Carrier struggles to profit (390 words)

Published: 8/22/2000

According to Evgeny Dzyubo, the temporary manager of Nizhni Novgorod Airlines (NNA), he will propose the restructuring of the airline's debts for the next six months with a delay in repayment of $1m, at the creditors committee on 25th August 2000 having received the creditors preliminary approval of his plan. The 25m rubles owed to the federal and regional authorities is also under negotiation according to Dzyubo. The airline made a profit in August according to Dzyubo, reflecting the hard work on the part of the temporary management on developing and executing a plan covering costs, tariffs etc., but he was reluctant to discuss the specifics of the plan. Passenger volumes in 2000, reports Dzyubo, are in line with the temporary management's unspecified plan, after volumes in 1999 matched those of 1998. Dzyubo says however, that the management 's primary target is profitability not top line growth and expects, barring disasters, to return a modest profit for 2000. He was however, reluctant to give any indication of the size of such a modest profit, arguing that the crisis of 1998 showed the folly of such predictions. Commenting on the relationship with Aeroflot, Dzyubo said that if the shareholders of the airline had accepted Aeroflot's offer to takeover the airline in 1996, it is unlikely that it would currently be under temporary management. Whether the management would consider another offer from Aeroflot, Dzyubo would not speculate given that the flag carrier has not returned with an offer since its rebuff. As to the competitive threat posed by Aeroflot-Nizhny Novgorod, the joint venture between Nizhny Novgorod Airport and Aeroflot, Dzyubo said they were only really competitors on the Nizhny Novgorod - Moscow route. In addition to its routes to Moscow's Domodedovo Airport, in its 2000 summer schedule the airline has regular routes from Nizhni Novgorod to Samara, Volgograd, Chelyabinsk, Ekaterinburg, Rostov, Sochi, Murmansk, Krasnodar, Urai, Novosibirsk, Irkutsk, Blagoveshchensk, Anapa, Norilsk, Baku (Azerbaijan), Yerevan (Armenia) and from Sochi to Cherepovets. The view that the Aeroflot regional carrier poses no competitive threat to the airline is an interesting view, as Aeroflot clearly intends to develop a number of major hubs within Russia and has already designated Rostov and Nizhni Novgorod for the purpose. The chances that they will solely compete on one route with the struggling carrier seem low.

Article ID: 2018