Merger of the two airlines expected (760 words)

Published: 5/30/2001

Alexander Fleisher, Deputy General Director of Tomskavia, is reported to have won the contract for the temporary management of bankrupt Novosibirskavia, in a move considered by some to be the first step towards merging the two entities. While selected by a committee comprising the Ministries of Transport, Economics, Finance and State Property and the civil aviation agency, the GSGA, Fleischer has yet to be officially appointed as Novosibirskavia's General Director. The management of Tomskavia, however, has undoubtedly supported the speculation of an impending merger. According to Fleisher, the successful creation of Tomskavia, from three Tomsk region airlines based in Tomsk, Kolpashevo, and Strezhevoi played a significant part in his appointment. Serguey Labutin, General Director of Tomskavia, is also reported by the local press to be already selecting an appropriate name for its affiliate in Novosibirsk: “Of course, we would like to preserve the name of Tomskavia, but Novosibirsk will be against it.” Tomskavia's primary interest is likely to be Novosibirskavia's fleet, given that one of Tomsk's major customers, oil company Yukos, plans to increase its volume in the Tomsk region by at least 40%. The increased revenues from this traffic could potentially pay back the debt of Novosibirskavia and supplement Tomsk's six An-24s with the capacity of Novosibirsk's 12 An-24s and 12 An-30s, in order to meet it. However, the West Siberian department of the GSGA refuses to link Fleisher's appointment with the merger of the two airlines, although this is out of line with the agency's national stance of encouraging such mergers. The Ministry of Transport has already suggested creating a new entity by merging Novosibirskavia and Tomskavia, in order to preserve air transport infrastructure in the regions. All these factors suggest that the possibility of a merger looks considerably more likely, given that Novosibirsk opposed the appointment of the Tomskavia manager. According to Vladimir Khorev, Head of Marketing of Novosibirskavia, the airline has yet to be notified of Fleisher's appointment: a fact that he rather wishfully interprets as being a sign that no final decision has been made, either on his appointment or on a merger. Victor Tolokonsky, governor of the Novosibirsk region, has spoken against the merger both with the Ministry of Transport and with the Tomsk regional governor, Victor Kress. He insists that the airline's debt of $1.6m is not significant and that he has undertaken to attract investors to Severny Airport, one of the airline's assets. He has also recently approached Gazpromavia to propose that it uses Severny as a base for transporting materials and teams to gas fields in the North. This is viewed as an unlikely scenario, given that Gazpromavia already has its own base in the Moscow region. The appointment of Fleisher comes after considerable speculation over a merger between GUP Novosibirsk Aviation Enterprise (Novosibirskavia) and Angara Airlines, given the carrier's large debts to the Irkutsk Aircraft Repair Factory 403, which owns Angara. The airline's major debtor, however, is the state. Despite being profitable, with earnings of Rb2m ($70,000) during the first few months of the year, in mid-April, creditors filed against the airline for bankruptcy, against cries of opposition from the local authorities. According to Khorev, if the 100% state-owned airline received prompt payment of the state's outstanding debts, this would go a long way to resolving the airline's financial situation, by reducing indebtedness by 50%. Khorev says that the company is continuing to operate normally, but admits that it does lack aircraft, as two An-24s are leased to Irkutsk Aircraft Repair factory 403 for operation by Angara Airlines, by way of covering debts to the repair plant. The lack of aircraft has also led Novosibirskavia to allow Tomsk to make additional flights from Severny and to Surgut and Strezhevoi. The current load factors are reported by Khorev to be around 60%, reflecting the start of the summer season. Novosibirskavia, despite aircraft shortages, has, however, maintained and increased flights to Omsk from Nizhnevartovsk, Surgut, and Khanty-Mansyisk.It recently added one more flight from Novosibirsk to Novy Urengoi. Under an agreement with Gazprom, the airline patrols the gas pipeline. It is also securing significant business in aerial photography: a buoyant sector in which the airline believes it has a significant market share in Russia. Of the airline's 12 aerial photography An-30s, three are currently operating, one other aircraft is close to flying and three are being overhauled. One aircraft is operating in Samara, with the others to be used, from June, in the Tyumen region. According to Khorev, the aerial photography An-30s are a good source of revenue.

Article ID: 2567