Two senior KD Avia managers have been arrested on suspicion of driving the Kaliningrad-based airline to bankruptcy, investigators said.
KD Avia chairman Sergei Grishchenko and executive manager Leonid Itskov face charges of abuse of office and the deliberate bankruptcy of a company, the Interior Ministry's southwestern regional branch said.
The airline has been grounded since September, when the Federal Air Transportation Agency annulled its flight certificate after learning that it had posted operational losses of 2.8 billion rubles ($96 million) for the first six months of the year and had significant debts to foreign and domestic airports, air navigation services, employees, leasing companies and the Pension Fund.
Grishchenko and Itskov were detained Nov. 30 in Kaliningrad in connection with an investigation into premeditated bankruptcy that was opened Sept. 9. A Kaliningrad court sanctioned their arrest Monday.
The Interior Ministry accused KD Avia management of carrying out deals without evident profit, resulting in massive debt.
"Investigators detected that KD Avia management carried out more than 2,000 operations worth 25 billion rubles from 2005 to 2008," it said in a statement.
However, KD Avia has not been declared bankrupt. An arbitration court is to consider the airline's bankruptcy status Jan. 26.
If found guilty of deliberate bankruptcy, both managers face up to six years in prison.
KD Avia, which expanded its passenger volumes rapidly in recent years on borrowed money, flew 1.36 million people in 2008, making it the country’s ninth-largest airline.