS – Northeast Asia Top-5 Top-5 Defend

• Aeroflot gradually but consistently increased presence in key international markets.

Strengthening Positions in International Transit Segment 2

Aeroflot Strategy on International Transit Markets

CAGR: 9.2%

5

6 1

2

4

7

8

10

9

3

NEA

SWA

SEA

ME

CIS

WE

EE

NA

International Transit Traffic

11.8% 11.6% 10.6% 14.0%

Share of International Transit in Aeroflot Airline PAX

International Transit Traffic (PAX mn)

10.3% 10.5% 7.2%


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• SkyTeam membership and code share agreements allow Aeroflot to increase presence on existing markets and enter new markets.

SkyTeam

• Active member of the alliance since 2006

• Participation in alliance’s initiatives (Sky Transfer

Accelerator, Sky Link Sprint, Sky Port and Sky Priority)

• Access to 87 incremental markets (up from 63 in 2009)

via SkyTeam in H1 2016

• Strengthened relationship with Air France, KLM, Alitalia

and China Eastern Airlines

• SkyTeam encompasses 1,062 destinations in 177

countries in 2016

665.4 mn

(annualized)

Code

Sharing

• Expansion of own network and more efficient utilisation

of fleet

• 29 existing code-share agreements, including 26 with

foreign partners and 3 with Russian airlines

• Signed a new code-share agreement with S7 Airlines,

start of code-share flights - from 1 July 2016

• Access to 79 incremental markets (up from 76 in

H1 2015) via code sharing agreements in H1 2016

• Improving connectivity and capturing more transit

passengers

• Number of marketing routes 263 in H1 2016

168,511

(H1 2016)

Expanding Network via Alliances and Agreements 3

Summary Overview Segment Passenger Traffic Selected Airlines


http://www.airfrance.com/

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Available Resources

Global Alliances

Strategic Partnerships

Build Presence in the Promising Markets

Leverage strategic partners’

sales

Offer new code share

itinerary options

Improve Yield

Combine strategic partners’ positions in large markets

Sync. schedules

on frequently

served routes

Leverage strategic partners’

high market share

Reduce Cost

Rationalise service in

high-frequency markets

Sync. network to/from jointly-served

markets

Key Benefits

and

Implications

• Aeroflot is actively developing strategic partnerships with multiple global carriers to increase its competitive position, brand visibility and increase economies of scale.

Strategic Partnerships: Aeroflot’s Approach 3

Global

Partnerships

is a Means to

Achieve 2025

Targets

Setting-up a number of strategic partnerships with leading airlines globally

Including code share agreements


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Infrastructure Expansion to Support Future Growth

Railway terminal

Construction of 3-rd

runway

Terminal B

Cargo (freight) terminal

Fuel-filling complex

Interterminal tunnel

Reconstruction of roads

31

47 55

59

2015 2020 2025 2030

Interterminal tunnel Reconstruction of

roads Railway terminal

5 6 7

1

2

3

4

5

6

7

SVO Traffic Forecast

SVO Site Outlay 2015–2017 SVO Hub Development Programme

Terminal B Cargo terminal Fuel-filling complex

Runway-3 1 2 3 4

CAGR: 4%

• 44 additional take-offs and landings per hour

• Completion date – 2018

• Focused on domestic flights

• Annual passenger capacity – 15 mn

• Area – 100 th m2

• Annual cargo capacity – 680 th tones

• Area – c. 90 th m2

• Capacity – 1 mn tones in 2017 (30% of total

airport volume)

• 2 terminal-to-terminal tunnels (passengers and

baggage)

• Length – 2,100 m

• Max connecting time – 50 min

• Better connection between South and North

terminals

• Comfortable direct entrance to the airport

terminal, 4 lanes

• New railway track

• 15 minutes time interval between

“Aeroexpress” trains

4

Source: Public domain, Sheremetyevo International Airport corporate presentation.

PAX, mn

• Sheremetyevo is set to become one of the most modern airports in Europe, increasing Moscow’s attractiveness as a transit hub for international passengers and providing a solid foundation for Aeroflot’s long-term strategy.


NETWORK AND FLEET OVERVIEW

SHAMIL KURMASHOV

DEPUTY CEO FOR COMMERCE AND FINANCE

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• Moscow (SVO)

based

• Hub-based

model with focus

on network

quality

• Exploiting transit

market

opportunities

• Based LED,

VKO, ROV;

branch in REN

• Mainly

scheduled,

limited charter

flights

• Transit potential

of ~ 20%

• Based in

Moscow (VKO)

• Low-frequency

P2P flights

• Focused on the

development of

domestic

routes, limited

number of

international

routes (≤ 15%)

Approach to Network Development

Aeroflot Group Network Development Strategy (1/3)

Network of Aeroflot Group’s Airlines

Fundamental net work development principles

• Network development is based on the multi-brand model ensuring maximum coverage of the air transportation market and presence in various price segments across different regions.

• Based in VVO,

KHV and UUS

• Performs

commercial

regional flights

and subsidized

local flights

Network convenience and coverage

Increasing flight frequencies

Selective addition of

destinations

Origin & destination principle

Network development goal/result

Network synergies: viable and competitive connectivity

options

Network development instruments

Moscow

Rostov-on-Don

St. Petersburg

Yuzhno-Sakhalinsk

Khabarovsk

Orenburg Vladivostok

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Relatively Stable Number of

Destinations…


• Moderate growth of destinations, focus on increase in frequencies on scheduled routes across all segments (international and domestic, long- and mid- haul) to improve network quality.

152

141 142

153

142

137 137

2013 2014 2015 6M 2016

Summer schedule Winter schedule

# of destinations1

… due to Focus on Network Quality

and Frequency…

9.6

11.1 11.8

10.9

11.5

2013 2014 2015 6M 2015 6M 2016

Average scheduled flight frequency2

CAGR: 10.9%

4.9%

… with Further Improvements

Possible Across the Segments.

9.7

13.2

12.1

6.7

International Domestic Mid-haul Long-Haul

Average scheduled flight frequency2

1 2016 summer schedule. 2 Average weekly frequency per route for Aeroflot Group excl. Pobeda.

98 abroad

55 in

Russia

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1.8 1.7

6M 2015 6M 2016

2.4

2.7

3.6

2013 2014 2015

11.6% 11.8% 14.0%

16.0% 16.7% 16.7%

7.9% 10.7%

13.5% 35.5%

39.2% 44.2%

2013 2014 2015Domestic - DomesticInternational - Domestic / Domestic - InternationalInternational - International

15.3% 13.2%

16.0% 16.2%

11.6% 11.7%

42.9% 41.1%

6M 2015 6M 2016

… Backed by Convenient Location of Aeroflot Hub


Source: Company data, IMF, Eurostat, RITA, Russian State Statistics Service, Rosaviatsia. 1 Data for Aeroflot airline’s own flights.

Growing share of transit of Aeroflot airline in Sheremetyevo Average weekly frequency per route

2.2%

0.0%

Growth

6M 2016

4.0%

… Results into Growing Aeroflot Airline’s Transit Flows

Increasing international transit PAX, mn

CAGR 22.3%

• Increasing flight frequency improves connectivity and supports Aeroflot’s traffic growth in Sheremetyevo airport.

• Advantageous geographical positions and Group’s efforts support traffic growth on key European and Asian

destinations.

Growing Connectivity of Aeroflot Flights1 ...

Connectivity ratio

From/To Paris London Vienna Stockholm Rome

Tokyo Via Moscow 15:00 15:05 13:45 13:15 14:55

Via Dubai 18:30 18:55 17:15 17:45 17:30

Shanghai Via Moscow 14:05 14:10 12:50 12:20 14:00

Via Dubai 17:25 17:50 16:10 16:40 16:25

Hong Kong Via Moscow 15:00 14:40 13:20 12:50 14:30

Via Dubai 18:30 17:10 15:30 16:00 15:45

Moscow

Shortest

geographical

distance

12.4 12.4

21.9 22.8

15.7 16.0

13.9x 18.8x

6М 2015 6М 2016

10.7 11.5

12.4

19.3 20.3

22.9

13.2 14.4

16.1

12.7x 13.5x 16.0x

2013 2014 2015

International Domestic Combined

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155 161

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268

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125

150

175

200

225

250

275

300

325

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375

400

425

450

2010 2015

Development of Wave-Based Schedule

• Aeroflot has developed it’s base airport – SVO – into a hub based on connectivity waves with convenient options for transit passengers.

• Migration from wave model to “rolling hub” and increasing average aircraft capacity target to overcome infrastructure constraints in SVO and promote efficiency of operations.

Rolling waves

2016

2010 Total WB1 Total Total Total WB1 Total WB1 WB1 WB1

Increase in Average Seat per Plane Drives Capacity Growth

Source: Company data 1 Wide-body aircraft

Aeroflot Operations Development in Sheremetyevo Hub (1/2)

Average # of seats per aircraft

+27% +27%

+22%

+13% +4%

+38%

+6%

+6%

+7%

+4%

Wave 3

(America,

Russia)

Wave 6

(all destionations) Wave 2

(all destinations)

Wave 1

(Europe,

CIS, Russia)

Wave 4

(Europe,

CIS, Russia)

Wave 7

(Europe,

CIS, Russia) Wave 5

(Europe,

CIS, Russia)

Wave 1

(Europe,

CIS, Russia) Wave 2

(all destinations)

Wave 3

(Europe,

Russia)

Wave 4

(Europe,

CIS, Russia)

Wave 5

(CIS, Middle

East, Russia,

Beijing) Wave 6

(all destinations)

Wave 7

(Middle

East, CIS,

Russia)

Ou

tbo

un

d f

lig

hts

In

bo

un

d f

lig

hts

Wave 8

(Europe, CIS,

Russia)

Wave 8

(Europe, CIS,

Russia)

Wave 8

(Europe,

CIS,

Russia)

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Multi destination waves (all-to-all)

Focus destination waves (selected connections)

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• Aeroflot still sees development opportunities in SVO airport with the current infrastructure capacities before

launch of the new terminal and third runway.

• Current initiatives are based on the development of the new wave and expansion of underutilized (less

intense) waves that will help to further boost connectivity.

Aeroflot Operations Development in Sheremetyevo Hub (2/2)

Inbound

flights

Russia, CIS

Europe,

Russia,

CIS

Russia, CIS,

America, China,

India, Middle East

America, Russia

Russia, CIS,

Europe

Europe, Russia,

Asia

Asia, Europe, Russia, CIS

Russia,

Europe, CIS Russia,

Europe

Europe,

Russia, CIS

Russia, CIS,

Europe Europe, Russia,

CIS, America, China

Europe, Russia

Europe, CIS,

Russia, New York

Russia (Far East),

Europe Russia, CIS,

Middle East,

Beijing

CIS, Russia

Outbound

flights

- new wave added in 2016 summer schedule

Aeroflot Airline 2016 Summer Schedule

01:00 02:00 03:00 04:00 05:00 06:00 07:00 08:00 09:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 00:00

- potential development in SVO before 2018 given current infrastructure capacity

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Network Overview: Balanced Development Across Regions

mn PAX bn ASK PLF

Russia

Europe

Americas

Asia

Middle East

14.0 17.6 23.4

10.3 11.6

2013 2014 2015 6M2015

6M2016

59% 37.5 43.6

56.3

25.8 26.8

2013 2014 2015 6M2015

6M2016

78% 80% 79% 75% 81%

2013 2014 2015 6M 2015 6M 2016

8.3 8.2 8.0 3.7 4.1

2013 2014 2015 6M2015

6M2016

25.4 25.5 23.8 11.4 12.7

2013 2014 2015 6M2015

6M2016

76% 74% 74% 71% 71%

2013 2014 2015 6M 2015 6M 2016

0.9 0.8 0.8 0.4 0.4

2013 2014 2015 6M2015

6M2016

9.5 8.8 8.4 4.0 4.6

2013 2014 2015 6M2015

6M2016

80% 79% 83% 80% 84%

2013 2014 2015 6M 2015 6M 2016

2.4 2.5 2.7 1.3 1.5

2013 2014 2015 6M2015

6M2016

19.2 21.0 22.5 11.0 12.7

2013 2014 2015 6M2015

6M2016

78% 75% 79% 79% 79%

2013 2014 2015 6M 2015 6M 2016

3.0 3.0 2.0 0.9 0.9

2013 2014 2015 6M2015

6M2016

10.6 10.6 7.6 3.6 3.6

2013 2014 2015 6M2015

6M2016

85% 82% 78% 77% 76%

2013 2014 2015 6M 2015 6M 2016

Share (6M 2016)

21%

Share (6M 2016)

2% Share (6M 2016)

8% Share (6M 2016)

5% Share (6M 2016)

42%

Share (6M 2016)

20%

Share (6M 2016)

7% Share (6M 2016)

20%

Share (6M 2016)

6%

Share (6M 2016)

Trends (2013-16 YTD)

• Russian market is a star performer

for the third year in row

• Increasing frequencies

• Selected addition of new

destinations

• Intelligent capacity management:

additional destinations and

increasing frequencies

• Operating numbers supported by

increased transit passenger flows

• Higher demand resulted in PLF

improvement

• Exploiting transit potential

• Optimization of capacity to leisure

markets in the region

• Capacity expansion on selected

routes

• Increased transit demand from Asia

• Addition of new destinations

• Frequencies and destination optimization

(incl. suspension of flights to Egypt and

decrease in frequencies to Turkey)

• Increased frequencies to key routes in

the region

• Aeroflot Group maintains presence in all major regions with intelligent expansion and capacity management taking into account market conditions.

• Aeroflot succeeded to reverse and/or mitigate downward trends in the key markets.

CIS 2.8 2.6 2.5 1.3 1.1

2013 2014 2015 6M2015

6M2016

6.8 6.3 6.1 3.1 3.2

2013 2014 2015 6M2015

6M2016

76% 77% 78% 76% 80%

2013 2014 2015 6M 2015 6M 2016

6% Share (6M 2016)

5% Share (6M 2016)

• Positive demand trends for

Caucasian republics and launch of

Kazakhstan

• Negative contribution from

suspension of flights to Ukraine

1

2

3

4

5

6

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17,854

19,694

269

69

363

867

272

PAX 6M2015

Top 10International

Routes

OtherInternational

Routes

Top 10DomesticRoutes

OtherDomesticRoutes

NewDestinations

PAX 6M2016

1.5%

0.4%

2.0%

4.9%

1.5%

10.3%

St Petersburg Ekaterinburg

Sochi Mineralnye Vody

Simferopol Samara

Krasnodar Vladivostok

Kaliningrad Kazan

Top 10 International Markets Group’s PAX Evolution (thd PAX)

Top 10 Domestic Routes

Total Share of Group’s PAX – 19.1%

Total Share of Group’s PAX – 21.1%

718

1 All Pobeda’s traffic (incl SVX and AER) is included in other domestic routes as it serves respective markets from VKO airport and targets completely different market segment.

6M 2016

6M 2016

Network Overview: Key Markets and Growth Decomposition

• Constant focus on domestic and international destinations with highest demand and expansion in the new market segment (LCC) paired with a low risk growth strategy.

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Aeroflot Group Fleet Development Strategy

Approach to Fleet Development

• Utilization of several (but limited) aircraft types from several producers due to the

larger fleet and focus on premium segment:

― Enables targeting different markets of various size (example: use of Airbus and

Boeing aircraft in different passenger capacity classes for long-haul flights -

Airbus A330 (300 seats) and Boeing 777 (400 seats)

― Enables flexibility, maximization of operational efficiency and load factors

― Allows receiving the best possible offers from suppliers (and lessors)

• Utilization of Airbus A320 and Boeing 737-800 aircraft on scheduled flights

• Boeing 777 and 747 are used on charter and tourist flights and flights to Far East

• Focus on narrow- body aircraft

• Optimization and unification of the fleet

• Utilization of Airbus A320 aircraft on scheduled flights

• Utilization of a standartisation approach

• The fleet is completely comprised of Boeing 737-800

Fleet Evolution Ownership Structure

2012 6M 2016 by # of aircraft

Total: 257 Total: 233

Owned 1%

Operating lease 80%

Finance lease 19%

Operating lease 65%

Finance lease 26%

Owned 9%

• Aeroflot maintains a balanced fleet expansion strategy focusing on consistent fleet renewal and long-term strategic goals for each brand.

# of aircraft (average number for the year)

17%

-3%

6%

4%

5% X% - CAGR, 2016-2021

182 225

59

78 20

17

12

26

273 296

315 324 335

346

2016 2017 2018 2019 2020 2021

• A320 family

• B737 NG

• SSJ100

• A330

• B777

Total: 5 types

• A320 family

• B737

• B747

• B777

Total: 4 types

• DHC-6

• DHC-8 (2 subtypes)

• A319

Total: 4 types

• B737 NG

Total: 1 type

Airline General Considerations and Fleet Development Principles Focus Producers Type Number

Classes Narrow b. Wide b.

• n/a

• n/a

• Economy

• Comfort

• Business

(extended

seat or

full-flat)

• Economy

• Business

• Economy

• Business

• Economy

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Execution of Fleet Strategy: Enhancing Fleet Standardization

2011 2015 2018 Structure

SSJ100

Аn-148

Yak-42

An-12

An-24

An-26

DHC-8-200/300

Tu-134

SSJ100

Аn-148

DHC-8-200/300

DHC-6-400

SSJ100

DHC-6-400

DHC-8-300

DHC-8-400

A319/320/321

B737 (Classic)

B737 (NG)

Tu-154

A319/320/321

B737 (Classic)

B737 (NG)

A319/320/321

B737 (NG)

MC-211

A330

B767

B777

Il-96

Тu-204

MD-11F

A330

B767

B777

A330

B747

B777

66%

18 types 10 types 10 types

Narrow-body (regional)

Narrow-body (medium-haul)

Wide-body (long-haul)

1 Irkut MC-21 is a twin-engine mid-range Russian jet airliner, which is now being developed and to be produced by the United Aircraft Corporation (UAC) Group.

17%

17%

• Focus on modern aircraft types is the main principle for the fleet development strategy ensuring long-term efficiency.

FINANCIAL OVERVIEW SHAMIL KURMASHOV DEPUTY CEO FOR COMMERCE AND FINANCE

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25.3

17.5

30.9 35.6

64.8

2013 2014 2015 H1 2015 H1 2016

31.8

24.8

58.7

13.3

30.0

2013 2014 2015 H1 2015 H1 2016

291.0 319.8

415.2

176.5

223.8

2013 2014 2015 H1 2015 H1 2016

Proven Track Record of Strong Financial Performance

Strong revenue growth on the back of increasing RASK and yields and expanding passenger traffic

Pro-active approach to revenue management helped to materialize FX effect on international fares despite macro headwinds

CAGR: 19.5%

26.8%

Margin

10.9% 7.8% 14.1% 7.5% 13.4%

Operating CF (RUB bn)

28.9 36.0 69.7 42.7 75.3

Revenue (RUB bn) EBITDA (RUB bn) and Margin FCF (RUB bn)

• Aeroflot Group delivers strong results amid expanding operations, active revenue management and strict cost control.

• The Group consistently generates positive and growing cash flows adjusting to volatile external environment.

Profitability improvement over the years on the back of efficiency initiatives and tight cost control in the volatile environment

Continued EBITDA and EBITDA margin expansion in 2016

Positive free cash flow generation due to operating strengths

Significant improvement in FCF and OCF in H1 2016 on the back of demand pickup and stronger bookings

CAGR: 35.8%

x2.3

CAGR: 10.4% 82.1%

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Revenue and Cost Management Strategy

• In order to deliver results and improve profitability Aeroflot focuses both on exploring revenue opportunities

and control over cost inflation where possible and introducing dedicated cost cutting projects.

Active revenue management

Exploring new geographical markets and new market niches

Exploiting ancillary revenue opportunities

Cost cutting programmes

Specific efficiency initiatives

Efficiency based strategy

Strong

Financial

Performance

Ma

na

gin

g r

eve

nu

e

Con

tro

llin

g c

osts

3

2

1

3

2

1

Cost-cutting Initiatives 3 Revenue Management 1 New Revenue Streams 2 Efficiency Based Strategy 1 Efficiency Initiatives 2 3

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Approach to Revenue Management

• Aeroflot has significant share of revenue denominated and/or linked to FX which helps to the mitigate FX effect on

operating expenses due to its pro-active approach to revenue management.

• Pro-active approach implies relevant actions based on the demand and market environment that targets positive

RASK dynamics (important both in RUB depreciating and appreciating environment).

… Delivers Results

RUB 39.5%

EUR 14.3%

EUR-linked 25.7%

USD and

other 20.5%

Sophisticated Approach to Revenue and Capacity Management …

Network management based on O&D

flows rather than particular flight legs Accessing profitability based on the

network effect in addition to the

performance of each route and

particular flight Offering various booking classes

depending on consumer strength and

demand

Origin & Destination

core principle of the revenue

management

Consistent Pricing

core principle of pricing policy

Diversified Revenue

Streams by Currency

core fare setting principle

Consistent fare adjustment to avoid

price shocks to the consumer in case of

significant FX fluctuations - PLF

implication is taken into account High flexibility with capacity deployment

closer to the departure (and various

business/economy composition) – to

optimise PLF)

Principles Related Metric

1

Group collects revenue in various

currencies (RUB, EUR, USD and other)

as fares are set in various currencies

― Domestic - in RUB

― Outbound international – EUR

― Inbound and transit (EUR, USD and

other currencies)

Diversified revenue (Aeroflot Group revenue 6M 2016)

Growing share of transit of Aeroflot airline (% of AFL PAX)

Improving RASK - better yields without compromising on PLF (RUB)

Price

Promo level

Web demand

Booking cancelations

Seats available by class

Past data

Seasonality

Sales speed

Current bookings

Ancillary

Competitor prices

Key Pricing and Revenue Management Factors

35.5% 39.2% 44.2% 42.9% 41.1%

2013 2014 2015 6M2015

6M2016

2.4 2.4 2.8

2.5 3.0

2013 2014 2015 6M2015

6M2016


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3.06 3.04

3.58

3.29

3.76

2013 2014 2015 H1 2015 H1 2016

109.1 115.8 124.7

58.8 63.6

2013 2014 2015 H1 2015 H1 2016

Effective Capacity and Revenue Management…

PLF (% and y-o-y p.p. change)

ASK, bn

0.1

8.2%

Growing Demand for Air

Transportation…

PAX, mn

…Backed by Intelligent Capacity

Management…

…Translated into Solid Unit

Revenue Growth

Yield for scheduled flights (RUB/RPK)

• Well-planned capacity growth that took into account markets trends and balance of supply and demand helped to increase load-factors and unit revenues at the same time.

CAGR: 6.9%

CAGR: 12.0%

10.3%

(0.4) 0.5

0.0

2.9

CAGR: 8.2% 14.6%

1

31.4

34.7

39.4

17.9

19.7

2013 2014 2015 H1 2015 H1 2016

78.2% 77.8%

78.3%

75.7%

78.6%

2013 2014 2015 H1 2015 H1 2016


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3.07 2.98

3.26

2.95

3.32

2013 2014 2015 H1 2015 H1 2016

… Both on Domestic and International Scheduled Routes

Despite Proactive Approach to

International Yields…

… as well as Domestic Yield

Management…

… Aeroflot Group Still Secures Pricing

Advantage in the Global Context

RUB/RPK RUB/RPK 6M 2016 yields – USD cents /RPK

• Attractive value proposition for consumers is one of the key strengths of the Group vis-à-vis foreign carriers which attracts new passengers and retains them thanks to superior product quality.

3.05 3.07

3.86

3.55

4.12

2013 2014 2015 H1 2015 H1 2016

CAGR: 12.6% 16.1% CAGR: 3.0% 12.6%

8.37

7.94

7.44

6.61

5.66 5.36

Qantas AirCanada

easyJet Latam TurkishAirlines

Aeroflot

1


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Exploring Additional Revenue Opportunities 3 2

New routes in the markets of presence in (H1 2016 vs H1 2015):

― Domestic routes: Saratov, Magadan

― International routes: Alicante, Valencia, Lyon

Ancillary Revenue New Markets and Segments

New Products

RUB 12.5 bn ancillary revenue in

H1 20161

48.6% share of revenue from

partners under frequent flyer programme in other

(ancillary) revenue

LCC revenue in H1 2016

RUB 8.0 bn

• Aeroflot Group strategy pursues opportunities for generating incremental revenue through new market and routes,

as well as an ever-expanding range of value-added ancillary services.

New markets: Kazakhstan (Aktau, Aktobe, Almaty, Astana, Atyrau,

Shymkent)

Pobeda addresses the LCC market segment that previously was underserved in Russia

Incremental revenue in H1 2016 from new destinations opened in LTM RUB 3.3 bn

Incremental revenue from Pobeda airline amounted to

RUB 4.7 bn in H1 2016

Incremental revenue from ancillary services and other revenue amounted

to RUB 0.7 bn RUB in H1 2016

Hotel revenue

Catering services onboard and Duty Free sales

Other partnerships – Europcar and DreamLines cruise operator

6.2% ancillary revenue

growth in H1 2016 y-o-y

Partners, including under frequent flyer programme

Baggage fees

Seat upgrades (Space + business)

Third-party refueling services, ground handling and MRO

+

Total revenue in H1 2016 from new destinations added in 2013 – H1 2016

amounted to RUB 8.1 bn

1 Other revenue as reported in IFRS accounts (excluding the line with airline agreements). This amount doesn't include income from various fees accounted as part of airline revenue (i.e. baggage fees).


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Continuous Quest for Cost Efficiencies

• Aeroflot is committed to operational and financial efficiency achieved via various means - from fundamental

principles of business strategy to dedicated efficiency programmes.

Efficiency Based Strategy Long-Term Efficiency Initiatives Cost-Cutting Initiatives

1 3 2

Aeroflot Group’s corporate strategy, fleet and network strategy result in enhancing operational efficiencies that drives financial results improvements

Strategic initiatives that particularly target operational and financial efficiency

Initiatives that have been implemented to cut specific costs, including programmes related to crisis trends in the Russian market in the beginning of 2015

Examples:

• Fleet optimization (order book and phase-out of existing aircraft)

• Network and headcount optimization by regional subsidiaries

• Administrative costs optimization

• Merger of regional subsidiaries

Examples:

• Operation of standardized modern and fuel efficient fleet and fuel consumption optimizations

• Effective fuel supply management

• Focus on connectivity and development of hub in SVO

• Development of multibrand strategy

Examples:

• Installation of sharklets

• Optimization of printed products

• Optimization of loading of meals, water, etc.

Continuous growth of business efficiency

Ongoing incremental savings represent additional contribution to improving

profitability

Prompt reaction to changing environment helped minimize adverse

external effects


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Cost Item % of OpEx % of FX portion Aeroflot Approach

Fuel 22.3% 69.8%

Monitoring and controlling of fuel consumption via optimizing routing and refuelling

Focus on maintaining efficient fleet

Continuous negotiations with suppliers (focus on formula-linked pricing)

Aircraft, Traffic and

Passenger Servicing 20.0% 42.2%

Optimizing operations (i.e. overnight stop and parking etc) to reduce cost

In-house catering company promoting synergies for on-board service

Negotiations with airports on non-regulated tariffs

Staff 15.5% 7.6% Indexation strictly linked to productivity, variable compensation - to KPIs

Optimizing headcount in subsidiaries (reduction of duplicate functions)

Continuous focus on productivity is further supported by LCC roll-out

Operating Lease 14.1% 99.5% Established relations with key global lessors and producers

Deployment of various aircraft types promotes flexibility and efficiency

Continuous market monitoring for efficient deal structures

Maintenance 8.7% 81.6% Continuous negotiations with MRO service providers to improve pricing

Increasing share of in-house MRO (A-Tekhnics)

Fleet renewal strategy – new aircraft required less MRO time and money

SG&A 6.4% 26.2%

Optimizations of duplicate functions in subsidiaries

Introduction of IT software to increase administrative personnel productivity

Stringent control of marketing and administrative costs

D&A and Customs

Duties 3.4% 0.0%

Decreased focus on finance lease (due to higher cost)

Steps taken to phase-out aircraft in finance lease (to be replaced by new aircraft)

Other OpEx 9.5% 63.3%

Promoting efficiency of sales channels (i.e. growing share of on-line)

Establishing procedures to minimize one-off effects

Cost control over other minor operating expenses

Operational Costs Overview

• Dealing with large portion of costs affected by external factors Aeroflot has to focus not only on controllable expenses

(RUB), but also on cost items influenced by macro factors (FX) executing dedicated optimization initiatives.

1


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1.76 1.91 2.22 2.14

2.45

0.73 0.75

0.76 0.76 0.70 2.49 2.66

2.97 2.90 3.15

2013 2014 2015 H1 2015 H1 2016

CASK - ex-fuel CASK - fuel

Unit Cost Evolution: Aeroflot and International Peers

• Limited expansion of CASK due to strict cost control and efficiency initiatives within the Group.

• Consistent excess of total RASK growth over CASK inflation which drives profitability growth.

• Aeroflot is the leader among international peers in both fuel and non-fuel cost efficiency.

Controlled CASK Inflation

CAGR: 9.4%

8.6%

CAGR: 11.1%

18.9%

3.30

4.08 3.79

5.34

1.10

0.86 1.31

1.47

4.40

4.95 5.11

6.81

H1 2016 H1 2016 H1 2016 H1 2016

1 PAX Revenue/ASK. 2 Converted to RUB using average CBR FX rates. 3 6 months ended 31 March 2016.

RUB/ASK

X% - Total RASK1 growth

H1 2015 H1 2016 3

Cost Advantage vs. Foreign Peers

RUB/ASK2

1


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24.8

23.5

23.1 23.2 22.8

2013 2014 2015 H1 2015 H1 2016

312.6

308.2 304.5

315.4

298.4

2013 2014 2015 H1 2015 H1 2016

Modern Fleet Reducing Fuel Costs

• Aeroflot Group has achieved efficiency gains in fuel costs (across all subsidiaries, including Aurora) as new

generation aircraft were put into operation and old and less fuel-efficient were phased out.

• Aeroflot Group will continue its strategy of deploying modern aircraft and therefore additional fuel savings should

come from regional subsidiaries and increasing LCC contribution effect.

Airline % of Fuel

Consumed

Relative Fuel

Consumption

Contribution to Unit Fuel

Savings (FY15 vs 13)

In line ~85%

In line

No material

contribution to

Group’s fuel savings

Below

average ~15%

Above

average

No material

contribution to

Group’s fuel savings

Aeroflot Group

Average

consumption

per ASK

-

Track Record of Increasing Fuel Efficiency Aeroflot Group Fuel Consumption by Subsidiary

Fuel consumption per ASK (gr/ASK)

1

CAGR

(3.6%)

(1.4%)

CAGR

(1.3%) (5.4%)

Fuel consumption per RTK (gr/TKM)


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100% 93%

113% 106%

200%

Average fuelprice

SVO Russianregionalairports

Airportsabroad

CIS airports

Efficient Fuel Supply Management

• Aeroflot deploys dedicated IT solutions for tankering to optimise fuel consumption given the price differential in the airports in Russia and abroad.

Approach to Fuel Supplies

Comments

Unified

Platform

Subsidiary airlines switched to Aeroflot’s fuel

procurement platform in 2013, and have since

realised significant efficiencies

Key

Suppliers

Large Russian integrated oil companies

Direct contracts with leading global players in

foreign airports (AFS, Shell, AirBP, Gazpromneft-

Aero, Sinopec)

Formula-

linked

Pricing

Formula-linked pricing in 25 airports in Russia, fixed

pricing contracts at 19 Russian airports

All 5-year contracts were terminated as of January

2016 in favour of 1-year contracts with formula-

linked pricing

Majority of fuel purchased in Russia (73% of

volume) and almost all fuel at international airports

supplied at formula-linked price

Formula

In Russia: Jet fuel price = NW Europe (FOB

Rotterdam) price x Discount x FX rate1 x 1.182 +

Storage + Fuelling fees (if applicable)

Abroad: Jet fuel price = Platt’s + applicable fees

Other

Hedging strategy review completed and discussed

by the Board (suspended for now, awaiting

approval)

Changes in taxation system (jet fuel excise and

reimbursement introduced in 2015)

Pricing Differential due to Economies of Scale

Attractive pricing in

SVO airport promoted by economies of

scale and efficient fuel

supplies strategy

₽ 29,763/t

₽ 27,593/t

₽ 33,559/t

₽ 31,528/t

₽ 59,439/t

Limited exposure to fuel supplies in

airports with higher than average fuel

price

1

Share of fuel

purchases

Fuel price:

relative to

average (%) and in RUB

6M 2016


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6

7

8

9

10

11

12

13

14

0 2000 4000 6000 8000

9.4 9.3

9.5

8.9

9.4

10.5 10.5

10.3

10.2 10.1

2013 2014 2015 6M 2015 6M 2016

Aeroflot Group Aeroflot Airline

Efficient Operations and High Utilisation Rates

Despite High Pace of Fleet Expansion Aeroflot

Group Was Able to Maintain Utilization…

Flight hours per day, average for 6M 2016

Flight hours per day

…on the back of Strong Performance of

Subsidiaries and Key Aircraft Types 1

average flight leg,

km

• Aeroflot has already achieved high utilization rates and targets to maintain and improve utilization on the back of LCC expansion.

• Aircraft utilization is a derivative of aircraft type deployed, flight leg and network, share of low-cost vs. premium operations as well as seasonality factor.

• Widebodies tend to have higher utilization than narrow bodies and narrow bodies for regional flights.

• Efficient exploitation of Aeroflot wide-body fleet, potential to further improve utilization of narrow bodies.

• Narrow bodies for regional transportation allow us to efficiently operate with high PLF at the certain markets with less demand and pronounced seasonality and add frequencies to increase convenience (frequencies = market share).

1

Wide body aircraft

Narrow body aircraft

1 Utilization and average flight leg for particular airline is shown for comparison purposes (rather than to indicate exact flight leg).


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9.7 9.9

12.2

10.8

13.3

2013 2014 2015 H1 2015 H1 2016

1,188 1,244

1,342 1,307 1,362

2013 2014 2015 H1 2015 H1 2016

1,059 1,109

1,189 1,157

1,202

2013 2014 2015 H1 2015 H1 2016

17.9 19.0 20.4 19.4 21.2

9.3 9.6

9.7 9.3

10.7

3.2 3.6

3.9 3.7

4.3

30.4

32.2

34.0 32.4

36.2

2013 2014 2015 H1 2015 H1 2016

Aeroroflot airline Airline subsidiaries Non-airline subsidiaries

Track Record of Improved Productivity

Note: H1 numbers are presented on annualized basis.

• Headcount growth linked to operational and top-line growth resulting in sizeable improvement in labour

productivity and translates into increasing operational profitability.

Aeroflot Group Headcount is

Efficient in Terms of…

… Number of PAX Serviced by both

Group’s and Airlines’ Employees …

… and Traffic Revenue Attributed

to Airlines’ Employee

CAGR

5.8% 11.8%

PAX per employee (Aeroflot Group)

PAX per employee (Airlines)

Note: H1 numbers are presented on annualized basis.

CAGR

12.1% 22.5%

Employees, thd RUB mn per airline employee

1


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2.98

2.52 2.39 2.39 2.40

2013 2014 2015 H1 2015 H1 2016

Current Status and Plans Overview Aeroflot Group MRO Capacity Overview

MRO

facilities

Strong team of approximately 2,000 MRO specialists

7 hangars for MRO in SVO, LED, VKO and REN and additional

hangar for regional aircraft in UUS

– Plans for construction of 1 hangar in SVO by 2018

– EASA certification for Boeing and Airbus aircraft maintenance

Organization

of MRO by

subsidiary

Currently over 85% checks conducted in-house

Third party

clients

60 third-party customers and 14 airlines served helping to increase

efficiency of hangars utilization (between scheduled checks of

Group’s aircraft)

A-Technics

goals and

rationale

Becoming key MRO facility of Aeroflot Group to implement

technical inspection in hangar facilities in Vnukovo airport and

Orenburg

Utilization of industry best practices and realization of synergies

with existing technical inspection platform of the Group

Building effective technical inspection company by utilizing unique

technical personnel competencies (i.e. wide-body fleet (B777,

B747) maintenance

Focus on reduction of the volume of Aeroflot Group’s technicall

inspection outsourcing and increase provision of services to third-

party airlines

Achieving operational profit by the end of 2017

MRO and Development of Own Facilities

Saint-Petersburg

Moscow

Orenburg

Number of

Hangars Headcount Capacity2

7 (+1 by 2018) > 2 000 ppl > 3 350 000

ppl/h

SVO (Aeroflot)

Maintenance staff

Hangar

Technical bases

VKO REN

1 060 ppl

+150 (4th)

130 ppl

4601 ppl

4th SVO hangar commissioning in

2018

LED (Rossiya airline)

630 ppl

2 1

2

2

2

3

6 1

Hangar capacity

CAGR: (10.4%) 0.4%

Maintenance Man-Hour / Flight Hour Ratio

1

Outsourced stations

In-house capacity

(hangars)

• Young fleet promotes improvement of fleet reliability and results in less time and money spent on MRO.

• Aeroflot Group focuses on developing its own MRO facilities to further improve efficiencies: creation of A-Technics will reduce the volume of maintenance outsourcing as well as to realize synergies with existing technical inspection platform of the Group.


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Long-Term Efficiency Initiatives

Optimization of printed products

Replacement of ULD with lightweight

devices

Replacement of liquid soap with foam,

etc.

Improving of technological processes

1

• Aeroflot is constantly pursuing various optimization initiatives to deliver better results for its shareholders.

• Generated savings of approximately 300 mn RUB only in 2015 (despite postponement of initiatives roll-out to subsidiaries after decision on regional subsidiary airlines integration).

Reducing the weight of the loaded aircraft

2

Cabin I-PAD instead of paper

Installation of sharklets (13 a/c with sharklets)

Introduction of innovative solutions and technologies

3

2

Energy efficiency programme in offices

and other facilities

Fuel consumption during aircraft

maintenance

Optimization of aircraft loading

(catering and water tanks)


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Optimizations in

the Subsidiaries Operational Improvements to Stimulate

Profitability of Aeroflot Airline Cost-cutting – General and

Administrative Costs

Response to Changing Market Environment

RUB 7.2 bn savings in 2015



3

• Network and fleet optimization

• Optimization of administrative expenses • Network and fleet optimization

• Rescheduling deliveries

• Headcount optimizations

• Cutting of administrative costs

• Aeroflot Group’s prompt reaction to the changing market environment shows Company’s flexibility and readiness to promptly implement complicated decisions.

• Initiatives helped to generate substantial costs savings due to termination or substantial reduction in loss-making operations.

• Positive effect of 2015 translated into 2016 and helped to improve profitability.


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Extracting Synergies from Subsidiary Consolidation

• The merger of Rossiya, Donavia and Orenair simplifies operational structure of regional subsidiaries and over the medium term will deliver tangible strategic, sales and cost synergies (worth several billion roubles going forward despite integration costs in 2016).

3

Positioning and Brand

• Unified product for the regions with clear positioning for the passenger

• Unified service standards and pricing policy

• Increased marketing efficiency

Operational Efficiency

• Efficiency of network management

• Flexibility in fleet management

• Standardized HR policies ensure superior customer experience

Financial Efficiency

• Centralization of financial management, headcount reduction, IT integration, elimination of overlapping activities and other SG&A expenses optimization

• Increasing efficiency of supplies due to economies of scale (single contracts with suppliers)

• Facilitation of intergroup interaction and control from the parent company

Stimulating sales

Reducing costs

Single Champion in the Mid-tier Segment Operational Efficiency and Synergies


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Financial Management Strategy

Financial leverage • Maintain leverage over the cycle (excl. one-off and external effects) in

line with the global industry average

Liquidity targets

Funding targets and debt structure

Hedging policy

Dividend policy

• Maintain minimum cash balance to cover scheduled payments, excess liquidity is placed on overnight deposits

• Conservative management of excess liquidity based on cash flow forecast

• Top tier banks placement and limit of cash concentration

• Borrowing by both PJSC Aeroflot and subsidiaries based on alternative analysis

• Diversified sources of funding by maturity and currency

• Unsecured debt (borrowings)

• 25% of the net income under IFRS according to the approved by the AGM dividend policy

• Subject to the guidelines from the major shareholder on dividend pay-out (possibility to increase pay-out – decree for SOE – up to 50%)

• Awaits BoD approval

Financial Targets Comments 6M 2016 Status

• Stringent financial policy to ensure successful development of the Group.

• Net Debt/EBITDA – 1.6x

• Adjusted Net Debt/ EBITDAR – 3.9x

• Cash – RUB 58.6 bn

• Undrawn credit lines RUB 77.8 bn

• Awaits BoD approval

• No dividends paid for 2015 in 2016

• Dividend pay-out for 2016 will be determined in 2017

• Borrowings RUB 43.1 bn

• 41% RUB, 38% USD, 21% EUR

Aircraft leasing • Decision is based on the total funding cost and financial implications • Operating leasing

MARKETING STRATEGY AND CUSTOMER SERVICE MIKHAIL FANDEYEV MARKETING DIRECTOR

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Pillars of the Marketing Strategy

Target customers across a diversified

range of brands

Carry out effective advertising, PR and

social media campaigns

Ensure customer service excellence

Strengthen loyalty

through Aeroflot Bonus

Lead in digital

integration

Advertising campaigns aimed at promoting services in Russia and strengthening Aeroflot’s

brand internationally in a cost-efficient manner

• Aeroflot focuses on all stages of the passenger flight cycle from attracting new passengers to ensuring high

standards of our product to analyzing feedback and developing effective FFP and marketing campaigns to retain

our clients.

Aeroflot captures growth across domestic and international markets by offering high quality services to a wide range of customers

Customer excellence at all touch points increases loyalty

• Extraordinary customer pre-flight experience is sustained by user friendly online environment, global customer office network and customer support through a multi-lingual call centre available 24/7/365

• Superior ground experience is achieved through offering comfort and convenience to customers and constant focus on operational efficiencies

• Outstanding flight experience across all classes is built around wide selection of high-quality food and beverages, inflight entertainment programmes and connectivity

Aeroflot Bonus programme and co-branded partnerships help sustain customer loyalty

Remain at the forefront of the airline industry’s digital innovation by integrating cutting edge solutions to drive future brand and efficiency gains

Group marketing strategy

1

2

3

4

5

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Targeting the Following Types of Passengers

Russia’s #1 airline. Modern and comfortable aircraft. Premium service offering

Customer Targeting Across a Diversified Range of Brands

• We segment the market into three categories by trip purpose (business, leisure and mixed) with each of the group

also divided by passenger price sensitivity (comfort, value and savers).

• The Group’s four brands target different customer segments with tailored pricing, product offering, brand identity and

marketing activities.

Positioning

Ideal combination of quality and price for travel

in Russia and abroad

Fulfilling a socially important mission of

facilitating travel to/from the Russian Far East

Low-priced travel aboard modern aircraft

Promotional Concept

• Tactical advertising (new routes, seasonal sales, etc.)

• Image promotion via partnerships & sponsorships

• Online: web, social, targeting using Big Data

• Creation/support of brand awareness

• Focus on regional markets

• Charter program

• Leverage Group umbrella effect

• Focus on relevant regional media markets

• Minimal effort expended on brand positioning

• Leverage Group umbrella effect

• Focus on word-of-mouth and recommendations from friends and family

• Strong social media focus

• Promotional sales offers

Traveller (comfort)1

Primary goal: leisure, VFR2 Priorities: schedule, comfort,

airline image

Vacationer (comfort)1

Primary goal: leisure, VFR2 Priorities: schedule, comfort,

airline image

Business (comfort) Primary goal: business

Priorities: schedule, comfort

Traveller (value) Primary goal: business

Priorities: price, schedule, fare conditions

Business (price-sensitive) Primary goal: business

Priorities: price, fare conditions, schedule

Business (value)

Primary goal: business Priorities: schedule, price, comfort

Traveller (price-

sensitive) Primary goal: leisure, VFR2

Priorities: price, schedule`

Charter Primary goal: leisure

Priorities: price, schedule

Practical (value) Primary goal: business

Priorities: price, schedule, fare conditions

Business (value)

Primary goal: business Priorities: schedule, price, comfort

Business (price-sensitive) Primary goal: business

Priorities: price, fare conditions, schedule

PRIORITY

PRIORITY

PRIORITY PRIORITY PRIORITY

1 Traveller Comfort are those who travel frequently, while Vacationer Comfort are those who travel around once per year. 2 VFR = Visiting friends and relatives.

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Brand Diversification: Livery and Concept

Airline Livery

• Livery aims to strengthen customer perception of airlines’ product diversification.

Logo Uniform

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Marketing Additionally Targets Customers by Geography

• Driving growth across domestic and international markets with targeted marketing campaigns.

Targeting Russian Consumers:

Moscow and the Regions

Targeting European Consumers: Fly

from Europe to Asia via Moscow

Targeting Asian Consumers: Fly

from Asia to Europe via Moscow

Across all of Russia, mainly targeting cities where Aeroflot operates its flights

Germany, UK, Spain, Italy, France and others countries China, Hong Kong, South Korea, Japan

• Promoting newly launched flights to consumers

• Maintaining high level of brand recognition via sponsorship programmes

• Informing international passengers on flight options to Russia

• Informing international passengers on international transit options via Moscow

• Informing international passengers on flight options to Russia

• Informing international passengers on international transit options via Moscow

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• Booking and Payment

• Itinerary changes

• Ancillary services

The Role of Marketing at Aeroflot

Pre-flight Experience

(purchasing tickets)

Marketing campaigns to attract passengers

Pre-flight Experience

(at the airport)

Inflight Experience

Frequent Flyer Programme

Marketing campaigns to retain passengers

Key Elements of Experience Focus in 2015-2016

Attracting

passengers

Post-flight

services and

passenger

retention

Ensuring

high

standards

of our

product

• Check-in (airport and online)

• Updated information

• Lounge

• Boarding, Disembarkation, Luggage

• Seat and Comfort (travel kit, blanket, etc)

• Food and Beverages

• Inflight entertainment

• Other: Space+, duty-free, etc

• Schedule (departure/arrival)

• Connectivity and transit

• Frequency

Flight and Trip Related Experience

• Developing Aeroflot website to facilitate bookings, payments and attract passengers’ focus on the relevant information

• Improving passenger experience in home airports in Russia

• Better service abroad – Sky Priority

• Improvements in business class across all aspects of experience

• Selected improvements in economy class

• Developing network,

offering optimal schedule, promoting connectivity in hubs

Feedback and complaints

1

2

3

• Marketing is integral to the Aeroflot business model, in particular driving customer acquisition and

retention.

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Customer Service Excellence: Pre-flight

Overview

• Booking, check-in and flight status updates from desktop, mobile or

Aeroflot app

• Flexible payment options: multi-currency, payment over phone, wire

payment for SME customers, online payment systems

• Ancillary services: Aeroexpress tickets, travel insurance, car hire,

virtual gift certificates and hotel booking

Overview

• Wide network of customer service offices and call centre to support customers before they travel

― 8 offices in Moscow, 3 at Sheremetyevo airport, 74 elsewhere in Russia and 91 in foreign countries

― Multi-language call-centre and dedicated lines for Aeroflot Bonus elite level members

Overview of Aeroflot International Offices

Key achievements in 2015-2016

• Development of the call-center:

― Opening of additional premises in Volgograd (in addition to Vladimir)

― Launch of Korean language call-center line

― Introduction of free Internet Call to call centre directly from all nine language versions of the website

― Further improvements of the IVR

• Launch of SMS notifications to inform passengers they can register for flights online

• Optimisation of offices, with 5 facilities closed in order to focus resources on more profitable locations

Online Booking and Support Ticket Offices and Call Centre

• Aeroflot prides itself on excellence in every interaction with passengers, including before the flight.

Website Mobile applications

Supportive- iOS support features (PassBook, Apple Watch and iBeacons)

Best in class - App store ratings of at least 4 out of 5 stars

Wide - support for all main mobile operating systems (iOS, Android and WindowsPhone)

Design – continuous introduction of improvements, crowdsourcing project launched in September 2016

Fast growth - ticket sales via web site rose from 10% of sales in 2009 to 25% in 2015

User-friendly - translated into 9 languages (added Chinese and Korean)

Customer-oriented - self registration via the website

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Customer Service Excellence: At the Airport

• Improving operational efficiency through faster and more streamlined processes.

Consistent focus on and investment in operational efficiency resulting in better customer experience and cost savings

Focus on optimising check-in and baggage flow processes

– Registration kiosks in international airports and at Aeroexpress train stations

– Baggage flow optimisation initiatives

Grouping flights at Sheremetyevo Terminal D to ensure minimum security control and boarding time

Offering business class domestic and transit passengers premium services at lounge at Sheremetyevo D Terminal

Faster and more streamlined connecting process for transit passengers following roll-out of new IT infrastructure, streamlined check-in and boarding procedures and training for front line staff

SkyPriority, available in 85+ destinations, allows for priority check-in, baggage drop-off, security and boarding lines

Ensures consistent quality of service and long-term loyalty of priority customers

125 Wi-Fi hotspots in all terminals

Fast Track service rolled out in 16 key European airports plus Bangkok and Tokyo

New electronic scales for hand luggage at boarding gates

Business Class lounges reaching international standards, e.g. Sheremetyevo lounges equipped with individual charging stations

Launch of online Baggage Tracing Service by Aeroflot

Consistent Improvement of Ground Experience Efficiency and Quality – Access to Sky Team Lounges

Key Achievements in 2015-2016

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Customer Service Excellence: On Board

Key achievements 2015-2016:

• All 36 long-haul aircraft are equipped with wireless internet access (new Wi-Fi fares introduced)

• Portable electronic devices are allowed to be used in Airplane Mode throughout the entire flight


• Replacement of entertainment system - Samsung Galaxy Tab S 8.4 with Premier IFE

• Upgrade of travel kits - Salvatore Ferragamo (for flights of 6 hours +)

• CAUDALIE brand cosmetics in business class lavatories (for flights of 8 hours +)

• National dishes on flights to Asia


• Increased bookings in comfort class by 20.7% for 1H 2016, year-on-year

• All Comfort Class seats equipped with USB charging ports for mobile devices

• New menus rolled out featuring exquisite food by world class chefs

High standards of comfort and service, individual approach, maximum choice and attention to details from highly-trained multi-lingual cabin crew

Spacious seats on narrow-bodies and separate cabin with comfortable spacious full-flat seats on A330 and B777

Multi-course gourmet meals

Offered on B777-300ER

Spacious and comfortable seats with increased row space

Up-scale and wide menu options

Travel kits, blankets and pillows

In-seat back 10.6’’ display entertainment system

Skytrax 4-star passenger service from a highly trained multilingual cabin crew

Optimum level of comfort and service

Ergonomic seats, blankets and pillows

In-seat back 9’’ display entertainment system (A330 and B777) offering a wide range of Western and Russian film and television programming

Fully flat beds on A330 and B777 Ergonomic seats in Economy class Nearly 100 cm of space between seats

• Tactical projects to further improve service on board.

Economy Class Comfort Class Business Class

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4.0

4.6

5.1 4.8

5.5

2013 2014 2015 1H2015

1H2016

Enhanced Loyalty through Aeroflot Bonus Programme

• Bonus programme aimed at retaining customers and increasing their loyalty.

Continuing Efforts to Improve the Programme Largest FFP in Russia and Eastern Europe

Partners of the Programme

• Developing programme to increase its attractiveness to members

― Strengthening partnerships - 60 new programme partners added since the start of 2016

― Expanded geography of mile redemptions for travel class upgrades at check-ins.

• Developing IT solutions to enhance convenience of FFP members

― Interactive route map with Aeroflot Bonus mile calculator added to customer dashboard as well as enhanced feedback messaging

― SMS notifications, ability to upgrade service class for bonus miles, purchasing tickets for bonus miles via mobile application, etc.

• IT solutions for targeting and increasing marketing campaigns efficiency

― Big Data and CRM projects launched to develop recommendations for members and develop customized email campaigns

19.1%

Aeroflot Bonus membership (mn) Growth by Segments (1H 2016 y-o-y)

+17.5%

+14.2%

+16.2%

+19.2%

Basic

Silver

Gold

Platinum

13.7% 13.0% 14.3%

Airline Partners Co-brand (Banks) Other Partners (Earning Miles) Other Partners (Spending Miles)

Over 5.5 million members to date, with 143 thousand Elite and Elite+ members (Silver, Gold and Platinum)

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Promoting the Brand

• Aeroflot leverages the full marketing toolkit to engage with its target audiences.

Over 150,000 followers on Instagram

Over 140,000 followers on Facebook

Over 130,000 followers on Twitter

Over 500,000 views on YouTube

Wide range of advertising channels used in Russia and internationally (TV, digital, OOH and press)

One the most valuable transportation brands globally and in Russia according to Brand Finance

Active sponsorship of sport as brand promotion, including official carrier of Manchester United and CSKA football teams

“…Aeroflot has turned things around, rising in

global airline-quality rankings and becoming a

darling for investors.”

Media Engagement Generates Right Kind of Press Smart Advertising and High-Profile Sponsorships

Top-rate social media with large following

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Corporate Sponsorships

• High level of strategically-chosen sponsorship activity aimed at increasing brand loyalty among target audience.

FC Manchester United

(official carrier) Russian Football Union

FC CSKA

(official carrier) Russian Basketball Federation

BC CSKA

(official carrier) Russian Chess Federation

Russian Olympic

Committee Russian Cinema

Russian Paralympic

Committee Theatre festival Golden Mask

RosFARR KVN

Russian Golf Association SPIEF’16

Russian Cycling

Federation Eastern Economic Forum

Volleyball Federation

of Russia

Football-related projects 67.5% Other sports

initiatives 23.0%

Cultural projects

9.5%

Spending on Sponsorship Programmes Key Partners

2015

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Retain and develop high-margin customers

through estimating income levels of each client on the basis of their lifecycle

(Cutomer Lifetime Value module) and acquisition of new high-margin customers

using “look-alike” methodology

Determine customer propensity

to respond to communications/offers across various channels (Customer

Propensity and Price Sensitivity Module), while identifying which

channels play a role in a successful transactions (Channel Efficiency

Module) to enhance effectiveness of communications and increase the share

of sales via Aeroflot’s own channels

Enhance the precision and commercial efficiency

of marketing communications by using information about passengers and

potential clients from various sources (Client 360 module)

Increase sales of tickets and ancillary services by displaying alternative or additional offers on possible destinations/services

based on past flights, correlations and partner data (Service Recommendations Module)

Big Data: The Next Big Thing in Marketing (1/2)

Understand social network activity

to identify customer preferences and communicate with clients based on this

knowledge

• Big Data will allow us to micro-target customers to boost sales, market more effectively and increase loyalty.

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Big Data: The Next Big Thing in Marketing (2/2)

• Big Data has the potential to generate incremental revenue and enhance the Group’s competitive advantage.

Operating systems

ACS

Automated online marketing

Dynamic behavioral segmentation

High yield clients acquisition

Advanced client analytics

Client Lifetime Value growth

Social networks

CRM structured data

Big Data unstructured data

Category

Project Timeline

Big Data Framework

Activities

Testing & Training

July Q2 2016 Q1 2016 2015

Preparation

Concept Development 12/16/2016

Commercial operation of System

August September October November December

Phase 2. Recommendations Service Module Customer Propensity and Price Sensitivity Module, Channel Efficiency Module

Phase 1 - Client 360 Module and Customer Lifetime Value Module

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Best Russian Airline

(2016, 2014, 2013)

4th Star awarded

in 2016

Best Airline

in Eastern Europe

(2016, 2015,

2014,2013 & 2011)

Recognized Service Leadership and NPS

• Aeroflot’s achievements in client services have been recognized by independent industry experts, professional

community and passengers and helped to significantly increase NPS.

Recognition for Outstanding Service and Achievements

Best Russian Airline

2013, 2014, 2015 7-star safety rating

Best European airline

(best business-class

in mid-haul segment)

Best Airline Cuisine

Top-10 Readers’ Choice Best Russian Airline

Results in Consistent Improvements in NPS

Dedication to high level of client service backed by relevant and effective marketing strategy has helped us to increase NPS (Net Promoter Score) for several years in row

― According to estimates, our NPS remained stable in H1 2016

Increase in NPS Index translates into incremental passenger traffic and revenue growth

52%

56% 58%

67% 72%

2011 2012 2013 2014 2015

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