According to reports Air Kazahkstan struggles under considerable debts

Published: 2/15/2000

The newly constituted Air Kazakhstan is currently struggling under a substantial burden of debts estimated to be $100m. According to reports, this represents five times the new air company"s assets and has led the temporary manager of one of the companies in the new group, Bakhytzhan Idrarkhov of Kazakhstan (Atyrau) Aue Zholy and the Almaty Maintenance Centre, to comment that, without government involvement, the group would be bankrupt. He added that the bankruptcy of his company was premature, given the nature and size of its individual outstanding debts. The estimates of the group debt vary widely. Speaking in December 1999, President of the group, Alexander Krinichansky, described the debts as “not to bad" at $25-30m. The former state airline debts amount to 2,280m tenge ($16m). This is made up of $700,000 owed in back pay to the airlines employees and debts to Russian aerospace companies for providing maintenance, as well as debts to other airlines including Aeroflot, which is reported to be owed $1.7m. Under the Kazakh civil code, if the airline fails to meet its debts, they will be transferred to its major shareholder: in this case, the state. This has opened up some interesting opportunities to trade debt at an intergovernmental level, with suggestions that the Baikonur Space Centre debt, owed by Russia, could be offset against Kazakh debts at VASO and Rybinsk. In addition, Aeroflot"s debt could be offset against ATC and overflight charges from the airline"s new sister company, Kazaeronavigatisiya. Alternatively, Aeroflot could receive tax credits. If the bankruptcy committee fails to find an adequate agreement between creditors of the entity by 10th March, then it seems likely that it will go to international arbitration. The dispersal of assets was supposed to be made under the government in the decree that transferred the airline to Air Kazakhstan, in which class 1-3 debtors would automatically be paid. To date, however, after ten months and four court cases, only 32m tenge has been paid. Associated articles: www.concise.org 5th March 1999; 2nd November 1999; 11th January 2000

Article ID: 1422