UTair to rejig organisational structure

Moscow
Source: Flightglobal.com
This story is sourced from Flightglobal.com

Russian carrier UTAir is to regroup its assets into two major divisions in a bid to increase overall efficiency and attract investors.

Alongside a 210-strong fleet of turboprops and twinjets, UTAir operates more than 340 helicopters. These two fleets provide distinctly different services, says financial director Igor Petrov, admitting that running them within the same organisational framework is uneconomical.

"Under the current setup, passenger services incur losses to us," he says. "Establishing two standalone businesses should help work out the right development strategy for both of them."

General manager Andrei Martirosov says the airline's detachment, based in the city of Nefteyugansk, has already been renamed UTAir Helicopter Services and will constitute the core of its all-helicopter arm.

He adds: "Within two years, there will also be a separate division dedicated solely to providing mainline passenger services and handling appropriate aircraft.

"The planned realignment is designed to enhance efficiency of both businesses and make them appealing to investors looking for particular types of air transportation."

UTAir is traded on the Micex exchange in Moscow and has a market capitalisation of Rb13.3 billion ($410 million), but analysts from Gazprombank, VTB and Deutsche Bank have recently estimated its value at between $1.5 billion and $2.5 billion.

Petrov says several domestic and foreign investment companies have shown an interest in buying equity in the airline, and adds: "Analysts propose different ways of increasing our capital and improving debt-to-equity ratio, such as a secondary public offering or stock issue through a private placement."

Last year, UTAir grossed Rb40.7 billion ($1.25 billion) in revenue from scheduled services – an increase from Rb30.1 billion in 2011 – after transporting 8.6 million passengers.