Russia's Federal Air Transport Agency, Rosaviatsiya, may impose restrictions on flights or even cancel the air operator licenses of 42 percent of the country's airlines, including over a third of the country's leading operators, due to their weak financial situation, Kommersant business daily said on Wednesday.
Kommersant quoted the transport agency statement saying that companies whose financial situation was worrying held 24.4 percent of the market by revenue.
The financial situation of the five leading airlines, Aeroflot, Transaero, S7 Airlines, Utair and Orenburg Airlines, is stable, but another seven airlines of the top 20 are at risk, Rosaviatsiya said.
The agency said 23 percent of all Russian airlines had negative net assets value as of early 2010, which, according to the Civil Code, seriously endangered their legitimacy. However, their owners did nothing to improve the situation, Rosaviatsiya said.
A month ago, Rosaviatsiya head Alexander Neradko slated budget carrier SkyExpress as a financially volatile company, a source at the Transport Ministry told Kommersant. Several days later, billionaire Oleg Deripaska's Basic Element rescued the company by securing all its loans.
Although Rosaviatsiya has the right to scrap air operator licenses of companies in financial distress, analysts think it is unlikely to do so due to the potentially huge social impact, and is more likely to impose restrictions instead.
The agency is authorized to deny access to charter flights and refuse to issue new authorization for international flights, which will result in the slow death of weak companies.
Some of the better unstable airlines could seek a merger with larger firms, but there are likely to be few takers for the worst operators, analysts say.
MOSCOW, August 18 (RIA Novosti)
