Airline gains an extention of its temporary management status despite the views of creditors and managers

Published: 11/22/1999

Bankrupt airport and carrier, Ivanovo Airlines (IGAP), based in the textile town of Ivanovo some 250km north-east of Moscow, is currently operating under a final six month extension to the external administration imposed in August 1998, led by Temporary Manager, V Filatov. The decision to grant the extension is a curious one, given the prospects of the troubled air company. Had the airline been sold, employees might have stood a chance of receiving some of the 4m rubles of wages owed over several years, yet their trade union supported the move. The airline"s main creditor, AO Ivenergo, a power supplier, was apparently in favour of a sale, together with the representative from the regional administration and Filatov himself, who has been strongly criticized for his failure to address the company"s difficulties. The reprieve may have had something to do with the fact that, during the summer, the airport received both the President of Belarus and the Mayor of Moscow, so raising its profile and perhaps contributing to the Arbitration Court"s decision. Although at the time of the latter visit, the runways had to have extensive ‘flora" removed and the management had to track down ground and ATC staff. Founded in 1939, IGAP operated, in its heyday, a fleet of 60 aircraft and helicopters making 15 flights a day. In 1995, it had 16 An-2s, 13 Mi-2s, four An-24Bs, two An-24RVs, two Tu-134As and three Tu-134s in agricultural layout. The Tu-134s were used for high altitude aerial photography, using French equipment. IGAP also has a maintenance base for the repair and overhaul of An-2s, Mi-2s, An-24s and Tu-134s. In the mid 1990s, it operated passenger flights to Sochi, Samara, Chelyabinsk, Mineral Vody, Krasnodar, Moscow, Arkhangelsk and Murmansk. Over the last two years, however, the airport has virtually stopped operating. Its fate was sealed in the view of some opbservers, when Vorobyev, a former Head of IGAP, founded Ivanovo-Avia, as part of the state enterprise, with the support of the regional administration. The objective of the new entity was to capitalize on international flights and the more profitable operations of customs and passenger processing. IGAP derived little or no benefit from the development and conflicts quickly surfaced. The international terminal of the airport controlled by Ivanovo-Avia raised prices substantially resulting in it only servicing three flights to Istanbul as the numbers of international passengers fell, and was later declared bankrupt. IGAP"s decline has continued, with the sale of aircraft and other assets. It now has just five Tu-134s, one of which is leased to a Moscow operator, with another requiring to be overhauled. The remaining three are reported to be “of limited use", which suggests they are not in flight worthy condition. Attempts to revive IGAP"s fortunes or enlist support, even through hunger strikes by some of its employees, have all failed. The workforce has diminished to 320 from 1,200. Of the 30 staff at Ivanovo-Avia, only three remain. The Temporary Managers of both entities have failed even to articulate a programme of reform. There have been calls for the replacement of Fedorov at the helm of Ivanovo-Avia. An estimated minimum of 10-12m rubles is needed to save the company, but so far this has not been forthcoming. Given that IGAP pilots have not flown for nearly two years, flight safety is also questionable. IGAP shed its small interregional routes, owing to low profit margins. Vladimir Airlines and Kostromo Airlines operating An-24s and An-26s, connecting with other Ivanovo regional airports, such as Kineshma and Yuryevets, immediately filled this niche. Yaroslavl Airlines is now exploring a new route to Moscow that will shorten the flight time by 30 minutes, so saving fuel. Even after its unsuccessful foray into international territory, IGAP could potentially have salvaged the situation by leasing its aircraft, sending pilots of Asia and Africa for cargo transportation, or by using its airport for servicing transit flights in line with many other airlines in similar positions. They however, did not do so. General Akhlyustin, Head of the Air Force Transport Aviation Training Centre, based at Severny Airport close by, has condemned IGAP management for failing to use its assets effectively. In the unlikely event that its management problems can indeed be resolved, there may be little left of the airport. This summer vandals removed and sold the metal of a heading antenna.

Article ID: 1118