Log in
Login
Password
Remember
Lost password
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 

4-Traders Homepage  >  News

News

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesHot NewsMost Read NewsRecomm.Business LeadersVideosCalendar 
The feature you requested does not exist. However, we suggest the following feature:

Russian Airline Aeroflot to Take Control of Carrier Transaero

09/01/2015 | 02:15pm US/Eastern

MOSCOW?Russia's largest airline, state-controlled Aeroflot, will take control of the country's No. 2 carrier Transaero in a government-brokered deal to stave off bankruptcy at the heavily indebted company.

Aeroflot Group, which says it already controls 37% of the Russian market, will restructure Transaero, which accounts for 14.4% of the country's passenger traffic, and merge it into its group of companies.

Transaero has struggled with heavy debts as Russians have cut foreign travel as the country's economy is in recession and the ruble has lost around half of its value in the past year.

"It is a mild form of nationalization of the struggling company. Which is very sensible as it is a huge headache for any country to bankrupt an air carrier. A handover of the company into the arms of a carrier, which is close to the state, looks logical," said Boris Rybak, chief executive at aviation consultancy firm Infomost Consulting.

The deal follows a steady rise in the Transaero's debt burden and serves as the latest example of how Russia, hit by Western sanctions, is bailing out some major troubled businesses, ranging from banks to oil companies.

Aeroflot's acquisition of a 75% stake in Transaero was backed by a government commission chaired by Igor Shuvalov, First Deputy Prime Minister, on the air transport industry on Tuesday.

According to the official RIA news agency, the deal is for a symbolic 1 ruble. Both companies declined to comment on the deal price.

A person close to the deal said the both companies won't face "substantial changes" to their operations.

"The shareholders of Transaero Airlines believe this measure will serve the interests of passengers, personnel and partners of the airline," the company said in a statement.

Founded in 1990, Transaero had a fleet of 97 airplanes and an outstanding debt of 67.5 billion rubles ($1.03 billion) at the end of the first half of 2015. Herman Gref, head of Russian lender Sberbank, which lent money to Transaero, said earlier this year that the company's debt issue was "serious."

Aeroflot, with a history that traces back to 1923, has a fleet of 161 airliners.

Earlier this week, Aeroflot surprised the market with stronger-than-expected financial results for the first six months of 2015, despite a challenging economic environment. Russia's economy contracted by 4.6% in the second quarter after shrinking by 2.2% in the first, while the volatile ruble ended the first half of the year some 45% weaker than a year ago.

The drop in the ruble's value dented consumer demand and thus the air industry turnover. According to Russia's Federal Air Transport Agency, passenger traffic to countries outside former U.S.S.R. fell 16.5% in the first six months of 2015 on an annual basis.

Transaero shares soared nearly 40% after news of the deal, while Aeroflot shares finished Moscow trading 5.75% lower.

Olga Razumovskaya contributed to this article

Write to Andrey Ostroukh at andrey.ostroukh@wsj.com

React to this article
Latest news
Date Title
02:15pDJRussian Airline Aeroflot to Take Control of Carrier Transaero
02:15p RESEARCH AND MARKETS : Wearables - The Key Considerations for News Publishers
02:15p RESEARCH AND MARKETS : 2015 Opportunities in the Solar Market for Crystalline and Thin Film Solar Cells
02:15p U.S. Multifamily Outlook Report from Yardi Matrix Foresees Continuing Apartment Growth
02:14p RESEARCH AND MARKETS : Markets and Strategies for Chemical and Material Suppliers in Niche Markets
02:13p DONALDSON : sales, profits sink amid mining and ag declines
02:12p GLOBAL COBALT : Shareholders Unanimously Approve Plan of Arrangemen...
02:12p GEORGIA PUBLIC SERVICE COMMISSION : Commission Approves $5 Million in Assistance for Low Income Natural Gas Customers over Next Five Years
02:12p CA : Faruqi & Faruqi, LLP : is Investigating CA, Inc. (CA) on Behalf of its Shareholders
02:12p USHCC Addresses Donald Trump on Immigration and Hispanic Issues
Latest news
Advertisement
Hot News 
BANCO ESPIRITO SANTO : Release concerning the disclosure of the financial information concerning the first half of 2015
KOFAX : 25 Ways to Lose a Customer
TUESDAY SECTOR LEADERS : Drugs, Apparel Stores
Aga saga sizzles as Whirlpool weighs rival bid
ENTU UK : Issues Profit Warning As It Decides To Shut Down Solar Division
Most Read News
08/31 ECB's New Guideline On Monetary Policy Implementation
08/31 SofTech Announces Q4 and FY 2015 Operating Results
08/31 FHLBank San Francisco Releases July 2015 Cost of Funds Index
08/31 KWANG SUNG ELECTRONICS H K : Appointment of Executive Director and Grant of Share Option
08/31 Fitch Maintains Freescale on Watch Positive Ahead of Merger with NXP
Most recommended articles
02:10pDJAnalysts Forecast 100,000 Barrel Rise in Crude Stocks
02:07p GM, Fiat Chrysler Canada sales rise in August
02:07p China fears hit stocks and oil, boost volatility
02:06p China fears hit stocks and oil, boost volatility
02:04p INFLATION A REASON TO KEEP RATES FAIRLY LOW : Fed's Rosengren