Radio Free Europe, Czech Republic
June 24 2004
Bankrupt Armenian Carrier Unable To Clear Huge Debt
By Gevorg Stamboltsian 24/06/2004 16:19
The executive director of Armenian Airlines said on Wednesday that
the state-owned carrier which was declared bankrupted recently is
highly unlikely to fully repay its debts estimated to total $28
million.
In an interview with RFE/RL, Arsen Avetisian said the company would
be able to do so only if it was allowed to resume and operate a
single daily flight from Yerevan to Moscow for at least two
consecutive years.
`But given the existing agreement between [the private airline]
Armavia and the Armenian government, the likelihood of the
implementation of a financial adjustment plan drawn up by Armenian
Airlines is very small,’ he admitted.
Armavia, which is owned by Russia’s second-biggest Sibir airline, was
granted most of Armenian Airlines’ flight rights in the former Soviet
Union and Western Europe when it signed the agreement with the
government more one year ago. It has since replaced Armenian
Airlines, notorious for mismanagement and poor service, as the
country’s flagship carrier.
The Yerevan-Moscow flights reportedly generate 42 percent of
Armavia’s operating revenues. Sibir, which has already invested
heavily in its Armenian subsidiary’s fleet of mainly European-made
aircraft, is therefore unlikely to share the lucrative service with
anyone.
Meanwhile, Armenian Airlines creditors, most of them based outside
Armenia, are expected to gather in Yerevan next month to discuss its
future. According to Avetisian, they will likely decided to liquidate
the company. He said it can partly clear the debts with proceeds from
the planned sale of its property and equipment, including Soviet-era
commercial jets.
Armenian Airlines, profitable as recently as in 1997, began steadily
sliding into bankruptcy in 1998 and carried out its last flight in
December. Avetisian blamed the downfall on the Russian economic
crisis of 1998 and a series of subsequent restructurings which
deprived the company of some of its profit-making divisions. But some
independent aviation experts believe that the company fell victim to
government corruption, inefficiency and mismanagement.
