Auction attracts little interest

Published: 6/27/2000

Not unsurprisingly given the record of sales of minority holdings in Russian airlines, the Sverdlov Region Property Fund announced that it had failed to sell the Russian State Property Fund's 13.93% interest in the airline, despite the minimum requirement of $630,000 for a stake in Russia's tenth largest airline.The reasons for the lack of success lie with the fact that the majority shareholder of Ural Airlines, with 50.9% of the company, is a Ural Airlines' subsidiary Ural Wings. This offers minority shareholders little chance of future control or for that matter, current transparency. Before the sale Vitaly Yudin, Deputy General Director of Ural Airlines, said that the airline was interested in acquiring the stake itself but did not bid. It would appear to have been a prudent move and allows the airline to keep its cash which, given current business conditions makes sense, and presumably to negotiate a better deal as the only available buyer at some point in the future. Ural, at the time of the announcement of the auction, expressed their unhappiness with the process arguing that they had good relations with the state and saw no reason for the sale. It seems unlikely in the short term that the state will be able to attract buyers for the stake and the airline can therefore bide its time until the state tries to sell again. The airline continues to develop its business with the launch of a code-sharing daily flight with Transaero from Yekaterinburg to Shermetyevo to connect with Transaero's international flights. The airline also opened routes to Volgograd, Rostov, Astrakan, Norilsk and Saratov on 15th May and is due to open a flight to Anapa to coincide with the summer season and the seasonal increase of six flights a week to Sochi.

Article ID: 1881