Donavia pilots protest about the speed of investigation of management's financial activity

Published: 7/8/1999

In spite of plans to incorporate Donavia (Donskiye Airlines) with Aeroflot, or merge it with Rostov airport to create a new aviation company, Rostov 99, (www.concise.org 18/3/99), the airline still seems to be in a less than healthy condition. 62 pilots from Donavia picketed the Transport Prosecutor's Department of Northern Caucasus at end June 1999. Organised by the pilots' trade union, the protest was intended to highlight the slow pace of progress of investigation, by the Prosecutor, of financial irregularities at Donavia. The pilots' leader, Vladimir Kozlov, alleges that Donavia has illegally pocketed around 100m roubles in Russia and that the level of fraud abroad involves several million dollars. The Rostov Region Court of Arbitration placed Donavia under external observation in April 1999. The order, which expires in August 1999, placed Irina Zlobina, an economist of the Federal Agency of Bankruptcy, as Temporary Manager. During the four months, she is charged with analysing the current condition of the airline and its future prospects and will make her recommendations to the August session of the Arbitration Court. The fate of Donavia is bleak. It is reputed to have debts currently amounting to 215m roubles and is operating in a business environment that has seen steep falls in passenger traffic, as a result of rising air fares at the beginning of 1998 and the general condition of the economy, after the August 1998 crisis. The trade union reports that, in 1997, even before the crisis, the airline was operating with load factors of 50%, creating large operating losses. According to the local press it is expected that, in August 1999, Zlobina will give a value for the capital assets of the airline, which include a fleet of TU-154Bs, Tu-134s, An-12s and Yak-40s. Speculation as to the value varies enormously. She will also be under pressure to explain why Pavel Duzhnikov, Director General, has not held a shareholders' meeting, in response to the repeated requests of the arbitration court. The Donavia management is reported to view this period of external observation as positive, before the imposition of external administration. This is because it coincides with the profitable summer season and the chance to improve the finances of the company.

Article ID: 665