Candidates seem unlikely, in present conditions, to attract much interest (416 words)

Published: 9/21/2001

The Russian government has made great play of late that it intends to sell stakes in a number of Russian airlines including a 13.93% stake in Ekaterinburg-based Ural Airlines, a 75% stake in Tyumen Airlines and a 74.69% stake in Abakan-based Khakasia Airlines. It has even signed a decree to this end. But the Ministry of Property has yet to establish the terms for the sales and is in the process of undertaking the evaluation and developing a tender process. The companies involved have refused to comment on the grounds that the terms of the tenders or auctions have not yet been announced. However, one spokesman from Tyumen Airlines reported that it had "no idea" that the state intended to sell its 75% stake in the company, which is jointly held by the Ministry of Property and the Federal Property Fund (51%/24%). A glance at the list of companies suggests that the government may not be exactly overwhelmed with buyers. Khakasia Airlines is reported to be in poor condition and Tyumen Airlines is experiencing strong competition from local competitors, particularly Tyumenaviatrans. Ural Airlines is by far the most attractive proposition, with a strong position in the Urals market from its base in Ekaterinburg, but the state's current efforts to prepare a sale follows two failed attempts in 2000. It has been speculated that this owed much to the management's control of the carrier through an associated company, Ural Wings, which holds a 50.9% share. Ural Wings has been mooted as a buyer of the government's 14% stake, but reports have suggested that the government's expectations were not met by its offer and a deal failed to materialise. It is unclear whether conditions have significantly changed in the last twelve months to make the sale of the minority any more attractive. The sale of Tyumen Airlines is already reported to be delayed, pending more favourable conditions, but there are reports that the Tyumen regional government, which has recently been increasing its stake in Tyumenaviatrans (TAT) (70%), was interested in merging the two carriers. TAT would not confirm any involvement and said that such a move would be “unlikely”. According to Alexei Chibrikov, Head of the corporate projects department at Aeroflot, the airline has not yet decided on whether to participate in the auctions and tenders and would not make a decision until it saw the terms from the government.

Article ID: 2772