Russia’s flagship Aeroflot plans $3bn emergency cash infusion | Business and Economy News

Aeroflot additionally plans to order 300 planes from a state-owned agency after Airbus, Boeing halted provides as a consequence of sanctions.

Below heavy strain from Western sanctions and airspace bans, Russian state flagship airline Aeroflot is planning to lift as much as 185.2 billion roubles ($3bn) in an emergency share problem, it stated.

Aeroflot, managed by the Russian state, on Tuesday stated shareholders at its annual assembly had permitted the issuance of 5.42 billion new shares that may very well be purchased at a worth of 34.29 roubles ($0.56) every below an open subscription.

The airline additionally plans to order 300 plane from United Plane Company, which is majority-owned by Rostec, Russia’s state aerospace and defence conglomerate, the Vedomosti enterprise newspaper reported.

The paper, citing two sources, stated Aeroflot was eyeing the Irkut MS-21 medium-range airplane, often known as the MC-21, which might carry greater than 200 passengers and is because of enter service this yr.

Aeroflot additionally desires the Sukhoi Superjet 100, Russia’s primary domestic-made passenger jet, which generally seats simply lower than 100 passengers. A smaller variety of orders could be made for the Tupolev Tu-214, which seats about 200 individuals, it stated.

With passenger numbers nonetheless down by a 3rd in contrast with pre-coronavirus ranges at first of the yr, the corporate has since been severely hit by Western sanctions.

The European Union, United States, United Kingdom and Canada have shut their airspace to Russian planes, chopping Aeroflot off from profitable flights to Western markets.

Airbus and Boeing – which accounted for all however 10 of Aeroflot’s 187-strong fleet at first of 2022 – have halted the provision of plane elements and providers to Russian carriers.

In response, Aeroflot opted to not pay dividends on its 2021 earnings and has not printed first-quarter outcomes for this yr, shielding itself from having to disclose the monetary toll of sanctions.

Wet-day fund

The $3bn injection is about to come back partly from Russia’s Nationwide Wealth Fund (NWF) – the federal government’s rainy-day fund that’s being marshalled to assist help key corporations hit by sanctions – with the federal government promising to speculate 107 billion roubles ($1.73bn) in Aeroflot.

The Kremlin has stated it can use the $198bn NWF to prop up the economic system by means of what is about to be a deep recession in addition to plug the federal government’s deficit.

Putin ordered ministers on Tuesday to attract up new guidelines for the way the NWF may be spent, suggesting tips may very well be relaxed to permit for extra state funding to revive financial exercise and probably opening the doorways to a flood of government-backed emergency funding.

Throughout the pandemic, Moscow stepped in to purchase 80 billion roubles ($1.3bn) of Aeroflot shares utilizing the NWF.

In its assertion on Tuesday, Aeroflot didn’t present particulars on how a lot of the brand new share problem the state could purchase. The finance ministry declined to remark.

The airline carried 2.2 million passengers in March 2022, together with on its low-cost airline, Pobeda – Russian for “victory”. That was down from 2.8 million in February and fewer than half the 4.6 million carried in March 2019.