Ukrainian airline counts cost of Canadian court battle as it aims to get its outsize cargo business back on track

Ukraine's Antonov Airlines has won a lengthy legal battle in Canada to free a seized An-124-100 Ruslan, enabling it to begin actively marketing its outsize cargo charter business again.

The aircraft is the second of seven Ruslans operated by Antonov Airlines that has been seized: the other is parked at a Belgian air force base outside Brussels pending a similar trial in April. Both countries recognise the rulings of the international court or arbitrage in Stockholm and allow third country nationals to freeze assets of debtors .

The airline's commercial director Valery Kulbaka says marketing activity has been effectively suspended over the past 18 months while it fought the successive cases. He adds that the company needs increased activity to recoup the estimated $75 million business downturn directly attributable to the seizure of the An-124 as well as legal costs.

Operations have also been restricted due to a "no-fly zone" of countries thought likely to enforce similar seizure orders.

"We're happy because at last it is resolved, but all is not solved: we still have an aircraft seized, we're still fighting in Europe, don't have access to the USA and we've suffered a colossal loss of business," says Kulbaka. He is confident the essential question of ownership proved in the Canadian case will convince Belgian judges to follow suit and reopen countries that recognise the Swedish court to the carrier.

Antonov Airlines is now to launch a lawsuit for damages estimated to exceed $100 million, but admits it has little chance of winning against TMR (formerly owned by The Mark Rich Company), which has no assets in Canada, says Kulbaka. Instead, it is to concentrate on rebuilding the business, which suffered a 39% drop in revenues last year as a combined result of loss of customer confidence and the operating restrictions.

Antonov Airlines is now preparing the aircraft for flight and return to revenue service. It was grounded at Goose Bay for over 18 months while the provincial and appeal court of Newfoundland-Labrador considered the case.

 How TMR confused the case

The Canadian federal court of appeal ruled last week that Cypriot company TMR Energy had no grounds to request the seizure of the Antonov Airlines An-124 at Goose Bay airport in June 2003, since an alleged debt owed to TMR by the State Property Fund of Ukraine had no relation to the Antonov Design Bureau or its Antonov Airlines division. The Canadian ruling found that TMR deliberately described Antonov Airlines as being a Ukrainian state entity "in such a way as to create some confusion" from which it would benefit. It also finds that TMR abused procedure in bringing the initial case in front of a low-level prothonotary court with little experience of the international arbitrage court.


Source: Flight International