Russian Carriers Discuss Combining Route Maps as Prelude to Possible Merger

World Airline News, April 6, 2001

Russian carriers Aeroflot and Sibir began the process of working toward a potential merger last month with the announcement of two working groups to form a joint leasing company and combine route maps.

Aeroflot Deputy General Director of Public Relations Alexaner Lopukhin told World Airline News the decision by Aeroflot and Sibir to form a joint leasing company for Tupolev TU-214/204 aircraft was a result of the Russian government promising to support the leasing of Russian-manufactured airplanes by subsidizing interest rates.

The two carriers are also discussing combining route maps with the possibility of codesharing on routes in the autumn-winter schedule, according to Lopukhin. "We would like to combine Sibir's routes with our international routes from Sheremetyevo (in Moscow). Sibir has 90 percent of the domestic market," he said.

An eventual merger of Aerflot and Sibir would benefit both carriers, according to Lopukhin. "Aeroflot needs to enlarge the Russian market and could do that using Sibir's routes. Sibir would have more international passengers," Lopukhin said. Sibir is scheduled to carry 2.1 million passengers this year while Aeroflot's passenger numbers will reach 5.9 million. A combined company could possibly transport eight million passengers.

Aeroflot continues to implement a strategy it developed a couple of years ago of stopping unprofitable routes and increasing frequencies on revenue- generating flights. The airline no longer flies to South America or South Africa and has concentrated on increasing frequencies in Europe.

Another part of that strategy is purchasing a European airline. Lopukhin said Aeroflot was still in discussions concerning a possible purchase of Virgin Express Ireland. "We need a low cost company in Europe to enlarge our presence."