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Aeroflot Proposes Delay Selling Shares Until Market Has Improved

OAO Aeroflot is proposing to delay selling shares until the market improves, according to the head of Russia’s largest airline.

“We think Aeroflot should be privatized later depending on the market,” Chief Executive Officer Vitaly Savelyev said in an interview at the St. Petersburg International Economic Forum today. Aeroflot’s shares are about 40 percent undervalued, he said, citing analyst estimates. Aeroflot fell 2.9 percent to 52.77 rubles yesterday in Moscow, the biggest drop since May 23. The stock is 51 percent below its high in February 2008.

The Russian government plans to give up its controlling stake in Aeroflot by 2016 as part of a plan to raise 427 billion rubles ($13 billion) through state asset sales to help balance the budget and reduce state influence in the economy. Russia may offer investors about 1.5 percent of Aeroflot as early as this year, Olga Dergunova, the head of the Federal Property Management Agency, said in April.

The Moscow-based airline, which has bought modern Airbus SAS jetliners and SuperJet 100 regional planes to upgrade its fleet, is able to grow independently and its shares should not be sold to a competing carrier, Savelyev said.

“A company developing its competitor is not very realistic,” he said. Aeroflot also aims to support local aviation companies, “which may be an issue for a private investor.”

The carrier isn’t holding talks with Alexander Lebedev, who finances the Evening Standard and Independent in the U.K., about buying the businessman’s remaining 4.5 percent stake.

Aeroflot has no plans to buy assets in Europe because of antitrust rules that don’t allow companies to consolidate controlling stakes, Savelyev said. Last week, the Italian newspaper la Repubblica reported that Aeroflot considered the possibility of acquiring Alitalia SpA.

“We are not holding talks, and have not received any offers,” Savelyev said in response to the report. “We are not looking for a company in Europe.”

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