Receivership results in sale to ZAO Media Group

Published: 6/1/2000

Buryastsky Airlines based in Ulan Ude and operating under temporary management since September of 1998, has become the property of Moscow-based ZAO Media Group headed by Alexei Popov, a former senior bureaucrat involved with aviation planning. The sale of the airline and its infrastructure at the request of the airline's creditors by the State Property Committee comes at the end of an 18-month period of receivership. The move did not encounter any objections from the region, which controls 10% of the company. It did however, require that Media Group gave certain assurances relating to the regional operator. The route structure should be supported, staff numbers should be retained at 70% of the current level of 1500, back pay amounting to 32.7m rubles should be paid and the new owners should undertake to make unspecified investments of 50m rubles in the carrier, as part of the ZAO Media-Group's 230m ruble ($7.5m) investment over five years that won the tender for the company. There are no reports as to the condition of the airline's fleet of 12 An-24 and An-26. Plans at the time of temporary management suggested that the airline required an investment of $50m, well beyond the capability of the regional government. To attract potential investors, 19% of the airline was put up for sale but failed to attract any interest. A total sale was therefore the only means of keeping the airline going and continuing services to remote parts of the region surrounding Lake Baikal only reachable by air. According to Arkady Badiev, the airline's temporary manager, the complete sale of the airline was the only means of preserving both employment and the route network. The airline is reported to have received interest from a number of groups including Ruslan and Gipromosstroi. The reason for Media Group's interest in the airline appears to lie in the fact that it was a major creditor and this proved to be an effective means of recovering its debt and also investing in an operator with considerable development potential as a cargo stop-off point on routes from Europe to Asia and longer term potential for the development of tourism in the region.

Article ID: 1827