Moscow has decided to include its Atlant-Soyuz airline into a new aviation holding being created by Russian Technologies in hopes that the state corporation can help the carrier pay off its debt.
Deputy Mayor Vladimir Silkin told Vedomosti that City Hall would participate in the new airline, tentatively named Rosavia. The decision was made last week by Mayor Yury Luzhkov, he said.
A source in the Moscow city government, explaining the decision, said it would be easier for the airline to pay off its debts jointly with the state holding than it would be alone. A source in Russian Technologies confirmed that the state corporation could help Atlant-Soyuz restructure its debt.
City Hall is demanding that the company remain an independent legal entity within the holding and that its chief executive, Yevgeny Bachurin, be allowed to keep the post for two years, said Vasily Kichedzhi, head of Moscow's transportation department.
A Russian Technologies spokesman declined comment on the matter. The source at the state company would only say that Aviakompania — a legal predecessor to Rosavia — would hold a board meeting next week to approve a development strategy for the airline. Under the plan, Moscow would contribute its stake in Atlant-Soyuz and ownership of nine Boeing 737-800s, he said.
The Mayor's Office and Russian Technologies agreed to create Rosavia last year, with the state corporation taking 51 percent and Moscow getting the rest. The city would include its Atlant-Soyuz, while Russian Technologies would contribute stakes in six carriers that it received from the state, including Rossiya, Vladivostok Avia and Orenavia.
A month ago, however, Moscow decided to take a one-year break in the talks to bring Atlant-Soyuz to financial health. The airline's debt was 11.6 billion rubles ($375 million) — 69 percent higher than its income — and it had negative profitability of 47 percent in the first quarter of 2009, Russian Technologies said in June.
The state corporation's assets aren't doing any better. The six airlines have a combined debt of 8.2 billion rubles and negative profitability of 15.5 percent.
Kichedzhi said Atlant-Soyuz's financial situation had not noticeably improved, but that it has been making money for the past four months and was meeting all of its obligations to its creditors: Bank of Moscow, Gazprombank and Vnukovo Airport.
The airline has promised to pay off its 600 million ruble debt to Vnukovo by December, Vnukovo first deputy CEO Vitaly Vantsev said. Spokespeople for Bank of Moscow and Gazprombank declined comment.
Atlant-Soyuz isn't a very attractive asset and is facing major problems ahead, said Boris Rybak, general director of Infomost. Help from Russian Technologies may be its only hope, but even then, bankruptcy is a possibility, he said.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.