Ukrainian flag carrier AeroSvit incurred severe operating losses in 2011 as a result of greater spending on business expansion and higher fuel costs.
Ahead of the airline shareholders meeting, the management revealed that its net loss totalled Hr1.45 billion ($180 million), more than trebling from the previous year.
At the same time, the value of AeroSvit's assets increased tenfold to Hr1.12 billion and staff grew 31.4% to 2,570 people. The carrier transported 2.8 million passengers, up 63% from 2010.
Sergey Kutsyi, an aide to AeroSvit's director general, said AeroSvit last year introduced 11 new routes, which required significant investment in associated fleet and network expansion.
"This was in addition to 20 routes we opened in 2010. They haven't become profitable yet because it takes, on average, two years," he said.
A higher volume of aircraft lease payments, and ground handling and maintenance costs was compounded by an upswing in fuel prices in the first half of 2011. "For us, fuel costs account for 40-50% of all outlays," noted Kutsyi.
AeroSvit has engaged in debt restructuring talks with creditor banks. To cut losses, it wants to optimise its network and frequencies, cancelling the most unprofitable services.
Kutsyi said it would also put special emphasis on boosting revenues through broader cooperation with codeshare partners.