ZAO bankruptcy could open doors for the state-owned carrier (440 words)

Published: 8/18/2000

According to Bolat Karimov, General Director of state-owned Kazakhstan carrier OAO Irtysh-Avia, if Kazakhstan national carrier, ZAO Air Kazakhstan Group goes bankrupt, Irtysh-Avia may potentially become the national carrier. In a report in a local newspaper in Almaty, Karimov commented that the administration of further state aid to the struggling airline was like giving 'medicine to the dead'. He does however concede that the government and not the creditors will make the decision on the group's bankruptcy. However, in the event of the government making the decision to let the embattled airline go, Karimov believes an airline should be there to step into its place and prevent the collapse of the air transport system as happened in 1996,when the bankrupt national carrier Kazakhstan Aue Zholy did not fly for seven days. According to Karimov, Irtysh-Avia has the ability to fill the vacuum. Karimov's comments may not be that fanciful according to reports in Vremya, Almaty, that suggest at a board meeting of ZAO Air Kazakhstan Group on 20th June, 2000, the directors unanimously decided to let a private company TOO Paida, rumoured to be supported by a former Kazak government minister Mukhtar Ablyazov, to become a shareholder of OAO Irtysh-Avia. The cost to Paida was 438,177,000 tenge (around $3 m), the stock being provided by an additional issue from the airlines owner, the State Property Committee and, according to reports, reducing the state's holding below 50%. This raises the possibility that the new flag carrier may be private, given that the deal with Paida required the authorisation, if not the active involvement, of both the Minister of Transport and Communications and the Prime Minister. Alexander Krinichansky, President of the holding Air Kazakhstan Group, which controls Air Kazajhstan, however says that no one is going to make Air Kazakhstan bankrupt. Arguing that there is less reason to do this now than there was eight months ago when the new entity was created. According to Krinichansky, the airline is not incurring any new debts, rumoured to be between $50-100m and further added that Karimov's advances for the status of national carrier were both premature and 'impolite' given that Irtysh-Avia is part of the holding company. His views also, says Kinichansky, do not reflect those within the rest of the entities making up the group. For Irtysh-Avia, based in the city of Pavlodar, the step to becoming national carrier is a short one from late last year, when the airline was merged with another regional carrier Ulba in an effort to bolster the struggling regional carriers burdened with debt.

Article ID: 2004