- Air Astana’s latest financial statements show a $40m net loss for the April-to-June quarter, with an operating margin at negative 352%. Not that the margin figure is all that meaningful, other than to highlight a situation of severely depressed revenues, against a stickier cost base that’s not dropping quite so fast. Q2 revenues in fact declined 94% y/y, while operating costs were down 71%. During last year’s Q2, the airline earned a positive 8% operating margin. It earned a 9% margin for all of 2019.
Air Astana is the national airline of Kazakhstan, a country which like neighboring Russia has a highly oil-dependent economy. That served it well during the oil boom of the first half of the 2010s. But when the boom fizzled in the second half of the decade, times were tougher. Air Astana is 51% owned by its government. The rest is owned by British defense firm BAE Systems. Its hub Nur-Sultan, formerly called Astana, is by whatever name well-positioned for east-west travel connecting Europe with Asia. But Almaty is a bigger business market, and operations are split sub-optimally across the two cities.
Last year, the carrier launched a wholly owned low-cost unit called Fly Arystan using A320s. When the pandemic hit, Air Astana grounded most of its fleet but maintained flights for oil service workers and repatriation charters. It operated some cargo flights too, continuing nearly 30% of Q2 revenues. Passenger capacity was down 88% y/y in the quarter; capacity in the second half of the year should be down more like 40%.
Helpfully, Air Astana’s largest market by revenues pre-crisis was the Kazakh domestic market. Its other major markets include Russia, Europe, Asia, and the Middle East. Before the crisis, it started receiving A321 NEO LRs and E2 E195s, with an eye toward nearly doubling its fleet to 60 planes by 2026.
Madhu Unnikrishnan
October 11th, 2020