Russia 090820 Basic Political Developments

Rosavia Airline Seeks Bids for 65 Jets

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Rosavia Airline Seeks Bids for 65 Jets
20 August 2009By Maria Antonova / The Moscow Times
ZHUKOVSKY, Moscow Region — Nascent airline Rosavia invited three companies to participate in a tender for up to 65 aircraft that will form the basis of its fleet, Russian Technologies chief Sergei Chemezov said Wednesday at the MAKS-2009 air show.

Russian Technologies invited Airbus, Boeing and Irkut to participate in the tender for 50 narrow-aisle jets with an option of purchasing 15 more. Invitations were extended personally to Irkut head Oleg Demchenko, Boeing senior vice president Aldo Basile and Airbus vice president Andreas Kramer.

“I’m intentionally not giving the total value of the contracts. The price for one plane will be between $35 million and $40 million, so you can do the math yourselves,” Chemezov told reporters. At the higher price, 65 planes would cost $2.6 billion.

The announcement breaks the state’s long silence regarding Rosavia, which was unveiled last fall and was originally supposed to begin flying this summer.

State corporation Russian Technologies said in September 2008 that it would help cash-strapped airline alliance AiRUnion — comprised mostly of state-controlled regional carriers — pay off debt and merge with Atlant-Soyuz, a carrier controlled by the Moscow city government.

The new airline has been billed as an eventual competitor to state-controlled Aeroflot, Russia’s largest carrier. The company is currently registered as Airline, while Rosavia is still a working name.

Rosavia will need a total of 120 planes by 2017, Chemezov said. By then, the airline hopes to service 20 million passengers, up from about 1 million now, according to figures in a Russian Technologies statement. Aeroflot flew 9.27 million passengers last year, or 11.6 million including its subsidiaries.

Chemezov said the airline would need the 65 new planes “in the beginning” to replace some of the 200 old aircraft owned by the airlines that were moved under Russian Technologies’ control. Three-quarters of the planes are obsolete and will be scrapped by 2017.

The jet makers will need to provide a financial plan for the deliveries, Chemezov said. Rosavia may work with Russian, European and U.S. financial organizations, and it could also request state guarantees to finance leasing or direct purchases, he said.

Rosavia hopes to sign a contract for the narrow-aisle planes before the end of the year after examining the companies’ proposals. Deliveries would happen between 2010 and 2016.

The three companies invited Wednesday will need to submit their proposals by Oct. 17, said Igor Zavyalov, deputy head of Russian Technologies. “We will consider all proposals,” he said.

The company will also prepare a tender for regional and wide-body planes by the end of the year, when the airline’s needs will be clearer, Chemezov said.

Chemezov said he was eager to see the new airline brought into operation quickly, but he admitted that the original plans to include Atlant-Soyuz were still shaky.

“We expected Moscow to [enter] with Atlant-Soyuz … but their financial condition does not allow it,” he said.

Atlant-Soyuz may become part of Rosavia later, “after the city government makes it more financially healthy,” he said. Under the original plans for Rosavia, Moscow was to receive 49 percent of the new carrier in exchange for including Atlant-Soyuz and its fleet of nine Boeing 737s.

Last week, City Hall decided to push back the inclusion of Atlant-Soyuz, Vedomosti reported. The airline has debts worth 11.6 billion rubles, the report said.

Although long-term plans still include a unified brand, the six airlines that are now part of Rosavia will have their own fleets and passenger volumes at first, Chemezov said, adding that Rosavia would serve as the “managing center.”

He did not say when Rosavia expected to receive its flight license.

Boeing has not yet read the details of Rosavia’s plane requirements, Basile, the senior vice president, said after the news conference. Usually such requirements include details on the salon interior and the number of passenger seats, he said.

“We’ll offer them whatever they are asking,” he said, referring to the specifications. The U.S. plane maker will gladly participate in the tender and hopes for a further working relationship with Rosavia, added Sergei Kravchenko, Boeing’s Russia head.

Boeing said in a presentation Monday that airlines in Russia and the Commonwealth of Independent States could buy 1,050 planes over the next 20 years, 58 percent of which would be narrow-aisle planes like the Boeing 737.

Gregor von Kursell — a spokesman for EADS, the parent company of Airbus — did not pick up the phone. Airbus’s most popular version of the narrow-aisle jet is the A320.

Irkut had no immediate comment.

Aeroflot Signs $100M Olympic Sponsorship
20 August 2009By Maria Antonova / The Moscow Times

ZHUKOVSKY, Moscow Region — Aeroflot will be the official carrier of the 2014 Sochi Winter Olympics, pledging $100 million in money and services between 2009 and 2016, Aeroflot head Vitaly Savelyev said Wednesday at the MAKS-2009 air salon.

Sochi Olympic Committee president Dmitry Chernyshenko said at a signing ceremony that Aeroflot won the tender, “leaving competitors far behind” with a bid that beat “practically all Russian and some foreign airlines” that participated.

He declined to name the participants or say how many bids they received. The companies signed a memorandum of understanding and said they would ink a full deal soon.

Deputy Prime Minister Dmitry Kozak, who is overseeing the Olympic preparations, told Prime Minister Vladimir Putin later in the day that the Aeroflot deal brought the sum of Sochi sponsorship agreements to $750 million.

Aeroflot’s sponsorship includes transporting the Russian Olympic teams and delegations over the next seven years, starting with the Vancouver Olympic Games next winter. In exchange, it can use the Sochi Olympics brand in its marketing for the duration of the deal.

“This is not charity but a partnership that is profitable to both sides,” Chernyshenko added, presenting Savelyev with the trophy of a gold medal. Savelyev gave him a model plane.

The Aeroflot chief declined to say how much of the $100 million would be in the form of services.

“Aeroflot is undervalued on the market, still perceived as a Soviet company, and we need to change that image. We’re a different company with different possibilities,” Savelyev said. The carrier said it plans to use the partnership to raise its passenger volume enough to compensate for the sponsorship by 2016.

“We hope to use the Superjet on our Moscow-Sochi route and in trips taken by the organizing committee,” Savelyev said, referring to a new Sukhoi regional jet.

The Sochi Olympic Games have already signed partnership agreements with MegaFon, Rostelecom, Rosneft and Sberbank. The government is still accepting bids for an official insurer and a gas company.

“We’re certain that events connected to the Olympics will be hosted without using budget funds,” Kozak said in a meeting with Putin, according to a transcript on the government web site.

He said the organizers were expecting to get considerably more funds from the two remaining sponsorship deals. The organizing committee decided Wednesday to not take funds allotted for them in the 2009 and 2010 federal budgets, he told Putin.

Kozak also noted the serious environmental concerns that have been raised about building through Sochi National Park.

He said he expected the International Olympic Committee to agree to allow Russia to hold the cross-country skiing and biathlon competitions on the same track, which would allow Russia to “save a significant amount of funds on building infrastructure for a separate biathlon facility … and lessen the impact on the environment.”

When asked by Putin for his estimate on the savings, Kozak put the figure at 20.5 billion rubles ($640 million). Talks with the committee will be held Thursday, he said.

While Olympic deals were struck in Moscow, 10 environmental activists on Wednesday blocked work on a road that is being built to link the Adler airport with ski lifts in Krasnaya Polyana, stopping logging in one of the construction areas along the route.

The 50-kilometer rail and road link is the single most expensive part of the Sochi Olympics preparations, costing more than half of the state’s overall budget for the games.

The activists demanded that authorities investigate and open a criminal case into the illegal logging.

“We have filed three complaints to the police, and while the workers have no documents that permit the clear-cutting, the police ignored them,” said Andrei Rudomakha, coordinator of the Environmental Watch of the North Caucasus and one of the protesters.

The protest dispersed in the afternoon after a police chief from Adler said they would stop the logging and open the criminal case, Rudomakha said by phone from Sochi.

Kozak told Reuters last month that concerns expressed by environmental groups over the road were “politicized.”

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