Read us | Listen to us | Watch us | Join Live Events | Turn Off Ads | Live |

Click on your language to translate this article:

Afrikaans Afrikaans Albanian Albanian Amharic Amharic Arabic Arabic Armenian Armenian Azerbaijani Azerbaijani Basque Basque Belarusian Belarusian Bengali Bengali Bosnian Bosnian Bulgarian Bulgarian Catalan Catalan Cebuano Cebuano Chichewa Chichewa Chinese (Simplified) Chinese (Simplified) Chinese (Traditional) Chinese (Traditional) Corsican Corsican Croatian Croatian Czech Czech Danish Danish Dutch Dutch English English Esperanto Esperanto Estonian Estonian Filipino Filipino Finnish Finnish French French Frisian Frisian Galician Galician Georgian Georgian German German Greek Greek Gujarati Gujarati Haitian Creole Haitian Creole Hausa Hausa Hawaiian Hawaiian Hebrew Hebrew Hindi Hindi Hmong Hmong Hungarian Hungarian Icelandic Icelandic Igbo Igbo Indonesian Indonesian Irish Irish Italian Italian Japanese Japanese Javanese Javanese Kannada Kannada Kazakh Kazakh Khmer Khmer Korean Korean Kurdish (Kurmanji) Kurdish (Kurmanji) Kyrgyz Kyrgyz Lao Lao Latin Latin Latvian Latvian Lithuanian Lithuanian Luxembourgish Luxembourgish Macedonian Macedonian Malagasy Malagasy Malay Malay Malayalam Malayalam Maltese Maltese Maori Maori Marathi Marathi Mongolian Mongolian Myanmar (Burmese) Myanmar (Burmese) Nepali Nepali Norwegian Norwegian Pashto Pashto Persian Persian Polish Polish Portuguese Portuguese Punjabi Punjabi Romanian Romanian Russian Russian Samoan Samoan Scottish Gaelic Scottish Gaelic Serbian Serbian Sesotho Sesotho Shona Shona Sindhi Sindhi Sinhala Sinhala Slovak Slovak Slovenian Slovenian Somali Somali Spanish Spanish Sudanese Sudanese Swahili Swahili Swedish Swedish Tajik Tajik Tamil Tamil Telugu Telugu Thai Thai Turkish Turkish Ukrainian Ukrainian Urdu Urdu Uzbek Uzbek Vietnamese Vietnamese Welsh Welsh Xhosa Xhosa Yiddish Yiddish Yoruba Yoruba Zulu Zulu

Russia’s largest private carrier flies into bankruptcy

0a1_2959
0a1_2959
Written by editor

MOSCOW, Russia – Russian Prime Minister Dmitry Medvedev has given the green light to begin bankruptcy proceedings for Transaero airlines, according to sources cited by Gazeta.ru.

MOSCOW, Russia – Russian Prime Minister Dmitry Medvedev has given the green light to begin bankruptcy proceedings for Transaero airlines, according to sources cited by Gazeta.ru. Negotiations on a takeover of Russia’s second-biggest carrier by Aeroflot have been deadlocked.

According to the Russian Interfax news agency, all the negotiators have acknowledged bankruptcy as the only possible way out. A source close to the deal told Interfax there are three reasons for that.

First, the airline’s shareholders have not been able to consolidate 75 percent plus one share that were expected to be transferred to Aeroflot. Secondly, Transaero creditors refused a debt restructuring model, proposed by Sberbank that is overseeing the deal. An the final reason was the Russian Ministry of Finance’s reluctance to give state guarantees of 85 billion rubles ($1.3 billion) for the restructuring of Transaero, which was promised in the early stages of negotiations.

The banks are opposed to the bankruptcy, but Aeroflot says they should have better assessed the risk when they gave loans to Transaero. According to Aeroflot, the airline had an extremely risky strategy in staying afloat.

Transaero is in such financial straits that it can’t refuel its planes, which is now done by Aeroflot. It said it would stop refueling Transaero planes on September 30, but First Deputy Prime Minister Igor Shuvalov asked Aeroflot to move the deadline to midnight October 2, Russian business media RBK reported.

Shuvalov has promised the government would help the 10,000 Transaero employees who may lose their jobs as well as passengers that had pre-purchased tickets.

At the beginning of September, Aeroflot said it intended to acquire a 75 percent stake in Transaero, which has about $4 billion in debt. Aeroflot’s main shareholder is the Russian state, which owns 51 percent stake in the carrier.