Russia to supply fuel to indebted AiRUnion alliance

2008-8-27

Russian Prime Minister Vladimir Putin on Tuesday ordered the state to supply fuel to beleaguered air alliance AiRUnion, which is grappling with a USD$1 billion debt and the grounding of its jets.

A total of 24,000 tonnes of fuel will be supplied from state reserves up to September 14 under the guarantee of state conglomerate Russian Technologies, a government statement said.

Russian Technologies, an industrial giant headed by ex-KGB official Sergei Chemezov with interests spanning arms, cars and titanium, has long been expected to take over the state's stakes in the three carriers in the AiRUnion alliance.

A source within Russian Technologies said on Monday the group planned to acquire these stakes, but was counting on financial assistance from the government.

"We've no plans (to refuse), but the corporation will try to attract the government," the source said on condition of anonymity.

KrasAir, the largest airline in the AiRUnion group, bought Hungarian airline Malev last year. The alliance also includes Domodedovo Airlines and Samara Airlines.

Hundreds of passengers booked on flights on AiRUnion carriers were stranded on Tuesday as flights were not taking off from Moscow, AiRUnion spokeswoman Yulia Bagrysheva said, without giving a reason for the delays.

The alliance's flights were also grounded last week as a result of fuel shortages. As a consequence, Russian aviation authorities barred AiRUnion from selling tickets for winter flights.

Transport Minister Igor Levitin said after an emergency meeting late on Monday that rival Russian carriers had agreed to take stranded AiRUnion passengers on flights with spare seats.

He did not confirm Russian newspaper reports on Tuesday that rival airlines Aeroflot and S7 Airlines, previously called Sibir, were already planning to fly the Moscow to Krasnoyarsk route most affected by the AiRUnion delays.

Levitin, quoted by his assistant, said government officials were trying to help AiRUnion find a way out of the crisis.

"It's not in the government's interest to see AiRUnion's financial situation get worse, for the companies to go bankrupt. Work is continuing to formulate a system of measures to find a way out of the crisis," the minister said via his assistant.

Source: airwise.com
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