Baikal may go the same way (360 words)

Published: 9/4/2000

Despite recent suggestions by Alexey Kulikov, General Director of Sayany Airlines, that the carrier should consider the extension of its cooperation with the other struggling Siberian airline Baikal, including fleet sharing, to improve its competitive position, Sibir has acquired over 50% of the Irkutsk-based bankrupt airline. Sibir is also negotiating with Baikal Airlines based in Irkutsk. Sibir announced that, in contrast to some of the other deals that it has carried out in Siberia, involving the affiliation of regional carriers, it decided to take over Sayany, which carried less than 3000 passengers last year. This allows the airline to use the route licences of the Irkutsk carrier, some of which, such as Irkitsk-Moscow and Moscow-Omsk-Chita, are currently being serviced by Sibir. Sibir is also reported to be in negotiation with Baikal Airlines with the intention of establishing 'business cooperation' and, given Sayany's historically close links with Baikal, utilising that relationship. It is unclear whether this 'business cooperation' will be as an affliliate or through acquisition. Baikal, as with many of the other carriers in the region, is bankrupt, losing well over 4m rubles in 1999 while carrying 30,000 passengers. Both airlines have been struggling to preserve their market share in face of tough competition from Moscow-based carriers on the long-haul high-volume routes, with Baikal in particular, selling off assets to meet wage arrears. According to Sibir the release of this information has been somewhat premature due to an early announcement by Sayany. The carrier approached Sibir after its request to join Aeroflot earlier this year was turned down. The acquisition of the smaller carriers by the super regional is however, unlikely to be welcomed by the Siberian governments who are generally cool to the expansion of Sibir and had outlined their own plans for the merger of the struggling carriers in which the state had an interest, based out of Irkutsk. The Irkutsk regional government has however, proved to have neither the commitment or the funds to achieve such a task, resulting in the Sibir deal, which given experience elsewhere in Siberia may be followed by further deals with other carriers.

Article ID: 2051