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Russia’s second largest airline asks govt, banks for assistance

December 21, 2014, 15:04 UTC+3

Specifically, it owed 2.5 billion rubles (around $ 60.7 million by the then exchange rate) to the oil corporation Rosneft and almost 2.0 billion rubles ($ 48.5 million) to Gazprom Aero company

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© Anton Novoderzhkin/TASS

MOSCOW, December 21. /TASS/. Russia’s second largest airline, Transaero has turned to the government and to creditors for aid. It says debts may compel it to ground all of its jets already before the New Year holidays, two separate sources familiar with the situation told TASS.

A federal official close to the Transport Ministry assured the reporter the authorities were doing everything in their power to prevent the cancelation of flights. He said Transaero was a backbone company in the Russian civil aviation industry and aid to it would be given by all means.

The official did not specify the type of aid, however.

“Olga Pleshakova, the Director General of the airline informed state agencies in the first half of December Transaero was running the risk of a suspension of flights as early as prior to the New Year,” a source familiar with Pleshakova’s letter to the government said. “She said the airline didn’t have the money to pay to its agents.”

The letter said among other things that airline had accumulated an overdue debt to suppliers of jet fuel by the end of November. Specifically, it owed 2.5 billion rubles (around $ 60.7 million by the then exchange rate) to the oil corporation Rosneft and almost 2.0 billion rubles ($ 48.5 million) to Gazprom Aero company.

Also, Transaero had an outstanding debt to Moscow’s Vnukovo airport.

The source said Pleshakova told the government a suspension of the airline’s operations was possible unless a moratorium on kerosene prices was introduced and the banks opened new sufficient loan facilities for it.

Another source told TASS Transaero was hoping to get a loan of over 8 billion rubles /$ 194.2 million/ but the bank managed to endorse only a far smaller loan.

“An urgent search for other options of how to cover the cash shortage is underway at present and Gazprombank or VTB bank may be invited to take part,” he said.

Pleshakova sent her letter to the government shortly before the start of the season of New Year vacations when the numbers of passengers traditionally surge steeply.

Transaero press service said a syndicated loan was being drawn up in partnership with Sberbank and in line with an endorsed schedule.

“Also, Transaero is cooperating fruitfully enough with a number of other large financial partners on various patterns of drawing financial resources to make payments on the loans that fell due on the period of August to December 2014,” the press service said in a commentary.

An official at the press service of the Transport Ministry declined to offer any comments on the situation but said there would be no suspension of Transaero’s flights.

“This airline will get assistance as a backbone element of the industry,” he said.

A source at Rosneft told TASS that Transaero did have outstanding debts for fuel but he did not specify their size. Gazprom Aero declined to make any comments on the situation.

“Vnukovo airport is not going to introduce any sanctions against the airline, as all the problems have always been resolved with it through negotiations,” airport spokeswoman Yelena Krylova said.

Devaluation of the ruble sharply deteriorated the economic position of Russian airlines. Vladimir Tassun, the president of the Association of Air Transport Operators said last week the aggregate losses of Russian airlines might hike six-fold upon the results of 2014 versus the previous year and reach 30 billion rubles /$ 728 million/.

As one of the causes of this situation, he pointed to a downhill devaluation of the ruble that dealt a blow to the airlines’ economic standing, given the fact they had to pay for the leasing of their jets.

Transaero has more than a hundred jet, of which 93 jets are leased.

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