Company Watch - Aeroflot.

Nov 27, 2006

Aeroflot's fleet plans until 2010, the carrier will operate 30 Russian Regional Jets and 65 A320 family aircraft. "We want to increase our long-haul fleet dramatically, up to 45 aircraft," he said, adding that the carrier will talk with Airbus and Boeing about the A350 and 787 respectively. "But I don't know when we can make a decision. Aeroflot had $180 million in aircraft leasing costs in 2006." He hopes that if and when Russia joins the WTO, taxes on Western-built aircraft will be reduced for Russian airlines, which he said "gives us a better chance to compete with Western carriers." Nov 22, 2006

Aeroflot CEO aims for increases in domestic share, long-haul fleet. Aeroflot currently holds 14% of the domestic market and flies to 25 destinations in Russia. Okulov said it is aiming for a 30% share by 2010. Aeroflot Chairman and CEO Valery Okulov said during an interview in Vienna that the carrier will post a 2006 profit of more than $200 million (it earned $220 million in 2005) and that there are no plans for an IPO despite the Russian government's August hint that it was prepared to part with its interest in the flag carrier. Nov 22, 2006

Aeroflot aims for greater domestic share with Siberian consolidation. Aeroflot is looking to consolidate the domestic airline industry further. Aeroflot East will operate both short- and long-haul routes. "First we have to bring the new carrier to Aeroflot standards. The program should be fully working within two years," Okulov said. SU already operates subsidiaries Aeroflot Don in Rostov and Aeroflot Nord in Arkhangelsk. It also has opened branches in Saint Petersburg and Magadan. It has a total market share in Russia of 60% on international routes but just 12% of the domestic market. "By 2010 we want to have a 30% share within Russia," he noted. Nov 22, 2006

Aeroflot will focus on enhancing instead its domestic presence. "This year we will grow 9% on international routes and 16% on the domestic network," Okulov said. "So we see our biggest growth within Russia, where we currently serve 25 destinations and where we want to increase our transport activity by 25%." That aim is behind the launch of a new regional carrier called Aeroflot East, which will be based in Khabarovsk and combine smaller carriers Dalavia Far East Airways and SAT Airlines. "We realized that foreign carriers have increased their activities in Russia by 14% and in the Far East by 18%. As a result, airlines from Russia have lost market share," he explained. Nov 22, 2006

Aeroflot's next step is to expand European services and connect them more effectively via Moscow Sheremetyevo to the Far East. "We want to build a bridge between Europe and Asia. Our investment in the new Sheremetyevo 3 terminal is $150 million," he said. Russian banks have chipped in another $300-$400 million. By Nov. 30, 2007, all flights operated by SU and its partners will transfer to the new facility. Nov 22, 2006

Aeroflot involved are Dalavia Far East Airways and SAT Airlines, according to an Aeroflot statement cited by Reuters, which said the move is part of the government's effort to transfer all state-owned airline stakes to Aeroflot. SAT flies from Yuzhno-Sakhalinsk to eight Siberian, three Japanese, one Chinese and two Korean destinations. Data on Dalavia was unavailable. SU earlier launched Aeroflot Don in Rostov and Aeroflot Nord in Arkhangelsk. Nov 21, 2006

Editor: Aram Gesar, eMail: [e-mail]

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Nov 13, 2006