The Ukraine Government has called on the country's three leading airlines to prepare merger plans in an effort to create a single strong national carrier.

The move would rescue 100% state-owned Air Ukraine which is in a poor financial and operational position following five years of internal division which has left it with increasing debts and a shrinking operation. It operates only five aircraft, and these have been subject to frequent seizure for debts.

Aerosvit and Ukraine International are much stronger. Each operates a fleet mainly of Boeing 737 Classics. Aerosvit has been profitable for several years, and Ukraine International expects to show a small profit this year. Each carries about 25% of the country's 1.2 million passengers annually. Both operators also have some outside shareholders, although the government retains a majority holding.

The three airlines are examining the position closely, and, subject to ensuring their outside shareholders are in agreement with any finalised proposals, and they do not assume Air Ukraine's debts, they generally agree that one strong carrier would be in the national interest.

Key to the outcome is a requirement for Air Ukraine to prepare accounts to international standards, and for any merged company to decide on staff integration.

Aerosvit and Ukraine Inter-national already co-operate in various areas and both have provided support to Air Ukraine.

Source: Flight International