Moscow-based bank plans to increase its presence in the Rostov-on-Don market and is likely to help develop airport as a regional hub (629 words)

Published: 10/8/2001

The United Industrial Trade Bank (OPTBank), through a subsidiary OPTInvest, has acquired the minority 49% holding in Aeroflot-Don from the Rostov-on-Don Regional Property Fund and called for an EGM to change the composition of the affiliated airline's board. Currently, the board has five representatives from Aeroflot (51%) and four from the bankrupt former operator, Don Airlines (Don Avia), through which the property fund owned its stake. The purchase of the stake was made in July by Moscow-based OPTBank (ranked 202nd bank in Russia at the end of 2000) after the failure on 18th May 2001 to auction, when no bids were received at the reserve price of Rb 140 m ($4.8m). The May auction followed an earlier unsuccessful attempt to sell the airline on 22nd March 2001. The price the bank has paid for the holding has not been disclosed, but the proceeds were earmarked for creditors of bankrupt Don Airlines, Aeroflot-Don's predecessor. At the time of the May auction, Alexei Chibrikov of Aeroflot's Corporate Project Department, made it clear that Aeroflot was not interested in increasing its stake. For the bank, the motivation behind the investment is to increase its presence in the Rostov-on-Don regional market, where it intends to open a representative office in the 1Q02: its first outside Moscow. In addition to taking a stake in the airline, the bank is also reported to be planning to provide a loan to Rostov-on-Don Airport and assist in attracting investors to the airport, which has had its role as a regional hub for Aeroflot recently reaffirmed by Valery Okulov, the airline's General Director. Created in 1994, OPTBank has a broad range of financial services activities, including a brokerage licence, with a number of companies involved in real estate development among its shareholders, including First Mortgage Company and the construction company, Zhilstroiindustria. According to reports, the bank is associated with a former Deputy General Director of Aeroflot, Dmitry Amunts, who recently left the airline to work with a former colleague at the infamous Mabetex (involved in the Kremlin refurbishment scandal) and Pavel Borodin, equally infamous after a protracted financial investigation by both the Swiss and Russian authorities. What the bank or the 39-year-old former civil servant and banker have in mind for the stake has yet to be revealed, but Amunts' duties at Aeroflot involved the planning of the airline's long-term strategy. This was principally focussed on the development and reinforcement of the airline's role as the predominant carrier within Russia and the CIS. The strategy was further developed by McKinsey, which saw the airline using its regional position to integrate into the SkyTeam alliance. The present condition of Aeroflot-Don is unclear, but recent figures from Aeroflot seem to support the case that its development as a feeder for Aeroflot might be working, despite earlier reports that the venture was toiling. Between April-December 2000, Aeroflot-Don carried 260,000 passengers, including 65,000 on international routes, a substantial improvement on the carrier's traffic prior to the Aeroflot takeover. The airline, created in March 2000, operates 19 aircraft and received its operating licence in April 2000. In July 2000, Aeroflot supplied the new airline with an overhauled Tu-154M and followed it with another aircraft later in the year, to supplement the former Don Airlines (Don Avia) fleet that was reported to be in poor condition, with the newest of its Tu-154Bs believed to have been built in 1982.The airline now flies two Tu-154Ms, nine Tu-154Bs, five Tu-134s and three An-12s from Rostov-on-Don to Moscow, St. Petersburg, Novosibirsk, Neryungri, Irkutsk, Khabarovsk, Vladivostok, Ekaterinburg, Krasnoyarsk, Tashkent, Yerevan and outside the CIS to Germany, Italy, UAE, Turkey and Israel.

Article ID: 2809