Tyumenaviatrans posts strong first quarter (975 words)

Published: 5/31/2001

Tyumenaviatrans (TAT) has announced its first dividend since 1996 and will pay shareholders Rb0.05 per share (0.17 cents) at a cost of Rb 25.9 m ($0.96m). The company's reason for restoring the payment of a dividend was a return to profits and a net profit of $17m, after a period of financial difficulty. As expected, the AGM, on 30th May, re-elected Andrey Martirosov as the General Director of the company. Despite reports of regional authorities buying from foreigners and other investors, the election of a number of new directors for the new Advisory Board (board of directors) from the administration of the Khanty Mansyisk, suggested that the region's holding had exceeded the 50% previously reported and that foreign investors, previously holders of 25.7% of the company's shares, may have sold out. Khanty Mansyisk was previously credited with holdings of 8.8% and the city of Surgut administration, 10%. The new members of the board are: · Gadzhi Amirov, Khanty Mansyisk Autonomous District administration · Vladimir Aseyev, Khanty Mansyisk Autonomous District administration · Vladimir Zhuravlev, Khanty Mansyisk Autonomous District administration · Oleg Chermezov, Khanty Mansyisk Autonomous District administration · Vladislav Nesterov, Surgut city administration · Dmitry Kopiev, State Property Fund · Andrey Martirosov, TAT's General Director The new board contrasts markedly with that elected in 2000, which contained three representatives of investment fund, Sovlink and another from US investment fund, Templeton Asset Management. According to reports, Khanty Mansyisk Autonomous District and Surgut city administration had increased their stakes to 25% and 18.8% by the end of April 2001 and, by TAT's AGM at the end of May, affiliated companies had acquired a further 23%, so giving the regional government 66.8% of the company's outstanding shares. According to Julia Zhdanova, from United Financial Group (UFG), the stakes were increased without ramping the share price. This suggests that the administrations did little bidding for the shares and that many shareholders, concerned by reports of regional authority- led mergers of regional airlines, took the opportunity to sell to a willing pair of buyers. The outgoing shareholders' concerns were somewhat justified by comments reported in Moscow daily Vedomosti, which quoted Vladislav Nesterov, Deputy Mayor of Surgut, as stating that the administration's stakes had been increased to around 70%, in order to create the basis for a merger with other regional carriers, including Tyumen Airlines and Orenburg Airlines. He added that, within three months, TAT would have a rights issue of its outstanding authorised, but unissued shares, which failed to find buyers in 1998 at 21 cents, when the market price was 7 cents. It seems likely from Nesterov's comments that the authorised shares will be used as a means of merging the various regional airlines, through issuing of TAT shares to the Tyumen regional administration for example, in return for the assets of Tyumen Airlines. However, according to Nesterov, this would require an EGM of both companies, in order to approve the move. Reports of the potential interest of Khanty Mansyisk Autonomous District in merging regional airlines first appeared in March 2001. Andrey Martirosov then stated that he supported the idea in principle, believing that mergers and acquisitions are the best solution for the Russian airline sector. He did, however, qualify his comments with the assertion that the merger of local airlines would only happen in the long term, given the differing shareholder structures among potential participants. It seems that the regional administration may have somewhat overridden those concerns and considerably shortened the timescale, as the regional administration's controlling holding of 70% allows it effectively to push through restructuring, since no individual shareholder is likely to muster the 25% blocking minority required under Russian law, to prevent it issuing the shares as the basis of a merger. TAT's spokeswoman, Inessa Gousseva, refused to comment on recent developments, saying she did not yet have authorisation to speak about changes on the board. She has, however, previously said that the company viewed as positive the fact that Khanty Manysk Autonomous District had increased its stake, given that the administration was willing to help the airline financially. This was recently demonstrated by recent reports of the region helping TAT acquire two Tu-154Ms, although the company was tight-lipped over the details of the assistance. Tyumenaviatrans (TAT) has also reported its Q1 2001 figures of 204,243 passengers carried in the first quarter: a remarkable increase of 70.5% on 1Q200. Cargo also showed a similar growth figure, with volume up by 93.2% at 2450 tonnes. The company did not release details of load factors but, given the modest additions to the fleet in the period, it could be concluded that the factors were up significantly. The airline's revenues grew by 235% to Rb758.2m ($26.6m)in 1Q 2001, compared to 1Q2000, with oil company, Surneftegaz, contributing $30m in revenues in the quarter. More generally, the buoyant domestic market generated 60% of the airline's revenues, with foreign activities, such as leasing helicopters to the United Nations (UN), constituting 30% of the total Unusually for the airline, its costs, at 152%, increased at a slower rate than revenues. This reflects the favourable supply deal for fuel negotiated with Surneftegaz, giving an operating margin of 15.1% after losses in 1Q 2000. Some areas of cost, such as aircraft maintenance have, however, continued an upward trend as a percentage of total costs, rising from 1% to 30% in 1Q 2001, as a result of the higher utilisation of TAT's ageing fleet .

Article ID: 2568