Transportation Industry

Company Watch - AiRUnion

AirGuide Business, Sept 8, 2008

Sep 7, 2008

AiRUnion is run by two Russian brothers -- Boris and Alexander Abramovich -- and the alliance's members are mostly state-controlled. The brothers also have stakes in some of the alliance's members. No one answered phones at AiRUnion on Friday. But in a statement on August 20, the firm apologized to passengers, saying revenues did not cover fuel costs. It was not immediately clear how the alliance's debts -- which Russian Technologies said amount to USD$800 million -- would be paid off. Moscow city government said on Friday it would not seek to bankrupt the companies in the alliance. "We are not yet rich enough to use bankruptcy procedures to get an improvement," Deputy Mayor Yury Roslyak told reporters.

Sources close to the alliance said part of the debts are secured by stakes owned by the Abramovich brothers in the alliance. They could not be reached for comment. Russian Technologies, chosen by the Kremlin to wrest back state control over troubled assets, grew to become one of Russia's most powerful industrial groups under Putin. The group is headed by Sergei Chemezov, a close ally of Putin who worked for an obscure Soviet trade body in East Germany when Putin worked as a KGB spy. Sep 5, 2008

Russia said on Friday it would create a state-controlled airline holding company as big as Aeroflot in order to rescue the cash-strapped AiRUnion airlines alliance. The new holding will be controlled by Russian Technologies, a state-owned industrial group crafted under former President Vladimir Putin. AiRUnion last month fell behind on payments for jet fuel, grounding aircraft and stranding thousands of people at airports across the country. Sep 5, 2008

The Kremlin is providing Russian airline alliance AirUnion with 24,000t of fuel from state reserves, enough to support its operations for a further 18 days. The move forms part of a plan aimed at enabling the creation of a new, economically viable carrier that would incorporate the assets of AirUnion, GTK Rossiya, KMV and Orenburg Airlines and be capable of competing with dominant flag carrier Aeroflot. AirUnion, whose members include Domodedovo Airlines, KrasAir, OmskAvia, Samara and SiAT, was forced to suspend most of its operations from Moscow Domodedovo and Krasnoyarsk Emelyanovo airports on 20 August after running up huge debts for airport services and fuel. However, with the support of the Russian aviation authorities, shareholders and partner airlines it managed to resume flights from 22 August. The airline sank back into crisis on 26 August, when 30 flights were not operated, affecting 4,000 passengers. Services were resumed the following day. Sep 2, 2008

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