Property fund sells 13.93% of airline

Published: 4/25/2000

The tender for the shareholding of the Sverdlov regional property fund 13.93% holding in Ural Airlines on the 18th May requires bids to be submitted by 16th May with a returnable deposit of $130,000 and a minimum bid of $630,000. The airline itself has made it clear that it is less than happy with the process though its Deputy General Director Vitaly Yudin, who has been quoted as saying that the company itself is interested in acquiring the stake, but would not confirm if they intend to participate in the auction. Their primary concern appears to be the loss of good relations with the state and the uncertainty of an unknown potential shareholder. There are no restrictions on potential bidders, but given that the management have majority control through a subsidiary, any incoming shareholder appear to have little opportunity to change the status quo. According to Yudin, who is obviously not unhappy to talk the price up, the airline is in good shape with profits rising by 31.7% in 1999 to $2.6m achieved by improvements in operating efficiency, which achieved substantial cost savings. These figures are all the more impressive given that the airline saw lucrative international passenger traffic fall by 25.5% to 127,300 passengers during 1999, with volume overall flat at 479,900 passengers. Cargo traffic suffered a similar decline in international traffic down by 11.55%, but was flat overall at 5,200 tonnes. Revenues in dollars fell by over 30% to $37.3m in 1999, rising in rubles by 76.3% to 920m rubles. The airline is endeavoring to rebuild its international traffic with a recent flight reopened to Prague and a code sharing agreement with Moscow carrier Transaero on routes from Ekaterinburg to Moscow, with the intention of carrying passengers on from Moscow to international destinations. The primary motivation for the code sharing however appears to be to get reasonable load factors on a route with several competing players. The company is generally not optimistic about growth in demand from its existing market and is looking for new sources of traffic in 2000 according to Yudin. The company currently operates 4 Il-86s, 14 Tu-154s and 3 An-24s, the fleet having considerably reduced during the last twelve months particularly among their smaller regional aircraft. The airline is currently owned by Krylya Urala, a travel subsidiary of the airline, which holds 50.9%, Uraltransbank based in Ekaterinburg, which holds 14.7% of the company and the Sverdlov region property fund with the 13.93% to be sold. Associated articles: www.concise.org 24th April 2000:Transaero and Ural Airlines get together 5th April 2000:Ural Airlines sale

Article ID: 1569