Aeroflot to rescue ailing Transaero with 75% stake purchase

Transaero, Russia’s second-largest airline, has been struggling to stay afloat after the airline’s net debt totaled RUB106 billion at the end of 2014. An Aeroflot spokesman was quoted as saying “Transaero will be completely overhauled and integrated into the Aeroflot group.”
According to a Transaero statement, the deal was concluded during a meeting with Igor Shuvalov, Russia’s First Deputy Prime Minister. An industry insider revealed that Aeroflot were paying just one ruble for the 75% stake in their biggest rivals.
While the first seven months of this year have seen Transaero increase passenger numbers by 2.7%, Russian airlines have been struggling for some time against a poor economic climate where international travel has decreased substantially. Consequently airlines have been left to deal with domestic routes which have not been profitable for some time either.
According to the Russian Association of Air Transport Operators, the Russian aviation industry lost approximately RUB30 billion in 2014, compared with a RUB4.7 billion loss in 2013. Currently Aeroflot has reported a first six months of 2015 net loss of RUB3.54 billion compared to RUB1.91 billion a year ago. However the company did confirm that passenger numbers were up 8.7 percent year-on-year for the same period
This deal in throwing a lifeline to Transaero clearly underlines the Kremlin’s intention to support ailing Russian industries. At time of publication RUB1.00 = US$0.015