Takeover yields Western Siberian routes to China (315 words)

Published: 6/27/2001

Siberia Airlines (Sibir) is negotiating a takeover of Irkutsk-based Baikal Airlines, according to the head of Sibir's Western Siberian affiliate, Vladimir Obyedkov. According to Obyedkov, Sibir's primary interest in the airline is its flight licences for routes to China from Irkutsk to Dalain and Shenyang. He added that Sibir plans to conclude the deal before 2002. Over the last couple of years, Baikal has virtually withdrawn from long haul routes, with the exception of routes to China, which have become Baikal's principle source of revenues, given heavy losses on local and regional services. In 1999, the losses led to the company's bankruptcy, which was only resolved in December 2000 by a restructuring agreement with creditors. This involved the sale of the airline's cargo subsidiary to Moscow carrier, Tacis. Obyedkov said that, aside from the interest in the routes, Sibir is ready to overhaul Baikal's fleet, one of which it has been leasing for the last year and a half on domestic routes. The overhaul initially would involve the two Tu-154s, currently making the flights to China, at a cost of about $1,380,000. For Sibir, the gradual takeover of airlines through affiliation is consistent with its strategy throughout Western Siberia. It means it is able to keep its separate existence in the terms of the GSGA's operating licence and to cherry pick the airlines' best aircraft. Early reports of Sibir's interest in Baikal coincided with its takeover of Sayany Airlines in December 2000. There were also reports that Angara Airlines, controlled by Aircraft Repair Factory 403 in Irkutsk, was interested in acquiring the airline, a move that, at the end of last year, was believed to have regional government support. Sibir commented that it has sufficient aircraft to service both scheduled and charter routes, with plans to launch a scheduled route from Irkutsk-Peking.

Article ID: 2615