Integration of the two operations begins (336 words)

Published: 5/4/2001

At the EGM on 27th April, Siberia Airlines (Sibir) gave the final seal of approval to the merger of Sibir with Vnukovo Airlines (VAL). While the legal merger will take up to a year, the Sibir spokesman made it clear that the two companies would commence operating as one entity soon after the EGM, continuing the close association that started with the merger's announcement. The new, merged airline, to be known as Siberia Airlines (Sibir), will be based at Tolmachevo Airport. VAL's route network, which is already being serviced by Sibir, will be controlled by Sibir's management and will operate under Sibir codes. Predictably, Vladimir Tasun, Chairman of the Sibir Board as well as Head of the GSGA regional office in Western Siberia, said that the merger fulfils the long held policy of the Ministry of Transport and the GSGA's predecessor, the FSVT, that airline merger should be encouraged. He added, however, that subsequent mergers might take time among the major airlines: a view supported by the extended courtship between Sibir and VAL. The major shareholders in OJSC Siberia Airlines, which was founded in May 1994, comprise the Ministry of State Property (25.5%), OJSC Rusinprom-invest (Novosibirsk) (19.5%), SEP-A (Gorno-Altaisk) (18.8%), Limited Partnership Portfolio investments (Novosibirsk) (12.71%) and OJSC Eurofinance Investment Company (Moscow) (5%). The airline's net profit for the first nine months of 2000 was Rb1.191 m ($0.04m). OJSC Vnukovo Airlines founded in March 1993. Its major shareholders includes the Ministry of State Property, which has a golden share allowing it to veto major decisions, presumably such as mergers, although this is unlikely in the current transaction. The remaining equity is held by controlling shareholder, OJSC Central company of FIG Rusaviaconsortium (43.42%) and Limited Partnership Universus (18.92%). According to Sibir, VAL's current financial condition is "complicated", implying that it is not particularly healthy. In fact, Sibir has made the restructuring of the airline's debts a condition of the takeover. These were estimated to be Rb607m ($21.5m) as of October 2000.

Article ID: 2515