Russia's Change of Plan on Transaero Bailout Lifts Aeroflotby and
Transaero's bankruptcy isn't `ruled out,' Shuvalov says
Russia ready to help Aeroflot execute Transaero flights
The Russian government’s decision to change its plan on Aeroflot PJSC’s takeover of Transaero Airlines sent the shares of the nation’s biggest airline surging.
Aeroflot jumped as much as 4.3 percent, while Transaero Airlines slid as much as 21 percent. The Russian government will change its plan on Transaero and its bankruptcy “isn’t ruled out,” First Deputy Prime Minister Igor Shuvalov said in Moscow on Wednesday. Aeroflot’s offer to buy 75 percent plus 1 share of Transaero expired on Tuesday, RIA Novosti reported, citing Transport Minister Maxim Sokolov.
A government commission earlier this month backed the takeover of Transaero by Aeroflot. Transaero became a casualty of Russia’s recession, which curtailed travel while the ruble’s 40 percent decline in the past year bloated the cost of leasing jets. The takeover would push up Aeroflot’s leverage, or debt as a ratio of earnings before interest, taxes, depreciation and amortization, to 6.1 times from 5 times, according to estimates by VTB Capital’s analyst Elena Sakhnova.
“As far as I know, the consolidation of the stake didn’t happen and the plan, that was approved by the government, will be changed,” Shuvalov told reporters. “The process of financial recovery and bankruptcy, including the termination of its existence on the market, is something people don’t have a problem with in a normal market economy."
Shuvalov said the government is ready to offer support to Aeroflot after it took on responsibility for executing Transaero tickets.
“We, the Russian government, need to accept right now that while we don’t need to save an enterprise, we need to take care of the people," Shuvalov said. “This is a giant enterprise, a giant employer of more than 10,000 people. We need to concern ourselves with their future."