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Today's paper. Last Updated: 06/01/2012

Aeroflot Lands Tax Cut

The Russian government will allow Aeroflot to lease two Boeing jets free of import taxes, clearing one key hurdle for the carrier to take delivery of the long-delayed long-range planes, according to an Aeroflot official.


The decision, and an agreement Wednesday in Atlanta between the foreign leasing company and Aeroflot, should clear the way for the Boeing 767-300ER planes to arrive in Russia within a month or two, said Alexander Devitt, press spokesman for Aeroflot.


Aeroflot had said earlier this year that the planes would be in service by July 1. But a 50 percent import duty on the planes, which took effect July 1, would have made the jets unprofitable to lease.


The air carrier needs the planes to upgrade the service and efficiency of its flights to the United States. It currently uses Russian IL-62 long-range planes for the service.


Russian airlines have been looking increasingly to Western planes to compete internationally. Domestic plane producers lack the manufacturing capacity to fill orders, and the airlines have been attracted to the Western planes because of their better reputations for safety and economy.


Aeroflot plans to lease the planes for five years from Ireland's GPA leasing company, a division of General Electric Capital Aviation Services. Neither side has disclosed a price for the deal but published reports have placed the value at $300 million.


At meetings this week between Aeroflot and GPA in Atlanta, Georgia, the two sides settled an outstanding question over service. Devitt said it was agreed that service for the planes would not be provided in Russia but probably in Europe. The final documents must now be drawn up and Devitt said the planes could be delivered within a month.Devitt said that since the government is the majority owner of Aeroflot, there was no reason to charge the company an import tax. But the government has yet to decide on a request from Transaero, an independent competitor to Aeroflot, to receive additional Boeings free of the import tax.


Transaero already has five Boeing planes but is seeking to lease additional planes and requested a waiver of the tax in a letter last month to the State Customs Committee. An official with the customs committee said the government has not yet ruled on the request. Devitt said Transaero had not paid any customs duties on its first five planes.




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