OREANDA-NEWS. October 02, 2009. Aeroflot Group and UTair showed divergent changes in turnover rates (-2.4% and +5.7% YoY, respectively), as reported by the Federal Agency for Aviation transportation. Both outpaced the Russian market, which in August 2009 had dropped 7% YoY, reported the press-centre of OTKRITIE FC.

View: We think this is positive news for Russia’s top airlines as they continue to strengthen their market positions in 2009. Although we expect a seasonal decline in the MoM dynamics of passenger turnover in the autumn, we think that due to the low base of 4Q08, the annual results for airlines will not be worse than the 8M09 figures. We expect positive 3Q09 RAS statements from Aeroflot and UTair, which are likely to show QoQ growth in their financials.

Valuation & Action: We reiterate our BUY rating for UTair, which trades on a 2009E EV/EBITDA of 5.8x, which is a 30% discount to peers. We have a HOLD rating for Aeroflot.