We have revisited our forecasts and assumptions for Aeroflot following publication of its 9MO3 unaudited IAS results and full-year 2003 operating data, which demonstrated a higher than expected increase in passenger and cargo turnover, and a higher load factors. We have raised our annual forecasts for Aeroflot’s passenger traffic for 2004—2010 by 2% on average, and we increased our estimates for average international and domestic passenger yields by 0.1 US cents. We have made adjustments to our forecast of the company’s operating costs; specifically, we have reduced our projections for depreciation and personnel.

Our expectation for 2004E EBITDA growth is 22%, and our EBITDA forecast is $296 million (EBITDA margin 16.7%). We expect Aeroflot’s earnings to reach $ 140—150 million, up 22—30% on expected net income of $114 million in 2003.