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Armenian "Armavia" Goes Bankrupt: Future Of National Air Traffic Und

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  • Armenian "Armavia" Goes Bankrupt: Future Of National Air Traffic Und

    ARMENIAN "ARMAVIA" GOES BANKRUPT: FUTURE OF NATIONAL AIR TRAFFIC UNDER QUESTION

    YEREVAN, April 2. /ARKA/. According to official information released
    Thursday, Armenian national air company Armavia made a decision
    to cease its flights as from April 1st 2013 and start a bankruptcy
    procedure. For the second time an Armenian national air carrier goes
    into bankruptcy: Armenian Airlines turned bankrupt in 2003.

    Armavia is starting a bankruptcy process.

    There has been a lot in mass media about Armavia's problems, its
    big debts and that its license may be revoked. Now events take an
    unexpected turn. Armavia's press service announced the company's
    decision to cease the flights and start a bankruptcy process.

    "Aviation is a field where you must not be satisfied with what you have
    already achieved. During three years, owner of Armavia air company
    kept investing money from his other businesses to support the air
    carrier. But today the situation is that there is no possibility left
    to continue like this. Hence, a decision is made to cease flying and
    start a bankruptcy", says the report. The document also says that
    the 2008 global economic crisis cause bankruptcy of many foreign
    air companies, such as KUBAN, AEROSWIT, RED WINGS, AMERICAN AIRLINES
    and others.

    Debts and disputes over SuperJet

    As early as in November 2012 reports said that owner of the company,
    president of MIKA Limited and a major Armenian businessman Mikhail
    Baghdasarov intended to sell its Armavia. The The main alleged reason
    was the economic crisis and the losses suffered from maintenance of
    the new Russian SuperJet.

    Last year Armavia returned one of the two Sukhoi SuperJet 100 on order
    to Sukhoi Civil Aircraft company: the reason given was the low quality
    assembly. The second Sukhoi SuperJet 100 had not been supplied and
    Baghdasarov said he had no debts to the jet manufacturing company.

    But the Sukhoi Civil Aircraft said that Armavia had not paid some
    4 million dollars for the first aircraft, that there is encumbrance
    recorded against it in an Armenian bank that the air company could
    not return the jet unless it exonerated the aircraft.

    Baghdasarov retorted saying that if the manufacturer had a buyer they
    would have exonerated the aircraft themselves since long ago.

    Yet, according to Armenian mass media, Armavia owes not only to Sukhoi
    Civil Aircaraft.

    Haykakan Zhamanak newspaper says the company has not repaid its 22
    million dollars loan from Bank VTB Armenia (taken for buying SuperJet
    100) and has not paid overdue salaries to the staff.

    Who is the buyer?

    Armenian print media say Baghdasarov intends to sell the air company
    at $50 million, but potential buyers are scared away because of the
    huge debts of Armavia.

    Late 2012 Baghdasarov told RBC daily that no Russian investors are
    interested in the deal, but there are Italians and investors from
    the East among potential buyers.

    According to Armenian mass media, a major businessman and leader of
    Prosperous Armenia party Gagik Tsarukyan showed the greatest interest
    in purchasing Armavia, but, reportedly, the two businessmen failed
    to come to an agreement.

    According to mass media reports, negotiations are under way with two
    foreign, an American and an Italian, companies.

    Allegedly, during his meeting with Baghdasarov Tsarukyan tried to
    convince him to first declare the company bankrupt and then sell it
    to him, but the government said the overdue salaries should be paid
    first (to avoid protests).

    Press secretary of Tsarukyan Ivetta Tonoyan, in commenting
    allegations, said that Gagik Tsarukyan has never had intentions to
    buy Armavia. "This information has no basis in fact", she said.

    After the bankruptcy...

    A number of questions remain to be answered after Armavia announced
    it will start a bankruptcy process, and the first one is who will be
    operating the company's flights. The press service said the company
    will cease its flights as from April 1, yet no single Armavia flight
    was operated from Zvartnots on Friday March 29.

    Will the company be sold or nationalized? For instance, Armenia's
    Public Council suggests partly nationalizing Armavia.

    "We believe that Armenia should have its national air carrier
    registered in Armenia, with most of its staff being Armenians", head
    of the Public Council Vazgen Manukyan told journalists. He also said
    that partial (from 30 to 51%) nationalization of air companies is
    quite common in many countries.

    According to Manukyan, having a national air company is of strategic
    importance to Armenia. "In case of a war, if we don't have our own
    air company, flights from other places may be forbidden, and then we
    will find ourselves in a full blockade", Manukyan said.

    Apart from this, many people still remember the protests held by
    employees of Armenian Airlines who were set adrift for long years in
    fighting for their occupational disease compensations to be paid.

    Let us hope the questions will be answered by the respectively agencies
    in the near future and both the staff and the passengers of Armavia
    will then know what to expect.

    Hayk Khalatyan, reporter of ARKA Agency

    The author's opinion does not necessarily reflect the opinion of the
    editorial office.

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