Aeroflot To Buy 75 Percent Of Transaero

September 1, 2015

Aeroflot said it will acquire a 75 percent stake in struggling competitor Transaero, to create one of the world's largest air transport companies.

The transaction, which underlines the Kremlin's determination to support ailing industries, throws a lifeline to the struggling private airline, whose net debt totalled RUB106 billion roubles (USD$1.63 billion) at the end of last year.

"Transaero will be completely overhauled and integrated into the Aeroflot group," an Aeroflot spokesman was quoted as saying by RIA news agency.

Passenger numbers for Transaero, Russia's second biggest airline, increased by 2.7 percent in the first seven months of 2015. However, it and other Russian airlines have been hit hard by the country's economic crisis as consumers have turned away from international flights, leaving carriers to struggle with unprofitable domestic routes.

The deal was agreed at a meeting with Russia's First Deputy Prime Minister Igor Shuvalov, Transaero said in a statement. An industry insider said Aeroflot would purchase the 75 percent stake for one rouble.

The Russian aviation industry lost around RUB30 billion roubles (USD$461.18 million) last year, according to the Russian Association of Air Transport Operators, compared with a RUB4.7 billion loss in 2013.

Aeroflot itself on Monday reported a net loss of RUB3.54 billion roubles (USD$54.42 million) for the first six months of 2015, compared to RUB1.91 billion a year ago. Passenger numbers were up 8.7 percent year-on-year in the same period, the company said.

(Reuters)