Air Ukraine gets government shareholder as other funding tactics fail to provide finance

Published: 10/26/1999

National carrier, Air Ukraine and Airbus Industries have resumed negotiations to lease an A-310, according to a report in Unian, the Ukrainian news agency. Negotiations were suspended two years ago, because the Ukrainian side was not satisfied with the lease terms according to reports. According to Leonid Kostyuchenko, Ukraine's Minister of Transport, the deal has been resurrected following the state's decision to take a 51% plus one share stake in the struggling airline, in return for the provision of funding for the extension of the air fleet's life limits and the acquisition of new aircraft. The decision appears to be the government's solution to prevent the airline from becoming bankrupt. Total losses for 1998 totalled 8m grivna ($1.95m at current rates), and almost 6m grivna ($1.46m) for H1 1999. Previous reports had suggested that the government had tried to rescue the airline using deferral of tax payments on an interest free basis. This has however, been abandoned as it was considered to be illegal under existing legislation, which only allowed tax deferrals for a period of three months at 75% of the central bank rate.

Article ID: 1020