Paul Duffy/MOSCOW

PRIVATISATION AND fleet renewal remain at the top of the agenda for Aeroflot-Russian International Airlines (ARIA), says chief executive Vladimir Tikhonov. He adds that the first step in the privatisation process will take place shortly with the issue of shares to airline's staff.

Employees are expected to receive up to 20% of the airline, with as much as another 29% due to be taken by "commercial investors". The Russian Government, however, will continue to hold a majority stake for at least another three years.

ARIA also appears to have seen off the threat of being broken up further. The Goskomimushestvo committee on state ownership has now confirmed that ARIA owns all of the fleet being flown within the group.

There had been concerns that some of ARIA's subsidiaries may succeed in breaking away to form new, independent, companies.

Tikhonov says that a top priority for the carrier is to secure funding for the renewal of the its ageing and fuel-inefficient fleet. Up to seven Western narrowbodies are among aircraft due to come into the fleet this year.

Previously, the Russian Government had provided ARIA with its aircraft at no cost, but Tikhonov now recognises that ARIA will have to get funding from the market. He believes that the most likely source of funds will be through ten-year loans from Russia's commercial banks.

Giving a review of the carrier's performance in 1994, Tikhonov reports that ARIA made an operating profit of 247 billion roubles ($59 million at current market rates).

Comparisons with previous years are virtually meaningless because of Russia's currency instability, but, on ARIA's figures, the profit would represent an operating margin of nearly 13%.

A better guide to financial performance comes from ARIA's hard-currency surplus, which was $156 million for the year, on revenues down by 11% at $748 million.

Passenger numbers were down marginally at 3.1 million, but ARIA expects this figure to rise again during 1995.

During the year, ARIA introduced 23 routes to Europe and the Americas, as well as beginning its first services within the CIS, which had previously been operated by the domestic divisions of Aeroflot.

Source: Flight International