Consolidation among out sized cargo players(499 words)

Published: 3/2/2001

It appears that speculation of how Heavy Lift would provide ongoing An-124-100 services after splitting with Volga Dnepr (VD) has been answered, by the announcement on the 23rd of February that the two rival and highly competitive carriers are to merge their out-sized activities into a joint venture, in cooperation with Antonov Airlines. The new company will provide out-sized cargo services under the name, Antonov Airlines (UK). According to Andrey Sovenko of ANTK Antonov confirmed that negotiations had been held on 27th February between the three parties' top management, at Antonov's operating base at Gostomel. These talks were to agree on the form the agreement between the three parties might take - a merger, a consortium/JV or an agent agreement. He would not confirm the formation or nature of a venture. Air Foyle, for its part says that it has agreed in principle with Heavy Lift to found a joint venture to “ promote, market and sell on a worldwide basis, commercial charters of all aircraft operated by Antonov Airlines”. Antonov's Airline's fleet consists of An-124-100s, An-24s, An-12s and (from June) the An-225. The Board of the new company will be chaired by Christopher Foyle, and made up of Bruce Bird of Air Foyle and also Graham Pearce and Michael Hayes of Heavy Lift. Christopher Foyle will be the Managing Director and Graham Pearce, Commercial Director. The only other provider of An-124 services, Polyot, was reported to be in negotiations with Antonov Airlines at the end of 2000, regarding co-operation in adding its additional two active aircraft and the four undergoing overhaul at Aviastar, to take advantage of the Air Foyle alliance in marketing its aircraft internationally. The outcome of the negotiations is not known, and Polyot's Air Start spokesman, Leonid Shirobokov, declined to comment, but did emphasize the airline would remain independent. VD, newly freed from what was considered by some to be an inequitable deal with Heavy Lift in its latter stages, may find the competition hotter than expected. Kommersant has however, quoted Alexay Isiakin, General Director of Volga Dnepr, as welcoming the merger on the basis that it "contributes to the reduction of losses from the competition among marketing agents". According to reports in Kommersant, this time Isaikin said " VD is in the process of conducting negotiations, with Antonov Airlines, over the possibility and terms of a merger", with the suggestion being made that Isiakin (interviewed in London) was there for discussions on this subject. Given the legal status of Antonov Airlines as part of ANTK Antonov, a state entity, a merger is an unlikely scenario and according to sources within Antonov, is considered by Antonov to be an unattractive option if it were possible. VD themselves have also refuted the Kommersant article as being misleading and that Isaikin did not state that he intend to merge with Antonov. Such a merger would also be unlikely, given that it would give the combined entity a 90% share of the out-sized market without Polyot's 7% share, and would be subject to anti-trust action in major markets.

Article ID: 2389