Aeroflot-Transaero deal, bigger but not better

AFP, MOSCOW: By acquiring its struggling rival Transaero, Russia’s largest airline Aeroflot is likely to find itself in a tight spot with an additional debt burden and a fleet of ageing aircraft, analysts said.
State-controlled Aeroflot announced this week its purchase of 75 per cent plus one of Transaero’s shares for the symbolic price of one ruble, citing the privately-held airline’s “extremely difficult financial position.”
The Russian government had backed consolidation of the two airlines, which is expected to begin today.
It is “undoubtedly the most important and significant decision” Aeroflot has ever taken, company chairman Kirill Androsov said in a statement. The acquisition would take Aeroflot closer to its goal of carrying 70 million passengers a year by 2025, he added.
The incorporation of Transaero will increase Aeroflot’s domination of the domestic market, controlling over half of the country’s air traffic with a fleet of more than 300 aircraft—larger than that of British Airways and Alitalia.
In any event, being 51-per cent owned by the state, Aeroflot could hardly turn down the deal.
“The Russian government has decided to rescue Transaero—Russia’s second-largest airline - from bankruptcy by forcing state-owned Aeroflot to buy the carrier,” analysts at Gazprombank said.
Investors and analysts have been sceptical about the deal after the details of government talks were leaked earlier this week, with Aeroflot’s shares tumbling nearly 10 per cent on the Moscow exchange on Tuesday and Wednesday.
“I think that the management of Aeroflot is not jumping with joy because they have serious work ahead of them,” the head of the Federal Anti-Monopoly Service, Igor Artemyev, told reporters.

 

Aeroflot-Transaero deal, bigger but not better

AFP, MOSCOW: By acquiring its struggling rival Transaero, Russias largest airline Aeroflot is likely to find itself in a tight spot with an additional debt burden and a fleet of ageing aircraft, analysts said. State-controlled Aeroflot announced this week its purchase of 75 per cent plus one of Transaeros shares for the symbolic price of one ruble, citing the privately-held airlines extremely difficult financial position. The Russian government had backed consolidation of the two airlines, which is expected to begin today. It is undoubtedly the most important and significant decision Aeroflot has ever taken, company chairman Kirill Androsov said in a statement. The acquisition would take Aeroflot closer to its goal of carrying 70 million passengers a year by 2025, he added. The incorporation of Transaero will increase Aeroflots domination of the domestic market, controlling over half of the countrys air traffic with a fleet of more than 300 aircraftlarger than that of British Airways and Alitalia. In any event, being 51-per cent owned by the state, Aeroflot could hardly turn down the deal. The Russian government has decided to rescue TransaeroRussias second-largest airline - from bankruptcy by forcing state-owned Aeroflot to buy the carrier, analysts at Gazprombank said. Investors and analysts have been sceptical about the deal after the details of government talks were leaked earlier this week, with Aeroflots shares tumbling nearly 10 per cent on the Moscow exchange on Tuesday and Wednesday. I think that the management of Aeroflot is not jumping with joy because they have serious work ahead of them, the head of the Federal Anti-Monopoly Service, Igor Artemyev, told reporters.