Kolstovo Airport and Ural airlines on block again (600 words)

Published: 8/10/2000

The results of the much-delayed auction of Kolstovo Airport and Ural Airlinesin Yekaterinburg are due on the 11th August. The airport auction, the fourth attempt by the regional property fund to sell, has been twice postponed recently in December 1999 and March 2000 due to lack of interest on the part of bidders, for a stake in what is one of Russia busiest airports. The package represents 9.06% of the airport at a minimum price of 23.5m rubles with a deposit is 4.7m rubles. There are no limitations for the resale of the stock. As of April 1, 2000, the airport had 3,000 employees with facilities totalling 52,000 square metres and a further 10,000 square metres of warehousing. The airport is reported to be up to date with its taxes. The first auction took place three years ago, but the winning bid could not pay the price, which was eight times the minimum bid. On the second attempt was in December 1999 with a starting price of 29 mln rubles, the tender received no bids and the reduction of price to 26.1m rubles attracted no interest in March of 2000. In response to the lack of interest the Chairman of the Property Fund, Victor Basargin cut the minimum price in an effort to bring it more in line with market expectations. In 1994, the Sverdlovsk state aviation enterprise was privatized and split into two big companies: AO Airport Koltsovo and AO Ural Airlines. 51% of the airport is owned by the state split evenly between between the Russian Federation and the Sverdlovsk region, 35% - by the employees, 5% was the stock option for the management leaving the 9.06% for the tender. At the same time the Property Fund is trying to sell 13.93% of Ural Airlines with a starting price are 16.2 m rubles, with no restrictions on the resale or the participation in the auction other than the payment of a 3.5m ruble deposit. The airline is on its second time around having failed to attract any attention in May of this year and with a starting price of 18m rubles for a 13.93% stake in the 1255 employee airline. Despite the fact that the airline is considered to be a reasonably safe bet, the bidders are reported to be dissuaded from investing in the airline due to the fact that it controls 50.9% of its own shares through a subsidiary. The price has not substantially reduced from the last auction suggesting that the airline and the state are practising something of a standoff. Urals has said that they would buy the stake, but saw no reason for the sell off 13.9% holding by the state with whom they consider they have close relations and to date has not participated in the auctions. Urals currently owns 20 aircraft including 4 IL-86s, 12 Tu-154Bs, and 2 Tu-154Ms of which 95% are reported to be serviceable. According to the General Director of the airline Serguey Skuratov, in 1999, the company's pilots received the ICAO category 2 of which only two airlines, Aeroflot and Urals have received. The company is currently investing in upgrading its aircraft to meet EU standards at a cost of $250,000 per aircraft. In 1999, Ural Airlines carried 480,000 passengers connecting Yekaterinburg with 22 airports of Russia and CIS and 24 foreign destinations. In 1999 the airline had sales of 919.4m rubles, an increase of 76% on 1998, although a fall of 30% in dollar terms. Despite this fact profits rose by 31.7% to 64.2 rubles due to considerable improvement in the airline's efficiency and cost savings and despite falls in the lucrative international traffic, of 25.5% in 1999.

Article ID: 1984