MOSCOW - Russian flag carrier Aeroflot (AFLT.RTS) said on Monday it expected passenger numbers to recover and profits to soar this year.

The state airline flew 5.5 million passengers in 2002, down 300,000 from the previous year, but expects a five percent increase in 2003, deputy general director Lev Koshliakov told Reuters.

"In 2003 we expect passenger numbers to rise by about five percent, that is 250,000 to 260,000 more people," he added.

Koshliakov said the number of passengers in 2002 had represented 68.8 percent seat occupancy and that figure would rise to 70 percent in 2003.

He said the company expected to have made net profit to Russian Accounting Standards (RAS) of $74.2 million last year, rising to more than $100 million in 2003.

"Results to International Accounting Standards (IAS) for 2002 will be close to the Russian figures," he said.

Aeroflot's full year IAS net profit was 20.1 million, up from $8.6 million in 2000.

The company rode out the global industry crisis that followed the September 11 attacks better than some of its peers as it was less dependent on transatlantic flights and was able to grab market share as its competitors cut flights to Russia.

FLEET RESTRUCTURING

Koshliakov said Aeroflot would achieve its ambitious growth targets by restructuring its fleet and increasing its number of passengers.

"We will restructure the fleet and reduce leasing costs, then use more economic planes to reduce spending on fuel," he said.

"The most important thing is for us to cut costs and optimise our use of resources," he said.

At the moment, Aeroflot's fleet consists of 27 Boeing 737s, 767s, 777s and Airbus 310s along with over 100 Russian aircraft, some of which are grounded.


Around 50 Russian planes will remain.

The whole restructuring programme will cost $600 million, but Aeroflot will use different schemes, including giving back used Boeings, so that it will end up paying $250 million.

The state owns 51.17 percent of Aeroflot.

The company's shares closed five percent lower at $0.3325 in Moscow.