1

Kirill S. BudaevKirill S. BudaevCorporate Property Department, DirectorCorporate Property Department, Director

February 2004February 2004

2

Contents

• Company overview

• Efficiency increase

• Operating results

• Financial results

Section 2

Section 3

Section 4

Section 1

3

Company Company OOverviewverview

• Founded in 1923• The biggest Russian airline:

– 5,8 mm. passengers carried in 2003– 25,6% market share in terms of overall passenger carriers.

• Operates 93 aircraft (31 foreign + 62 Russian-built)• Flies to 104 destinations in 48 countries• Financial performance in 2003*:

– USD 1.56 bn. in sales– USD 114,85 mm. in net profit

• USD 853 mm. market capitalization• 51,2% government-owned (38,9%- institutional investors, 9,9%-private

individuals)

* in compliance with the Russian Accounting Standards

4

Market environmentMarket environment

•Shortage of adequate capacity•Noise & emission restrictions introduced by European countries•Strict regulation•Still high degree of fragmentation•Low purchasing power – low yield – major constraint•Higher growth rates in the charter segment

Passengers transported by Russian airlines

29,5

26,5

20

22

24

26

28

30

2002 2003

11%

Russian airline industry growth in 2000-2002

60,56 64,7170,9

29,526,5225,07

0

10

20

30

40

50

60

70

80

2001 2002 2003

RPK bn.Pax mm.

5

Competitive positionCompetitive positionAeroflot position in Russian Civil Aviation

32,6%31,3%

27,3%25,6%

0%

5%

10%

15%

20%

25%

30%

35%

2000 2001 2002 2003

• Still an ultimate leader in the industry

• Decrease of the market share is due to:

– radical reduction of old Soviet-built aircraft capacities

– concentration of the market growth in the non-core segment

Share of Aeroflot 10M 2003 (Domestic)

2,9% 3,00%

7,4%

11,7%11,3%

7,2%

5,0%

0%

2%

4%

6%

8%

10%

12%

14%

Share of Aeroflot 10M 2003 (International)

2,8% 1,9%

9,7%11,8%

39,8%

0,5%4,8%

0%5%

10%15%20%25%30%35%40%45%

Aeroflot Sibir Pulkovo Krasair Utair Uralairlines

Domoddovoairlines

6

Stock performanceStock performance

0,240,260,280,300,320,340,360,380,400,420,440,460,480,500,520,540,560,580,600,620,640,660,680,700,72

17.01.0

3

24.01.0

3

28.01.0

3

04.02.0

3

26.02.0

3

03.03.0

3

12.03.0

3

22.04.0

3

07.05.0

3

20.05.0

3

02.06.0

3

18.08.0

3

05.09.0

3

26.09.0

3

08.10.0

3

22.10.0

3

24.10.0

3

01.12.0

3

03.12.0

3

09.12.0

3

31.12.0

3

260280300320340360380400420440460480500520540560580600620640660680700

RTS Quotation, USD MICEX Quotation, USD RTS Index

7

Corporate governance policiesThe management realizes the need to comply with corporate governance standards in order to increase the company’s capitalization. The company takes into account the interests of minority shareholders and prospective investors in particular, this means:

•Implementation of standards of Corporate

governance Code of FCSM and internal Code of Corporate Conduct

•Simple and transparent procedures for shareholders

•Liquidity support:

- RTS listing

- MICEX listing

- Frankfurt Stock exchange (GDR 1 level)

•Full transparency

-Annual audit by Deloitte&Touche

-Timely disclosure of

- operating and financial results

- major transactions

The provision of equal and timely access to Information-Regular briefings for shareholders and investors-Web – site with section Investor relations (www.aeroflot.ru)-Comprehensive annual report-Presentation and press – conferences-E-mail distribution list-Disclosure on www.skrin.ru; www.adr.db.com

The Board of Directors’ role increase

- election of General Director

- approval of deals exceeding $15 million

- extension of list of deals that need the

approval of Board of Directors

Increase of S&P Corporate Governance Score from 4,6 to 5,2

8

Strategic visionStrategic vision

Our goal is - to be a world-class airline based on the best traditions of Russian civil aviation.

To implement this vision Aeroflot will strive to:

• Strengthen leading position in the national civil aviation industry

• Fly to the most of largest cities of the world through:

- viable network

- cooperating with partner airlines

• Provide quality service, matching or surpassing competition

• Achieve level of operational and financial performance of AEA airlines

• Build a corporate culture based on effective system of employee participation

9

Major directions of activity in 2003

•Network optimization

- Company continued to develop it’s rout network according to started in the year 2000 network optimization program and impact of SARS and Iraq war.The priority was given to the routs with a high profitability.

•Raising of fleet usage effectiveness

- The Company substantially decreased usage of fuel ineffective aircrafts such as: Il 76, Il 86, Il 62

•Foreign made fleet replacement program

- Aeroflot started to realize foreign made fleet replacement program. The program envisages replacement of 27 foreign made aircrafts of the Company on the 27 new foreign made aircrafts. The program is essential for rout network development and operating costs optimization.

10

Efficiency increase in 200Efficiency increase in 20033

11

Network optimisationNetwork optimisation

Europe41%

America10%

Asia19%

Africa&Middle East4%

CIS, Baltic and Russia26%

•Concentration of capacities on high-yield routes

•Providing high yield routes with competitive planes

•Improvement of connectivity

(Network connectivity was increased from 10,% in 2002 to 14% in 2003)

•Closure of loss making / marginally profitable routes

•Because of SARS and Iraq war Aeroflot passenger turnover in Southeast Asia reduced on 7,6% and in Asia on 7,1%.

LH

AABAUA

AF

DL

AY

LO

MA

SQSN

JL

OS

SX

20022005

1999

0

40

80

120

160

0 10 20 30 40 50"Depth" (Average weekly frequency)

"W

idth

" (

Qua

ntit

y of

rou

tes) SU

3,6 6,9 10,4

Network quality

Network structure by revenue

Revenue rate and load factor

65,7 65,8 68,4 69,4

6,65,5 5,9 6,4

0

20

40

60

80

2000 2001 2002 9M 2003 E

Revenue rate per RPK Passenger load factor

12

Changes in Aeroflot passenger traffic in accordance with SARS and Iraq war (Summer 2003)

Russia

Middle East Asia

Africa

Europe

North America

РАХ +18127

РАХ+7311

РАХ-13800

РАХ-150949

РАХ-9800

South America

13

Fleet utilisationFleet utilisation

21,5

13,610,9

0

6,4

50,2

6,7

2,2 1,92,0

23,0

40,0

9,7

38,8

16,0

20,4

34,5

20,5

5,7 3,94,1

26,0

44,3

2,3

39,1

9,9

35,8

17,4

9,8

19,123

1,9

24,2

33,532,6

0

10

20

30

40

50

60

Il96 B767 B737 B777 A310 Il62 Il86 Tu154 Tu134 Il76 DC10 A-319 A-320

thou

sand

FH

2001 2002 2003 E

•In 2003 passenger aircraft flight hours increased on 1,0% beside 2002 and cargo aircrafts flight hours increased on 7,1% beside 2002.•

14

Foreign – made Foreign – made fleet restructuringfleet restructuring

B777-200ER (2)

B767-300ER (4)

A310-300 (11)

B737- 400 (10)

B767-300ER (operating leases)

А320 family (10 operating

leases, 8 finance leases)

1 tуре of LH aircraft (9)

1 tуре of MH aircraft (18)

27 aircraft 27 aircraft

Primary objectives:

•Ensure significant cost savings and increased operational efficiency through higher fleet commonality

•Incorporate high degree of fleet planning and fleet management flexibility

•Achieve high asset liquidity and broad choice of long-term financing sources

15

RussianRussian - made - made and cargo fleet restructuring and cargo fleet restructuring

Il96-300(6)

Il62 (10)

Il86 (14)

Tu154M (20)

Tu134 (15)

Medium-term target - provide further commonality of the whole fleet

Il76(10)

DC10F(2)

1 type of LH aircraft 6 Il96 + 6 on order

1 type of MH aircraft 20 Tu154M

1 type of SH aircraft 11 Tu134M

65 aircraft 52 aircraft

1 type of freighter4 DC10F

16

Operating profit and net profit dynamics Operating profit and net profit dynamics

158,8

40,182,1

7,3-6,2

-59,6

-210,9

89,3

20,18,6

-250

-200

-150

-100

-50

0

50

100

150

200

1998 1999 2000 2001 2002

USD

mln

Operating profit Net profit

107,0 106,7

69,7

89,6

0,0

20,0

40,0

60,0

80,0

100,0

120,0

9M2002 9M2003

Operating profit Net profit

USD mln

*9M2002 and 9M2003 results - non audited data

17

Operating Results 200Operating Results 20033

18

Main operating figuresMain operating figures

Passenger turnover

18939,317644,7

18202,6

14163,713828,3

15107,3

4038,93816,43832,0

02000400060008000

100001200014000160001800020000

2001 2002 2003E

RP

K m

ln

TotalIntern.Domest.

Ton-km turnover

2258,62152,5

2252,7

1805,11737,21822,1

447,6415,3436,5

0

500

1000

1500

2000

2500

2001 2002 2003E

RT

K m

ln

TotalIntern.Domest.

Mail and cargo traffic

87,093,7 95,7

14,7 16,2 18,5

101,7109,9

114,2

0

20

40

60

80

100

120

2001 2002 2003E

thou

sand

ton

s

TotalIntern.Domest.

Passenger traffic

5832,15489,6

5843,5

4129,83886,54206,6

1713,71603,11625,5

0

1000

2000

3000

4000

5000

6000

7000

2001 2002 2003E

PA

X t

hous

and

TotalIntern.Domest.

19

Load factors and fuel consumptionLoad factors and fuel consumption

Passenger load factor

64,2

67,3 67,9

72,7 72,7

74,9

65,8

68,469,4

58

60

62

64

66

68

70

72

74

76

2001 2002 2003E

%

TotalInt.Domestic

Commercial load factor

51,555,4 55,4

63,2 60,764,6

57,056,453,5

0

10

20

30

40

50

60

70

2001 2002 2003

%

TotalInt.Domestic

Specific fuel consumption

567,0

492,0479,0

420

440

460

480

500

520

540

560

580

2001 2002 2003E

gram

m/t

on-k

ilom

eter 1% of passenger load factor increase -

USD16,5 mln of additional revenue

1% of commercial load factor increase - USD27 mln of additional revenue

20

Financial Results 2002Financial Results 2002 andand

9 months 2003 results 9 months 2003 results (not – audited)(not – audited)

21

Profit and loss statementProfit and loss statement

31.12.01 (USD mln)

31.12.02 (USD mln)

9M 2002E (USD mln)

9M 2003E (USD mln)

Revenue 1 558,0 1563,0 1103,7 1176,0

Operating costs 1 517,9 1404,2 996,7 1068,3

Operating profit 40,1 158,8 107,0 106,7

Profit before taxes an minority interest

10,7 132,9 89,2 117,6

Profit after taxes 21,8 91,3 69,7 89,6

Minority interest 1,7 2,0 - -

Net profit 20,1 89,3 69,7 89,6

Net profit per share $0,018 $0,080

22

RevenueRevenuess (I)(I)

Revenue in 2000-2002

1406,9

1558,0 1563,0

1300

1350

1400

1450

1500

1550

1600

2000 2001 2002

USD

mil

lion

Traffic revenue in 9M 2002-9M 2003 Estimated

922,8

980,8

890900910920930940950960970980990

9M 2002 9M 2003

USD

mil

lion

Revenue in 9M 2002 - 9M 2003 Estimated

1103,7

1176,0

1020

1080

1140

1200

9M 2002 9M 2003

USD

mil

lion

Traffic revenue in 2000-2002

1074,0

1221,01244,3

950

1000

1050

1100

1150

1200

1250

1300

2000 2001 2002

USD

mil

lion

1,8%

6,2%

6,5%

23

Revenues (II) Revenues (II)

Passenger revenue in 2000-2002

956,4

1115,7 1120,5

850

900

950

1000

1050

1100

1150

2000 2001 2002

USD

mil

lion

Passenger revenue in 9M 2002-9M 2003 Estimated

854,2

903,6

820

830

840

850

860

870

880

890

900

910

9M 2002 9M 2003

USD

mil

lion

5,8%

0,5%

24

Passenger revenue Passenger revenue breakdown breakdown by region by region

39,341,4

11 10

22,3

19

4,1 3,7

25,723,2

0

5

10

15

20

25

30

35

40

45

2002 2003

Europe

America

Asia

Africa

CIS, Baltic and Russia

%

25

Revenue ratesRevenue ratesRevenue/passenger

205,6194,4

234,6214,9

135,3130,2

0

50

100

150

200

250

2001 2002

Pas

seng

er r

even

ue./t

raffi

c

TotalIntern.Domest.

Passenger yield

6,0

6,6

5,55,7

5,9

6,4

4,85

5,25,45,65,8

66,26,46,66,8

2001 2002

Pas

seng

er r

even

ue/R

PK

TotalIntern.Domest.

Revenue per passenger increased by 5,8% in 2002international routes - by 9,2%domestic routes - by 3,9%

Passenger yield increased by 8,5% in 2002international routes – by 10,0%domestic routes - by 3,6%.

Revenue/passenger

202,3201,8

200

201

202

203

204

205

9M 2002 E 9M 2003E

Pas

snge

r re

venu

e/tr

affic

Passenger yield

6,6

6,3

6

6,5

7

9M 2002E 9M 2003E

Pas

seng

er r

even

ue/R

PK

0,2%4,8%

26

Operating Operating profit/RTKprofit/RTK

68,9 72,667,2 65,2

1,77,4

0

10

20

30

40

50

60

70

80

2001 2002

Revene/RTK Costs/RTK Operating result

68,5 71,2

61,8 64,7

6,7 6,5

0

10

20

30

40

50

60

70

80

9M 2002E 9M 2003E

Revenue / RTK Costs / RTK Operating result

27

Operating costsOperating costs

1218,3Total

54,5Other expenses

5,6Increase in (release of) provision for bad and doubtful accounts

35,9Communication expenses

41,5Third – party passenger services

56,9Operating taxes

83,2Administration and general expenses

99,5Operating lease expenses

110,7Sales and marketing

112,5Maintenance

259,3Aircraft and traffic servicing

358,7Fuel

(USD mln)

% to 200120022001

( USD mln)

274,7

244,8

109,7

103,2

104,2

69,5

30,6

32,5

35,3

6,2

Penalties - 16,4

54,7

1081,8

76,6

94,4

97,5

93,2

104,7

83,5

53,8

78,3

98,3

110,7

-

100,4

88,8

28

Operating costs 9 months 2002 and 2003Operating costs 9 months 2002 and 2003

  9M 2002 Estimated(USD million)

9M 2003 Estimated(USD million)

% to 9 months 2002

Fuel (193,9) (225,6) 116,3

Aircraft and traffic servicing (175,8) (191,1) 108,7

Operating lease expenses (71,4) (92,8) 129,9

Depreciation (84,7) (65,1) 76,9

Maintenance (86,5) (103,1) 119,2

Operating taxes (19,1) (11,1) 58,1

Long-term investments reserve changes 0,7    

Doubtful receivables reserve (1,8) 0,3  

Sales and Marketing (84,7) (82,1) 96,9

Staff costs (138,1) (148,7) 107,7

Communication expenses (27,2) (30,1) 110,7

Passengers servicing (51,1) (53,4) 104,5

Insurance (21,1) (22,1) 104,7

Administration and general expenses (42,0) (44,3) 105,5

Total 996,7 1069,3 107,3

29

Operating costs structureOperating costs structure

100 Total

4,5Other expenses

0,5Increase in (release of) provision for bad and doubtful accounts

2,9Communication expenses

3,4Third – party passenger services

4,7Operating taxes

6,8Administration and general expenses

8,2Operating lease expenses

9,1Sales and marketing

9,2Maintenance

21,3Aircraft and traffic servicing

29,4Fuel

20022001

25,422,6

Penalties

10,2 9,5 9,6 6,4 2,8

3,03,3

0,6

- 1,55,1

100

30

Operating costs 9 months 2002 and 2003 Operating costs 9 months 2002 and 2003 structurestructure

  9M 2002 Estimated(USD million)

9M 2003 Estimated(USD million)

Fuel 19,5 21,1

Aircraft and traffic servicing 17,6 17,9

Operating lease expenses 7,2 8,7

Depreciation 8,5 6,1

Maintenance 8,7 9,6

Operating taxes 1,9 1,0

Doubtful receivables reserve 0,2 -

Sales and Marketing 8,5 7,7

Staff costs 13,8 13,9

Communication expenses 2,7 2,8

Passengers servicing 5,1 5

Insurance 2,1 2,1

Administration and general expenses 4,2 4,1

Total 100 100

31

Operating costs / RTKOperating costs / RTK

Operating costs

1324,0

1517,0

1404,2

1200

1250

1300

1350

1400

1450

1500

1550

2000 2001 2002

USD

mln

Production cost of 1 tkm

59,1

67,2

65,2

54

56

58

60

62

64

66

68

2000 2001 2002

USc

-7,4%

-3,0%

Operating costs 9 months 2002 and 2003

996,7

1069,3

900

1000

1100

9M 2002 Estimated 9M 2003 Estimated

Production cost of 1 tkm

61,8

64,7

60

61

62

63

64

65

9M 2002E 9M 2003E

7,3%

4,7%

32

Balance sheetsBalance sheets 31.12.01

(USD mln)31.12.02

(USD mln)Change to 2001

Current assets 292,6 320,4 27,8

Long – term assets 819,6 565,0 -254,6

Total assets 1 112,2 885,4 -226,8

Short – term liabilities 562,6 461,9 -100,7

Long – term liabilities 464,3 250,8 -213,5

Minority interest 7,6 7,9 0,3

Shareholders’ equity 77,7 164,8 87,1

Total liabilities andShareholders equity

1 112,2 885,4 -226,8

33

Balance sheets (Balance sheets (as for September 30, 2003)as for September 30, 2003)

30.09.02(USD,000)

30.09.03(USD,000)

Current assets 264 993 322 276

Long – term assets 690 383 391 400

Total assets 1 070,2 886,8

Short – term liabilities 443,0 398,4

Long – term liabilities 447,1 214,3

Shareholders’ equity 180,1 274,1

Total liabilities andShareholders equity

1 070,2 886,8

34

DEBTDEBT

Debt/EBITDAR

4,10

5,044,67

2,56

4,93

0

1

2

3

4

5

6

1998 1999 2000 2001 2002

Debt composition

82 773 3 3

441 435 391339

113

602 602707 700 729

65469

110131

0

100

200

300

400

500

600

700

800

1998 1999 2000 2001 2002

ST debt LT debt LT leases Off BS debt

35

Financial Financial forecastsforecasts

Op

erat

ing

inco

me

in 2

002

113

111

70142

142

31 1815

32242

Rev

enue

fro

m

incr

ease

d vo

lum

e

Incr

ease

d yi

eld

Cos

ts f

or in

crea

sed

volu

me

Cos

t gro

wth

due

to

incr

ease

d pr

ices

Fue

l cos

t sav

ings

Fli

ght c

ost s

avin

gs

Mai

nten

ance

cos

t sa

ving

s

Lea

se c

ost s

avin

gs

Op

erat

ing

inco

me

in 2

005

Aeroflot’s activities in the area of business optimization allow the company to increase its

operating income on more then USD 200 million in 2005

36

Long-term strategic focusLong-term strategic focus

• To increase market share on profitable routs

• Further improvement of operating and financial results

• To increase quality of services

• Batter brand recognition

• Leading role in Russian airline industry consolidation

• Building strategy-focused organisation

• To join one of the one of the world alliance membership

• Strategic projects:

– New terminal

– Group restructuring

37

Contacts:

www.aeroflot.ru

afokeeva@aeroflot.ru

Kbudaev@aeroflot.ru

Tel: (7095) 258 06 86