Domodedovo flies again amid some confusion as to what happened and why?

Published: 2/7/2000

Domodedovo Airlines is back in the air and servicing passengers in the Far East and elsewhere after the suspension of flights in January, after the seizure of the Moscow based airline's accounts by the Federal tax authorities and non-payment by the federal authorities of debts to the carrier. Ticket sales and flights by the airline were restarted on the 4th February as a result of a partial resolution of the dispute between the authorities and the airline, with the tax debt of $1m deferred until the 10th February, when it is assumed that the MoD, one of the airline's biggest debtors, will have paid $2m of what it owes. As Russia's third largest carrier, DAL and one of the few profitable carriers, on paper at least, the tax authorities and government's actions have done little to secure the future of the carrier leaving the management in limbo if it cannot meet the payment on the 10th February because of the failure of other debtors to pay. The case has however, highlighted the highly arbitrary nature of tax enforcement in Russia, and that even wholly government companies can fall foul of the lack of 'joined up government ' within the present administration. If the payment fails to materialise, the company is faced with ever more complex and pressing problems if the accounts are frozen again with new debts to fuel suppliers and re-scheduled flights. Rumours of a deliberate government ploy to bankrupt the company are now rife, given the relatively small tax arrears compared with the amount DAL is actually owed. Vladimir Andreev, Head of the Russian FSVT, has dismissed such speculation and claims that the problem will be resolved “in a matter of a few days”. However, Vladimir Barchenko, Deputy Director of the airline, commented that it is still “too early” to say whether this case is wrapped up. If the airline was bankrupted it is unclear what would happen, as under Russian law there is a extended period of administration before a company is liquidated and the company would be managed by an administrator appointed by the Moscow Arbitration Court, the liquidation of the airline's fleet one of the rumoured reasons for the tax authorities actions would therefore take some time to come about. The government has also already slated the airline for privatisation in 2000,with ownership split between the state (51%) and DAL's 1700 employees (49%), after which the state will sell approximately 26% of its stake. No further details as to how and when this might happen have been revealed, but it seems unlikely that the government would effectively seek to deprive itself of the revenue from a potential placement of stock. Associated article: www.concise.org. 21st January 2000

Article ID: 1398