Russia approves merger of five regional airlines
Bloomberg News, The Associated PressPublished: May 2, 2007
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MOSCOW: President Vladimir Putin on Wednesday approved the merger of five regional airlines amid a government drive to consolidate and modernize Russia's ailing domestic industry.
The five members of the AirUnion alliance will be rolled into a similarly named company, AirUnion, in which the state will hold no less than 45 percent of the shares, according to a statement issued by the presidential press service.
Government officials have promoted the creation of the holding company as a step to encourage consolidation among Russia's many regional airlines, and to create a rival to the market leaders, Aeroflot and S7
. Russia is home to more than 180 airlines.
The state currently holds a controlling 51 percent stake in KrasAir, which is co-owned by the Russian entrepreneur Boris Abramovich.
The government also owns 50 percent in Domodedovo Airlines and 46.5 percent in Samara airlines. Two other companies - Omskavia and Sibaviatrans - are privately owned. Together the five companies carried 4.9 million passengers in 2006, AirUnion said on its Web site.
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AirUnion will be established in six months "to improve aviation transportation and increase efficiency of Russian airlines," Putin said in the decree.
A number of crashes involving Russian airlines and airports claimed more than 400 lives in Russia last year and cast a harsh light on the decrepit state of many of the nation's carriers.
In October, First Deputy Prime Minister Sergei Ivanov, who oversees air safety, called for consolidation in a sector where many companies lack the cash to overhaul their Soviet-era fleets.
The merger also comes as the state builds an aircraft-making corporation aimed at reinvigorating Russia's splintered manufacturers, who saw their orders plummet after the Soviet breakup.
The AirUnion alliance has a fleet of about 80 aircraft and flies to more than 100 destinations.