Despite pressing financial problems Baikal settles ticketing dispute for lower figure than awarded by court

Published: 11/23/1999

Troubled airline Baikal and the curiously named, Regional Aviation Agency of International Economic Relations (RAMES), which acted as a ticket agency for the airline, are reported to have reached an out-of-court settlement, resolving a dispute in which RAMES had been judged by the Eastern Siberian Transport Prosecutor"s office to have illegally retained revenues derived from ticket sales. In addition, RAMES further violated its agency agreement by selling tickets, from February 1997 to August 1998 on behalf of other airlines, but allocating expenses to Baikal. It is estimated that Baikal"s losses amounted to some 2.5m rubles. The Prosecutor had assessed compensation in favour of Baikal as being almost 9m rubles. Now, it seems the airline has been prepared to accept substantially lower than this amount of 500,000 rubles under an amicable agreement, which in Russian law over rides the prosecutor"s decision. The arbitration court in Irkutsk, supposedly administering the affairs of the company, has accepted the agreement on the grounds that it does not violate the rights and legitimate interests of other parties, including creditors. However, with wage arrears totaling 37m by June 1999, it is hardly surprising that the Prosecutor considers the agreed settlement to be somewhat inadequate in the circumstances. Baikal is now operating under a final six month extension to its temporary management, which expires in May 2000 (www.concise.org. 16th November 1999). The issue of state owned ticket agencies has been a thorn of contention for many of Russia"s airlines, with accusations of corruption and inefficiency. They are however, being increasingly abandoned by the growing airlines, who favour establishing their own systems of ticket distribution.

Article ID: 1121