Aircraft

Russian carrier targets deal for 10 ex-Northwest twinjets as it phases out Tupolevs in favour of Western aircraft

Russian carrier Sibir Airlines aims to boost its fleet expansion and renewal effort by leasing 10 ex-Northwest Airlines Airbus A319s as it pursues its ambitious growth plans.

The airline says “our chances of getting these aircraft – hopefully by this summer – are now higher, but we can’t say for sure”. Financing for the deal would come from GE Commercial Aviation Services, Sibir adds.

The airline, which operates 10 Boeing 737s, six Airbus A310s, nine Ilyushin Il-86s, 28 Tuploev Tu-154Ms and two Tu-204s, plans to lease “at least two more 737s and two more A310s this year” for its scheduled business. The carrier is set to take delivery of a leased 737-400 in June for charter operations.

Sibir is gradually phasing out its fleet of Tupolevs in favour of foreign-built aircraft. The airline expects to post revenues of around $670 million when it publishes its full-year results in June, an increase of more than one third on 2004.

But Sibir, which markets itself as S7 Airlines, faces obstacles as it attempts to increase its domestic routes, which account for around 78% of its business. Sibir says the Russian aviation market has to contend with ageing fleets and infrastructure, soaring fuel prices with no possibility to hedge, high airport taxes for Western aircraft, a customer base that is extremely sensitive to increases in ticket price and overcapacity – “there are 185 airlines in Russia – that’s too many for a country with 35 million passengers,” Sibir says.

The regional airport lobby, whereby many smaller airports are linked to the airlines that fly from them, also causes problems for the airline as it attempts to expand its domestic reach.

Sibir is trying to get around the problem by targeting “more friendly markets”, where the local airline and airport are not a single entity, and by “trying to lobby our interests on a regional level”. The airline adds: “Our strategy in the late 90s was to buy up smaller airlines: we’re not in a position to do so right now.”

HELEN MASSY-BERESFORD / MOSCOW