Alexander Velovich/MOSCOW

Aeroflot-Russian International Airlines (ARIA) general director Valery Okulov says that the carrier is trying to tone down Russian Government plans for a wholesale privatisation auction in 1998, while at the same time the airline is pressing ahead with plans to raise cash in European and US markets.

Okulov says that although there is no objection to privatisation, the ARIA board wants to avoid a quick auction of a 51%stake, as recently proposed by the Government. He says that ARIA is proposing a more gradual process, with only 7%of its shares to be auctioned in 1998 and another 4-6%in 1999. It also recommends that the Government should retain a 25% stake and a controlling veto.

The airline is also about to start a campaign to attract investors. In November ARIA is due to use American Deposit Receipts (ADR) on the New York stock exchange, which avoid the need for a direct listing by the company. The deal initially involves 5%of shares, but Okulov hopes to raise that to 7-8%.

ARIA also plans to offer Eurobonds and sell its shares on the Russian stock exchange from 1998.

Okulov's comments come as the airline revealed a pre-tax profit of 186 billion roubles ($32 million) for the first half of this year, and traffic figures which are expected to put the carrier on course to beat the 3.8 million passengers flown in 1996.

Much of the growth is targeted on an aggressive drive to increase the airline's presence in the domestic Russian market, with a long-term goal of reaching 2 million passengers a year. Domestic operations still accounted for only 2% of traffic in 1996, but that is expected to climb to 6.5%this year.

So far this year, ARIA has added 11 new destinations within Russia and other former-Soviet Republics, with plans to add a further 30 cities over the next two years.

The airline has ordered ten Boeing 737-400s to back up this expansion and is to acquire Tupolev Tu-214s from the Kazan production plant.

Source: Flight International