Aeroflot to Auction 49 Percent Stake

Aeroflot, once the world's biggest airline monopoly which has been split into 321 small airlines since the Soviet collapse, plans to sell a 49 percent stake at a privatization auction, company officials said Friday. The former Soviet flag carrier would sell its shares for cash at an investment tender soon, but a final date has yet to be set, the officials said. The government would keep a majority 51 percent stake in the Russian state's international carrier, which became a joint-stock company this week to allow privatization after two years of chaotic reorganization. Privatization at Aeroflot was delayed by a dispute between airline officials and the government over whether it should be split up or sold as a single lot. But airline officials said Aeroflot's "daughter" companies would also be privatized. The proceeds of the sell-off would go towards purchases of new equipment and spare parts. They gave no details of the sell-off, but privatization officials say public offerings for cash -- due to start from July 1 after the expiry of the voucher privatization -- would involve sales of block shares to foreign and domestic investors. Hundreds of domestic and international airlines have been set up since Aeroflot was broken up as part of post Communist market reforms, plunging civil aviation into chaos. The breakup has hurt safety standards and increased the number of accidents, with 348 deaths in 1993 compared with 250 the previous year. There were two major crashes in Russia this year: a domestic Aeroflot flight near Irkutsk in which 125 people died and an Aeroflot-Russian International Airlines plane which also crashed in Siberia, killing all 75 people on board. Privatization in the aviation industry has been marred by disagreements between air transport authorities, who want a gradual approach, and the State Property Committee in charge of privatization, which favors speedy sell-offs. Despite the crisis in the industry, Western experts expect the market to revive in 1996 as Aeroflot and its successor airlines in former Soviet republics step up hard-currency-earning international flights.